YANG & PHAN
[2020] FCCA 3053
•11 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YANG & PHAN | [2020] FCCA 3053 |
| Catchwords: FAMILY LAW – Property – parties divorced in China in 2014 – whether the Wife is out of time to institute property proceedings – divorce in China does not require consideration for leave out of time – Wife’s application for leave to proceed on an undefended basis – where the Husband has not participated in these proceedings–Wife given leave to proceed on an undefended basis– interests of justice in bringing the proceedings to an end – where there is property in Australia and China – lack of persuasive evidence regarding property allegedly owned by the Husband in China - lack of sworn valuations - orders not made regarding property in China – orders made regarding property in Australia. |
| Legislation: Family Law Act 1975 (Cth), ss.44(3), 75(2), 79(2), 79(4), 79A, 117(1), 117(2), 117(2A). Federal Circuit Court Rules 2001 (Cth), rr.1.03, 13.03C, 16.05. |
| Cases cited: Aleksovski v Aleksovski [1996] FamCA 111 Allesch v Maunz [2000] HCA 40 Anderson & McIntosh [2013] FamCAFC 200 Dickons v Dickons [2012] FamCAFC 154 |
| Applicant: | MR YANG |
| Respondent: | MR PHAN |
| File Number: | MLC 10105 of 2019 |
| Judgment of: | Judge Carter |
| Hearing date: | 29 September 2020 |
| Date of Last Submission: | 29 September 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 11 November 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Tesoriero |
| Solicitors for the Applicant: | Hutchinson Legal |
| There was no appearance by the Respondent. |
ORDERS
Leave is granted to the Wife to proceed on an undefended basis.
Within 720 days of the date of these orders, the parties do all such acts and things necessary and sign all documents as may be required to list the real property situate at and known as B Street, Suburb C in the State of Victoria (“the B Street, Suburb C property”) on the market for sale. The Wife to have conduct of the sale and to decide the terms and conditions for the real property to be sold and the sale proceeds to be disbursed as follows:-
(a)payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)payment of any money due and owing to the mortgagee; and
(c)the net balance to be retained by the Wife.
Within 720 days of the date of these orders, the parties do all acts and things necessary and sign all documents as may be required to list the real property situate at and known as D(1) Street, Suburb E in the State of Victoria (“D(1) Street, Suburb E”) on the market for sale. The Wife have conduct of the sale and to decide the terms and conditions for D Street, Suburb E to be sold and the sale proceeds to be disbursed as follows:-
(a)payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)payment of any money due and owing to the mortgagee; and
(c)the net balance to be retained by the Wife.
Pending the sale of the properties:-
(a)the Wife have the sole right to occupy the B Street, Suburb C property, and the Wife be responsible for all the ongoing payments with the said property as and when they fall due;
(b)the Wife have the sole right to apply the rental income of D(1) Street, Suburb E and the Wife be responsible for all the ongoing payments with the said property as and when they fall due;
(c)the parties hold their respective interest in the real properties upon Trust pursuant to these orders;
(d)neither party further encumber the properties without the consent in writing of the other party; and
(e)the Wife is responsible for keeping the properties insured.
Within 60 days of the date of these orders, the Husband pay to the Wife the sum of $2,108.
Pursuant to section 106A of the Family Law Act 1975 (Cth), in the event that either party fails to execute any document within 14 days of being requested to do so by email, a Registrar of the Court is hereby appointed to authorise such documents on behalf of that party.
The Wife otherwise retain for her sole use and benefit:-
(a)the contents of all bank accounts in her sole name; and
(b)her personal belongings.
Within 7 days of the making of these orders, the Wife serve a copy of these orders upon the Husband as follows:-
(a)via post to the Husband’s last known address, F Street, City G, China;
(b)via email to ... .com; and
(c)via text message to ... .
In the event that the Husband seeks to make an application to the Court to consider varying or setting aside the orders made in his absence, any such application must be made within 45 days of being served with these orders.
AND THE COURT NOTES THAT:
A.Pursuant to rule 16.05(2)(a) of the Federal Circuit Court Rules 2001, the Court may vary or set aside a judgment or order made in the absence of a party.
B.The Court is satisfied that the final property orders are a just and equitable division of the property in these proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Yang & Phan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10105 of 2019
| MS YANG |
Applicant
And
| MR PHAN |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant Wife in these proceedings seeks to proceed on an undefended basis in relation to property proceedings instituted by her on 5 September 2019. She seeks orders in relation to the parties’ property, some of which is in Australia and some of which is in China.
