Yum and WEN & Ors
[2010] FamCA 1086
•30 November 2010
FAMILY COURT OF AUSTRALIA
| YUM & WEN AND ORS | [2010 ] FamCA 1086 |
| FAMILY LAW – PROPERTY – Accusations of fraudulent divorce from second wife to frustrate property division – Whether husband had any interest in the property of his second wife and her son – Non-disclosure of business and income by the husband |
| Family Law Act 1975 (Cth) |
| Baldachino & Hanas [2010] FamCA 234 Black & Kellner (1992) FLC 92-287 Jones v Dunkel (1959) 101 CLR 298 K & K [2002] FamCA 1150 Oriolo & Oriolo (1985) FLC 91-653 Weir & Weir (1993) FLC 92 – 338 |
| APPLICANT: | Ms Yum |
| RESPONDENT: | Mr Wen |
| 3rd RESPONDENT: | F Lan |
| 4th RESPONDENT: | Ms Wo |
| FILE NUMBER: | SYF | 3985 | of | 2005 |
| DATE DELIVERED: | 30 November 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 23 - 27 August 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Jamieson |
| SOLICITOR FOR THE APPLICANT: | Di Lizio & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Dura |
| SOLICITOR FOR THE RESPONDENT: | Marando Solicitors |
| COUNSEL FOR THE 3RD & 4TH RESPONDENT: | Mr Cutler |
| SOLICITOR FOR THE 3RD & 4TH RESPONDENT: | Luminous Legal |
Orders
The Further Further Amended Application for Final Orders 1(d) filed by the applicant wife on 30 April 2009 be dismissed.
The Applicant wife is declared to have no interest in the property known as C property in the state of New South Wales with Folio Identifier ….
The Respondent husband is declared to have no interest in the property known as C property in the state of New South Wales with Folio Identifier ….
Pursuant to section 79, an order be made in accordance with orders 5 to 11 hereof.
Within 42 days of the date of these orders the Respondent husband do all acts and things and execute all documents necessary to transfer the following properties to the Applicant wife:
5.1.L Street, B, New South Wales and being the whole of the land contained in Folio Identifier …; and
5.2.A Street, B, New South Wales being the whole of the land contained in Folio Identifier ….
The wife indemnify the husband in respect of unpaid Council rates and unpaid strata levy fees in relation to either of the properties referred to in paragraph 5.
Contemporaneously with the transfers referred to in paragraph 5, the wife pay to the husband the sum of $19,129.
The parties do all things and sign all necessary documents to enable the wife to receive the monies and any interest in the controlled monies account.
The wife do all things and sign all necessary documents to allow the husband to receive the monies held in the husband’s solicitor’s account (in the approximate sum of $3,570).
The husband indemnify the wife in relation to any debt the husband may owe his brother or any other person or entity.
As between themselves the parties to be declared to be the legal owners in law and equity of all other properties, monies, and chattels standing in their respective possession or name at the time of the hearing, as set out in the table at the end of the Reasons for Judgment.
If either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.
The husband and wife have liberty on 14 days notice to restore the matter before me in respect of any Application for the implementation of these Orders.
Any party may make any Application for Costs or pursue any Application for Costs by filing an application and relisting the matter within the time specified in the Family Law Rules.
IT IS NOTED that publication of this judgment under the pseudonym Yum & Wen and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 3985 of 2005
| MS YUM |
Applicant
And
| MR WEN |
Respondent
And
| F LAN |
3rd Respondent
And
| MS WO |
4th Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The husband and wife seek different orders about how to alter interests in property held by each of them.
They cohabited for 18 years and had 5 children together.
After the parties divorced, the husband began a relationship with the fourth Respondent; married her; separated from her and is now divorced also from her. The majority of the final hearing was focused on whether the husband had an interest in the property of the fourth Respondent’s son (the fifth Respondent) and whether the husband’s separation and divorce from the fourth Respondent was a ‘sham’ to undermine the wife’s claim in that property.
APPLICATIONS
The Applicant wife seeks the following:
1)That within 42 days of the date of these orders the Respondent husband do all acts and things and execute all documents necessary to the transfer of the following properties to the Applicant wife:
i)[L Street, B], New South Wales and being the whole of the land contained in Folio Identifier […].
ii)[A Street, B], New South Wales being the whole of the land contained in Folio Identifier […].
2)That in the event that the Respondent husband refuses or neglects to execute any document or instrument or transfers or to do any act necessary to give effect to order 1 above, that the Registrar or Deputy Registrar of the Family Court of Australia (Sydney Registry) be appointed pursuant to s106 of the Family Law Act, to execute such document or instrument or transfer in the name of the relevant party and to do all other acts and things necessary to give validity and operation to the instrument or transfer documents.
3)That the Respondent husband pay to the wife within 42 days such sum as the Court considers appropriate by way of an adjustment pursuant to s.79 of the Family Law Act.
4)That pursuant to s.78 of the Family Law Act the husband be declared to have a beneficial interest in the property at [C] in NSW and being the whole of the land contained in lot […] in Deposited Plan […] and that such property be charged with the burden if the amount to be paid by the husband to the wife pursuant to order 3 above.
5)That as between themselves the parties to be declared to be the legal owners in law in equity of all other properties, monies, and chattels standing in their respective possession or name at the time of the hearing.
6)That the Respondents pay the applicant wife’s costs of these proceedings, including reserved costs.
The husband’s response dated 1 November 2005 was out of date in the sense that properties he sought to transfer or sell had already been disposed of. Counsel for the husband did not hand up a minute of orders sought in the proceedings before me. In final submissions the Respondent husband sought that the husband receive 35% of the asset pool and the wife receive 65%. It was submitted that as part of his 35%, the husband should be transferred the A Street premises after the rates on that property had been paid, would receive a $40,000 payment from the wife, and be responsible for the D Trading debt.
The fourth and fifth Respondents seek the following by their Response filed 1 July 2009:
1)That the Further Further Amended Application for Final Orders 1(d) filed by the applicant wife on 30 April 2009 be dismissed
2)That the applicant wife is declared to have no interest in the property known as [C property] in the state of New South Wales with Folio Identifier […];
3)That the Respondent husband is declared to have no interest in the property known as [C property] in the state of New South Wales with Folio Identifier […];
4)That the applicant wife pay the 4th and 5th Respondents’ cost of and incidental to these proceedings on a solicitor client’s basis.
DOCUMENTS RELIED UPON
The Applicant wife relied on the following:
7.1.Further Amended Application filed 30 April 2009;
7.2.Affidavit filed 4 May 2010; and
7.3.Financial Statement filed 2 July 2010.
The Respondent husband relied on the following:
8.1.Response filed 1 November 2005;
8.2.Affidavit filed 16 June 2010; and
8.3.Financial Statement filed 16 June 2010.
The fourth and fifth Respondent relied on the following:
9.1.Response filed 1 July 2009;
9.2.Affidavit of the fourth Respondent filed 28 July 2010; and
9.3.Affidavit of the fifth Respondent filed 19 August 2010.
SHORT HISTORY
The husband was born in China in 1958.
The wife was born in China in 1959.
The parties were married and commenced cohabitation in 1986.
The husband immigrated to Australia in August 1992 and the wife immigrated in September 1992.
The parties’ five children were born in 1988, 1994, 1996, 1997 and 2000.
The parties separated on 26 April 2005 and divorced on 10 September 2006.
The fifth Respondent arrived in Australia in October 2005.
The fourth Respondent arrived in Australia in June 2006.
The husband married the fourth Respondent in October 2006.
The husband and the fourth Respondent separated on 24 January 2009 and were divorced on 17 June 2010.
CREDIT
Husband
I find the husband to be a very unreliable witness. In the first two days of the hearing he gave inconsistent evidence on a number of occasions.
There was significant cross-examination regarding the husband’s place of residence, with Counsel for the wife suggesting that the husband was still living with the fourth Respondent (his second wife from whom he is divorced). While I cannot find conclusively that the husband is living with the fourth Respondent, there were significant inconsistencies in the husband’s evidence about him being at his second wife’s home.
When asked his address in examination in chief the Husband provided to the interpreter a document on which his address at X was written. In cross examination it was put to him that this address was a construction site. He denied this. Evidence subsequently called by the wife from private inquiry agents confirmed that construction was taking place at the address the husband had given. The husband further said in cross examination that he rented a small garage on the site. On the second day, the husband produced photos and gave evidence to suggest that he lived in unit three of the block of flats, and that the other units were being refurbished but not his.
