Zeng and Jing & Anor
[2018] FamCA 423
•12 June 2018
FAMILY COURT OF AUSTRALIA
| ZENG & JING AND ANOR | [2018] FamCA 423 |
| FAMILY LAW – CHILDREN – where the husband seeks a two stage approach to the contact orders for a child not quite three years of age, the second stage being that when he obtains appropriate accommodation, it be extended to overnight – where the court says that such an order is inappropriate without knowing what impact such an increase in time would have on the child – where the wife opposes the extensive nature of the first stage of the orders proposed but the court finds that having regard to the wife’s willingness to have had the child in her care at times immediately around separation, there is no foundation for such concern about the husband’s capacity – orders made. FAMILY LAW – PROPERTY – where the husband seeks a partial property settlement on an urgency basis but the evidence from the wife and her mother as second respondent is either incomplete or not filed at all and the court is unable to discern who has what interests in what property – order for partial property settlement refused but the husband may bring further application when evidence is clear. FAMILY LAW – PROPERTY – where the husband seeks injunctive relief relating to the disposal of assets including an application under s 106B of the Family Law Act 1975 (Cth) – where the evidence supports the granting of injunctions and to which both and second respondent consent but there is not sufficient evidence to find that the husband’s interests of claim may have been defeated because it may be that the property does not belong to the husband and the wife – application for s 106B orders is refused. |
| Family Law Act 1975 (Cth) |
| Bing and Bing (2007) FLC 93-318 Goode and Goode (2006 FLC 93-286 |
| APPLICANT: | Mr Zeng |
| RESPONDENT: | Ms Jing |
| INTERVENOR: | Ms Lao |
| FILE NUMBER: | MLC | 5795 | of | 2018 |
| DATE DELIVERED: | 12 June 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 6 June 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Wilson |
| SOLICITOR FOR THE APPLICANT: | Kennedy Partners |
| COUNSEL FOR THE RESPONDENT: | Mr O'Shannessy |
| SOLICITOR FOR THE RESPONDENT: | Carew Counsel Pty Ltd |
| COUNSEL FOR THE INTERVENOR: | Mr Matta |
| SOLICITOR FOR THE INTERVENOR: | Sayer Jones |
Orders
That the application of the husband for interim orders as contained in his application filed 4 June 2018 and the response of the wife seeking interim orders as contained in the document filed at court on 6 June 2018 are both adjourned to the Judicial Duty List at 10.00am on 31 July 2018.
That the application of the husband for interim relief by way of a partial property settlement or litigation funding in the sum of $250,000 is refused.
That paragraph (2) of the application for interim orders filed 4 June 2018 is dismissed.
That the wife and the second respondent are restrained by injunction from disposing of or encumbering the fixed assets of either of them and/or all of the entities under which the mother and the wife have control save as may be agreed between the parties or by further order of the court.
That the wife and the second respondent are restrained by injunction from altering the existing corporate and/or trust structures including, altering the directorships, the shareholdings or, making decisions to alter the trustee of any trust by use of the appointor power under any such trust.
That the husband have leave to apply to the senior registrar’s list if there is no agreement in respect of any variation and/or extension of the parenting orders made on 6 June 2018 in respect of the child X born in 2015.
That the parties’ costs of the day are otherwise reserved to the return date.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zeng & Jing and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 5795 of 2018
| Mr Zeng |
Applicant
And
| Ms Jing |
1st Respondent
And
| Ms Lao |
2nd Respondent
REASONS FOR JUDGMENT
This is a complicated property matter between Mr Zeng (“the husband”), Ms Jing (“the wife”) and Ms Lao (“the mother”).
These proceedings were in the Judicial Duty List on 6 June 2018 and each of the three parties was represented by counsel.
The applicant in the proceedings is the husband. The husband and wife are obviously married and from their relationship there are two children. Y is the parties’ first child and she appears to have a disability. As a consequence, she currently resides with the husband’s parents in China. The parties have a second child X (the child) who is currently residing in the care of the wife.
The second respondent is the wife’s mother.
The marriage of the husband and the wife seemed to come to an end at the end of May 2018 and the husband filed an initiating application in the court on 25 May 2018 seeking a raft of orders relating to both parenting and property.
It is convenient to deal with the parenting issue first. The only parenting orders that are relevant to these reasons concern the child. the child is not quite three years of age.