The Wife is 55 years of age. The Wife says she ceased paid employment in 1997, when the parties’ first child was born. In early 2020 she was able to obtain employment with a business. However, she says her employment is likely to be terminated as she has not performed well, and the business has been adversely impacted by the COVID-19 pandemic. At the time she swore her Financial Statement on 25 September 2020 she was earning $710 gross per week.
The Husband is an Australian citizen, but ordinarily resides in China. He is almost 66 years of age. The Wife says he has worked as a salesperson, earning around $100,000 in 2015. However, she does not know his current income or employment. The Wife says he has remarried.
The parties married in China in 1990. They immigrated to Australia in 1994. They have two adult sons, Mr H who was born in 1997 and is now 23 years of age, and Mr J who was born in 2000 and is 19 years of age. They remain living with the Wife at the former matrimonial home at B Street, Suburb C in the State of Victoria (“the former matrimonial home”).
The parties separated in around 2014, and the Wife says they agreed to divorce in China in around mid 2014. That divorce is not registered in Australia.
Is leave out of time required?
Section 44(3) of the Family Law Act 1975 (Cth) (“the Act”) refers to an application for a property settlement to be brought within 12 months of a “divorce order” taking effect.
With respect to the preliminary issue of whether the divorce order made in China effects the time limitation specified in section 44(3) of the Act, Counsel for the Wife helpfully directed the Court to the decision of Anderson & McIntosh [2013] FamCAFC 200 (“Anderson”), whereby their Honours accepted the trial judge’s analysis of the legislation and his determination that the meaning of “divorce order” can only mean an order for divorce made under the Act, and does not encompass a divorce granted overseas.
Accordingly, I am satisfied that the Wife does not need leave to proceed out of time, as they parties have not yet obtained a divorce order from this Court.
The Wife’s application to proceed undefended
The Wife seeks to proceed on an undefended basis.
Pursuant to Rule 13.03C of the Federal Circuit Court Rules 2001 (“the Rules”):-
(1) If a party to a proceeding is absent from a hearing (including a first court date), the Court or a Registrar may do 1 or more of the following:
(a) adjourn the hearing to a specific date or generally;
(b) order that there is not to be any hearing, unless:
(i) the proceeding is again set down for hearing; or
(ii) any other steps that the Court or the Registrar directs are taken;
(c) if the absent party is an applicant—dismiss the application;
(d) if the absent party is a party who has made an interlocutory application or a cross‑claim—dismiss the interlocutory application or cross‑claim;
(e) proceed with the hearing generally or in relation to any claim for relief in the proceeding.
(2) If a party to a proceeding is absent from a hearing, the Court or a Registrar may also make an order of the kind mentioned in subrule 13.03B(1), (2) or (4), or any other order, or may give any directions, and specify any consequences for non‑compliance with the order, that the Court or the Registrar thinks just.
The High Court of Australia in Allesch v Maunz [2000] HCA 40 recognised that a party may not participate in proceedings, and cannot generally be forced to do so. Their Honours said that the Court is not:-
…obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved… Additionally (as this Court has itself accepted), the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.
Further, their Honours said, “Affording the opportunity [to be heard] is all that the law and principle require”.
The Wife deposes that whilst she and the Husband maintained a good relationship after separation, in 2019 she lost touch with him. She said this substantially coincided with him marrying his current wife.
Prior to the first return of this matter on 29 January 2020, the Wife made the following steps to serve and notify the Husband of these proceedings:-
a)before issuing proceedings, the Wife’s solicitors sent two letters to the Husband in China seeking to discuss a property settlement. There was no response to those letters;
b)the Wife’s solicitors submitted a request to the Supreme Court in China for service pursuant to the Hague Convention on Service Abroad on 12 September 2019. That application was accepted by the Supreme Court in China, however the Husband was not located and served through that process;
c)the Wife says she received a text message she believes was from the Husband on 5 November 2019 in which he said he wanted to sort out a property settlement. However, he did not answer her when she attempted to call him back. He has not responded to subsequent text messages sent to that number either;
d)the Wife’s solicitors conducted a search of the Australian electoral roll. The Husband’s address according to the roll remains the former matrimonial home;
e)the Husband has ‘deleted’ the Wife and their children from WeChat, so she has been unable to contact him through that means;
f)the Wife has searched for, but been unable to find a Facebook user matching the Husband’s English or Chinese names; and
g)the Wife’s documents were sent to the Husband by email on 25 November 2019. He has not responded to that email, or any subsequent emails sent to that address.
