Zha & Wun
[2022] FedCFamC1F 274
•29 April 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zha & Wun [2022] FedCFamC1F 274
File number(s): SYC4269 of 2020 Judgment of: ALTOBELLI J Date of judgment: 29 April 2022 Catchwords: FAMILY LAW – PROPERTY – Review of decision – Where Senior Judicial Registrar made directions for parties to file evidence on the Applicant’s proposal to join a Fourth Respondent and further dismissed the Second and Third Respondent’s proposal to, upon receipt of Applicant’s Point of Claim, either file Points of Defence or seek to dismiss the Applicant’s case – Where Second and Third Respondent contend they need not put on evidence in response to the Applicant until the Applicant files a Points of Claim document outlining her case against them – Where Applicant contends that a lack of proper disclosure prevents her from doing so – Review allowed in part – Orders varied to extend the compliance timeframe – Further orders made that the Second and Third Respondents provide proper disclosure to the Applicant and the Applicant thereafter provide a Points of Claim document. Legislation: Family Law Rules 2004 (Cth) r 13.04 . Cases cited: B Pty Ltd and Ors & K and Anor (2008) FLC 93–380; [2008] FamCAFC113
Zhu & Wun [2021] FamCA 143
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 1 February 2022 Place: Sydney Counsel for the Applicant: Mr Sweeney Solicitor for the Applicant: Landers & Rogers Solicitor Advocate for the First Respondent: Mr Luo Solicitor for the First Respondent: Sunfield Chambers Solicitors & Associates Counsel for the Second and Third Respondents: Mr Hollo Solicitor for the Second and Third Respondents: David H Cohen & Co ORDERS
SYC 4269 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ZHA
Applicant
AND: MR WUN
First Respondent
MR A WUN
Second Respondent
MS YANG
Third Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
29 APRIL 2022
THE COURT ORDERS THAT:
1.The Application for Review filed on 17 December 2021 is allowed as to Orders 4 and 5 only of the orders made on 16 November 2021.
2.Order 4 of the orders made on 16 November 2021 is varied to read:
“Within 21 days of the date of these orders, the First, Second and Third Respondents file and serve:
(a)any Response to the Application seeking to add AB Pty Ltd; and
(b)any affidavit in support of the Response.”
3.Order 5 of the orders made on 16 November 2021 is varied to read:
“Within 21 days thereafter, the proposed Fourth Respondent may serve on each party to the proceedings:
(a)any Response relied upon; and
(b)any affidavit in support of that Response.”
4.Within 21 days of the date of these orders, the Second and Third Respondents respond to and provide to the Applicant the information requested in the letter dated 28 August 2020 from the Applicant’s solicitor.
5.Within 14 days of receiving the response referred to in Order 4, the Applicant make any further request for information from the Second and Third Respondents.
6.Within 21 days of receiving a further request for information from the Applicant as referred to in Order 5, the Second and Third Respondents provide said requested information to the Applicant.
7.Within 28 days of receiving the further information from the Second and Third Respondents as referred to in Order 6, the Applicant file and serve on the Second, Third and Fourth (if applicable) Respondents Points of Claim setting out with particularity the factual contentions and legal basis relied on in support of the final relief claimed in the Further Amended Initiating Application against each of the Second, Third and Fourth (if applicable) Respondents to enable them to fairly understand the case they each have to meet.
8.Subject to further submissions, the costs of all parties be reserved.
9.The Application for Review filed on 17 December 2021 is otherwise dismissed.
10.The matter is referred to Senior Judicial Registrar Hoult to determine the joinder or otherwise of AB Pty Ltd.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zha & Wun has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
These are complex property proceedings between Ms Zha, the Applicant wife (“the wife”), and Mr Wun, the First Respondent husband (“the husband”). In addition to these proceedings, the parties have also commenced property proceedings in Country AD and China. The pool of assets is substantial. The litigation is in its early stages. There are disclosure issues particularly in relation to the husband. In one of the many interlocutory applications that have been heard in these proceedings, Watts J has already made reference to disclosure issues in relation to the husband.