A significant untruth was told on the first day about where the husband was residing on the nights of Thursday 19 August 2010 and Friday 20 August 2010. The husband denied that he stayed at the home of the fourth and fifth Respondent (“C property”). He denied being at C property in the week before the trial. He said he was staying at a friend’s house and that he got a train to work. The wife called evidence from two private inquiry agents. Mr G observed the husband in the back seat of a red Ford leaving the C premises at 8.48am on Friday 20 August 2010. The fourth Respondent was a passenger in the front seat and the car was driven by the fifth Respondent. Mr G later that day (7.44pm) observed the husband departing from a car park in N as the driver of the red Ford. The husband denied that he had been in a red Ford on that Friday and particularly he denied that he had left the C premises in that motor vehicle on Friday morning.
After both inquiry agents gave oral evidence and tendered photographic and DVD evidence and the Husband was given a section 128 certificate, the husband admitted that he had stayed at C property on Thursday, Saturday, Sunday and Monday night, and from about dawn to 8am on Saturday morning after spending the night at a friend’s gathering. The husband said he didn’t tell the whole story because he didn’t want to cause trouble for the fourth Respondent. He found it difficult to admit that he had ‘lied’ and cited his Buddhist beliefs for him being an honest man. The husband seemed unable to remember the lies he had actually told the court under oath on the previous day.
The husband and fifth Respondent both maintained that the husband slept downstairs on the couch. During evidence however, the husband said “I slept on the couch downstairs at [C property]. [C property]…I started about 5am. I slept to about 8am, when the kid came upstairs he saw me then he took me to 563, the shop.” When I questioned this, the husband maintained he said ‘downstairs’ in the fourth sentence, as did the fourth and fifth Respondents’ Mandarin speaking lawyer. The husband’s translator and the fourth and fifth Respondents’ translator heard ‘upstairs’. I form the view that the interpreter providing the translation was accurately translating what the husband had said. Having said that, I have otherwise found that I cannot rely upon much that the husband has said and so accordingly I do not place much weight upon one version of where he slept as opposed to another version. I will generally accept the evidence of the fifth respondent and therefore find that in all probability the husband slept downstairs on occasions when he spent overnight in his second wife’s home.
During his relationship with the fourth Respondent, the husband maintains that he lived at his sister’s house from 2007 to 2009 and stayed at his new wife’s home at C only on the weekends. The husband was cross examined as to why that was the case. The husband gave a number of different explanations.
Initially he said his sister’s house was above the shop which he had to open in the morning so it was more convenient and avoided traffic. He also said it was free to eat there. Later he mentioned that he didn’t move into C property because the home was bought by his second wife and step-son, not him, and the husband said he felt uncomfortable living in a house that was not his. Given that he was married to his second wife at the time, this seems to be an implausible explanation for his alleged lack of full time occupancy of the C property.
In examination in chief the husband said he was unemployed. I later learned from the husband that he was working in Chinese medicine and was paid $10 per patient by his employer to whom he says he owed $70,000. He said he had only recently begun working there, from October 2009, and that he only worked once or twice a week. The husband’s own evidence later was that he worked on the Friday, Saturday and Sunday before the hearing. The husband was again unwilling to admit that he was earning income from personal exertion. He said that because he was working to pay off his debt to his employer, he wasn’t actually employed, despite receiving a small income. The husband’s financial statement most recently filed indicates that he receives no regular amount of income arising from any personal exertion by him.
The husband was asked what the fourth Respondent’s job entailed in 2007 when both she and he worked in his sister’s business. The husband said she was a cleaner. He later said she did ‘everything’ including cooking and cleaning. The husband gave the clear impression that his second wife did not do any significant duty relating to his sister’s business. A document (Exhibit L) was produced that recorded the fourth Respondent had been employed as the full time general manager in the business since 2006 (the document being dated August 2007). It further said that the fourth Respondent was responsible for therapy & Pharmaceutical work. The husband confirmed that the fourth Respondent possessed an intense interest in Chinese medicine. The husband, in my view, was being totally disingenuous when responding to the initial questions about the fourth Respondent’s role in his sister’s business. The husband again denied that he lied and said that he hadn’t been asked whether she was the general manager, and anyway he said she did ‘everything’. On balance I think the truth lies somewhere in the middle. The fourth Respondent herself agreed that she had only administered two therapies in total and had no experience working with pharmaceuticals. I conclude however that the husband’s second wife was more involved in the actual Chinese medicine business than was originally indicated by the husband.
Further inconsistencies were noted in the husband’s affidavit of 30 October 2007 where he does not mention that he remarried and he said he wanted to purchase a modest residence, when he was fully intending to move in with the fourth Respondent in her home, for at least part of the time. The husband says he thought his marital status was irrelevant, and said he was still intending to purchase a modest residence because there were personality clashes between he and the fourth Respondent and he knew they would eventually separate. The husband was giving evidence about a period of time which is only about a year after he married the fourth Respondent and over a year before he says the fourth Respondent and he separated. I form the view that the omission in his affidavit of 30 October 2007 to even mention that he had remarried was a deliberate attempt to conceal relevant information.
Wife
Counsel for the husband, whilst making no submission that I could find his client a credible witness, submitted that the wife was also an unreliable witness. He referred to the following matters:
31.1.She did not disclose she has a watch worth $17,000;
31.2.Items on her 2005 financial statement were no longer on her 2010 financial statement. This submission by counsel for the husband was not particularised. No significant non disclosure was identified in cross examination;
31.3.The wife’s disclosure in cross examination that she had other previously undisclosed accounts in China around about the time that she moved monies after separation. The wife did have some difficulty describing how her withdrawals of $429,000 from a Bankwest mortgage were distributed. She had particular difficulty remembering whether transfers were made electronically or made in cash. She also had difficulty remembering what accounts she held at the time and which accounts were involved in the transfers. I do not believe the wife was being evasive in regards to this questioning. I find that there were many sums of money being transferred between multiple accounts, and keeping track of such money trails from 2005 would prove difficult. It was not demonstrated that any of the “undisclosed” accounts had any significant amounts in them. The wife will be debited for all Australian funds that she removed after separation that were not used to discharge joint debt;
31.4.The wife made some unsolicited and irrelevant statements during cross examination including that the husband had raped her sister; the husband had children to other women and that the husband had put poison in the children’s lunch boxes. Correctly and for obvious reasons, none of these statements were explored. Although they are inherently unlikely and worrying, I do not conclude that the wife has significantly fabricated evidence about financial matters;
31.5.Counsel for the husband submitted that the wife’s use of the husband’s power of attorney to remove monies from accounts shortly after separation showed the wife was inherently dishonest. I do not make that assessment. She was still emotionally affected by the separation at the time of the hearing. I infer that she was significantly emotionally affected by the separation at the time it happened. Her actions at separation were occasioned by emotion not dishonesty. All the money was returned to Australia shortly after she had removed it.
31.6.The wife gave evidence about an intention to go into partnership with her sister which seemed inconsistent with a statement that she had made in an earlier affidavit. Whilst I accept there was an inconsistency, it was not about a significant matter and I do not place any weight upon it in terms of the wife’s credit;
31.7.Counsel for the husband also suggested I question the wife’s conduct in hiring private investigators, where the only effect of their evidence would be to discredit the husband. At the time this suggestion was made I responded that the husband had indeed been highly discredited, and so this was not a particularly strong submission to make. I also note that a further purpose for the private investigators was to question the validity of the separation between the husband and the fourth Respondent; and
31.8.Counsel for the husband submitted that the wife’s decision to have her eldest daughter present in Court reflected poorly upon her. I do not accept that is so.
I found the wife generally to be a reliable witness.
Fourth Respondent
The fourth Respondent gave inconsistent evidence in the hearing about visiting the business where the husband worked. She initially said that she attended upon the centre only when dropping the husband to work. Later, the fourth respondent was explaining that because she and the husband were now brother and sister in Buddhism (in the absence of a romantic relationship) they shared their good fortune and assisted each other through difficulties. She was then asked how the husband could possibly share his good fortune if she maintained that he contributed no money whatsoever to her during or after their relationship. The fourth Respondent said that the assistance needn’t be financial, and the husband assists her by giving her head massages to relieve stress. This was said to occur at the business once a month or once every two months. I find that it is likely the fourth Respondent concocted the story about the head massages to assist her unlikely evidence that the husband contributed not one dollar to her welfare during or after their marriage.