On 29 January 2020, an order was made dispensing with service on the condition that the Wife’s documents and a copy of the orders made that day were posted and emailed to the Husband on or before 7 February 2020. In accordance with that order:-
a)the Wife’s documents and a copy of the orders were posted to the Husband’s address in China on 4 February 2020;
b)the Wife’s documents and a copy of the orders were sent to the Husband’s email on 4 February 2020; and
c)additionally, the Wife sent a text message to the Husband’s mobile telephone advising him the documents had been emailed and posted and advising him of the adjourned date.
There has been no response by the Husband to any of those efforts made to serve him and bring these proceedings to his attention.
Pursuant to the orders made on 29 January 2020, the Husband was to personally attend at the adjourned date of 30 March 2020.
On 30 March 2020, the Husband did not attend Court. He had not contacted the Wife, her solicitors, or the Court. No documents were filed by him. Further orders were made setting the matter down for hearing not before 8 June 2020, and the Wife was given liberty to seek to proceed undefended on the adjourned date should the Husband not file material. The Wife was directed to serve her trial material upon the Husband in accordance with the 29 January 2020 orders.
The Wife filed an Amended Initiating Application on 27 April 2020, setting out more with specificity the orders sought by her. That document, together with the orders made on 30 March 2020, were served on the Husband by email on 27 April 2020 and by post on 5 May 2020. On 12 May 2020, a further email was sent to the Husband’s mobile advising him of the documents having been provided and of the adjourned date.
On 24 June 2020, the Wife discovered that a property owned by the parties at D(2) Street, Suburb E in the State of Victoria (“D(2) Street, Suburb E”) had been listed for sale in late 2019 and had sold in early 2020. Settlement occurred in mid 2020. The property was sold for $550,000. That sale occurred approximately two weeks after the Husband had been served by email with the Wife’s material and a copy of the Court orders made on 29 January 2020.
The matter returned to Court on 24 July 2020. There was no appearance by or on behalf of the Husband that day. Further orders were made for the Husband to file material and the matter was adjourned to 29 September 2020. A costs order for $2,180 was made against the Husband as the Wife could not proceed to trial that day, as she required an opportunity to subpoena material regarding the sale of D(2) Street, Suburb E. The orders included that the Wife was to serve a copy of those orders and her trial material on the Husband by email and by notifying him of same via text message.
The Wife served a copy of the orders of 24 July 2020 on the Husband by email on 12 August 2020.
On 25 September 2020, the Wife filed a further Amended Initiating Application together with her trial affidavit. Those documents were served on the Husband in accordance with the earlier orders on 25 September 2020. On 28 September 2020, the Wife served by email a copy of the affidavit of the parties’ adult son Mr J, the affidavit of her cousin Mr K (“Mr K”), and her Outline of Case.
I am accordingly satisfied that the Husband is aware of the Wife’s application, the orders she now seeks and of the hearing date, although the Wife’s trial affidavit was served only four days before the hearing before me.
My Chambers had further attempted to email the Husband as follows:-
a)on 12 May 2020, to advise that the matter was to be relisted to 24 July 2020 for interim defended hearing;
b)on 30 June 2020, to advise of the method by which the interim defended hearing would be conducted and seeking that the parties enter appearances;
c)on 23 July 2020, to send the Microsoft Teams conference invitation for the interim defended hearing;
d)on 21 September 2020, to advise of the method by which the Final Hearing on 29 September 2020 would be conducted and seeking that the parties enter appearances; and
e)on 28 September 2020, to send the Microsoft Teams conference invitation for the Final Hearing.
On none of those occasions were the emails sent to the Husband ‘bounced back’ to my Chambers, nor did the Husband respond to any such correspondence.
The matter was listed before me on 29 September 2020. No documents have been filed by the Husband. There was no appearance by or on behalf of the Husband that day, and he has not attempted to contact my Chambers, the Wife or the Wife’s solicitors. He has at no time responded to the Wife’s emails or text messages regarding these proceedings.
In considering whether leave to proceed undefended should be granted, I note the provisions of Rule 1.03 of the Rules states as follows:-
(1) The object of these Rules is to assist the just, efficient and economical resolution of proceedings.
(2) In accordance with the objects of the Act, the Rules aim to help the Court:
* to operate as informally as possible
* to use streamlined processes
* to encourage the use of appropriate dispute resolution procedures.
(3) The Court will apply the Rules in accordance with their objects.
(4) To assist the Court, the parties must:
* avoid undue delay, expense and technicality
* consider options for primary dispute resolution as early as possible.
