Zha & Wun
[2021] FamCA 143
•19 March 2021
FAMILY COURT OF AUSTRALIA
Zha & Wun [2021] FamCA 143
File number(s): SYC 4269 of 2020 Judgment of: WATTS J Date of judgment: 19 March 2021 Catchwords: FAMILY LAW – ANTI-SUIT INJUNCTION – Where the applicant wife has commenced proceedings in China, Hong Kong and Australia – Where the respondent husband applied, pursuant to s 114(3) of the Family Law Act 1975 (Cth), for an order restraining the wife from continuing proceedings against the husband in Australia – Where it is agreed that Australia was not a clearly inappropriate forum – Where the husband has failed to provide full and frank disclosure – Where the wife has validly commenced proceedings in Australia pursuant to s 79 of the Act – Where it is not vexatious or oppressive to require the husband to involve himself in the Australian proceedings – Where on the balance of convenience the proceedings in Australia should continue – Application for an anti-suit injunction dismissed.
FAMILY LAW – INTERIM – LITIGATION FUNDING – Where the wife seeks for the husband to pay to her an amount of $500,000 by way of either an interim property order (s79;80(1)(h) of the Act) or an order as to costs (s117 of the Act), subject to certain conditions – Where the wife is entitled to an order on either basis.
FAMILY LAW – PROCEDURAL – Where there was no basis for discharging earlier injunctions made in the wife’s favour – Where the wife did not press for an undefended hearing.
Legislation: Family Law Act 1975 (Cth) ss 4, 21, 75, 79, 80, 114, 117
Matrimonial Causes Act 1959 (Cth) s 124
Cases cited: Antonarkis v Delly (1976) 10 ALR 251
CSR Limited v Signa Insurance Australia Ltd (1997) 189 CLR 345
Harris and Harris (1993) FLC 92-378
In the Marriage of J U and T Poletti (1990) 15 Fam LR 794
Lan & Hao (No. 2) (2017) FLC 93-795
R v Ross-Jones; Ex parte Green (1984) 156 CLR 185
Salvage & Fosse (2020) FLC 93-966
Sieling and Sieling (1979) FLC 90-627
Strahan & Strahan (interim property orders) (2011) FLC 93-466
Taylor v Taylor (1979) 143 CLR 1
Teo & Guan (2015) FLC 93-653
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538
Zschokke and Zschokke (1996) FLC 92-693
Number of paragraphs: 136 Date of hearing: 11 December 2020 Place: Sydney Counsel for the Applicant: Mr Campton SC Solicitor for the Applicant: Lander & Rogers Counsel for the Respondent: Mr Lloyd SC with Mr Livingstone Solicitor for the Respondent: Sunfield Chambers Solicitors & Associates ORDERS
SYC 4269 of 2020 BETWEEN: MS ZHA
Applicant
AND: MR WUN
Respondent
ORDER MADE BY:
WATTS J
DATE OF ORDER:
19 MARCH 2021
THE COURT ORDERS THAT:
1.The husband’s Response to Initiating Application filed 17 August 2020 is dismissed.
2.The husband’s application for an injunction under s 114(3) Family Law Act 1975 (Cth) (“the Act”) is dismissed.
3.The husband’s application for an order that the ex parte orders made 7 July 2020 be set aside is dismissed.
4.In respect to the wife’s Amended Application in a Case filed 13 November 2020:
(a)The wife’s applications 2.2 and 2.3 (noting the husband’s failure to comply with orders and that the matter proceed to an undefended hearing) is dismissed.
(b)By consent, that as between the husband and the wife and pending further order, the husband shall be and is hereby restrained from doing any act or thing to prevent the Wife's receipt of rental income from the following properties:
(i)C Street, Suburb D in the State of New South Wales (with folio identifier …);
(ii)L Street, Suburb M in the State of New South Wales (with folio identifier …);
(iii)MM Street, Suburb NN (with folio identifier …);
(iv)PP Street, City R, China;
(v)QQ Street, City SS, China; and
(vi)RR Street, Suburb TT, City VV, China.
5.Within twenty-one (21) days of the date of these Orders and pending further Order, the Husband pay or cause to be paid to the trust account of the Solicitors for the Applicant Wife, Lander & Rogers Lawyers, pursuant to s 79 and s 80(1)(h) of the Act, the sum of $500,000 with that money to be applied towards the Wife's costs and disbursements as set out in Order 6 herein.
6.The sum referred to in Order 5 above shall be applied by the Solicitors for the Wife in payment of the costs and disbursements incurred or to be incurred by the Wife in the conduct of these proceedings, including but not limited to the reasonable costs and disbursements:
(a)Rendered by the Solicitors for the Wife pursuant to their Costs Agreement with the Wife including but not limited to the payment of Counsel's fees;
(b)Rendered by Accountants appointed by the Court or engaged by the Wife or the Solicitors for the Wife to report on and/or value taxation matters, including but not limited to capital gains tax and any interests of the Husband and/or the Wife in any business, company, superannuation fund, trust or entity; and/or
(c)Rendered by Valuers appointed by the Court and/or engaged by the Wife or the Solicitors for the Wife to report on or value any real and/or personal property in which the Husband and/or the Wife may have an interest, and of any business, company, trust or entity in which the Husband and/or the Wife have an interest.
7.The wife’s application that the proceedings instituted by her for a property settlement order pursuant to s 79 of the Act to proceed on an undefended basis be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zha & Wun has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WATTS J
INTRODUCTION
Both parties bring interlocutory applications related to interconnected litigation in Australia, China and Hong Kong.
On 30 June 2020, the wife commenced proceedings in Australia for a property settlement order. Connected to that application was an application by the wife for declarations against the second and third respondents that they held their legal interests in two real properties in Australia beneficially for the husband and she sought orders that would bring those assets back into the pool of assets to be altered between the husband and the wife.
APPLICATIONS
The wife by way of an Amended Application in a Case filed 13 November 2020 sought:
(a)An order for exclusive occupation of the property in which she current resides in Australia;
(b)An order that she be allowed to produce all court documents filed in these proceedings in the proceedings in China and in Hong Kong with reference to particular documents;
(c)An order relating to the payment of mortgage, rates and insurance in respect of the Australian properties;
(d)An order for the wife to receive the benefit of rental income from particular properties;
(e)An order for litigation funding; and
(f)The wife also, based on asserted serious and persistent non-disclosure by the husband, sought an order that her application for a property settlement order in Australia proceed on an undefended basis.
The parties agreed on all issues relating to the orders sought by the wife apart from the applications for litigation funding and that the matter proceed on an undefended basis. By consent, an order was made in chambers on 25 January 2021 dealing with issues 3(a)–3(c) above. By consent, an order shall be made in the terms of application 6 of the wife’s Amended Application in a Case filed 13 November 2020 (to receive rental incomes from certain properties).
