Zha & Wun (No 2)
[2022] FedCFamC1F 576
Federal Circuit and Family Court of Australia
(DIVISION 1)
Zha & Wun (No 2) [2022] FedCFamC1F 576
File number(s): SYC 4269 of 2020 Judgment of: SCHONELL J Date of judgment: 10 August 2022 Catchwords: FAMILY LAW – FINANCIAL – Interim orders – Where the wife sought various financial orders against the husband – Where the husband opposed the orders and sought to discharge various existing consent orders by seeking to sell various properties – Where the husband did not establish a change of circumstances sufficient to warrant reconsideration of the orders – Husband’s application dismissed – Orders sought by the wife made.
FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife sought against the second and third respondents enforcement of disclosure orders previously made and various restraints – Where the second and third respondents contended that later orders superseded the earlier disclosure orders – Interpretation of orders and judgment – Where the later orders did not supplant the earlier disclosure orders – Where the wife also sought to join a company that the second respondent is the sole director shareholder of – Where it is appropriate to that the company be joined to the proceedings.
Legislation: Family Law Act 1975 (Cth) ss 79, 80, 117
Family Law Rules 2004 (Cth) r 13.04
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.06
Cases cited: Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170; [1981] HCA 39
Kachmar & Madero [2022] FedCFamC1F 476
Medlow& Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 144
Shamon & Shamon [2021] FamCA 417
Strahan & Strahan (2011) FLC 93-466; [2009] FamCAFC 166
Zha & Wun [2021] FamCA 143
Zha & Wun [2022] FedCFamC1F 274
Division: Division 1 First Instance Number of paragraphs: 77 Date of hearing: 29 July 2022 Place: Sydney Counsel for the Applicant: Mr Dickson QC with Mr Fudim Solicitor for the Applicant: Pickering Pendleton Counsel for the First Respondent: Mr Ahmad Solicitor for the First Respondent: Sunfield Chambers Counsel for the Second and Third Respondents: Mr Hollo Solicitor for 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
ApplicantAND: MR WUN
First RespondentMR A WUN
Second Respondent
MS YANG
Third Respondent
order made by:
SCHONELL J
DATE OF ORDER:
10 August 2022
THE COURT ORDERS THAT:
1.That within 7 days of the date of these Orders, the parties shall do all acts and things and sign all documents necessary to transfer the following into a bank account in the applicant wife’s (“the wife’s”) sole name (the Utility account):
1.1 100% of the funds presently held in Offset Account ending #84;
1.2 100% of the funds presently held in Offset Account ending #64; and
1.3 100% of the funds presently held in Offset Account ending #03.
2.That upon receipt of the funds into the Utility Account as provided for at Order 1 herein, such funds shall be paid as follows:
2.1 Payment to the wife of $171,600 by way of arrears of rent for the property situated at PP Street, City R (“the R property”);
2.2 In payment to the wife of $43,655.39 being the expenses the subject of Order 3 dated 25 January 2021;
2.3 In payment to the wife the sum of $3,300 on a weekly basis from 15 August 2022 in lieu of the rent on the R property;
2.4In payment of the mortgage arrears in respect of the properties identified in Order 2.6;
2.5In payment of outstanding land tax in respect of the properties identified in Order 2.6;
2.6 In payment of the following on an ongoing basis, as and when same fall due:
2.6.1 all monthly mortgage repayments, outgoings, insurance premiums and utility bills including but not limited to electricity, gas, water, sewerage and garbage disposal, internet, phone services, cleaning (but excluding land tax for which the respondent husband (“the husband”) remains solely liable), for the following properties:
(a) C Street, Suburb D in the State of New South Wales (with folio identifier …);
(b) J Street, Suburb K in the State of New South Wales (with folio identifier …) and the attached car space;
(c) L Street, Suburb M in the State of New South Wales (with folio identifier …);
(d) G Street, Suburb H in the State of New South Wales (with folio identifier …); and
(e) E Street, Suburb F in the State of New South Wales (with folio identifier …).
3.That the wife shall otherwise not utilise the funds in the Utility Account for any other purpose, unless agreed in writing between the parties or pursuant to an Order of the Court.
4.That Order 3 of the orders dated 25 January 2021 and Order 4(b)(iv) of the orders dated 19 March 2021 otherwise be discharged and THE COURT NOTES that the injunctive Orders made by Henderson J dated 7 July 2020 remain in effect.