(5) If appropriate, the Court will help to implement primary dispute resolution.
I also have regard to the serious nature of the consequences to the Husband and his entitlements if the matter proceeds in his absence. Those consequences must be balanced against the interests of the Wife in having the proceedings brought to a conclusion justly, efficiently and economically.
Rule 16.05 of the Rules also has an ameliorating effect where orders are made in the absence of a party, permitting a Court to vary or set aside its judgment in those circumstances. That Rule does not give the Husband a right to set aside any orders I have made. However, it does enable the Court to revisit a decision made in circumstances where one party was absent, without resorting either to the appeal process or the making of an application pursuant to section 79A of the Act.
Given the efforts that have been made to advise the Husband of the proceedings and to provide him with the opportunity to participate, and his apparent failure to do so, I am satisfied the Husband was, or reasonably should have been aware that the matter was listed before me on 29 September 2020, and that the matter may proceed in his absence on that day. Accordingly, I am satisfied that leave should be granted to the Wife to proceed undefended.
The matter cannot continue to be delayed indefinitely as a result of the Husband failing to participate in the proceedings. They need to be brought to a conclusion.
The Wife’s evidence
The Wife relied on her Amended Initiating Application, Financial Statement and trial affidavit, all filed on 25 September 2020. She also relied on the affidavits of the parties’ adult son Mr J and Mr K, both filed on 27 September 2020.
The Wife deposes that neither party had significant assets at the commencement of the marriage. She said the parties both worked hard, and made equal contributions in their separate spheres, with the Husband being the primary income earner and the Wife the primary parent once the children were born.
The Wife says during the marriage the parties purchased the following properties:-
a)in 2003, the parties purchased a property at L Street, City G, China for AUD$400,000 (“the L Street, City G property”). The Wife does not depose to how the funds to purchase the property were raised, or whether it was subject to a mortgage at that time; and
b)in 2010, the parties purchased the former matrimonial home for $670,000. The Wife does not depose to how the funds to purchase property were raised, or whether it was subject to a mortgage at that time.
The Wife also says the parties commenced a company, N Company in 2004, which she expects the Husband continues to operate. That appears to be an I.T. company, but the Wife does not explain what the company actually does, beyond deposing that it was a “trading business”. She does not know the current value or status of the company.
At the time the parties separated, the children were 13 and 17 years of age. The Wife says the Husband has primarily lived in China since the separation, and accordingly she has had the overwhelming responsibility of caring for the children. She sets out that the children generally spend time with the Husband for two weeks each year, either travelling to visit him in China, or the Husband travelled to Australia and spent time with them here. The Wife says that continued until 2019, when the Husband “became unreachable”.
The Wife has remained living in the former matrimonial home with the children. The Wife says before she lost contact with the Husband, the parties remained on good terms for a number of years, and continued to make financial investments together, she says to benefit themselves and their children.
The Wife says the L Street, City G property was sold at around the time of separation, in early 2014. According to the sales contract, the property sold for RMB 13,000,000. That was approximately AUD$2,600,000 in 2014. It is implicit in the Wife’s material that the property was unencumbered, as she says the parties had the benefit of the whole of the proceeds of AUD$2,600,000 which they agreed to share between them. However, she says notwithstanding that agreement, the proceeds have been applied as follows:-
a)the Husband has transferred to the Wife by way of multiple bank transfers a total of $531,820 between February and May 2014. Of those funds, the Wife applied $515,694 towards the mortgage encumbering the former matrimonial home, and used the balance to meet her living expenses and towards the support of the children;
b)in around mid-2015, by agreement, the parties paid a total of $162,738 to purchase two off the plan units, being D(2) Street, Suburb E and D(1) Street, Suburb E (“D(1) Street, Suburb E”, collectively referred to as “the Suburb E properties”) in joint names. The Suburb E properties were purchased off the plan for $565,000 and $572,000 respectively; and
c)the Husband used approximately $900,000 to purchase a property at O Street, City G, China (“the O Street, City G property”) in his sole name.
The Wife does not depose as to what occurred to the balance of those funds.
The Suburb E properties were completed in 2017. The Wife sets out in her Outline of Case that at that time, the parties extended the mortgage over the former matrimonial home, taking out $600,000 from that mortgage and using those funds to settle on the Suburb E properties. The balance of the monies to effect settlement were borrowed by way of a mortgage with the Commonwealth Bank of Australia in joint names.
The Wife says after completion, the Suburb E properties were rented out, and the Husband retained the rent and made the mortgage repayments until mid-2019.