The husband’s Response to the Initiating Application which was filed 17 August 2020 sought an order on a permanent basis that the wife be restrained from taking any further step in the Australian proceedings, save for adjourning or discontinuing them. In the course of the case management of this matter, the husband identified the relief that he sought as being in the nature of an anti-suit injunction restraining the pursuit of the Australian proceedings in favour of the proceedings in China and/or Hong Kong, and was based on an assertion that Australia was a clearly inappropriate forum for the hearing of the property settlement proceedings between the husband and the wife (Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; CSR Limited v Signa Insurance Australia Ltd (1997) 189 CLR 345).
The husband also sought an interim order to restrain the wife from taking any further steps in the proceedings until the proceedings which the wife had commenced in the High Court of Hong Kong and the proceedings in China described by the wife in paragraph 11 of her affidavit filed 30 June 2020 (“June affidavit”) had been heard and determined.
The husband also sought that ex parte orders that had been made by the court on 7 July 2020 freezing assets in Australia be set aside.
On 14 October 2020 the matter was set down for hearing on 11 December 2020, to deal with the applications sought by each party.
The husband in his case outline refined the interim order he sought as follows:
That the [wife] be restrained from taking any further step in these proceedings pending the later of:
a.Proceedings which she has commenced in the High Court of Hong Kong being heard and determined; and
b.Proceedings in China described by the applicant in paragraph 11 of her affidavit affirmed 29 June 2020 being first heard and determined.
The suggestion that this application was being made by the husband under s 79(5) of the Family Law Act 1975 (Cth) (“the Act), whilst initially embraced by senior counsel for the husband, was later abandoned.
At the outset of the hearing on 11 December 2020, senior counsel for the husband made clear that the husband no longer asserted that Australia was a clearly inappropriate forum for the hearing of the application that the wife had brought for a final property settlement order. Senior counsel for the husband made it clear that the only power that he sought the court to exercise in making the order temporarily staying the proceedings in Australia, was s 114(3) of the Act. Towards the end of the hearing, senior counsel for the husband purported to reserve the right to argue res judicata in the Australian proceedings after the outcome of the Chinese proceedings are known. Section 21(2) of the Act provides that the Family Court of Australia is a superior court of record. It is possessed of an implied jurisdiction, albeit not unlimited (Taylor v Taylor (1979) 143 CLR 1), including to protect its own processes. The husband placed no reliance upon the court’s implied jurisdiction to protect its own process.
Whilst the second and third respondents (the husband’s brother and sister-in-law), were given the opportunity to participate in this hearing, it was not anticipated that they would do so and they have not been involved in this part of the litigation.
The wife is required to file her points of claim against the second and third respondents 14 days after receipt of the husband’s financial disclosure (Order 4 made 17 August 2020) but the wife claims that financial disclosure is yet to occur.
Both parties relied upon a substantial volume of written material including individual expert evidence relevant to the proceedings in China. Both experts gave oral evidence on Chinese law.
The husband has not filed a document in either jurisdiction setting out what orders he wants by way of a final property settlement order.
BACKGROUND
The husband was born … 1972 and is 48 years of age.
The wife was born … 1984 and is 36 years of age.
The parties met in May 2009 and married on … 2012.
In May 2014 the parties relocated to Australia.
The parties separated in June 2018. There are no children of the marriage.
Shortly before the hearing the husband engaged with a set of draft balance sheets that the wife had prepared and provided some estimates of his own as to the value of assets and the amount of the liabilities. Their respective estimates of the net value of those assets are as follows:
Property in China
Wife $43,490,391 + NK
Husband $33,728,016
Hong Kong
Wife $11,900,822 + NK
Husband $6,023,399
Australia / Country S / Country UU / Country WW
Wife $17,552,845 + NK
Husband $3,712,849 + NK
The wife asserts that the pool of property for adjustment, once those assets which have been marked as having a value that is not known are taken into account, is an amount of not less than AUD$150 million. The husband concedes that the value of some of the assets in Hong Kong and the value of ten companies on the Australian/Country S/Country UU/Country WW balance sheet are not known. The wife asserts that up until 17 August 2020, when the husband filed his financial statement, the husband had elected not to disclose the fact of, or any particulars as to, or any estimate of the value of his property outside of Australia in the course of these s 79 proceedings. I accept he has not disclosed any taxation returns or published financial statements of his corporate or trading entities in Australia or outside Australia to the wife.
The wife commenced proceedings in the High Court of Hong Kong which support the Australian proceedings (Exhibit A-13, wife’s affidavit filed 13 November 2020). The wife obtained injunctions in Hong Kong restraining the husband from:
·Removing the Hong Kong assets up to a value of AUD$9,317,124; and
·Disposing or diminishing the value of any of his assets in Hong Kong (solely or jointly owned).
A further order was made in Hong Kong extending the injunction until the final determination of the Australian proceedings or the final determination of the originating summons filed in Hong Kong, whichever is the earliest. In addition, an order has been made in Hong Kong for the husband to provide disclosure of particular banking records. The wife asserts that the husband has failed to comply with that order but the husband disputes that is so.
On 9 June 2020 the wife commenced divorce proceedings in the City R District Court in China. The Chinese court made a preservation order on an ex parte basis which froze the husband’s cash at bank or other property to the value of CY 150 million (approximately USD $30 million).
The husband challenged the jurisdiction of the Chinese court to hear the proceedings on the basis that the wife was an Australian citizen. In those proceedings, he asserted that the matter should proceed in Australia instead of China. The husband received an adverse judgment in relation to that proposition which was delivered on 8 September 2020.
The husband appealed to the City R Intermediate People’s Court on 15 September 2020 from the lower Chinese court jurisdiction ruling. The husband submitted in the appeal that he had settled in Australia and he would participate in the Australian proceedings. The husband’s appeal was dismissed by the Chinese appellate court on 30 October 2020.
In recent times, the husband has simultaneously opposed applications proceeding in both China and Australia on the basis that the other jurisdiction is attending to the matter.
DOCUMENTS RELIED UPON BY THE WIFE
The documents the wife relied (as per the wife’s case outline and email of 11 December 2020) upon were as follows:
(a)Amended Application in a Case filed 13 November 2020;
(b)Consolidated affidavit of the wife filed 13 November 2020;
(c)Financial statement of the wife filed 13 November 2020;
(d)Affidavit of the wife, amending financial statement pursuant to rule 13.02 filed 10 December 2020;
(e)Affidavit of Mr XX filed 27 November 2020; and
(f)Paragraphs 58 and 65 and 68 and 86 of the wife’s June affidavit which was responded to at paragraphs 16 – 29 and 49 – 68 of the affidavit of the husband filed 16 August 2020.