There was a small inconsistency in the evidence of the husband and fourth Respondent about who initiated the arrangement for the husband to stay at the fourth Respondent’s home during the hearing. The husband said the fourth Respondent suggested it, and he did as he was told. The fourth Respondent said the husband suggested it. I am unable to find whose evidence is more likely, but little rests on this matter.
Counsel for the wife highlighted the fourth Respondent’s willingness to act dishonestly in other matters. These are:
35.1.Securing a mortgage from the Bank of Shanghai on the basis of assisting the cash flow of her company, when it was actually to renovate the house in C;
35.2.Submitting a document to the Immigration Department describing her work in acupuncture, Chinese therapies and pharmaceuticals at the business of the husband’s sister, when the fourth Respondent had only administered two needles in total and had no experience working with pharmaceuticals;
35.3.Failing to declare the money in excess of $10,000 being brought into Australia. The fourth Respondent says the customs form was in English and a stranger helped her fill it out and advised that the customs officials would deal with that issue when they searched her bag, which they did not. I do not find this excuse particularly plausible; and
35.4.As outlined in paragraph 25 of her affidavit, the fourth Respondent split her money between friends and asked them to transfer it to her, to avoid China’s law regarding maximum amounts of money that may be transferred out of the country. The fourth Respondent did not agree with this paragraph of her affidavit and said that she was rather avoiding the rules on how much money could be exchanged into other currencies. The difference is not particularly important – the wife was still actively avoiding financial regulations in China.
Notwithstanding some difficulties in the evidence given by the fourth Respondent, overall I accept the evidence which she gave.
Fifth Respondent
Like the fourth Respondent, there were some minor inconsistencies in the evidence given by the fifth Respondent, but overall I accept the evidence which he gave.
The fifth Respondent gave some curious evidence about the red Ford motor vehicle being in the car park at N after he returned home late from Central Station on Friday evening (in circumstances where the husband had previously that afternoon been observed driving the red Ford away from the car park at N).
I note that the fifth Respondent was absent from the Court the previous day when this evidence was given. When the inconsistency was highlighted the fifth Respondent said that he didn’t know what the husband did with the car in the meantime and that when he got to it the car was in relatively the same spot and that he couldn’t remember if it was in the same spot, but if it wasn’t this wouldn’t be unusual because he often loses his car. It might be coincidental but I am not sure as to whether or not the fifth Respondent was being frank with me when giving this evidence.
The fifth Respondent gave oral evidence which was inconsistent with the version of conversation he said he had with his mother as set out in paragraph 21 of his affidavit. In that paragraph he says:
“Before I left China to return to Australia in January 2007, [Ms Wo] said to me words to the effect, ‘I have money packed in your bag and the money can be paid to construct the house. Those monies are the balance of the loan and some of my savings in the business’. Once I arrived in Australia, I opened my luggage and counted the money. I found that the money was $80,000. I then deposited the $80,000 into my bank.”
When cross examined about this conversation, the fifth Respondent said that his mother had also told him that part of the monies had come from his father and his paternal grandfather.
Earlier in his affidavit, the fifth Respondent had related a conversation that he had had with his paternal grandfather in November 2005 where his paternal grandfather inter alia, told him that he would provide some money for him to buy a place in Australia. The affidavit also sets out the conversation that he had with his mother in July 2006 relating to the monies required for the acquisition of the land upon which the house was eventually constructed at C. That was in the following terms:
“15. [Ms Wo] told me words to the effect that, ‘I don’t want to buy the property using my name because I only have a temporary visa and I don’t know if I will be staying in Australia permanently. Further more, part of the money to buy the property comes from your father and his relatives. They told me not to have my name on the title’.”
It was submitted by counsel for the fifth Respondent that the fifth Respondent had confused in oral evidence the conversation that he had with his mother in July 2006 with the one that he had with his mother in January 2007. Having observed the fifth Respondent in the witness box, I did not gain the impression that he was attempting to deliberately lie to me about his understanding as to the source of funds. It was obvious from his evidence that he had little involvement in the financing of the acquisition of the land and the construction of the dwelling on the land and that more generally he left financial matters up to his mother. I do not accept that the differences between what the fifth Respondent said in paragraph 21 of his affidavit and his oral evidence are sufficient for me to conclude that he was deliberately fabricating a conversation that he said he had with his mother.
Conclusions as to credit
Unless I indicate otherwise (because a version is inherently unlikely or there is other objective evidence), where the husband’s evidence is inconsistent with the wife’s, I will accept the wife’s evidence, and unless I indicate otherwise, where the husband’s evidence is inconsistent with evidence given by the fourth or fifth Respondents, I will accept the evidence given by the fourth and/or fifth Respondents.
CHRONOLOGY
The husband was born in China in 1958 (currently 52 years of age).
The wife was born in China in 1959 (currently 51 years of age).
The parties met in 1981 or 1982.
The parties were married and commenced cohabitation in 1986 in China. The wife worked for the Chinese government from 1984 – 1991. The husband was trained in Chinese medicine and was working at a University.
After their marriage, the parties leased the property of the husband’s sister.
The parties’ first child was born in 1988.
The husband’s sister arrived in Australia in 1989.
The husband borrowed money in 1991 totalling $8,000 from a friend. The loan was repaid by the husband.
The husband immigrated to Australia in August 1992 and commenced work at a Factory.
In 1992 the wife travelled to Europe and worked there while the husband applied for the wife to come to Australia.
The wife migrated to Australia in September 1992 whilst their daughter was cared for by relatives in China.
The wife commenced work at the Factory in September 1992 after her arrival. She sustained a work injury in January 2004.
The husband became a permanent Australian resident in 1993.
The husband owned a property at R with his sister, purchased in 1992. The husband transferred his interest in 1994 to his sister and she paid $20,000.
The parties purchased the property at J in 1993 for about $114,000 with the parties paying $20,000 and the balance funded by a mortgage. The husband commenced practicing Chinese medicine from the J property. The husband registered the business name “Wen Clinic” on 25 August 1993.
The parties’ eldest child arrived in Australia in June 1994. The husband says he sent $200 per month to China from September 1991 until June 1994 to care for his daughter. The husband alleged that the wife’s sister took ownership of the husband’s property in China when the daughter moved. Neither of these assertions was explored at the hearing.
The parties’ second daughter was born in July 1994.
The wife received a compensation payment, for her 1994 work injury, of $25,000 in 1996, and on 1 March 1996 applied the compensation and some savings, totalling $31,389 to the J property mortgage.
On 21 March 1996 the wife’s father transferred $23,600 to the wife. She withdrew a further $31,000 from her account on 30 April 1996 and applied it to the J property mortgage.
The parties’ son was born in May 1996.
The husband became an Australian citizen in 1996.
The parties sold the J property in 1997 for $130,000 and received $120,000 net after this sale.
In 1997 the parties purchased the property at L Street, B (the matrimonial home). They applied $50,000 from the proceeds of the J property sale and financed the remainder by a mortgage. Later another $50,000 was applied from the J property sale to reduce the L Street mortgage.
In 1997 or 1998 the parties purchased a property at A Street, B, in the husband’s name. It was purchased for approximately $90,000. The amount of $18,000 was paid as a deposit and the balance financed by a mortgage, which was discharged in 2003 or 2004. The husband began operating his clinic from the A Street premises (instead of the J property) in March 1998 and continued to do so until 2005.
The parties’ daughter was born in November 1997.
In 1999 the husband brought $60,000 in cash from China, on behalf of the wife’s brother.
In late February or early March 2000 the husband lent Canadian $20,000 to his brother.
The parties’ son was born in May 2000.
On 30 September 2000 the wife changed her name by Deed Poll.
In 2001 the husband suffered a mild stroke and travelled to China for treatment.
On 18 October 2001 the husband signed a Power of Attorney to his wife, registered 2 November 2001. The wife said it was to enable her to exchange contracts on the second O Street, B, property while the husband was in China (although the wife says settlement of the two O St properties did not occur until 2003).
In July 2002 “Wen Pty Ltd” was incorporated. This company became the owner of the business “Wen Clinic”.
In 2002 a Melbourne property was purchased off the plan, but the settlement was not completed and the deposit was forfeited. There was no testing of this evidence at trial, and neither party asserted that the other should be responsible for the loss.
The parties purchased a property at H in 2003 for $1,240,000.