The Wife says the Husband continued to pay child support to her until mid-2016. At that time, the parties’ children were around 19 and 15 years of age. She says the Husband proposed that the Wife retain the Suburb E properties in lieu of ongoing child support, to which she agreed.
The Wife deposes that the Husband ceased making the mortgage payments for the Suburb E properties in around mid-2019. She has annexed to her trial affidavit a copy of a Notice of Default addressed to the Husband at the former matrimonial home, dated 17 October 2019 confirming the joint mortgage encumbering D(1) Street, Suburb E had fallen into arrears. The Wife deposes that whilst the Husband ceased making the loan repayments, he continued to retain the rental income, and transferred that overseas. The amount owing on the mortgage encumbering D(1) Street, Suburb E was $293,466 at that time.
Unbeknownst to the Wife, the Husband sold D(2) Street, Suburb E on 17 February 2020 for $550,000. When the Wife discovered this, she subpoenaed the firm who conducted the conveyancing for the Husband of the sale. Those documents revealed the net proceeds of the sale were transferred to Ms Yang, the Husband’s current wife. The sum of $221,174 was paid to her on 18 March 2020 and a further $40,000 on 7 April 2020. Those funds were then transferred by her overseas.
I am unclear how the property was sold without the Wife’s knowledge if it was registered in joint names. If the property was in the Husband’s name only, I do not know why a caveat had not been lodged to protect the Wife’s interest.
What are the parties’ assets and liabilities?
The Wife asserts the pool is comprised as follows:-
Former matrimonial home, valued by her at $820,000, subject to a mortgage of $557,579, in joint names
Equity E$262,421
D Street, Suburb E, valued by her at $400,000, subject to a mortgage of $289,632, in joint names
Equity E$110,368
The O Street, City G property in the Husband’s name
E$2,000,000
Add back of the sale proceeds of D Street, Suburb E
$261,274
HSBC bank account in the Wife’s name
$13,850
Neither party has any superannuation.
The evidence produced by the Wife in support of her contentions as to the value of the assets in the pool is limited, and her case is poorly prepared in this respect.
In relation to the former matrimonial home, I do not have any evidence regarding the payment of the mortgage beyond what I have described. I do not know, for instance, what was owing at the time the parties separated, or what it was reduced to when $515,694 of the proceeds of the O Street, City G property were paid into it. Drawing from the Wife’s Outline of Case, it appears the mortgage was increased to $600,000 in 2017. I do not know whether the Wife has made any further redraws from that mortgage. The mortgage is now $557,579. There is no valuation of the property.
In relation to the Suburb E properties, I do not have any evidence as to their value beyond what the Wife asserts. I note D(2) Street, Suburb E was sold for $550,000 earlier this year, which is significantly higher than the $400,000 the Wife asserts is the value of D(1) Street, Suburb E. However, I do not know the difference between the properties.
In relation to the O Street, City G property:-
a)the Wife has adduced no expert or independent evidence either as to the fact that the Husband owns the property, or the value of it;
b)the Wife says she believes the Husband used $900,000 from the proceeds of the O Street, City G property sale to purchase the property, but as she was not involved in the purchase, she has no evidence to support that assertion;
c)the Wife says she has been unable to travel to China to obtain any evidence as to property registration. I note according to the Wife’s material her father is in China. I do not know whether or not he could have obtained the relevant information;
d)in support of her assertion that the Husband owns the property, the Wife relies on an affidavit filed by Mr K. Mr K says the Husband engaged him to manage the renovations to the property between June and August 2014, and that it appeared to him that the Husband owned the O Street, City G property;
e)the parties’ adult son Mr J has also deposed an affidavit the Wife relies upon as evidence of ownership. Mr J deposes that he and his brother have spent time with the Husband at the O Street, City G property in 2014/2015 and again in 2018. He says the Husband told them the property belonged to him;
f)the Wife estimates the property is now worth $2,000,000. She has no expertise to give that evidence The Wife has provided a screen shot from what she says is a Chinese Real Estate website which she describes as a property valuation in support of her assertion that the property is worth AUD$2,000,000. As set out below, I am not convinced that document is admissible, and even if it is, there is no weight I can put on it.
I note that the Husband has not participated in these proceedings, and accordingly has not put before the Court any material that contradicts the Wife’s assertions. However, that does not mean that I must accept all the assertions made by the Wife. In particular, I am not prepared to accept that the Husband has an unencumbered property worth AUD$2,000,000 based on the evidence sought to be adduced by the Wife.