DOCUMENTS RELIED UPON BY THE HUSBAND
The documents the husband relied upon were as follows:
(a)Response to Initiating Application filed 17 August 2020;
(b)Response to Amended Application in a Case filed 2 December 2020;
(c)Husband’s affidavit affirmed 2 December 2020;
(d)Husband’s affidavit filed 10 December 2020;
(e)Husband’s financial statement filed 17 August 2020;
(f)Affidavit of Professor YY filed 30 November 2020;
(g)Affidavit by Mr Z filed 1 December 2020.
Mr XX and Professor YY for the husband gave written and oral expert evidence in relation to the proceedings in China.
THE HUSBAND’S SECTION 114(3) APPLICATION
The husband asserted that it was oppressive and vexatious to run two concurrent sets of proceedings, one in China and one in Australia, seeking a property settlement order and accordingly the wife should be restrained from taking any further steps in Australia until such time as the proceedings that she had commenced in China had concluded.
Can the husband rely upon s 114(3)?
Senior counsel for the wife raised the issue as to whether or not it was possible for the husband to rely on s 114(3) in circumstances where he had not yet made any application for any other substantive order in any jurisdiction. He did not refer to any authority as to why it was not possible.
Section 114(3) is in the following terms:
A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
To borrow from a comment made by Gibbs CJ (with which Mason J agreed) in R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 199 ss 114(3) “means what it says”. It is a wide power which is available to be exercised in aid of the jurisdiction otherwise conferred upon the court.
The proceedings pursuant to ss 114(3) are a “matrimonial cause” (as defined by (f) in s 4(1) of the Act) being “other proceedings … in relation to … current proceedings”.
The High Court discussed s 124 of the Matrimonial Causes Act 1959 (Cth), which has almost identical wording to s 114(3) of the Act, in Antonarkis v Delly (1976) 10 ALR 251 at 255–256 and said:
… However, the section gives power to grant an injunction only to a court exercising jurisdiction under the Act, that is, in a proceeding properly brought under the Act, and clearly the injunction can only be granted in aid of an exercise of jurisdiction under the Act. As Wallace P. said in the passage in Horne v. Horne (1963), 63 S.R. (N.S.W.) 121, at p.135, which is referred to in Sanders v. Sanders, “this power is limited to aiding, enforcing or protecting the proper and due exercise of the matrimonial causes jurisdiction or the provisions of the Act”…
The High Court went on to make the point that the section applies to both interlocutory and permanent injunctions. The injunction sought in this case is interlocutory and not permanent.
The wife has validly commenced an application under s 79 of the Act. The husband’s application under s 114(3) is made in proceedings where the court is exercising jurisdiction under the Act.
The Full Court in Teo & Guan (2015) FLC 93-653 (“Teo & Guan”) at [90] and [100] said it may be open to rely upon s 114(3) to grant an anti-suit injunction.
In my view, s 114(3) provides the Family Court with statutory jurisdiction to avoid injustice by staying proceedings which are an abuse of process or which constitute vexatious or oppressive conduct. This jurisdiction extends to the making of orders to protect the integrity of the processes of this court.
I proceed on the basis that I have the power under s 114(3) to make the order as sought by the husband.
Approach to be taken
The Full Court in Teo & Guan, whilst expressing the view that s 114(3) was available as a source of power to order restraint of the proceedings, did not suggest a path to the exercise of discretion under that section.
Anti-suit injunctions, in most cases, concern court orders restraining a person from commencing or continuing of proceedings in a different forum. For example, Lan & Hao (No. 2) (2017) FLC 93-795 (“Lan & Hao (No 2)”) involved an application for an anti-suit injunction by the wife to prevent the husband from continuing property proceedings in China. That application was based upon the court’s implied jurisdiction to protect its own process.
It is instructive to consider the path suggested by the Full Court in Lan & Hao(No. 2) at [45] and [46], which is:
(a)To consider:
·the nature of the proceedings in China to determine whether they raised the same or a different controversy;
·whether or not there was something to be gained in them; and
·whether there was complete relief available in Australia.
(b)Find whether a continuation of the Australian proceedings in parallel with the Chinese proceedings is vexatious, in the sense of “productive of serious and unjustified trouble and harassment”, or oppressive in the sense of being “seriously and unfairly burdensome, prejudicial or damaging”.
(c)Consider the course to be taken in respect to the Australian proceedings.
I also bear in mind that the Full Court in Sieling and Sieling (1979) FLC 90-627 at 78,264 said:
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly.
The nature of the proceedings in China
The proceedings in China are of a more confined nature than those in Australia, although it seems the assets in China form the bulk of the property held by the parties or either of them.
Both parties were given leave to call adversarial experts after there had been a total breakdown of the implementation of orders for the appointment of a single expert. Mr XX, an experienced trial lawyer, practising in the jurisdiction, was called by the wife. Professor YY, a professor at the AAA University, gave evidence for the husband. Orders were made for the experts, following the production of their reports, to confer and produce a joint expert statement as to the areas in which they agreed and disagreed. For reasons for which the husband offered no explanation, the husband’s expert did not make himself available to conduct a joint conference. Instead what was produced was a unilateral statement by the wife’s expert which Professor YY annotated shortly before the commencement of the hearing.
It is agreed that any property order in the Chinese proceedings is one “in rem”. The wife can only claim against property that was acquired during the period of the marriage. The Chinese proceedings will probably not deal with property in any other jurisdictions; do not entail any inquiry about the valuation of property in China or outside China; and are confined to the title of property, and when it was acquired, and do not extend to interests held by third parties (such as companies) in which the husband has a direct or indirect interest in property.
The experts disagreed about the length of time the Chinese proceedings are likely to take. In final submissions, senior counsel for the wife claimed that the effect of Mr XX’s evidence was, it will take one or two years for the Chinese divorce to be recognised and then another two to three years to progress the wife’s property claim and that is then subject to appeal. Whilst Mr XX’s oral evidence was less than precise, its effect was there are no specific time frames in China for the completion of a property application involving foreign assets.
Professor YY relied upon a guideline which stated that things would normally be completed within a six month period. However, Professor YY’s practice as a lawyer was a matter of contention and he conceded he had no practical experience as to the application of that guideline.
As indicated, the husband had opposed the jurisdiction of the Chinese courts to hear the applications the wife has brought there but he has lost his bid to stop those proceedings. However, that opposition has meant the actual proceedings by the wife for financial relief in China have not progressed far. The husband is yet to respond to the wife’s substantive claims in China.
Also, to reiterate, the husband, in the Chinese proceedings said that he was willing to respond to the wife’s case in Australia. The wife accordingly is claiming that the husband is playing one jurisdiction off the other, claiming in each jurisdiction that the wife is prosecuting her claim in the other jurisdiction.
The husband has not filed an application for any order for substantive property orders in either jurisdiction, so to some extent its impossible in the context of this interim hearing to know what he would concede was the wife’s entitlement either in Australia or in China.
The order the wife seeks in China is an order for $30 million. The order that the wife seeks in Australia is an order for $10 million plus the transfer of real estate to her.