In 2003 the townhouses at O Street were purchased. The land totalled about 3,000 square metres and had a mortgage of about $560,000. The parties entered into an agreement to have this site developed with townhouses in partnership with a third party. The company “CPI Pty Ltd” (“CPI”) was registered on 29 August 2003. Both parties were directors and shareholders of the company. CPI became the owner of three of these townhouses, namely the townhouses 1, 3 and 8 at O Street.
In 2004 the property at Z was purchased in the husband’s name only. Twenty percent of the purchase price was funded by monies held by the husband and the balance and costs were paid for using the proceeds of a mortgage from Citibank. The mortgage on this property was later refinanced and consolidated with the mortgage on a property in Brisbane.
The husband asserts the wife took out a Westpac life insurance policy valued at $2,000,000 without his knowledge in October 2004. The wife is the beneficiary of that policy.
In December 2004 the properties in Brisbane were purchased. The husband said the wife travelled to Queensland to purchase the properties. The property at Brisbane was purchased for about $400,000 on behalf of the husband who is the sole owner of this property. The purchase was financed using a mortgage from Westpac which is consolidated with the mortgage on the Z property, totalling $600,000.
On 17 March 2005 the husband travelled to China for medical treatment on a tumour. The husband says on 22 March 2005 he underwent an operation for the treatment of his tumour. The husband says he returned to Australia on 20 or 21 April 2005. He asserts he felt ill following his operation and proceeded to treat himself.
The parties separated on 26 April 2005 after 19 years cohabitation.
The husband alleges following the separation, he was no longer in receipt of rent payments from the Z property but the wife was. He says he did not know where the proceeds of the Z property went.
After separation the wife withdrew over $829,000 from their various mortgage accounts without the husband’s knowledge or consent. The withdrawals were as follows:
86.1.On 28 April 2005 she drew down $489,000 on mortgage of their jointly owned H property.
86.2.On 5 May 2005 she drew down $160,000 against the jointly owned L Street property.
86.3.On 9 May 2005 the wife drew down a further amount of $180,000 against the jointly owned L Street property.
In April 2005 the husband ceased to operate his business from A Street. The contents of the business premises were removed by the husband. The husband began to operate his business from his sister’s business which had previously operated out of her R home but which had now been relocated to F. The husband says he resided rent-free with his sister at F and worked for her, receiving $240 per week.
A Revocation of Power of Attorney was signed by the husband on 4 May 2005 and registered 5 May 2005.
The husband made a number of withdrawals from bank accounts after separation:
89.1.On 26 May 2005 he withdrew $12,000 from his Westpac account. The wife said he also withdrew $22,000 from her Westpac account that day.
89.2.On 27 May 2005 he withdrew $22,000 from the joint St George account.
89.3.On 14 June 2005 he withdrew $1,500 from the joint St George account.
89.4.On 4 October 2005 he withdrew $13,000 from a joint account with St George.
The Y properties were sold for a loss in October 2005. The husband paid $10,000 and the wife a paid $23,000 towards the losses of the sale.
In late 2005 the wife returned most of the money she had previously withdrawn from mortgage accounts as follows:
91.1.In September she deposited $269,000 into the CPI St George Account and then transferred the monies into the ING mortgage account;
91.2.Also in September she deposited $350,000 into the Permanent Custodians mortgage held against the L Street property;
91.3.She deposited $50,000 into a bank account held in her name with HSBC Shanghai; and
91.4.She deposited $90,865 into CBA account on 1 November 2005.
The fifth Respondent arrived in Australia on 19 October 2005 and resided with the husband and his sister.
On 7 December 2005 interim orders were made by consent preventing the parties from further disposing of assets besides those specified in the orders, and that the wife have access to accounts in her name provided she account to the husband on a monthly basis for money she was expending on living expenses and outgoings on investment properties.
On 20 March 2006 an order was made for the wife to have exclusive occupancy of the A Street premises and for the husband to return business equipment so that the wife could run a business. Despite the order, the husband retained furniture. The husband says orders were also made stating that rent from the H property be put towards the mortgage until the husband moved into that property. He says the wife failed to pay monies in reduction of the loan and Bankwest took possession of the H property.
In April 2006 the Brisbane property and the Z property were sold by the mortgagee. Each party received $35,000.
In May 2006 the second Brisbane property was sold and each party received $32,589.
The fourth Respondent arrived in Australia on 29 June 2006.
A part deposit of $1,000 was paid in respect of the purchase of the fifth Respondent’s property at C on 23 July 2006. A further $19,000 was paid on 19 August 2006.
The parties were divorced on 10 September 2006.
On 25 September 2006 the husband and fourth respondent entered into a pre-marriage agreement.
The husband married the fourth Respondent, Ms WO, in October 2006.
The fifth Respondent travelled to China from December 2007 to January 2007, returning with $80,000 in cash.
On 8 January 2007 there were body corporate fees outstanding from the O Street properties in the sum of $11,000.
An application was made for the winding up of CPI in January 2007. On 19 April 2007 an official liquidator of CPI was appointed.
In May 2007, the property at 8 O Street was sold according to Court orders, with the liquidator’s approval. The net proceeds of the sale of $116,084.09 are held in trust by the husband’s solicitors.
Later in 2007 the properties at 1 and 3 O Street were sold. The surplus funds were applied to administration fees and creditors.
In September 2007 the third Brisbane property was sold and the wife received net proceeds of $398,000.
In November 2007 the property at H was sold by the mortgagee, after they took possession in August 2006. She said there was a shortfall of $240,000 which she negotiated down to $185,000 and paid from the Brisbane sale proceeds.
In January 2008 the wife travelled with the children on holidays.
In June 2008 the wife purchased a Ford motor vehicle, furniture and equipment.
On 22 July 2008 an ‘Anton Pillar order’ was sought by the wife against the fourth and fifth respondents. An order was made by Loughnan JR, whereby the wife and those authorised by her gained access to the property at C for the purpose of locating documents specified by the orders. These orders were carried out on 28 July 2008 and documents were removed from the C premises of the 4th and 5th Respondents. The wife had all of the documents that were obtained as a result of the order of 22 July 2008 available to her.
The husband and the fourth Respondent separated on 24 January 2009.
The husband said on 24 January 2009 he rented and moved into X property, paying $140 per week rent.
December 2009 was the last time the husband spent time with the children.
The husband and fourth Respondent filed an Application for Divorce on 14 May 2010 and were divorced on 17 June 2010.
APPLICANT’S CLAIM AGAINST THE 4TH AND 5TH RESPONDENTS
Jurisdiction
At the commencement of the hearing I clarified with counsel for the Applicant that the application the wife was making against the fourth and fifth Respondents was either based on accrued jurisdiction or alternatively on Part VIIIAA Family Law Act1975 (Cth) (“FLA”) more specifically s 90AE(2)(b) FLA.
Counsel for the Applicant however did not refer at any point during the hearing to Part VIIIAA FLA and did not address any of the issues set out in s 90AE(3) or (4). Consequently, any claim based on Part VIIIAA FLA was not pursued by the Applicant.
In relation to any claim under accrued jurisdiction, it seems that the claim is one of a resulting trust (the Applicant claiming that the Respondent had provided the whole of the funds for the acquisition of the C land and the construction of the dwelling upon it).
Application Sought
In final submissions counsel for the Applicant confirmed that he sought a declaration that the husband be entitled to the whole of the right, title and interest in the C property which is registered in the name of the fifth Respondent.
It is difficult, even on the submissions made by the Applicant, to see how that application could be maintained (except on the basis that I was being invited to draw a general inference that the relationship between the husband and the fourth Respondent continued and that he was the sole source of all funds that she had provided towards the acquisition of the C property).
In final submissions, when I asked whether the Wife conceded that the fourth or fifth respondent had some interest in the C property, counsel for the Applicant indicated that he was unable to specify any portion of the C property to which either of them might be entitled (and accordingly he maintained his client’s application for a declaration in relation to the whole of the C property).
Conduct of the Hearing
The wife’s claim against the fourth and fifth Respondents was heard during the first three days of the hearing. The wife’s case proceeded in a curious fashion and evolved during these three days. Initially the wife indicated she intended to not lead any evidence herself but rely on cross examination of the husband and the fourth and fifth Respondents. She also indicated she would be tendering documents that had recently come to the Court under subpoena.