Camperdown property
5.That the wife be at liberty to do all acts and things and sign all documents to cause the property situated at and known as J Street, Suburb K to be tenanted and that the wife shall be solely entitled to the rental income derived from the K property and on that basis, Order 1 of the Orders dated 25 January 2021 be discharged save and except that the husband shall remain restrained from entering the said property without the prior written consent of the wife first being obtained, or further order of the Court.
Disclosure by Second and Third Respondents
6.That within 28 days of the date of this order, the second and third respondents shall comply with Order 3 of the Orders dated 17 August 2020 and provide to the wife’s solicitors all documents prescribed by r 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Joinder
7.AB Pty Ltd be joined as the fourth respondent to these proceedings (insofar as not already joined).
Miscellaneous
8.That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, a registrar of the Federal Circuit and Family Court of Australia be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the Husband and do all acts and things necessary to give validity and operation to the deed, document or instrument upon lodgement of such document and the filing of an affidavit on behalf of the requesting party as to the said neglect or refusal and such deed or instrument shall thereafter be sufficient authority for the National Australia Bank to give effect to Order 2 herein.
9.That all outstanding applications 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 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
SCHONELL J:
These complex financial proceedings involve the applicant wife (“the wife”), the first respondent husband (“the husband”), the husband’s brother (“the second respondent”) and his wife (“the third respondent”) and their company AB Pty Ltd. The wife initially commenced proceedings in the Court on 30 June 2020. However, despite numerous interlocutory applications and hearings before at least four judges of the Court in the last two years, the parties are no closer to a resolution of the dispute. At this latest hearing, the parties’ applications included enforcement of orders, issues of disclosure, sale of property, interim property distribution and joinder of a company. The applications arise against a background of competing allegations of non-disclosure and a dispute as to the quantum of the matrimonial pool, being asserted by the husband as something in the order of $40 million and asserted by the wife as being something over $100 million. The parties’ assets comprise of property in Australia, China and other overseas locations. The ownership of a great deal of the property is a matter in dispute between the parties.
The wife seeks orders more particularised in her Case Outline but which can be broadly characterised as against the husband for reimbursement of various expenses paid for by her or others of in excess of $43,000, a payment of a sum of money said to be arrears of rent that she was entitled to under Court orders, a mechanism for the payment of ongoing expenses and to lease a property. The husband opposed the wife’s orders and sought a sale of various pieces of real estate in Australia with the proceeds of sale, after repayment of various debts, to be in part paid to him and the balance invested in an interest-bearing deposit.
The wife also sought orders as against the second and third respondents for the joinder of AB Pty Ltd as the fourth respondent, enforcement of orders by way of disclosure and various restraints. The second and third respondents did not oppose the joinder, while the husband was silent as to his position on the making of this order. I was advised that the parties had reached agreement as to the restraints, thus leaving solely for determination as against the second and third respondents the issue of disclosure.
The wife relied upon the following documents:
(1)Further Amended Application filed 2 June 2022;
(2)Affidavit of wife filed 2 June 2022;
(3)Financial Statement filed 13 November 2020;
(4)Points of Claim filed 19 July 2022;
(5)Further Further Amened Initiating Application filed 22 July 2022; and
(6)Case Outline document.
The husband relied upon the following documents:
(1)Response filed 12 May 2022;
(2)Affidavit of husband filed 27 July 2022;
(3)Affidavit of husband filed 14 September 2021 as to paragraphs 19 and 20 only;
(4)Financial Statement filed 28 July 2022; and
(5)Case Outline document.
The second and third respondents relied upon the following documents:
(6)Response filed 20 May 2022;
(7)Affidavit of Mr AE filed 21 June 2022;
(8)Justice Altobelli’s judgment of Zha & Wun [2022] FedCFamC1F 274 delivered 29 April 2022; and
(9)Case Outline document.
Background
Some background to the proceedings is necessary to put in context the orders that the parties seek.
The parties commenced cohabitation according to the wife in 2009 and in 2011 according to the husband. The parties were married in 2012. The parties apparently agree that they separated in 2018. There are no children of the relationship.
The husband is aged 49 years and the wife is aged 38 years.
The wife contends that the husband is the owner of a business empire having a value in excess of $100 million. Much of the trading enterprise is said by her to be held by the second and third respondents for the husband.