Up until very recently, all three parties to the proceedings lived at a house in Suburb B and on 2 June 2018, the husband left it. It is the husband’s case that until that time, he was the parent most responsible for the care of the child. That is all denied by the wife. It seems that both parents are engaged in the operation of a business. The husband describes himself as a businessman and the wife describes herself as a business operator and otherwise engaged in home duties. Whatever the correct position is in relation to who has carried out the preponderance of parenting tasks here, the wife could not have been that concerned about the child in the care of the husband because she vacated the property for some days leaving him in the husband’s care just around the time of separation. The husband is currently in temporary accommodation.
In terms of the future, the husband seeks that the child live with him but at the moment, he is not in a position to pursue those orders. Thus, the only issue for the court at this stage are interim orders.
The husband’s position was that the child should stay with him on each Saturday and each Sunday between the hours of 9.00am and 5.00pm and each Wednesday from 2.00pm to 6.00pm. He then proposed that once he obtained appropriate accommodation, that time be extended to alternate weekends from Friday through to Monday and each Wednesday overnight into the Thursday.
The wife’s position was that the time should only be on Saturday and Wednesday. She opposes any overnight time.
All of the material indicates that whilst there is a dispute, both parties have been involved in this child’s life. As I have already indicated, the wife was content to leave the child in the husband’s care whilst she vacated for reasons that do not immediately matter. The fact that the wife is also now content for the husband to have at least significant day time care of a child not yet three years of age, must also mean that the court can infer that she has sufficient confidence about his capacity to care for the child at least during those hours. Just what difference an overnight would make, remained unclear. Counsel for the wife began by indicating that because of the child’s vulnerable age, he should not be separated from his mother but the evidence would not support that in this particular case for the reasons already articulated.
The Full Court in Goode and Goode (2006 FLC 93-286 has made clear that on an interim application for parenting orders, the statutory pathway has to be considered but the court should not engage in speculation but rather, deal with matters about which there is little controversy, or from evidence upon which findings can be drawn as plausible. Accordingly, in my view, the most significant evidence here is the fact that both parties were living together until very recently and the wife was content for the child to be in the husband’s care at least for some of the time even if there is a dispute about what has precisely occurred.
Section 61DA of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings for parenting orders, the court must apply a presumption that it is in the best interests of a child for the parents to have equal shared parental responsibility for that child. For the purposes of the future final hearing in respect of the parenting issue, it is significant that both parties agree there should be an order for equal shared parental responsibility.
Despite that, the court still has to address the matters set out in the legislation. In this case, s 61DA provides that the presumption may be rebutted or indeed not applied in circumstances of the court making findings associated with family violence or alternatively, it not being in the best interests of the child for his parents to have that responsibility.
Section 61DA(3) however provides that when the court is making an interim order, the presumption applies unless the court considers that it would not be appropriate in the circumstances for it to be applied. In my view, that is a situation here where there is clearly an unhappy relationship between the parties at the moment and they are not communicating about many things relating to finances but also their son the child. I do not have sufficient evidence to be able to make a finding about all of the relevant matters concerning their respective parenting capacity and responsibility and under those circumstances, I am satisfied that it is not appropriate to apply the presumption.
Section 64B of the Act sets out the sorts of parenting orders that the court may make under its jurisdiction given by virtue of s 65D. The sorts of orders that the court may make include the allocation of time between a parent and the child. At the moment, the husband is only seeking some time during the day pending obtaining appropriate accommodation for himself and the child.
Having regard to the fact that I have no idea how the child would adapt to any change, I would not be prepared to make the sorts of orders proposed for the future predicated on the basis that the husband will find accommodation. To the extent that the wife does not agree with him having any extension of the time that I propose to order that he can have liberty to apply to the senior registrar to make a further application for an extension of time.
When making a parenting order, the court must apply a principle that what governs the determination is the best interests of that child. Section 60CC of the Act sets out the matters that are to be taken into account in determining best interests. There is no suggestion here of the exposure of the child to physical or psychological harm and no dispute that he will benefit from having a meaningful relationship with both parents.
The nature of the child’s relationship with both parents and indeed, his maternal grandmother, is very much the subject of dispute and about which I cannot make any findings. Similarly, I am obliged to take into account the extent to which each of the parents has taken the opportunity to participate in decisions about the child’s life as well as spend time with him. Again I am unable to make any findings about those matters.
The most important issue here is the likely effect of any changes on the child’s circumstances and in particular, any separation problems that may arise, from any orders that would separate him from either of his parents. I do not know how well he recognises either of the parents or his surroundings and will not have the opportunity to draw inferences from the existing affidavit material because it is contentious. The parties sensibly have engaged Ms C, a psychologist, to assist them and ultimately if they cannot reach agreement, the court will determine what impact any orders will have on the child.