The present application specifically pertains to the Second and Third Respondents, the husband’s brother and sister-in-law, who were joined to the proceedings as a result of an application filed by the wife on 14 August 2020. The wife amended this application on 10 December 2021 and joined the Fourth Respondent by naming the said entity on the application. Orders 3, 4 and 5 of the said amended application in effect seek declarations that the Second and Third Respondents hold on trust for the husband purportedly valuable real estate known as 2 N Street and 4 N Street, Suburb P (“the Suburb P properties”), in Sydney.
In addition, at Orders 7–10, the wife also seeks declarations against the Second Respondent who purportedly holds shares in the proposed Fourth Respondent, as well as seeking a declaration that the Second Respondent holds in trust for the husband a 30 per cent shareholding in two other named corporate entities who are not parties to the proceedings.
The substantive relief sought by the wife includes orders for the transfer of properties to her, transfers of the Suburb P properties, as well as a cash payment to her of $10 million.
The matter comes back before the Court in the context of an order made by a Senior Judicial Registrar on 16 November 2021 (“the orders”). The orders are reproduced below:
1.That the Application of the wife for the matter to proceed on an undefended basis be dismissed.
2.That the Application of the second and third Respondents be dismissed.
3.That on or before 10 December 2021, the Applicant file:
(a) an Application in a Proceeding;
(b)an affidavit setting out the facts relied upon to support the addition of the proposed new party, including a statement of the proposed new parties’ relationship (if any) to the other parties;
and serve upon the new proposed party:
(i) a copy of the Application in a Proceeding;
(ii) the affidavit referred to in paragraph (3)(b); and
(iii) any relevant document;
and serve upon the other parties:
(iv) copy of the Application; and
(v) a copy of the affidavit [referred] to in paragraph 3(b).
4.That on or before 18 January 2022 the first, second and third Respondents file and serve:
(a) any Response to the Application seeking to add [AB Pty Ltd]; and
(b) any affidavit in support of the Response.
5.That on or before 10 February 2022, the proposed fourth Respondent may serve on each party to the proceedings:
(a) any Response relied upon;
(b) any affidavit in support of that Response.
6.That the costs of all parties be reserved.
The matter came before me on 1 February 2022. The wife was represented by Mr Sweeney of counsel. The husband was represented by his solicitor, Mr Luo. The Second, Third and Fourth Respondents were represented by Mr Hollo of counsel.
The Second, Third and Fourth Respondents sought the following orders:
The Court ORDERS that:
1.Orders 2, 4, 5 made by Senior Judicial Registrar on 16 November 2021 be set aside.
2.In lieu thereof, the Court makes the following orders:
a.Within 14 days of the date of these orders, the Applicant file and serve on each of the Second, Third and Fourth Respondents Points of Claim setting out with particularity the factual contentions and legal basis relied on in support of the final relief claimed in the Further Amended Initiating Application against each of the Second, Third and Fourth Respondents to enable them fairly to understand the case they each have to meet;
b.Within 28 days of the date of these Orders, the Second, Third and Fourth Respondents:
i.In the event that they contend that there is no or no proper basis for the Applicant to maintain claims against any of them, file and serve any application seeking any summary Orders against the Applicant (in the case of the Second or Third Respondents) and/or disjoinder Orders (in the case of the Fourth Respondent); or
ii.Otherwise, file and serve Points of Response in response to the Applicant’s Points of Claim together with any evidence in opposition to the Applicants’ Application to join the Fourth Respondent;
c.The parties have liberty to apply on 3 days’ notice in relation to these orders, including whether any other party has failed to comply with these orders.
3.Such further or other Orders as the Court thinks fit.
4.The Applicant pay the Second, Third and Fourth Respondent’s costs of this Application.