The husband says the wife had minimal assets at the time of the marriage. So the likelihood of the wife being able to establish a claim in China is unclear. The single expert evidence may indicate that the wife may have no viable claim of any real value in China. It is obscure at the moment as to whether or not all the property in China which is held in the husband’s name, was acquired before the marriage. The husband makes no disclosure about that.
The wife also makes a claim in China based upon the husband causing her nervous shock. The evidence before me does not allow any assessment as to the nature of that claim although there is some indication that the claim is confined to about AUD$10,000.
Conclusion about the course to be taken in the Australian proceedings
The wife’s application in this jurisdiction shall consider all the assets of each of the parties, whether held solely or jointly, and wherever in the world they are held.
The wife submits that in the event that the husband’s application for the Australian proceedings to be stayed until the completion of overseas proceedings was granted, she will not be able to access interim relief in Australia and will lose the benefit of current injunctions. I am unable to accept the second part of that submission. The husband’s application to dismiss those injunctions will be dealt with separately in these reasons. The wife argues that she would not be able to access litigation funding and that the injunctions she has obtained in Hong Kong, which hang off the Australian proceedings, might also be in jeopardy. She also asserts that she would be unable to progress her claim against the second and third respondents in Australia.
As discussed later in these reasons, I find the husband has failed in his obligations for full and frank disclosure, particularly in relation to his corporate and business assets outside Australia.
The wife submits that this Court at the time of a final hearing, can consider whether it deals with the property of the parties globally or deals with the property in China by way of a separate consideration in the s 79 process. The wife submits that much will depend on the findings of fact as to the justice and equity made during the course of the trial, the status at that time of the Chinese proceedings and any orders made in them. The wife says that this court can take into account the balance of the property in the world outside China when determining the s 79 adjustment orders between the parties while not making any order adjusting the Chinese property.
Senior counsel for the husband submitted that it would be possible if the two proceedings were allowed to continue simultaneously that both courts could simultaneously hand down diametrically opposed property settlement orders. That is improbable. As senior counsel for the wife pointed out, the refusal of an injunction at this point in time does not mean that the final trial in the Australian and Chinese proceedings will take place concurrently. It means that they will run concurrently at the present time. It will be a matter for the docket judge, when appointed when the matter has reached an appropriate stage in the pool of matters awaiting hearing, to determine when the final hearing in the Australia proceedings are set down.
This Court has processes which need to be undertaken prior to the case being ready for trial.
In the end s 114(3) requires the application of the principles that relate to any interlocutory injunction.
The husband has not yet filed any response to the proceedings in Australia nor complied with requests for discovery.
I find it would not be vexatious or oppressive for the husband to be required to continue to involve himself in the preparation of the proceedings in Australia. On the balance of convenience, the proceedings in Australia should continue.
Consequently the husband’s application pursuant to s 114(3) of the Act shall be dismissed.
WIFE’S APPLICATION FOR LITIGATION FUNDING
In the wife’s Amended Application in a Case filed 13 November 2020, she sought orders in the following terms:
3.That within twenty-one (21) days of the date of these Orders and pending further Order, the Husband pay or cause to be paid to the trust account of the Solicitors for the Applicant Wife, Lander & Rogers Lawyers, pursuant to sections 79 and 80(1)(h) or section 117 or section 74 of the Family Law Act 1975 (Cth), the sum of $500,000 with that money to be applied towards the Wife's costs and disbursements as set out in Order 4 herein.
4.The sum referred to in Order 3 above shall be applied by the Solicitors for the Wife in payment of the costs and disbursements incurred or to be incurred by the Wife in the conduct of these proceedings, including but not limited to the reasonable costs and disbursements:
4.1Rendered by the Solicitors for the Wife pursuant to their Costs Agreement with the Wife including but not limited to the payment of Counsel's fees;
4.2Rendered by Accountants appointed by the Court or engaged by the Wife or the Solicitors for the Wife to report on and/or value taxation matters, including but not limited to capital gains tax and any interests of the Husband and/or the Wife in any business, company, superannuation fund, trust or entity; and/or
4.3Rendered by Valuers appointed by the Court and/or engaged by the Wife or the Solicitors for the Wife to report on or value any real and/or personal property in which the Husband and/or the Wife may have an interest, and of any business, company, trust or entity in which the Husband and/or the Wife have an interest.
This application was opposed by the husband on the following bases including:
·Monies that had been received and spent by the wife since the separation;
·The reasonableness of the monies that the wife said she needed; and
·The reversibility of any order that is made.
The husband submits that the wife already has considerable wealth and high income in Australia (in respect of which she pays no tax) and that the proceedings, particularly in relation to litigation funding are vexatious.
At a management event prior to the hearing, the wife indicated that she was relying on s 117(2) of the Act as a source of power for the making of these orders. However, in the wife’s case outline filed 10 December 2020, the wife made clear that the order by way of litigation funding was, sought, as the order was drafted, namely pursuant to either s 79 and s 80(1)(h) or s 117(2) of the Act (at paragraph 42). During oral submissions at the hearing, senior counsel for the wife conceded that at a previous management event the wife had only sought to rely upon s 117.
I proceed on the basis that at the hearing the wife sought a litigation funding order in the alternative firstly as an interim property order or secondly, an interim costs order.
Law and principles applicable to litigation funding orders
The Full Court in Strahan & Strahan (interim property orders) (2011) FLC 93-466 (“Strahan”) discussed the principles applicable to applications for interim property orders. An interim property decision involves two steps.
The first step
First, it must be established that s 80(1)(h) of the Act was enlivened to allow an interim property settlement under s 79 of the Act. The test for this was not confined to compelling circumstances. The Court in Strahan revisited the earlier well known statement made in Harris and Harris (1993) FLC 92-378 (“Harris”) at 79,930 where the Full Court had said:
The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.
In Strahan, the Full Court said:
132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
…
139.We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
As explained by the Full Court in Strahan, s 80(1)(h) of the Act is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of “compelling circumstances”. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “over arching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.
Considerations about making an interim property order in “the interests of justice”
The notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order.
In In the Marriage of J U and T Poletti (1990) 15 Fam LR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
…It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
The second step
As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a s 79 order (ss 79(2) and 79(4) of the Act). A detailed inquiry is not required, but there must be some assessment of s 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
Being a preliminary property order, the wife ordinarily would be able to choose how to spend the money however she wishes. However in this case, she has limited her application by seeking that monies provided pursuant to the order be earmarked for spending on the particular purpose of litigation funding.
Principles in relation to interim costs orders
In Salvage & Fosse (2020) FLC 93-966 (“Salvage & Fosse”), the Full Court considered principles relevant to the making of a litigation funding order pursuant to s 117 of the Act.
At [8] of that judgment, the plurality said:
…it is accepted by the appellant, as it must be, that s 117 of the Act empowers the Court to make such orders as to costs and is of sufficient width to empower the making of the order sought by the respondent in the proceedings.