The only mention in the wife’s initial affidavit as to anything to do with the assertion that funds for C property came from the husband was paragraph 82 of the wife’s affidavit which was an expression of the wife’s belief. That paragraph was not allowed to be read.
Notwithstanding an assurance on a couple of occasions during the hearing by counsel for the Applicant that all documents to support the applicant’s case had been tendered, over three days some further documents were produced from documents that had been delivered up as a result of a search on 28 July 2008 pursuant to an Anton Pillar order. These Anton Pillar documents and those handed up earlier as exhibits formed the entire written case of the wife.
The Wife’s Case
It seems there were two bases upon which the wife’s claim that the husband be entitled to the whole of the right, title and interest in the C property was made:
125.1.That $44,000 was taken from the matrimonial pool and provided to the fourth Respondent to use for improvements to the C property; and
125.2.That the romantic relationship between the husband and the fourth Respondent still continues, and an inference follows that the husband was the sole source of all funds that the fourth Respondent had provided towards the acquisition of the C property.
The $44,000 taken by the husband
Exhibit K shows that an amount of $44,000 was taken from matrimonial property and sent to China for a “sick friend”. I was asked to draw the inference, given the balance of the evidence that I heard, that this money had gone to the fourth Respondent in China and had formed part of the monies that she had brought back from China for the acquisition and improvement of the C property. Exhibit K shows a letter from the husband’s lawyers to the wife’s lawyers dated 11 October 2005, advising that “our client instructs us that he withdrew approximately $44,000 about a month after separation…” I note that the fifth Respondent arrived in Australia on 19 October 2005, and there is no mention of him bringing substantial sums with him. As will be mentioned below, the fourth Respondent had amounts in Chinese currency in the Bank of China between July and November 2005 which amounted to an equivalent to an amount of AUD $205,000. The fourth Respondent’s account showed a balance of $129,495.76 at 29 November 2005 and she brought this money with her when she came to Australia in June 2006. The fourth and fifth Respondent put a $1,000 deposit on the C land on 23 July 2006 and the fourth Respondent put a further towards it $19,000 on 19 August 2006. The fifth Respondent brought monies to Australia for the purpose of building the C home the next year, in 2007.
The husband denied that he had in fact sent $44,000 to China for a sick friend, despite the letter from his lawyer to the wife’s lawyers. He further denied that he ever sent any money to China, or that he had a sick friend in China. He denied also that he ever sent money to the fourth or fifth Respondents, whether in China or Australia.
Apart from the limited documentation sourced from the Anton Pillar order that was tendered in the hearing, I infer that none of the other documents that were taken from the fourth Respondent in July 2008 provided any connection between the husband and the fourth Respondent in relation to financial matters, as I am confident that they would have been tendered in evidence if they had existed. I conclude that the fourth Respondent did not have in her possession as at July 2008 documents that would tend to show that the husband had some real connection with the source of funds for the acquisition and improvement of the C property.
The $44,000 the husband sent to China occurred well before the fifth Respondent purchased the C land, and the money used for the construction of the house came into Australia more than a year after. There is no evidence of any weight to connect that $44,000 to the C property. Where all parties in the hearing were involved in money transfers into and out of China, this $44,000 was not an extraordinary occurrence. No inference can be drawn from the fact that this money was sent to China before the fifth Respondent brought money to Australia. I do not find that the $44,000 the husband sent overseas is connected in any way to the purchase of the C property.
The current relationship between the husband and fourth Respondent
The Applicant employed private inquiry agents to place the husband under surveillance on the Friday and Saturday before the hearing. They discovered three things. Firstly, that the husband had left the C property on Friday morning and on Saturday morning. This subsequently led to the admission by the husband after originally denying it, that he had slept at the property on Thursday, Friday, Saturday and Sunday nights and it subsequently transpired he also was staying at the C property on at least the initial nights during the hearing (the following week). It also established that the husband, during the period immediately before the hearing, had the partial use of the fifth Respondent’s motor vehicle which was ordinarily garaged at the C property. The third thing is that the husband attended a Chinese medicine business located in N on the Friday and Saturday immediately before the hearing.
The husband said he was given the keys on Monday 16 August to stay at C property during the trial because it was easier to get to Court in time from that address. He claimed that he didn’t have to be at work at a specific time, which is why it was convenient for him to stay in X normally. These claims were made despite the fact the surveillance footage showed the husband opening the shop at the beginning of usual working hours.
Admissions were made by the husband and the fourth and fifth Respondents that the husband had attended the C property on about a monthly basis since the separation in January 2009 and that the fourth and fifth Respondents were still friendly with the husband.
Department of Immigration and Citizenship records at Exhibit D show the husband and the fourth Respondent travelled together to China and back on three occasions, on the same flight. This occurred in June, September and October 2009. The husband says these trips were to treat a relative of the fourth Respondent in China, and showed no evidence of a romantic relationship.
As outlined earlier, although the husband and the fifth Respondents maintain that the husband slept downstairs on the couch, the husband mentioned that the fifth Respondent had come upstairs to wake him, although there were issues with the interpretation of this evidence. As mentioned earlier, given the difficulty I had with the husband’s evidence generally, if there was a conflict between the evidence of the husband and the evidence of the fifth Respondent, I would prefer the version given by the fifth Respondent.
Having said that, I am far from confident that I have been told the full story in relation to the level of the continuing involvement between the husband and fourth and fifth Respondents.
On balance of probabilities however, I am not satisfied that the Application for Divorce which was jointly filed by the husband and fourth Respondent is a fraud or a sham. On the balance of probabilities I am relatively comfortably satisfied that they are no longer in a marriage-like relationship. My disquiet in relation to the exact extent of their relationship however falls short of allowing me to draw an inference that there was collusion between them in order to hide financial arrangements between them which would lead me to a finding that the husband was the sole source or even the primary source of the funding of the acquisition and improvement of the C property.
Source of funds for C property
The property at C was purchased for $200,000 and the building of the house cost approximately $250,000. I was told that for the purposes of this hearing, the parties agreed that the current value of the C property was $420,000.
The evidence led by the fourth and fifth Respondents in respect of the source of funds and the method of the acquisition and improvement of the C property is supported by banking records. The authenticity of those records was not challenged. The oral evidence of the fourth and fifth Respondents was consistent with what they had said in their written documents.
The fourth Respondent sets out the money she had available before coming to Australia. Annexure B shows seven deposits into her Bank of China account between July and November 2005. Five of these amounts are in Chinese currency. The symbol used is CNY:
42,000
3,500
600,100
602,258
1,247,857
The fourth Respondent in her affidavit says that that amount is equivalent to an amount of $205,000 Australian dollars. That assertion by the fourth Respondent was not challenged in evidence and I accept that there is no dispute about the exchange rate that has been used to carry out the currency conversion.
There are three other amounts in Australian dollars. They are as follows:
$100,002
$1,400
$16,100
$117,502
The fourth Respondent was cross examined as to why some of the deposits that appear in annexure B were in Australian currency (the implication being that these may have been Australian dollars that had come from Australia and sent by the husband). On balance I accept the fourth Respondent’s explanation that she used money changers to convert this money on the basis that she had in her mind at that time that her son was going to go and study in Australia and she wanted to have Australian currency that she could bring to Australia.
Annexure A indicates the balance of the fourth Respondent’s Bank of China account on 29 November 2005 at $129,495.76. Counsel for the fourth Respondent made clear that account had had transferred into it the amount of $117,502 from Annexure B.
As at 2005 then, the fourth Respondent demonstrates that she had savings of $334,495. The fourth Respondent gave oral evidence that from 1994 to 2000 she was a Manager with an Import and Export Corporation, and from 2000 until 2003 she worked in China as a General Manager for a company. The immigration documents at Exhibit O show support this evidence. From 2003 to 2005 she was the General Manager of her own business.
The fourth Respondent brought the sum of $266,100 with her in cash when she moved to Australia in June 2006. This money was deposited into a St George account the day she arrived in Australia, evidenced by receipt at Exhibit C. The fourth Respondent said this $266,100 comprised of $100,000 from her own savings, $80,000 from her parents and $90,000 from her son’s biological father and paternal grandfather. The fifth Respondent said that $230,000 was transferred to him from the fourth Respondent before settlement of the land purchase. The fifth Respondent said the $230,000 was used, along with some of his previous savings, to pay the land purchase and partly pay the builder for the construction of the home.