The Court NOTES that:
5.In the event that the Applicant’s Application dated 10 December 2021 to join the Fourth Respondent is required to be determined by the Court, that Application is to be dealt with on the papers by Senior Judicial Registrar Hoult in accordance with paragraph 33 of the Ex Tempore Judgment dated 16 November 2021.
(Emphasis in original)
In effect, they sought to set aside Orders 2, 4 and 5 made 16 November 2021, and substitute orders requiring the wife to file and serve a points of claim document setting out with particularity the factual contentions and legal basis relied on in support of her claim against these respondents. Consequential orders are then sought.
The husband does not oppose the application, but the wife does.
Relevantly, on 17 August 2020, Henderson J made a number of orders pertinent to the issue before the Court. Bearing in mind that at that time the Fourth Respondent was not yet a party to the proceedings, the relevant orders made by her Honour are Orders 3–6:
BY CONSENT THE COURT ORDERS THAT:
3.Each party will within 14 days provide disclosure as required by Rule 13.04 of the Family Law Rules 2004 and specifically, the husband will provide particular documents to the wife as outlined in a letter dated 16 July 2020 from the wife’s solicitor to the husband’s solicitor.
4.The wife will serve points of claim in relation to any cause of action as against the Second and Third Respondents 14 days thereafter the receipt of the above-mentioned documents.
5.The Second and Third Respondents, and the husband if required or if he chooses to do so, will provide a response to the points of claim served by the wife within 28 days of receipt of same.
6.Within 14 days the wife will respond to a request for particulars from the husband’s solicitor dated 31 July 2020.
From this Court’s perspective, it is clear that her Honour intended the husband to provide disclosure to the wife which would then enable her to formulate and serve points of claim in relation to any cause of action as against the Second and Third Respondents.
The wife now contends that the husband has not provided her with sufficient disclosure which would enable her to formulate her points of claim against the Second and Third Respondents. Through her solicitor, she has asked the Second and Third Respondents to provide evidence of the source of funds used to purchase the Suburb P properties, together with documents relating to a loan exceeding $6.5 million from the Second Respondent to the husband.
The Second and Third Respondents contend that they should not be required to make disclosure or respond to the wife’s requests until she has formulated and served her points of claim.
So far as the wife and the Second and Third Respondents are concerned, they are at stalemate.
A number of observations are made by this Court.
A strong impression is formed that the husband has not provided complete disclosure. This impression is formed on the basis of the existing judicial observations of Watts J in Zha & Wun [2021] FamCA 143 on 19 March 2021. The wife’s continued protestations contribute to this impression. The husband’s denials are also noted. There is no doubt that the affairs of the husband and wife are complex and span several jurisdictions. The nature and scope of disclosure must, reasonably, reflect the complexity of the financial affairs of the parties.
The husband’s evidence suggests that, at least in so far as the Second Respondent is concerned, there exists a relationship of debtor and creditor, the precise details of which may not yet be clear. A familial relationship also exists as the Second Respondent is his brother. The Second and Third Respondents are related by marriage. The existence of these relationships is sufficient to reasonably raise the wife’s suspicion in the context of this case. Her concerns are set out at paragraphs 29–30 of her affidavit filed 29 June 2020.
In the present context, it is no answer for the husband to say or infer through his senior counsel in his Case Outline filed 15 September 2021, that if there are issues of non-compliance in relation to disclosure, the proper remedy is contravention or contempt applications. These are blunt instruments to bring about disclosure, even putting aside issues of cost and delay. Experience indicates that many a trial commences without complete disclosure and it is only after cross-examination that truth is revealed with inevitable costs consequences. The husband would do well to remember this.
The impression of this Court is that short of the husband being cross-examined, the wife may never really know enough about the husband’s relationship and financial dealings with the Second and Third Respondents, so as to be able to provide to them the points of claim that they request.