There have been proceedings between the parties in Country AD and a judgment in the wife’s favour for $6 million in China, which is subject to an appeal.
On 7 July 2020, Henderson J made orders ex parte restraining the husband from selling, mortgaging, assigning or disposing of various pieces of real estate. Her Honour’s orders included:
7.Pursuant to section 114 of the Family Law Act 1975 (Cth) and until further Order, the Husband be restrained by injunction from selling, mortgaging, assigning, disposing, alienating or further encumbering any and all real properties within and outside of Australia held in his sole name or jointly with any other person or entity, including but not limited to the following properties situate at and known as:
a.C Street, Suburb D in the State of New South Wales (folio identifier …);
b.E Street, Suburb F in the State of New South Wales (with folio identifier …);
c.G Street, Suburb H in the State of New South Wales (folio identifier …);
d.J Street, Suburb K, in the State of New South Wales (folio identifier …);
e.L Street, Suburb M in the State of New South Wales (folio identifier …);
f.L Street, Suburb M in the State of New South Wales (folio identifier …);
g.L Street, Suburb M in the State of New South Wales (folio identifier …); and
h.Any other properties held by the Husband, either solely or jointly with any other persons or entities.
…
12.Pending further order, the Wife shall be solely entitled to the rental income from C Street, Suburb D in the State of New South Wales (with folio identifier …).
The matter next came before the Court on 17 August 2020. On that occasion, the husband was represented by counsel and orders were made by consent in relation to disclosure issues and in particular the following orders were made:
9.The injunctive Orders of Justice Henderson dated 7 July 2020 are varied to enable the completion of the purchase of the Suburb NN property by GG Pty Ltd as set out at page 66 of the wife’s tender bundle annexed to her Affidavit filed 30 June 2020, requiring the sum of no less than $594,271 to complete.
10.Additionally, the injunctive Orders of 7 July 2020 are varied to permit the husband to discharge the arrears and/or if necessary and required by the bank, the entirety of the mortgage currently in respect of the property in Suburb M as set out at page 75 of the wife’s tender bundle annexed to her Affidavit filed 30 June 2020.
THE COURT NOTES THAT
1. The issues left to be determined on an interim basis relate to:
•The husband’s application that the injunctive Orders made on 7 July 2020 be dismissed;
•The wife’s application for interim costs;
•The argument raised by the husband that either the proceedings commenced by the wife in Australia be stayed pending the completion of the proceedings in China, or that Australia is a wholly inappropriate forum to determine the property issues as between the parties.
2.The estimated hearing length for the interim costs application and the discharge of the injunctions is one day, and the husband’s forum argument is an additional day.
3.The hearing will proceed by way of Microsoft Teams unless otherwise directed.
The matter was next before the Court on 14 October 2020. On that occasion the husband was again represented by counsel and various interlocutory orders were made this time by Watts J and included an order as follows:
16.I note part of what the husband wishes dealt with on the next occasion is order 2 sought in his interim response filed 17 August 2020, namely, that the ex parte orders made 7 July 2020 be set aside.
On 25 January 2021, Watts J made orders by consent granting the wife exclusive occupation of the Suburb K property and made orders varying the ex parte orders made by Henderson J as follows:
3.That the injunctive Orders made by Justice Henderson of the Family Court of Australia dated 7 July 2020 be varied to enable the following expenses to be paid from the National Australia Bank home loan offset account #84 or any other account from any banks as agreed upon by the parties:-
3.1All monthly mortgage repayments, outgoings, government charges, insurance premiums and utility bills including but not limited to electricity, gas, water, sewerage and garbage disposal, internet, phone services, cleaning etc., for the following properties: -
3.1.1C Street, Suburb D in the State of New South Wales (with folio identifier …);
3.1.2E Street, Suburb F in the State of New South Wales (with folio identifier …);
3.1.3G Street, Suburb H in the State of New South Wales (with folio identifier …);
3.1.4J Street, Suburb K in the State of New South Wales (with folio identifier …) and the attached car space; and
3.1.5L Street, Suburb M in the State of New South Wales (with folio identifier …).
3.2Land Tax in the sum of $112,744.21 (pursuant to notice issued by Revenue NSW dated 18 November 2020) or any other or further amount as advised by Revenue NSW.