As already observed, I have nothing official that corroborates her assertion that the Husband even owns a property in China in his sole name. I note the Husband has remarried. I do not know whether – if the Husband owns property in China - his Wife is on title, or what her entitlements to that property may be under Chinese law.
In relation to the screen shot upon which the Wife seeks to rely, it does not appear to me to be a valuation as she describes it in her trial affidavit, but possibly a listing of properties available for sale at some undisclosed time.
If the document is a list of properties available for sale; offers to buy and offers to sell land are not, generally, evidence of the value of the property: see e.g. VW &EW & Ors [2006] FamCA 269. The fact that the property may be on the market or have been on the market for sale at a particular price is not evidence of the value of the property. In this case, there is no evidence there were even any offers to purchase the property at or around that alleged value.
Notwithstanding the Wife’s description of the document as being a valuation, I understood from Counsel for the Wife that the document was a list of comparable property sales. If that is correct, I have no evidence as to the qualifications of the person who created the document, nor do I have any evidence to verify the properties listed are comparable. If it is a valuation, I have no evidence as to the person’s expertise, and cannot identify the address of the O Street, City G property on the face of the document.
In my view, the screen shot is not admissible as evidence of the value of the property.
Alternatively, if I am wrong about the admissibility of the screen shot, then in my view, no weight can be put on it. As already observed, I do not know the qualifications of the purported estate agent. I cannot identify the property address on the screen shot. I do not even know what the document actually is. Although the Wife asserts it is a ‘valuation’, there is nothing on the face of the document as translated that identifies it as such. Further, if the document purports to set out comparable sales, as asserted by Counsel for the Wife, I have no way of knowing whether the properties are, in fact, comparable. Additionally, there does not appear to be any date given to the document.
It is clear the Husband has not provided disclosure, and as set out in Weir & Weir (1993) FLC 92-338, the Court need not be unduly cautious about findings in favour of an innocent party. However, any inference I draw must be rational and based on facts that are proven. There must be a foundation for the inference. It does seem that the Husband has had the benefit of the balance of the proceeds of the sale of the O Street, City G property in 2014. However, the evidence the Wife has sought to adduce falls short, in my view, of providing the Court with evidence from which an inference can be rationally drawn that the Husband owns the O Street, City G property unencumbered and worth AUD$2,000,000.
Additionally, the Wife seeks an order that the O Street, City G property be sold and funds be paid to her from those proceeds. As already observed, I do not know who actually holds the title to the O Street, City G property. Nor do I know what entitlements the Husband’s wife may have to any property he holds pursuant to Chinese law. I note further the observations made by the Full Court in Galloway & Midden (No.2) [2014] FamCAFC 60 at paragraph 20 that:-
… an Australian court will avoid making an order in relation to assets in a foreign country that might operate in direct conflict with the laws of that country. (See, for example, Michael Wilson and Partners Ltd v Robert Colin Nichols [2008] NSWSC 1230 at [6]- [7] per Brereton J).
In circumstances where I am not satisfied as to the ownership of the O Street, City G property, the value of the property, or whether another person may have entitlements to that property, I cannot be satisfied that the O Street, City G property forms part of the Husband’s existing legal or equitable interests.
In my view, the appropriate approach is for this Court to deal with the assets that are or were in Australia. That is because, as already identified, I do not have reliable evidence as to the assets that may be in China, or the ownership of those assets. It may be that the Wife will have alternate remedies available to her in China should she wish to pursue the matter further in proceedings in that jurisdiction. I will take into account the Wife’s evidence that the Husband had the benefit of retaining the bulk of the proceeds of the sale of the O Street, City G property when determining what orders, if any, should be made.
It is unfortunate that the Wife has not adduced expert evidence as to the value of the former matrimonial home or D(1) Street, Suburb E. I note, however, the values she attributes to those assets do not seem to be far-fetched or improbable. Had the Husband sought to challenge those valuations, he has had the opportunity to do so.
I am satisfied that the proceeds of the sale of D(2) Street, Suburb E should be notionally added back. That property appears to have been sold by the Husband after he became aware of these proceedings. It was a joint property, and he has retained the entire proceeds for his use and benefit.
The pool is accordingly:-
Former matrimonial home, valued at $820,000, subject to a mortgage of $557,579, in joint names
Equity E$262,421
D(1) Street, Suburb E, valued at $400,000, subject to a mortgage of $289,632, in joint names
Equity E$110,368
Add back of the sale proceeds D(2) Street, Suburb E, retained by the Husband
$261,274
HSBC account in the Wife’s name
$13,850
TOTAL known assets in Australia
$647,913
Is it just and equitable to make an order?