At [9] the plurality referred to that as “long-held and unimpeachable jurisprudence”.
At [15] the plurality recast the previous test establish by the Full Court in Zschokke and Zschokke (1996) FLC 92-693 by saying:
It would not be just, for example, for the respondent to have to pay the legal expenses of the applicant, where the case to be taken was weak, fanciful or misguided or where the effect on the respondent of such an order would work an injustice. We do not consider it helpful, however, for there to be a need to identify the applicant’s case as strong, persuasive or such like to justify an order. That invites a descent into semantics and an artificial characterisation of the strength of the proposed proceedings. The consideration should be whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs …
Otherwise, the plurality referred to the discussion of relevant principles by me in the dissenting judgment. It is expedient simply to set out [56]–[71]:
56.When making an order for litigation expenses, it is important to identify the source of power because that will determine the relevant considerations for making the order (see Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”); Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (“Paris King Investments”) and Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at [221]).
57.The four possible powers referred to by relevant authorities for the making of an order for interim provision of litigation expenses are the powers to make orders as to: property (s 90SM and s 90SS(1)(h) and (k)), costs (s 117(2)), maintenance (s 90SE) and injunctions (s 114(2A)(c)).
58.In a financial case involving de facto spouses, an order for litigation expenses will most usually be made relying upon the property power. If unavailable, for example because of the need to determine jurisdictional facts, the next most obvious source of power is s 117(2) of the Act (see Breen v Breen (1990) 65 ALJR 195) (“Breen”); Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at [2], [10], [60]–[62]; Zschokke and Strahan).
59.Section 117(2) is available “in proceedings under this Act”. In this case, the respondent has commenced proceedings under s 90UM of the Act to set aside the Cohabitation Agreement. This section provides jurisdiction to, in effect, decide whether s 90SA(1) excludes the respondent from making an application under s 90SM. The availability of this Court to determine jurisdiction attracts the provisions of s 117(2).
60.Section 117(1) expresses the general rule that a party to proceedings under the Act shall bear his or her own costs. However, the High Court in Penfold v Penfold (1980) 144 CLR 311 (“Penfold”), said at 315:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs…
61.The requirement of justice must remain a basic condition in the making of an order of the type in question under s 117(2) (see Strahan at [124] quoting Zschokke). That should be understood to mean justice when balancing competing considerations in favour of or against each of the parties.
62.When considering whether it is just to make an interim order for the provision of litigation expenses pursuant to s 117(2), the court shall have regard to the matters set out in s 117(2A) of the Act. In Zschokke (at 83,217) the Full Court said:
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably paragraphs (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by paragraph (g)…
63.In relation to s 117(2A)(a), apart from the general financial circumstances of each of the parties to the proceedings, the Full Court in Zschokke identified the following particular considerations:
a)a position of relative financial strength on the part of the respondent;
b)a capacity on the part of the respondent to meet his or her own litigation costs; and
c)an ability on the part of the applicant to meet his or her litigation costs.
64.As to such other relevant matters, under s 117(2A)(g), the plurality in Strahan at [96] and [141] specifically adopted the following considerations referred to in Paris King Investments at [30]:
a)the applicant should have “at least an arguable case for substantive relief which deserves to be heard”;
b)there should be evidence of the applicant’s “likely costs of litigation” (see also Wilson and Wilson (1989) FLC 92-033 at 77,453); and
c)it is not “an essential pre-condition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
65.In respect of the first of the considerations referred to in the preceding paragraph, that the applicant should have at least an arguable case for substantive relief which deserves to be heard, the trial before the primary judge and the submissions before this Court proceeded on the basis that the statement made by the Full Court in Strahan at [141] was correct. The primary judge was asked to make an assessment as to whether or not the respondent had at least an arguable case for substantive relief which deserved to be heard. The test adopted in Strahan was formulated by Brereton J in Paris King Investments at [30]. It was an objective test. Brereton J had apparently drawn upon an earlier statement made by Moss J in Chester v Chester (1995) FLC 92-612 (“Chester”), which was in different terms. Moss J said, “[i]t is desirable that the [a]pplicant should provide evidence of having been advised by the [a]pplicant’s solicitor that the [a]pplicant has a good case on the merits” (at [27]). This was a subjective test and in this case, as discussed below, the respondent’s solicitor made such a submission. The test proposed by Brereton J and adopted by the plurality in Strahan went beyond the mere advice of the lawyer for the applicant for the litigation funding order. The test is “at least an arguable case”. The hearing of an application for a litigation funding order is not an occasion to run a rehearsal of the substantive application on tested evidence. As Kirby J said, in the context of a summary dismissal application, in Lindon v Commonwealth (No 2) (1996) 136 ALR 251 at 256, “[e]xperience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment”. Departure from an earlier decision of the Full Court should be done “cautiously and only when compelled to the conclusion that the earlier decision is wrong” (Nguyen v Nguyen (1990) 169 CLR 245 at 268-270). It was not argued before us that the Full Court in Strahan was wrong. Absent argument, I am not compelled or prepared to say that the Full Court had set an inappropriate test.
66.The plurality in Strahan at [96] also made reference to further considerations articulated in Paris King Investments at [31]. The first was that an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”. In Kendling v Kendling (2008) 39 Fam LR 404 at [48], the Full Court, referring to a statement by Nygh J at first instance in Poletti & Poletti (1990) 15 Fam LR 794 (“Poletti”), said that it was not necessary to require an “itemised bills of cost” or that the costs “be at scale” or that a taxation assessment under the Family Law Rules 2004 (Cth) is required. The second was that “an order can be made in respect of costs already incurred as well as of future costs”. In Chester, Moss J at [26] notes that general principles expressed in earlier cases under the Matrimonial Causes Act 1959 (Cth), included recognition that the object of an interim costs order “is to provide the [a]pplicant with a means to continue the conduct of the litigation not to reimburse the [a]pplicant for moneys already expended on or towards her costs”. In Paris King Investments, Brereton J at [31] expressed the view that an order can be made in relation to costs already incurred but the exercise of distinction between costs already incurred and those to be incurred may be relevant to the discretion to make an order, and its quantum.
67.Cases involving a dispute on the facts as to jurisdiction, may raise the question as to whether or not an order for litigation expenses is recoverable if the party against whom the order is made is ultimately successful in opposing the application for substantive relief. In the context of an interim property case, the Court in Strahan at [99] endorsed the statement in Harris and Harris (1993) FLC 92-378 (“Harris”) at 79,930:
… [T]he Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so.
68.However, in relation to an order for litigation expenses, the Full Court in Zschokke at 83,221 said:
However, while the conclusion in relation to the uncertainty of the amount of the [applicant’s] eventual property settlement award may be fatal to an application under s 80(1)(h), it is not necessarily so to an application under s 117(2). It is just one of the matters to be balanced in the exercise of the discretion under the latter sub-section.