There can be no doubt that as a matter of fairness and legal principle, the Second and Third Respondents are entitled to understand the basis on which they have been joined to the proceedings, and the nature of the claim that is made against them. This was capably argued by their senior counsel at the time, Mr AC, in his Case Outline filed 17 August 2020. There can also be no doubt as to the correctness of the observations made by the Full Court at [44] in B Pty Ltd and Ors & K and Anor (2008) FLC 93–380.
On behalf of the wife it was contended that the Second and Third Respondents have not complied with Order 3 made by Henderson J on 17 August 2020. This order requires disclosure in accordance with r 13.04 of the Family Law Rules 2004 (Cth). This contention caused no controversy during submissions before me. Moreover, the letter of the Second and Third Respondents’ solicitor dated 28 August 2020, in response to the wife’s solicitor’s letter of the same date, does create the impression that Order 3 has not been complied with. It is curious that the same parties who are insisting on technical compliance with Order 4 have not complied with Order 3. This case appears beset with an all too frequent phenomena in litigation in this Court: selective hearing or understanding of orders, or selective compliance with the same.
The stalemate needs to be broken. This litigation cannot proceed insofar as it relates to the Second and Third Respondents until the wife has sufficient information that will enable her to formulate her points of claim against them. The wife’s experience of the husband’s lack of cooperation in this regard is hardly surprising from the wife’s perspective because she would contend that the husband and Second and Third Respondents have aligned interests.
It is quite possible that at the time the order for points of claim was made, in effect linked to the husband’s disclosure, the difficulties associated with disclosure could not have reasonably been anticipated. Subsequent events certainly support this hypothesis.
A practical approach is required in order to circumvent the stalemate.
The Second and Third Respondents will be ordered to respond to the letter dated 28 August 2020 from the solicitor for the wife. Whilst the letter itself requests provision of the information referred to therein within seven days, a more reasonable timeframe is 21 days. This should provide the wife with more information than she currently has, and hopefully sufficient information for her to then properly particularise her claim against the Second and Third Respondents. The Court does not rule out the possibility that the information provided will lead to further information requests. The order cannot anticipate or somehow specify this. A reasonable level of cooperation between the highly experienced and reputable lawyers advising the parties in this case is expected. They need not be reminded that they owe duties to the Court, as well as to their clients. Any further request from the wife for information must be made within 14 days of receiving the first response, and the further requested information must be provided within a further 21 days.
No later than 28 days after the further information has been provided, the wife will need to file and serve her points of claim. In this regard, the Court will adopt the wording used in the orders sought on behalf of the Second, Third and the proposed Fourth Respondents, subject to comments below in relation to the latter. Once the points of claim have been filed and served the Second and Third Respondents can decide whether to seek summary relief, or file points of response.
Insofar as a review is sought in relation to the orders concerning the Fourth Respondent, the Court agrees that the better and more efficient manner of disposing of the issue of whether the Fourth Respondent has been, or should be, properly joined to the proceedings is a matter left to the learned Senior Judicial Registrar in accordance with [33] of his ex tempore judgment dated 16 November 2021. Orders 4 and 5 made by the Senior Judicial Registrar will need to be varied, therefore, only as regards the timeframe for filing. Order 4 will state 21 days, and Order 5 will state 21 days. The matter will then revert to the Senior Judicial Registrar to determine the joinder or otherwise of AB Pty Ltd, subject to his power to do so.
Order 2 made on 16 November 2021 dismissed the application of the Second and Third Respondents. The effect of the orders sought was to dismiss the claim by the wife to join the Second, Third and Fourth Respondents to the proceedings. As a result of the orders proposed today, the Court sees no utility in setting aside the order at this time.
Given the changes to the orders that this Court will make, the Application for Review will be technically granted in part, but orders will be made in terms set out above.
Without in any way binding the parties, this Court’s preliminary impression is that costs should be reserved generally. The allocation of costs for the present skirmish seems to be inextricably interwoven with the substantive issues in the proceedings between the wife and the husband.
This is clearly a matter that should be dealt with within the Major Complex Financial Proceedings List. There is also an argument for a judge case managing this matter.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 29 April 2022
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