The Wife urges the Court to make an order that alters the parties’ interests in their property. I cannot conflate my determination pursuant to section 79(2) of the Act with my determination pursuant to section 79(4) of the Act. They are separate enquiries, and it is not permissible to begin with an assumption that one or other party has the right to have property interests altered or divided between them.
The parties separated after a 24 year marriage, which produced two children. They acquired various property interests jointly and individually during the marriage and in the six years post-separation, utilising joint funds to do so.
The former matrimonial home and D(1) Street, Suburb E are held in joint names. The Husband may have assets in his sole name in China. If there is no adjustment made, the Husband would apparently retain substantial assets in China and half of the equity in the properties remaining in Australia, as well as having removed over $260,000 from the jurisdiction, and having retained substantial funds from the proceeds of the sale of the O Street, City G property. That would mean the Wife’s significant contributions, particularly post-separation to the care and support of the children and her future needs, would not be recognised.
In my view, this is one of the “vast majority of cases” referred to by the plurality in Stanford v Stanford [2012] HCA 52, in which the requirements of section 79(2) of the Act are fairly readily satisfied. It is plainly just and equitable to make an order pursuant to section 79(4) of the Act in these proceedings for a division of property between the parties.
Assessment of contributions
In assessing what orders to make pursuant to section 79(4), I am not required to undertake a detailed mathematical exercise. Rather, I must weigh and assess all the contributions made by both parties, and “somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (per Kay J in Aleksovski v Aleksovski [1996] FamCA 111 at paragraph 90). This is a holistic exercise, to determine what orders “represent justice and equity in the particular circumstances of this particular relationship” (per the Full Court of the Family Court of Australia in Dickons v Dickons [2012] FamCAFC 154 at paragraph 23).
In terms of the parties’ respective contributions at the commencement of and during cohabitation, the evidence of the Wife is that:-
a)neither party had any significant initial contribution, nor did either party make any contribution during the relationship or post-separation by way of gift, inheritance or the like;
b)the Wife worked before having the children, and contributed her income to the family. She was the children’s primary carer, and the person primarily responsible for home duties during the relationship; and
c)the Husband was the primary income earner throughout the relationship. His capacity to earn an income was significantly assisted by the Wife’s role as homemaker and parent.
I assess the parties’ contributions during the marriage as roughly equal.
In relation to contributions post-separation:-
a)the Wife continued to provide the primary care for the children, with the Husband spending most of his time overseas. Whilst the Husband paid child support for the children until 2016, the overwhelming burden of meeting the children’s needs fell to the Wife. She was almost exclusively responsible for attending to their daily needs, taking them to and from school, managing their medical appointments, extra-curricular and social activities, and undertaking home duties. The Husband spent just two weeks with the children each year;
b)the Wife had the benefit of living in the former matrimonial home. I do not know what the mortgage was at the date of separation. She says she has been solely responsible for the payment of the mortgage and meeting the costs of the property since 2014. The Wife says she has the financial support of her family to make the home loan repayments. I note the mortgage was increased to $600,000 in 2017, and since that time, the Wife has made the repayments on that mortgage, reducing it to $557,579. She says she has also attended to the maintenance of the property since the parties’ separation;
c)the parties sold the O Street, City G property netting proceeds of approximately AUD$2,600,000:-
i)the sum of $515,694 from proceeds of the O Street, City G property was paid into the mortgage encumbering the former matrimonial home;
ii)the parties also invested $162,738 into the Suburb E properties; and
iii)the Husband has, according to the Wife, had the benefit of the balance of those monies, using part of those funds to purchase the O Street, City G property;
d)the Husband made the mortgage payments on the Suburb E properties until mid-2019 and has retained the rental income from the Suburb E properties;
e)it appears from the Wife’s evidence that she is now meeting the mortgage payments on the remaining D(1) Street, Suburb E, as well as on the former matrimonial home; and
f)the Husband has retained the proceeds of sale of D(2) Street, Suburb E of $261,274.
The factors pursuant to section 75(2) of the Act
In terms of the parties’ future needs, I have no evidence as to the Husband’s income or state of health other than as already set out. The Wife is 55 years of age. In her Outline of Case, it is asserted the Wife is suffering stress and has poor mental health.
The Wife has a limited income earning capacity. She had been out of the paid workforce for 20 years, but has been able to obtain a job this year. However, she says that job is unlikely to continue. Her total income from that employment is approximately $37,000. It is a very modest income.