69. As Kent J said in Rakete v Rakete (2012) 48 Fam LR 325 (“Rakete”) at [55]:
… [T]he capacity to repay, whilst a relevant consideration, cannot be elevated to the status of an essential pre‑condition to the making of an Order in cases involving s 90K [or s 90UM]…
70.The High Court in Breen said at 195–195 that an order for the interim provision of litigation expenses “should be so framed as to protect the parties from any risk of injustice arising from the manner in which the funds are expended”. There is no question that his Honour fulfilled that requirement in this case by attaching to the litigation funding order, the provision “which monies are only to be used to meet the [respondent’s] legal costs in these proceedings”. If a party pays to the other party monies for litigation funding, that party at least should obtain the advantage of moving the litigation towards finality.
71.The Full Courts in both Harris and Strahan make comments to the effect that there should be as few interim applications for orders for litigation expenses as possible.
As already noted, the plurality in Salvage & Fosse did not agree with the plurality in Strahan as referred to in [64](a) of Salvage & Fosse, saying that in an application for interim costs the applicant should do more than have “at least an arguably case for substantive relief which deserves to be heard” but needs to demonstrate a case which is sufficient, in all the circumstances, as to its nature and prospects, to justify an interim order for costs.
The wife’s s 79 claim
The substantive relief sought by the wife in the Australian proceedings is for a property settlement order pursuant to s 79 of the Act.
The parties met in May 2009, commenced cohabitation in 2011 and married on … 2012. They relocated to Australia in May 2014. The wife now resides in Australia and the husband resides in China. The parties separated in June 2018.
The wife was 25 years of age when the parties met. She left her life in China to come to Australia. The wife asserts that whilst she was reluctant to do so, she moved to Australia at the request of the husband so that they could raise a family here. The parties’ attempts to have a child were unsuccessful. She was not engaged in paid employment whilst in Australia but sets out in her June affidavit the involvement that she says she had in the development of the property portfolio in Australia and the part she played in assisting the husband manage his finances globally (paragraphs 58–61). At paragraphs 62 and 63 of the June affidavit, the wife asserts she provided extensive support to the husband whilst he was developing his businesses and career, including emotional support and attending to the majority of homemaking duties. She asserts that she has managed the properties in Australia and three properties in China since the separation with very minimal assistance from the husband. The wife in her June affidavit at paragraphs 58–65 and 68 and 86 sets out evidence relevant to contributions and 75(2) considerations. The wife sets out what she says were sacrifices she made in relation to her education and career in order to be involved in a relationship with the husband. She asserts that as a result of the marriage and the husband’s request, she gave up tertiary studies and that her capacity to return to the workforce is limited by that fact. Notwithstanding the involvement that the wife said she had in parts of the husband’s business, she says that she never was privy to what his income was, from its numerous sources from within Australia and overseas.
The husband asserts that the wife has made no significant financial or non-financial contributions to the acquisition, conservation or improvement of assets and does not place any significant value on the wife’s role as homemaker during their cohabitation. Senior counsel for the husband categorises the cohabitation as a “six year relationship with no contribution by the wife and, I’m not being rude, but her best activity, with great respect to her, seems to be spending cash monies. The contributions that she contends she made to the assets is de minimis” (Transcript 11 December 2020, p. 54 lines 17–20). Reference was made to purchases the wife had made of shopping in capital cities in different cities in different States of Australia.
The husband’s financial statement filed 17 August 2020 indicates an estimate by him of value of property owned by him of about $54,837,667 with liabilities of $15,222,190 (a net worth of $39,615,477). Of that amount, the husband indicates that there are liquid funds in financial institutions of about $3,767,569.
The husband now placed new estimates of value on balance sheet items, estimating that his net worth is in the order of $43,464,248 ($33,728,000 in China; $6,023,399 in Hong Kong and $3,712,849 in Australian assets). The husband denies the wife’s assertion that the husband has assets in Country UU, Country WW and Country S.
The wife has filed a financial statement in which she indicates that currently she has assets in her name to a value of $4,951,189 with liabilities of $1,538,000 (net assets of $3,413,189). At the time of the hearing, her financial statement indicated that she had liquid funds in financial institutions of $197,189.
Further, the wife’s evidence (in her affidavit and financial statement) indicates that she receives weekly income from nine rental properties in the sum of $10,295 per week according to her financial statement (although her affidavit quotes a figure that is $150 less but that is of no moment). She indicates that personal expenses are $4,546 per week. The consent orders that have been made in this matter reduce the commitment that she has set out of $2,200 per week in rates to some lower figure. Details in her financial statement would possibly allow me to work out what that reduction is but given I was given no assistance from counsel in that regard and it is not otherwise necessary to do so, so I will not.
At paragraph 110 of the husband’s first affidavit, he details amounts that have been provided to the wife between 8 June 2018 and 17 July 2019. Those amounts total $759,000. There is a deal of contested material in relation to movement of monies by the wife after the separation. That material is not sufficient for me to make an adverse finding against the wife in respect of contentious issues as to how she has used funds since the separation. The husband says that he ceased making payments to the wife because he understood that the wife would have received sufficient income from rentals to cover her living expenses and other expenses. The husband (at paragraph 107) of his affidavit and in oral submissions draws particular attention to expenditure by the wife in the period of August 2018 to January 2020 on dining at restaurants and one particular example on 14 November 2018 where she spent $1,383.40 shopping for designer goods. Whilst this evidence was adduced by the husband to refute the assertions by the wife of the effect of her being dislocated from her normal life in China, it is also of some relevance as to the lifestyle which the wife (and possibly both parties) enjoyed during the marriage. The exploration of that issue may be a matter for another day.
Because of prepayment of rent in relation to the City R and City SS properties, at the date of the hearing, the wife was not receiving regular weekly amounts of rent totalling $5,025 per week ($3,300 + $1,725). The wife in her most recent affidavit says that the rent in respect of the City R property was paid to her in advance on 19 August 2020 in the sum of $82,508. The next rental payment in respect of that property will recommence in March 2021. Further, that in relation to the rent from the City SS property, she received an amount of $42,129 on 11 September 2020 and the next payment due in respect of that property will be October 2021. Given that the receipt of both of those sums was prior to the date upon which she swore her financial statement, I infer that the receipt of those funds has been accounted for in that financial statement.
As already discussed, the wife’s application in China is for a property settlement order of AUD$30 million. She also has an application for compensation for nervous shock which, as best I can calculate, is only of an amount of AUD$10,900. On the limited information that I have and considering the expert evidence, it is unclear how the wife would maintain any significant claim in China. It is the husband’s position that the wife had minimal assets coming in to the marriage. The husband is not explicitly clear as to whether or not any assets were acquired in China during the six years of the parties’ marriage. If no assets were actually acquired, then it may be that the wife has no significant claim in China.