All of the other matters set out in s 60CC(3) are factors about which I am unable to make any findings and in the circumstances I propose to ensure that, on the assumption that the child is a vulnerable child who is accustomed to having his father around in his life but now sees him disappear, should have his father significantly involved again as quickly as possible. The best way to do that with both parties otherwise working, is to give the husband three weekends out of four but daytime only. Wednesday is also a day apparently that the child attends child care and it has not been suggested that he suffers from any separation anxiety. Accordingly, I see no reason why it is not in his best interest for his father to collect him from childcare and at the end of that time return him to the wife. Accordingly, I am satisfied that on an interim basis, until the report of Ms C is available or the husband maintains that there is a complete breakdown of communication with the wife to the extent that she will not agree to extend his time beyond the existing orders, and the matter has to come back to court, the parties can live with the orders as I have pronounced after the hearing on 6 June.
I turn then to the issues associated with the financial matters.
As already indicated, the husband is a businessman and the wife is a company director. There is a raft of companies involved in this particular case. Because of the contentious nature of the evidence, I am unable to make any findings about just exactly which version of the parties’ evidence is correct. Indeed in respect of the mother, there was no evidence as she had only just been served. In respect of the evidence provided by the wife, it was conceded by her counsel that it was extremely limited, if not deficient due to the great haste in which it was prepared having regard to the timing of the filing by the husband.
The nub of the dispute between the parties is relatively simple. The husband says that many of the assets associated with the parties’ businesses belonged to he and the wife albeit through a series of entities and trusts save for a property in Suburb B which is owned as tenants in common between the mother as to 80 per cent and the wife as to 20 per cent. The wife’s position, no doubt supported by the mother, is that all of these assets belong to the wife’s parents and have always been funded as such by them but, for reasons which are yet to be explained, the various assets are in the names of entities in which the wife has a legal interest. The extent of that legal interest is contentious. It may be that the various corporate entities are simply trustees of the family trusts and it is not clear from any of the evidence, nor did counsel for any of the parties seem to know, whether there is a particular appointor who has control over those trusts.
The contentious issue seems to arise from the fact that there are three particular companies out of all of the companies involved.
D Pty Ltd is a company in which the wife was the sole director and held 50 per cent of the shares. The other 50 per cent shareholding was held by the mother.
E Pty Ltd is another company in which the wife held 100 per cent of the shares.
F Pty Ltd is a company in which the wife also held 100 per cent of the shares.
Just what these companies do and whether they are simply trust companies is a matter that I do not need to clarify or determine at the moment. The contentious issue is that around 28 May 2018, which is said to be the time at which the parties separated, documents were executed so that the wife resigned as a sole director of D Pty Ltd and transferred the 50 per cent shareholding to her mother. In respect of both E Pty Ltd and F Pty Ltd, the wife transferred her shares to the mother. According to the search of the ASIC records undertaken by the solicitors for the husband, the date upon which this transferring of assets all occurred was 3 May. That record was not sent to ASIC until 28 May. The husband is extremely suspicious of that action and the wife gives no explanation in her hastily prepared affidavit as to why that occurred.
The actions in relation to those three companies give rise to the husband bringing an application under s 106B of the Act for, at least the interim period, the transfers to be reversed and for the wife to resume her position as a director. For their part, both the wife and the mother resist any such transfers notwithstanding they have failed to give any explanations as to why they occurred but indicate that they are content for injunctions to be made against them to restrain them from disposing of the fixed assets or any of the existing corporate structures. In respect of the latter, the mother is the person who now holds those shares but the wife has otherwise agreed that the injunctions could be made against her as well.
Mr Matta on behalf of the mother said that his client needed an adjournment to put all of the appropriate material before the court. It is asserted by the mother that the assets may have been in the wife’s name but they were held on trust for the parents. One no doubt would want evidence as to why the records were as they were shown, how the ASIC records would show the beneficial interest (if any) of the parties and, what the relevant taxation returns would show in terms of any distributions of either capital or income from any trusts which are the subject of control by any of these companies. Presumably, there are also minutes of company meetings which not only set out the background that would support the argument of the mother but why the relevant transfers were made even if there is some foundation for the mother’s argument that the assets were held on trust. If indeed, as would then seem a possibility, the transfers were made by the wife because of the marriage break down, the mother has a right to intervene in any proceedings.
All of these matters remain to be seen when the evidence is more comprehensively put before the court.
Section 106B of the Act provides that the court has power to set aside an instrument or disposition by or on behalf of the party which is made to defeat an existing or anticipated order in the proceedings or which, irrespective of intention, is likely to defeat any such order.