The initial deposit of $1,000 in respect of the acquisition of the land at C was receipted in the joint names of the fourth and fifth Respondents. The balance of the deposit of $19,000 was paid by the fourth Respondent on 19 August 2006 (see annexure E to her affidavit).
The husband and fourth Respondent married in October 2006. The evidence of the fourth Respondent was that she had not felt a romantic involvement much before the husband proposed to her in September 2006. On 25 September 2006 the parties entered into a pre-marriage agreement which is annexure F to the fourth Respondent’s affidavit.
On 22 January 2007 the fourth Respondent, using her Shanghai property as security, borrowed 800,000 RMB (this is the same as CNY). This is approximately equal to AUD $131,440. As outlined above the fourth Respondent admitted in cross examination that she had not told the financial institution from which she borrowed those monies the true reason that she was borrowing them. They were used in the building of the C home. The loan was discharged when the fourth respondent’s Shanghai property was sold. Of the loan money, $100,000 was transferred to the fourth Respondent’s bank account on or after 24 January 2007, while the rest was added to the fifth Respondent’s savings and brought to Australia by the fifth Respondent in cash. This is set out in the two paragraphs below.
On 24, 25 and 29 January 2007 approximately $100,000 was brought out of China. The fourth Respondent was aware that Chinese law did not permit the conversion of Chinese currency into foreign currency beyond a particular limit. For that purpose, she enlisted two of her friends to convert Chinese currency into Australian dollars so it could be moved out of the country. The records at Exhibit G indicate four electronic transfers, two of $25,500 and two of $25,000 in the names of the fourth Respondent, the fifth Respondent and the two friends.
The same banking record at Exhibit G indicates two deposits, one of $50,000 on 25 January 2007 and one of $30,000 on 29 January 2007 which represents a sum of $80,000 in cash which the fifth Respondent brought in a suitcase that had been packed by his mother from China to Australia. I accept the fifth Respondent’s evidence that he was not aware of exactly how much was in his suitcase until he unpacked it when he got into Australia on his mother’s instructions and proceeded to bank it. I accept the explanation that he gives in his affidavit as to why it was banked three days apart in two different parcels.
Conclusion on the interest in the C Property
Having analysed the funds available to the fourth and fifth Respondents, I find they had sufficient resources to purchase the land at C, without the need for contributions from the husband. The fourth Respondent’s employment history and business involvement in China explains the accumulation of capital she asserts. After $200,000 was paid for the land in 2006, the fourth respondent still had more than sufficient capital to pay for the construction of the dwelling on the land ($205,000 + $129,495 +$80,000 + $90,000 – less the amount forwarded to the fifth respondent to assist in the acquisition of the land).
The fourth respondent then additionally borrowed $131,400. Also the fifth Respondent says that he regularly receives gifts from family members in red envelopes, and although he is unsure how much each gift was, he estimates $4,000 on average.
Whilst the paper trail is not crystal clear, the fourth and fifth respondents have established that they had more than sufficient resources to fund the acquisition and construction of the C property without having to rely upon any contribution from the husband. The fifth Respondent is the registered proprietor of C property. The presumption of advancement applies in the fifth Respondent’s favour in relation to monies provided by his mother for C property. Other relatives of the fifth respondent in China may have a claim against him but I find the husband does not.
ALTERATION OF PROPERTY BETWEEN THE HUSBAND AND WIFE
In this matter my task is to:
154.1.Identify and value the property, assets, financial resources and liabilities of the parties;
154.2.Identify relevant contributions and assess them;
154.3.Consider relevant matters referred to in Section 79(4)(d) – (g) of the Family Law Act 1975 (Cth);
154.4.Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.
Both sides made submissions on the basis that a global approach would be taken to the assessment of contributions.
BALANCE SHEET
On the second last day of the hearing, a balance sheet was tendered and I substantially set out that balance sheet below. During final submissions, various items were consolidated and the numbering I adopt in these reasons is consequently slightly different from what was originally on Exhibit R. Where there is controversy in relation to the value of an item, my determination is indicated in bold in the table below and the reason for the determination is set out after the table.
Assets
| Item no. | Title | Description | Husband | Wife | Agreed/ Determined | Value |
| 1 | J | [L Street, B] | $400,000.00 | $400,000.00 | Agreed | $400,000.00 |
| 2 | H | [A Street, B] | $220,000.00 | $220,000.00 | Agreed | $220,000.00 |
| 3 | H | AMP shares | $25,000.00 | $25,000.00 | Agreed | $25,000.00 |
| 4 | H | IAG shares | $15,000.00 | $15,000.00 | Agreed | $15,000.00 |
| 5 | H | Household contents | $1,000.00 | $11,100.00 | Determined | $11,000.00 |
| 6 | W | Household contents | $8,000.00 | $8,000.00 | Agreed | $8,000.00 |
| 7 | W | Ford Ghia motor vehicle | $17,000.00 | $17,000.00 | Agreed | $17,000.00 |
| 8 | H | Rolex watch | $18,000.00 | $18,000.00 | Agreed | $18,000.00 |
| 9 | W | Rolex watch | $17,000.00 | $17,000.00 | Agreed | $17,000.00 |
| 10 | H | Furniture and equipment from [A Street] business | $0.00 | $33,910.00 | Determined | $33,910.00 |
| 11 | J | Monies held in controlled monies account | $42,000.00 | $42,000.00 | Agreed | $42,000.00 |
| 12 | J | Loan owing from husband's brother | $0.00 | $0.00 | Agreed | $0.00 |
| 13 | J | Monies held in husband's solicitor's trust account | $3,570.00 | $3,570.00 | Agreed | $3,570.00 |
| 14 | W | Monies received by wife after separation | $446,500.00 | $446,500.00 | Agreed | $446,500.00 |
| 15 | W | Legal fees paid to date | $0.00 | $0.00 | Agreed | $0.00 |
| 16 | H | Legal fees paid to date | $65,742.00 | $65,742.00 | Agreed | $65,742.00 |
| 17 | H | Monies received by husband from sale of motor vehicle and proceeds of withdrawals from various accounts by the husband after separation | $112,100.00 | $132,100.00 | Determined | $112,100.00 |
| 18 | H | AMP super | $7,433.00 | $7,433.00 | Agreed | $7,433.00 |
| 19 | W | AMP super | $3,000.00 | $3,000.00 | Agreed | $3,000.00 |
| 20 | H | Monies received by husband after separation in consideration of the transfer of stock & equipment from the [A Street] business | $0.00 | $153,443.00 | Determined | $109,533 |
| Total assets | $1,554,788 | |||||
| Liabilities | ||||||
| Item no. | Title | Description | Husband | Wife | Agreed/ Determined | Value |
| 21 | J | Unpaid Council rates | $6,000.00 | $6,000.00 | Agreed | $6,000.00 |
| 22 | J | Unpaid strata levies ([A Street]) | $20,000.00 | $20,000.00 | Agreed | $20,000.00 |
| 23 | H | [Q Health] P/L | $30,532.00 | $0.00 | Determined | $0.00 |
| 24 | H | [D Trading] | $67,119.00 | $0.00 | Determined | $0.00 |
| Total liabilities | $26,000.00 | |||||
| Total net assets | $1,528,788 | |||||
Item 5: Husband’s household contents
The husband in his financial statement says that he estimates his household contents to have a value of $1,000. The husband was asked about purchases of household contents which he made after separation. These items are particularised in three invoices at pages 104 to 106 of his affidavit and total $11,000. The husband says that these items are now at the new home of his brother-in-law. This is to some extent corroborated by the photos that the husband apparently took of the interior of his unit which shows very little furnishings. However, I am unable to conclude that the husband has no control over these items and I find that the amount of money expended on these items by the husband in the sum of $11,000 should be added against the husband on the balance sheet.
Item 10: Husband’s furniture and equipment from the A Street business
It is not disputed that the husband removed furniture and equipment from the A Street shop. Order 5 made 20 March 2006 required the husband to deliver these items to the wife. Upon delivery, the parties were to sign an agreed inventory. There was correspondence between the solicitors for the parties in which the husband asserted that the value of these items was in the sum of $33,910 (see annexures A40, A41 and A42 of the wife’s affidavit). For some reason, which I am unable to discern, the solicitor for the husband asked that the wife pay this amount prior to the return of the items, notwithstanding the clear terms of the order. When this was pointed out, the husband asked the wife to acknowledge the items were worth $33,910. The husband did not return the items and I find that they were part of what went to the husband’s sister when the husband cleared out the A Street shop. I find that the appropriate amount to be added for these items is in the sum of $33,910.