The husband has not indicated to this Court what property settlement order he would agree to. Nor has he set out his position in relation to what property order he is seeking in the Chinese litigation. The parties agreed that I would have in evidence communication between them on 15 July 2019. In that communication, the husband indicated that apart from the property in Australia that he described as “E Street” and which it was agreed was a reference to the property at Suburb F, the wife could have everything else in Australia. The wife and the Court do not know whether or not that is still the husband’s position today in relation to an overall settlement of all outstanding property claims between the parties wherever they might be. It is also unclear as to whether the husband was saying the properties would be transferred to the wife without encumbrance. At the time of the hearing, deposits had been placed upon two other Australian properties.
Based upon the joint balance sheets provided, the gross value of the Australian properties is about $10.7 million, with liabilities of about $5 million.
Non-disclosure
The wife asserts that there have been multiple requests for disclosure as to the husband’s financial conduct and circumstances. The wife further asserts that the husband has not provided any financial disclosure in the Chinese proceedings and has not complied with orders for disclosure in both the Hong Kong proceedings and these proceedings. The wife first sought financial disclosure from the husband by way of a letter written by her lawyers to the husband’s lawyers on 16 July 2020 (exhibit A-16 to the wife’s affidavit filed 13 November 2020). Henderson J made an order for the exchange of financial disclosure as required under the Family Law Rules 2004 (Cth) (“the rules”) on 17 August 2020. That disclosure was required by 31 August 2020. The wife provided documents on that day (although the husband, for his part, complains that the wife has not fully disclosed how she has used monies received since separation).
On 28 August 2020 a letter was sent to the husband’s lawyers seeking disclosure with regards to alleged loans owed by the husband to a number of individuals. As at the date of this hearing, the wife had received no reply to the request contained in that correspondence.
By 1 September 2020 disclosure in compliance with the order of Henderson J had not been made by the husband and a letter was sent to the husband’s lawyers requesting compliance. A follow-up letter was sent on 7 September 2020. On 28 September 2020 the wife’s lawyers once again sought disclosure.
At a case management event before myself on 14 October 2020, counsel for the husband indicated that the husband had not complied with disclosure orders made previously as he was “unwell”. Further orders were made for disclosure on that day.
On 19 October 2020 the husband’s lawyers sent to the wife’s lawyers a link to documents that the wife already had as a result of obtaining them through third party subpoenas. The only additional material that the wife received as a result of that link was some emails exchanged between the husband and a particular company on 12 October 2020.
On 28 October 2020 the wife’s lawyers received a letter from the husband’s lawyers providing ASIC searches of various entities and searches of transfers of properties held by the husband in Australia. No other documents were disclosed and specifically there was no full disclosure provided of documents relevant to assets held by the husband outside Australia.
The wife in her affidavit filed 13 November 2020 particularises the information that the husband has not provided in relation to 12 corporate entities in Australia in which he has interests.
At paragraph 118 of his first affidavit filed 2 December 2020, the husband makes clear that apart from what is in his financial statement, which he says contains a disclosure of the value of his foreign assets and liabilities, the husband took the decision to delay providing financial disclosure relevant to overseas assets until the court had dealt with his application to halt the Australian proceedings. That is, the husband’s position was that if he was successful in having an order made restraining the wife from continuing the Australian proceedings, he would not be required, at least in the short term, to provide to the wife all documents relevant to interests that he had in assets overseas.
The husband’s financial statement indicates that he has a 20 per cent interest in DD Pty Ltd which he estimates has a value of $600,000. He also sets out that he has interests in 20 other overseas companies which he estimates has at least a value of $9,462,830. That estimate of value however has to be seen in the light of what is contained in note 11 which discloses that in relation to seven of the companies, he is unable to estimate value of his interest in them. The husband has all the shareholding or a substantial shareholding in some of these companies. It does not seem in dispute that the husband has not given full financial disclosure of financial statements for every one of these companies. Separately, the husband says that he has got interests in businesses which he operates through companies which he estimates have a value of $3,810,000. There are seven such businesses, four of which are conducted in China. Again, it does not seem to be controversial that the husband has not provided full disclosure of financial statements in respect of the trading of all of these businesses.
The wife asserts (and I am unable in the context of this hearing to make any finding) that the husband has not fully set out in his financial statement the interests that he holds by proxy through third parties.
The wife overall describes the disclosure which the husband has given as “scant”. The husband disagrees.
Although I am unable to make any finding about the extent of the non-disclosure, I find the husband has deliberately avoided providing any significant disclosure of financial statements (let alone source documents) pertaining to his assets held outside Australia and I accept that the wife has little current knowledge of the husband’s financial positions, both within Australia and outside Australia that extend beyond his holdings of real estate. There can be no doubt that as between the husband and wife, it is the husband who controls and has access to relevant documents and information in respect of contested issues.
Is the wife’s request appropriate?
Senior counsel for the husband submitted that there was not one scintilla of evidence as to how the $500,000 sought by the wife by way of a litigation funding order, is made up. That is not so. The wife’s most affidavit filed 10 December 2020 contains particulars in a detailed costs notice dated 9 December 2020 which provides the following details. The wife has incurred professional costs and disbursements in the sum of $515,969.33. The wife has not provided itemised invoices. That notice indicates that a further sum of approximately $46,956.93 plus GST is outstanding and yet to be billed. The notice indicates that further fees are likely to be incurred and the details are as follows:
(a)Senior counsel fees for the interim hearing ($9,900 per day inclusive of GST and $990 per hour inclusive of GST for other work such as conference time and preparation);
(b)Solicitors costs associates with instructing senior counsel at the interim hearing and disbursements in the range of $4,000 - $7,000 plus GST;
(c)Preparing and filing points of claim against third parties ($7,500 - $10,000 plus GST);
(d)Provision for further interim hearings if required ($20,000 - $30,000 plus GST);
(e)Considering disclosure documents received from the husband or alternatively the need to issue further subpoenas to obtain relevant financial documents ($7,500 - $10,000 plus GST);
(f)Valuing 11 Australian properties ($9,000 – $14,000 plus GST);
(g)Valuing corporate interests in Australia ($60,000 – $100,000);
(h)Preparing for and conducting a two day mediation ($50,000 – $65,000 plus GST);
(i)Preparing for and conducting a five to seven day final hearing ($300,000 – $400,000 plus GST).
Ignoring the calculation of GST and taking the higher of the estimates, the overall estimated future costs are in the sum of $693,000. The amount of $293,000 relates to work done prior to the holding of a final hearing and $400,000 is the provisional allowance (plus GST) for a five to seven day final hearing. It is to be noted that this estimate at item (e) in the previous paragraph, only provides for $7,500 – $10,000 plus GST as a budget which would allow the wife some ability to explore the nature and the value of the husband’s interests outside Australia. That seems quite a conservative figure given the extent of the inquiry which might be required.