At first blush, what the wife has done may give rise to the implementation of that section and that is why the husband brought the application. On the other hand however, the husband acknowledges that the relevant shares were never in his name. How he claims an interest in those shares and/or the properties held by either the companies or the trusts, is a vexed question and I am unable to determine that issue absent comprehensive material from the mother or the wife’s clarification of the matters that she has already set out in her affidavit.
I am not in a position therefore at an interim level to make a finding that the dispositions were made to defeat an existing or anticipated order or indeed irrespective of that intention were likely to defeat any such order. I do not know the extent of the parties’ wealth nor indeed the foundation for the mother’s claim.
One curious asset is a property in Suburb B. As earlier mentioned, it is owned as to 80 per cent by the mother and 20 per cent to the wife. The husband’s explanation was that both he and the wife owed the wife’s parents money and this property was purchased and put in the mother’s name, albeit under mortgage, and the husband and wife are responsible for the mortgage. I am not comfortable that I am able to say that that position is correct until I have the position of the mother to explain why that structure was set up.
Having regard to the injunctions proffered by both the wife and the mother, it is not appropriate that I make orders under s 106B of the Act but rather to accept the injunctive orders as appropriate and proper as an interim measure.
The husband also seeks an order that by way of part property settlement, or litigation funding, he be paid $250,000. Counsel for the husband pointed to the fact that there was a drawdown facility under the control of the wife in the vicinity of $1 million and each party should draw $250,000 to satisfy whatever needs or legal expenses they currently have. Again, I am left in a situation where there is little or no evidence about this facility and more importantly, what impact it would have on the lending institution’s attitude or indeed the impact on any of the businesses involved. A further dilemma is that counsel for the wife has indicated that the facility is now drawn down to the extent of $700,000. The difficulty for me is that the inadequacy of the information and evidence upon which I could make any such orders limits what I can do.
Counsel for the wife said that it was premature to make the order because the husband was unable to otherwise point to a source from which the money could be drawn. In my view that is not a matter that the court should concern itself with because how an order is enforced is a matter entirely for the parties (see Bing and Bing (2007) FLC 93-318).
The other dilemma associated with making any such order is that I am not at all clear what assets the husband and the wife own. In respect of the final orders sought by the husband, the application pleads:
There be such alteration of property interest as this Honourable Court deems appropriate.
Having pleased with such imprecision, the husband sought to be excused from pleading precisely pending the completion of financial disclosure by the wife. One obvious inference from that is that he does not know what assets are controlled by the wife.
The wife did not assist the court much either because in respect of her response, she pleaded that there be:
Alteration of property interests between the parties as this Honourable Court deems appropriate.
She too sought to be excused from compliance with the requirement for precise pleadings pending “the completion of valuation and discovery”. I found that quite remarkable in circumstances where her case is that none of the assets are in the husband’s name nor, more particularly, on the basis of the submissions of both her counsel and that of the mother, are any assets controlled by her owned beneficially. In other words, the wife’s case, as articulated in the oral presentation, was that the assets belong to the parents.
That being the case, the only asset that I can identify as a potential asset to which an attachment or alteration could be made on the basis that it could be found to be property of either the husband and/or the wife, is the wife’s 20 per cent interest in the Suburb B property. That property is now the subject of a contract of sale which is to settle in the months ahead. Absent a very clear indication as to why the wife says that she is not the beneficial owner of the 20 per cent interest in that property, and I do not have that evidence because of the rush with which the wife’s affidavit was prepared and no evidence from the mother, I could not find that I understand what property it is that the parties have to divide nor indeed, based on their respective pleadings, what the parameters of the property dispute may be. In the circumstances, it is not appropriate that the court exercise its power to make an alteration of property interests even on a partial or interim property basis at this stage. That finding would not preclude the husband from bringing a proper application when all of the evidence is before the court. Accordingly, it is not appropriate that I make an order in relation to partial property settlement.
On the basis therefore that those were the primary issues to be determined and the other orders were not pressed, it was a position of both the wife and the mother that there should be a further hearing. With the shortage of resources, the only appropriate order is that the matter be placed in the next judicial duty list for consideration as to whether the material is adequate and at which time, the husband can pursue the interim orders that he proposes as I do not propose to dismiss his application completely but rather to decline to make the orders on the evidence presented. Thus, the parties will have to prepare properly and present the comprehensive evidence on the next return date. Both the wife and the mother sought 21 days in which to file the material and the husband should have an opportunity to reply as well as issue any subpoena to cover issues about which discovery cannot immediately resolve problems. The next duty list available is 31 July albeit is already overloaded, but I see no reason why the parties cannot at least endeavour to obtain a hearing on that date.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 12 June 2018.
Associate:
Date: 12 June 2018
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