Item 14: Monies received by the wife after separation
A number of items were consolidated from the original balance sheet. Originally the figures on the balance sheet were $489,000 from drawdown of 25 April 2005, $160,000 from drawdown of 5 May 2005 and $180,000 from drawdown of 9 May 2005. It was eventually agreed that the figure to be added against the wife in relation to monies received by her after separation was in the sum of $446,500.
Item 17: Monies received by the husband after separation
It is agreed that the husband received after separation the benefit of monies from various sources, namely, the sale of two properties, the sale of a motor vehicle and monies sent to China. These amounts totalled either $112,100 (husband’s contention) or $132,100 (wife’s contention). The argument about the difference in these two amounts centred around the amount the husband sent to China. The husband said he had sent $44,000 to China. He also had made a reference to sending $22,000 to a sick friend in China.
Counsel for the wife asserted that the husband’s evidence was that the $22,000 was an additional amount to the $44,000, counsel for the husband asserted that the $22,000 was part of the $44,000.
The solicitor for the husband wrote a letter dated 11 October 2005 (Exhibit K) saying:
“2. Our client instructs us that he withdrew approximately $44,000 about a month after separation and these funds were sent to China for a mutual friend of the parties’ medical treatment expenses.”
Particulars were sought but refused (see Exhibit K).
In fact, the husband’s oral evidence is that he never sent $44,000 to China, and further that he never sent any money to any person in China. The translation of the husband’s further evidence was “I did withdraw $44,000 from the joint bank account with my ex-wife then [inaudible] $22,000 from my personal account and together $44,000 and something like $22,000.”
The husband denied that he ever talked to the solicitor about sending money overseas or that he gave the instructions referred to in the letter dated 11 October 2005. The solicitor for the husband was called and gave oral evidence that he had received those instructions. I accept his evidence and accordingly find that the husband made an admission through his solicitor that he sent at least $44,000 overseas.
There is no basis arising from the cross examination of the husband to add any further amount to the amount the husband has conceded.
I find that the correct figure to be added to the balance sheet against the husband for item 17 is in the sum of $112,100 (which includes an adjustment against the husband for $44,000, not $66,000 in respect of the monies he conceded through his solicitor, that he sent to China).
Item 20: Monies received by husband after separation in consideration of the transfer of stock & equipment from the A Street business
The wife submits that the sums amounting to the $155,443 should be placed back on to the balance sheet arising from the evidence contained in annexures 44, 45 and 46 of the wife’s affidavit. The inference is that these amounts were paid to the husband as a result of him transferring the stock and other equipment from the A Street business to the F business. Some of these amounts however are clearly attributed to income and tax. The $2,000 in annexure 45 appears to be money paid by the husband for tax, and the $10,000 in annexure 46 appears to be income from wages. The amount attributable to payments from stock in Annexures 44 to 46 is $143,443, as outlined in Annexure 44. The word “stock” appears on the last page of A44. The husband conceded that a relative was involved in moving items. The husband’s explanation as to what had happened to the items that were moved was implausible. The husband said that although he signed for some of the payments (as set out in A45), he never saw any money. Counsel for the husband submitted that the methodology of the calculations cannot be explained, and raised a Jones v Dunkel (1959) 101 CLR 298 submission about the wife’s failure to call the author of those documents.
I am satisfied that stock that was contained in the A street business was sold after separation by the husband, out of the F business. I am also satisfied that the husband received adequate compensation from his sister in relation to those sales. Although there was no agreement as to the value of the items, what was actually moved has been particularised at paragraph 53 of the wife’s affidavit.
I am uneasy however about adding back the whole of the sum claimed, having made the finding I have made about item 10. There is a significant risk, to do so would be to double count. I find that payments by the husband’s sister to him related to everything she received from the A Street shop. I find that the amount of $143,443, less $33,910 (item 10), namely $109,533, should be added to the balance sheet against the husband.
Item 23: Liability to Q Health P/L
The husband says he owes Q Health Pty Ltd $30,532. This is particularised in the annexure to his financial circumstances as consisting of three amounts:
$ 4050
$ 15,345
$ 11,137
$ 30,532
These amounts correspond to invoices and a packing statement at pages 51, 42 and 41 of the husband’s affidavit respectively. The invoices are dated 2 April 2005; 15 January 2005 and 12 February 2005 respectively. Exhibit S contains documents tendered by consent. They include a statement of claim commenced in the Parramatta Local Court by Q Health Pty Ltd against the husband and wife. The amount claimed is in the sum of $30,532.50 plus interest. The claim against the wife has now been the subject of an arbitral award in the wife’s favour. The wife was successful in defending the case, partly because the plaintiff failed to show any agency relationship between the wife and the husband in relation to the contract with the plaintiff but mainly because the arbitrator found that Q Health had kept two sets of books. A fourth packing statement was produced in evidence. This document is part of Exhibit S before me. It is dated 31 May 2005 and has an order number “016560” that is identical to the order number of the invoice dated 15 January 2005. Other particulars on the two documents are identical except the total amount on the May document does not have GST added. The May statement is addressed to the husband’s sister and is marked as paid. I have no evidence as to why it might have been that Q Health Pty Ltd only sought to pursue the wife (and not the husband) for the outstanding debt. Given all of this, I find it would be unsafe to add this debt to the balance sheet as a liability against the husband and I find that I should not do so.
Item 24: Liability to D Trading Pty Ltd
The husband asserts in his financial statement that he owes D Trading $67,119. Annexure J to the husband’s affidavit is a Statement of Claim issued by D Trading Pty Ltd against the husband filed 1 November 2006 seeking $67,111. The husband says this debt arose from trading activities in the shop at B during the marriage when he was in partnership with the wife. It is an agreed fact that no judgment debt has been entered arising from the 2006 Statement of Claim. The husband says there is a continuing relationship between himself and D Trading. He says the owner of that company also owns the Chinese Medicine Centre in N. I will find elsewhere that the husband operates a business from those premises which he has failed to disclose to the court. I do not accept the husband’s evidence that he attends those premises and works off this debt to D Trading. If that was so, I would have expected that the alleged debt in 2010 would not be identical to the alleged debt in 2006.
Counsel for the husband submits that the husband was not tested in relation to this debt. I am not able to accept in an uncritical way, evidence given by the husband.
Counsel for the wife, made a submission based on Jones & Dunkel, commenting on the husband’s failure to call the business owner as a witness. Given the doubts that exist about the husband’s relationship with the business owner, I accept that is a weighty submission.
Given my inability to accept the husband’s evidence about the ownership of the N shop, I am unable to accept an assertion that the husband has a liability in the sum asserted to D Trading Pty Ltd. I am unable to find that there is currently any monies owed by the husband to D Trading Pty Ltd.
Items 24 and 25: School and tutorial fees
Counsel for the wife was unable to point me to any evidence to support the wife’s contention in respect of these alleged debts. They are not referred to in her most recent financial statement. Accordingly I am unable to add them to the balance sheet.
CONTRIBUTIONS
During final submissions, counsel for the wife submitted that at least a ten percent adjustment should be made in the wife’s favour because of the contributions made by the parties to the date of the hearing. Counsel for the husband acknowledged the wife’s post separation contributions but contended that only a five percent adjustment should be made in favour of the wife.
Contributions to date of separation
Apart from one matter, the parties agree that after their long marriage with five children, the contributions by the parties were equal to the date of separation.
Counsel for the wife submitted that I should take into account as a contribution made on behalf of the wife, an amount of $60,000 the wife says came to her from her brother in China. The husband disputed that any such monies came into Australia from China from the wife’s brother.
The wife’s evidence is that in 1999 the husband went to China where he received $60,000 from her brother. Upon his return from China, the wife says the husband showed her an envelope containing Australian dollars and reported to her, her brother’s instructions to put it in the bank. The wife said she deposited the money into a personal AMP account which was opened for this sole purpose of housing the $60,000 however she does not have any banking records for this. The money was put towards purchase of property after 2000 (the wife is not sure which property, but thinks it was perhaps the O Street, B, development). The wife says she has a letter from her brother in Chinese about the $60,000 however it is not in evidence before me. The wife said that she and her brother have had many arguments regarding the $60,000 and so she has not asked him for further formalities about the debt.