I note the Wife deposes that the Husband has previously earned around $100,000 in 2015. He is now almost 66 years of age. It is understood he is living with his current Wife. I have no evidence as to the financial circumstances relating to that cohabitation. According to the Wife, the Husband has also retained the business, the value of which – and the drawings from which - are not known. He may also have additional assets and financial resources.
Orders to be made
The Wife seeks orders in summary for:-
a)the sale of the former matrimonial home, conducted by her, and that she retain the whole of the proceeds of same;
b)the sale of D(1) Street, Suburb E and that she have the conduct of the sale and retain the proceeds of the sale for same;
c)pending the sales, to take place within two years, the Wife receive the rental income from D(1) Street, Suburb E and she be responsible for making the mortgage repayments on both the properties;
d)the Husband repay the Wife the sum of $261,274.45, being the sale proceeds of D(2) Street, Suburb E; and
e)the Husband’s O Street, City G property be sold and the Wife receive AUD$700,000 from the sale of the property with the Husband to retain the balance of the proceeds.
The Wife does not make any proposal for the payment of Capital Gains Tax (“CGT”) upon the sale of either D(2) Street, Suburb E or the remaining unit, and no evidence was lead in relation to what that might be. Accordingly, I will not make any orders regarding the payment of CGT and it will simply fall where it falls.
Whilst the parties’ contributions during the lengthy marriage were equal, the Wife’s post-separation contributions, over the last six years are, in my view, greater than those made by the Husband. In particular, as outlined, the Wife carried the substantial burden of providing care for the parties’ children in the almost complete absence of the Husband. She has also maintained the former matrimonial home post-separation, including making the mortgage repayments due.
I assess the Wife’s contributions at 55% and those of the Husband at 45%.
In my view, there should be an adjustment in favour of the Wife of a further 5%, bringing her total entitlement to 60%, and the Husband’s at 40% when taking into account the parties’ income earning capacities, and the possibility the Husband has other assets or financial resources in his control in China, including having had the benefit of the bulk of the proceeds of sale of the O Street, City G property.
Accordingly, the orders I make are for the Wife to retain the balance of the assets that are in Australia, and the Husband to pay to the Wife a further $2,108.
I note the Wife seeks two years to place the properties on the market for sale. I was not addressed as to that unusually long lead up to sale. However, I will not interfere with that proposal. The COVID-19 pandemic may have an effect on property sales, and the Wife may want to choose a more appropriate time to market and sell the properties. Additionally, the Husband has not filed any material complaining of the proposed delayed sale. I further note the Wife’s proposed orders include that she will meet the mortgage and other expenses pending the sale. In that way the Husband is not prejudiced by the delay in sales.
Costs application
The Wife seeks an order that the Husband pay her costs in relation to these proceedings totalling $13,131.79.
The usual rule is as set out in section 117(1) of the Act, that each party to proceedings under this Act shall bear their own costs. Pursuant to section 117(2) of the Act2 however, the Court can depart from that usual rule if there are circumstances that justify it doing so. In considering if any order should be made as to costs, the Court must take into account the matters set out in section 117(2A).
Additionally, the Wife seeks her costs of $13,131.79 calculated on an indemnity basis.
I have no information as to the financial circumstances of the parties other than as set out in these reasons. In terms of the parties’ conduct, the Wife says the Husband’s failure to participate has caused her to incur further expenses. For example, she says she incurred additional costs in relation to attempting service, and as a result of issuing subpoenas when D(2) Street, Suburb E was sold. However, beyond the general assertion that her costs were increased, there was no articulation as to how, and to what extent, those costs were increased.
I note the Wife’s costs total $13,131.79. Had the Husband participated in the proceedings, it may well have been that her costs would have exceeded those she has incurred. There would have been a mediation, discovery and the like, as well as costs incurred in reading and responding to his material.
There has already been one costs order against the Husband as a result of costs thrown away on 24 July 2020. Pursuant to that order, the Husband is to pay the Wife’s costs of $2,180 for that day, as it was a wasted Court event, arising from the unilateral sale of D(2) Street, Suburb E. However, I am not of the view that the circumstances otherwise justify departing from the usual rule that each party bear their own costs, and accordingly, I will make no further order as to costs.
For all of the foregoing reasons, I make orders as are set out.
I certify that the preceding ninety-two (91) paragraphs are a true copy of the reasons for judgment of Judge Carter
Associate:
Date: 11 November 2020
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