Senior counsel for the husband referred to both the amount spent on legal costs to date and the amount the wife projects that she will spend as “eye-watering”. The wife also put into evidence the costs agreement that she signed with her lawyers indicating that Mr Parker and Ms Lau have carriage of her matter. They have rates of $900 and $725 per hour respectively. Senior counsel for the husband asserted that the wife’s fee agreement provides for her lawyers to charge $200 for each page that they read. That is not accurate. The figure is $75 per page. There is a charge for $230 for every page they write. The husband has not provided any costs notice in accordance with the rules so there is no point of comparison with the detail that the wife has given in relation to costs. There is no evidence that would indicate that the rates charged are not reasonably commensurate with market rates in matters of this type.
It is the wife’s case that the costs in her matter have escalated due to:
(a)The complexity of the matter, including jurisdictional issues;
(b)The husband’s failure to provide full and frank financial disclosure and the consequent need to issue subpoenas and updating subpoenas;
(c)Extensive correspondence exchanged with the husband’s lawyers with regard to other outstanding issues;
(d)The need to relist the matter urgently in relation to the selection of a single expert;
(e)The ultimate need to instruct an adversarial expert;
(f)Instructions to brief senior counsel(s) to advise and appear in the matter.
The wife’s costs notice recorded that the source of funds for the payment of the amount of costs to date had been met from the wife’s savings and from her “BBB Investment Fund”.
Disposition
Interim property order
In relation to the interim property order, the overarching consideration is the interests of justice, without the need for the wife to establish compelling circumstances, I find that it is appropriate to make an interim property order in favour of the wife, having regard to the usual matters in s 79, (given that a detailed inquiry is not required) and adopting a conservative approach to the final outcome. I take into account the position that the husband announced he would be content with in 2019. If that position sets out the meets and bounds of what the husband believes is the wife’s just and equitable and appropriate entitlement to a property settlement order (and given that he has provided no other alternative, I will accept that as his latest position on the matter), the property that would be in the hands of the wife is more than sufficient to deal with the husband’s legitimate expectations at the final hearing and an award in the sum of $500,000 would be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
As set out above, the wife has $197,000 in liquid funds. Her estimated future legal expenses are $693,000. That would make an order in the sum of $500,000 appropriate.
It might be thought that because $400,000 is budgeted for a final hearing, that the question of an advance for that purpose might be deferred until the parties had participated in the mediation for which the wife has budgeted.
In Harris, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of sec 79 proceedings.
In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 79 and s 80(1)(h) of the Act:
Regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
A corollary of these statements made by the Full Court in both Harris and in Strahan is the proposition that as a generality, the interests of the parties and the court are better served by there being as few interim property applications under s 79 as possible.
Accordingly, an order would be made in favour of the wife by way of interim property settlement in the sum of $500,000.
The wife has proposed that the order for litigation funding be framed in a manner that would mean that the monies are only used to meet the wife’s legal costs in these proceedings. Those costs might, of course, extend to inquiries in respect to the existence of and value of assets outside the jurisdiction. It may be that the wife has underestimated the amount that she will need to satisfy herself of the identity and value of the husband’s assets outside Australia. The order proposed which quarantines the funds allows some flexibility in how the wife’s budget for the litigation is expended.
Interim costs order
If I am wrong in relation to making an interim property settlement order, then I turn to consider the wife’s alternate application under s 117(2) of the Act. I am satisfied that the wife has raised a case which is sufficient, in all the circumstances, as to its nature and prospects, to justify an interim order for costs. Turning to s 117(2) of the Act, I consider whether or not it is just to make an order for interim costs in the wife’s favour. In doing so, I am required to consider those matters set out in s 117(2A) of the Act. Neither party is on legal aid and the proceedings are not at a stage where there has been a total lack of success of one of the parties. Nor in relation to the context of interim costs order is the existence of terms of an offer for settlement of any relevance and in any event no evidence has been provided of any such offers. Relevant to s 117(2A)(a), I have set out above the position of the relative financial strengths of the parties and the capacity of the wife to meet her own litigation costs. The husband is in a far stronger financial position.
There is no suggestion that the husband does not have an ability to meet his own litigation costs. The wife has provided evidence of her “likely costs of litigation” and although it is not an essential precondition, her lawyers have indicated to her that they will not continue to act unless the costs are paid or secured on an ongoing basis.
Given the likely minimum outcome for the wife, I find that she will have the capacity to repay the order for costs if it is found ultimately that those costs should not have been ordered in the first place, and an appropriate adjustment to the s 79 order is required.
For those reasons, I would have found it just to make an order pursuant to s 117(2) in the same terms as the order that I have made under s 79 and s 80(h).
HUSBAND’S APPLICATION TO DISCHARGE ORDERS MADE 7 JULY 2020
Injunctions were made on an ex parte basis on 7 July 2020 restraining the husband from:
·Selling, mortgaging, assigning, disposing, alienating or further encumbering real properties in Australia and outside Australia;
·Alienating, further encumbering or adversely dealing with any corporate interest in Australia and overseas; and
·Assigning, disposing, withdrawing and/or causing the total balance of the husband’s bank accounts with Q Bank, Z Bank and National Australia Bank from being reduced to a sum below $3.8 million.
On 17 August 2020 those restraining orders were varied by consent to facilitate the settlement of the purchase of a property at Suburb NN by GG Pty Ltd (of which the parties are directors and shareholders) and to address the arrears of mortgages relating to a real property at Suburb M which is held in the sole name of the husband.
The husband sought an order that the ex parte orders made 7 July 2020 be set aside subject to the husband providing 28 days written notice of any transaction he proposes to enter into which are not in the ordinary course of business. Senior counsel for the husband submitted that the current injunctive order was too wide.
Senior counsel for the wife argued that the order should be retained.
Given the matters discussed above, and particularly:
(a)the lack of clarity about the relief sought by the husband;
(b)the nature of the relief sought by the wife;
(c)the lack of disclosure by the husband;
(d)the extent of the husband’s wealth; and
(e)the husband’s failure to demonstrate how the current injunction is hindering his ability to operate financially.
The husband has not satisfied me that the order made by Henderson J should be discharged. The husband’s application to discharge the orders made 7 July 2020 shall be dismissed.
THE WIFE’S APPLICATION FOR AN UNDEFENDED HEARING
This application was not specifically referred to during oral submissions.
At paragraph 20 of the wife’s case outline, this application is not mentioned. During oral argument senior counsel for the wife said he sought all of the applications in the wife’s application in a case subject to the further discussion that took place in oral argument. There was no reference in submissions to application 2.2 (that application sought that a notation be made that the husband had failed to comply with various orders) and hanging off was order 2 being the wife’s application for the matter to proceed to a hearing on an undefended basis.
The wife’s application to proceed to an undefended hearing of her s 79 application is premature and shall be dismissed.
I certify that the preceding one hundred and thirty-six (136) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Watts. Associate:
Dated: 19 March 2021
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