In the absence of any objective evidence, and consistent with my findings on credit, I accept the wife’s evidence about this money coming into Australia, and do not accept the husband’s evidence.
Post separation contributions
Post separation contributions heavily favour the wife. The wife has been substantially financially responsible for the five children of the marriage since the separation. The husband has paid minimal child support in the amounts of between $29 and $40 per month.
The wife has agreed to have added back against her on the balance sheet the sum of $446,500 being funds she removed from joint accounts after the separation which did not go to joint debts. No significant amount of these funds remains. I am satisfied that the wife substantially expended these funds upon caring for the five children in the past five years. The wife’s current unchallenged weekly living expenses are in the sum of $1,615.
Conclusion about contributions
I have no difficulty in accepting the wife’s submission that there should be a 10 percent adjustment in favour of the wife based on contributions made that include the contribution made by her brother and the contributions made by the wife since the separation in her role as homemaker and parent.
SECTION 79(4)(d) - (g) MATTERS
Counsel for the husband suggested that there should be a 7.5 to 10 percent adjustment in the wife’s favour for s 75(2) matters. Counsel for the wife seemed to take different positions during the final submissions as to what this adjustment should be. After a short adjournment counsel for the wife settled on a submission that the wife should receive a further 10% adjustment for the future care of the children, a further 5% adjustment for her reduced earning capacity, and a further 20% to 25% on account of non-disclosure by the husband. This submission would lead to a 95 to 100 percentage adjustment in the wife’s favour and would see her receiving the whole of the net assets that are available to be divided between the parties and the husband raising funds to make a payment to the wife to adjust for notional assets which have been added back to the balance sheet.
The husband and wife are 52 and 51 respectively. Both the husband and wife are not in good health. The husband lists a number of ailments at paragraph 103 of his affidavit, which includes back problems, numbness and pain in the legs, and problems with various internal organs. The husband says he is unable to work due to his health, however the evidence now before the Court is that he does work at least part-time.
The wife says she suffers from the neck injury she obtained in 1993, and also suffers from thyroditis which at times causes her to be unable to breathe, and results in her fainting. The wife says she has been unable to work due to her health, her limited English and qualifications, and because she has had to care for the five children.
The wife still has all five children living at home, aged 10, 12, 13, 16 and 21. The eldest receives youth allowance.
The wife receives an income of $372 per week in the form of rental monies from the A Street, B, premises. She also receives $375 per week in Family Benefit payments and $450 in New Start Allowances. She receives $47 per week child support. The wife’s weekly expenditure is $1,615 which exceeds her weekly income by $411.
The husband says he receives an income of $60 per week on account of his work at the Chinese medicine centre. He also receives $170 in sickness benefits. The husband puts his weekly expenditure at $240 per week. His expenditure exceeds his income by $10. The wife does not accept the husband’s claim that he receives only $60 per week income on account of his repaying a loan to his employer. This is further discussed below.
The wife has the occupancy of the former matrimonial home with the children, while the husband says he rents accommodation at $140 per week.
Non-disclosure
A party to property proceedings is required to make a full and frank disclosure of a party’s financial position (Oriolo & Oriolo (1985) FLC 91-653; Black & Kellner (1992) FLC 92-287; Weir & Weir (1993) FLC 92 – 338). That case law is reinforced by the Family Law Rules, specifically Parts 13.1 and 13.2.
In Weir the Court stated at [79593]:
“It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”
Faulks J in Baldachino & Hanas [2010] FamCA 234 explained that the authorities “do not permit [a Judge], in the absence of any evidence, to manufacture property or to make orders about “notional” property” but rather it allows them to make a more significant adjustment pursuant to s 75(2)(o) on the basis non-disclosure infers that financial circumstances generally are better than what has been disclosed. Some cases, such as Weir have taken a different approach, estimating the undisclosed amount where sufficient evidence is available.
Similarly, The Full Court in K & K (2002) FamCA 1150, held at [51]:
“Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seen to be disadvantaged by the lack of complete candour.”
What adjustment should appropriately be made for non-disclosure differs depending on the circumstances. Counsel for the wife directed me to Baldachino & Hanas where the adjustment was 20 percent on account of the husband undervaluing his weekly income by $594. Faulks ACJ (at the time) does acknowledge in that Judgment however that adjustments made for non-disclosure are generally “relatively minor”. In K &K the trial Judge made an adjustment of 10 percent where he thought there was a high probability that assets had not been disclosed, where the known asset pool was $33 million.
The husband has not disclosed in any credible way the fact that he has continued to work in the business of the provision and dispensation of Chinese medicine. I am not satisfied that his tax returns adequately reflect his level of income nor am I satisfied that the husband has fully disclosed his interest in the business at which he works.
Prior to separation he was running a business which was generating, on disclosed income, an amount of $100,000 gross before tax (split two ways between the husband and wife in partnership). I find, on balance, that the husband continues to run a business at N of a similar nature. I do not know the amount of his regular income because he has failed to disclose it.
The husband has had an involvement in working in his sister’s and brother-in-law’s practice, receiving substantial payments from them. Documents annexed to the wife’s affidavit at A45 would indicate payments in the order of a weekly amount of $1,000. I do not accept the husband’s explanation that he signed documents which receipted payments to him in circumstances where those payments were not actually made to him. Those documents provide a substantial basis upon which to conclude that the husband has failed to properly disclose what his level of income was at that time, and continues to do so. Counsel for the husband suggested that the wife should have called the author of the documents pointed to the fact that there was no documentation proving that the husband received the income recorded. This submission has no weight. If the husband wished to assert that the documents which he had signed did not reflect the correct position, it was open to him to call evidence to that effect. The husband’s counsel further suggests that the income recorded cannot be accepted on its face without an understanding of tax liabilities it entailed, and there is some force in that submission and I take it into account.
I have been careful not to double count in relation to this non-disclosure and note that the payments analysed at item 20 of the balance sheet do not include the records at A45 which detail the husband’s income.
Conclusion s 79(4)(d) – (g) factors
Taking the matters that I have referred to into account, I find that an appropriate adjustment for section 79(4)(d)-(g) factors would be 12.5 percent in the wife’s favour.
JUST AND EQUITABLE
Based on submissions relating to contributions and s 79(4)(d) - (g) matters, counsel for the husband sought a 62.5/37.5 to 65/35 division of the net assets on the balance sheet. Counsel for the wife sought more than 100 percent of the net assets available for distribution (excluding add backs).
The result of my findings on contributions and section 79(4)(d)-(g) factors would lead to division of the assets as to 72.5 percent to the wife and 27.5 percent to the husband.
That division could be achieved by altering the assets in the following manner:
Husband gets 27.5%
Assets
Item
No.
Description
Percentage
Value
3
AMP shares
100%
$25,000
4
IAG shares
100%
$15,000
5
Household contents
100%
$11,000
8
Rolex watch
100%
$18,000
10
Furniture and equipment from A Street business
100%
$33,910
12
Loan owing from husband's brother
100%
$0
13
Monies held in husband's solicitor's trust account
100%
$3,570
16
Legal fees paid to date
100%
$65,742
17
Monies received by husband from sale of motor vehicle and proceeds of withdrawals from various accounts by the husband after separation
100%
$112,100
18
AMP super
100%
$7,433
20
Monies received by husband after separation in consideration of the transfer of stock & equipment from the A Street business
100%
$109,533
Liabilities
Item No.
Description
Percentage
Value
23
Q Health (Aust) P/L
100%
$0
24
D Trading
100%
$0
Husband receives
$19,129
Net Assets to Husband
$420,417
Wife gets 72.5%
Assets
Item No.
Description
Percentage
Value
1
L Street, B
100%
$400,000
2
A Street, B
100%
$220,000
6
Household contents
100%
$8,000
7
Ford Ghia motor vehicle
100%
$17,000
9
Rolex watch
100%
$17,000
11
Monies held in controlled monies account
100%
$42,000
14
Monies received by wife after separation
100%
$446,500
15
Legal fees paid to date
100%
$0
19
AMP super
100%
$3,000
Liabilities
Item No.
Description
Percentage
Value
21
Unpaid Council rates
100%
$6,000
22
Unpaid strata levies (A Street)
100%
$20,000
Wife pays Husband
$19,129
Net Assets to Wife
$1,108,371
Standing back, I find that it is just and equitable to make a division of the assets in the way that is indicated in the above table.
I certify that the preceding two hundred and six (206) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 30 November 2010.
Associate:
Date: 30 November 2010
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