4. For the purpose of order 3 herein:
4.1 the parties shall do all acts and things and sign all documents necessary to provide the necessary authority to the National Australian Bank or any other bank as agreed between the parties; and
4.2leave be granted to the parties to serve a sealed copy of these Orders to the National Australia Bank or any other bank as agreed between the parties.
On 19 March 2021, Watts J made further orders dismissing an application of the husband that the ex parte orders made 7 July 2020 be dismissed. His Honour specifically made orders, including:
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 Min the State of New South Wales (with folio identifier …);
(iii)MM Street, Suburb NN (with folio identifier …);
(iv)PP Street, City R;
(v)QQ Street, City SS; and
(vi)RR Street, Suburb TT, City VV.
Relevantly, for the purposes of the relief the husband currently seeks, no appeal was lodged as against Order 3.
On 1 February 2022, Altobelli J heard a Review Application filed by the second and third respondents and made various orders. Relevantly, for the purposes of the relief sought against the second and third respondents, his Honour did not dismiss Henderson J’s orders as to disclosure.
It is convenient to deal first with the orders as sought by the husband because, if made, they could render otiose much of the wife’s relief.
Relief sought by husband
The husband seeks orders for the sale of three pieces of real estate in New South Wales. From the proceeds of sale of the real estate he sought that the mortgages be discharged, that there be a payment to a Mr T of approximately $498,000, that there be a payment to the husband of $400,000 by way of interim costs or partial property order and that the balance be invested in an interest-bearing deposit account.
The husband contended that he needs funds to pay his legal fees, that the mortgages and outgoings on the properties are not being met, and that the various mortgagees will act to protect their security. He asserts arrears under mortgages of at least $182,000 and unpaid legal fees of nearly $349,000.
The husband contended that a payment to him of $400,000 would not defeat the wife’s claim on a final basis in circumstances where the pool of assets was said by her to be in excess of $100 million.
The husband as a consequence of the relief he seeks sought orders discharging the consent orders made by Watts J on 25 January 2021 and 19 March 2021 dealing with the property the subject of the ex parte application the consequence of which would be that the wife would no longer receive the benefit of the rental income from those properties.
The husband’s counsel contended in his Case Outline as follows:
3.4 To the extent that this state of affairs is the consequence of court order, it appears they were never the subject of contest. However there is no reasoned basis for the state of affairs to continue.
3.5 The most logical way through this is to permit the Husband to sell the properties that he wishes on the condition that he pay down any matrimonial debt and that any net residue to be preserved in an interest bearing account. This will necessarily require the Court to discharge or vary the injunction orders made at Order 7,8 and 12 of the ex parte orders made in July 2020.
3.6 Otherwise the husband seeks:
(a) $400,000 be paid to him to fund his legal costs or otherwise provide some immediate liquidity; and
(b) $497,971.69 to be paid to Mr T in repayment of a loan.
In the course of his counsel’s submissions, he indicated that he would not seek repayment at this stage of the loan said to have been advanced by Mr T. The other relief was sought alternatively under s 79 or 117(2) of the Family Law Act 1975 (Cth) (“the Act”).
The jurisprudence on the circumstances in which the Court can make an order for what is colloquially called interim property is well settled. The authority to make such an order is found through a combination of s 79 and s 80(1)(h) of the Act. Section 79 is the source of power, while s 80 enables the making of the order.
The Court must initially be satisfied that it is appropriate to make an order; and that it is it in the interests of justice to make an order. If so, then has a case been established for the making of a s 79 order. An exhaustive assessment of the s 79 considerations is not required.
In Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”), the Full Court observed:
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.
In Medlow& Medlow (2016) FLC 93-692, the Full Court observed:
86.The onus was clearly upon the husband to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife's property claims. The onus was not on the wife to adduce such evidence.
Therefore, the authorities establish that the Court should consider the following in making an interim property order:
(a)The Court should act conservatively.
(b)Is it in the interests of justice to make an order?
(c)Is a case established to make a s 79 order? A detailed assessment of the s 79 considerations is not required.
(d)Are there sufficient assets available for an interim distribution? However, it is not necessary to point to an immediate fund.
(e)The categories of cases in which an order will be made are not closed and are not limited solely to costs.
(f)Is the order capable of being reversed or taken into account at the final hearing?
(g)Albeit that the matter can be determined pursuant to a particular section of the Act, the ultimate categorisation of the amount to be paid can be left to the final trial judge.
The husband alternatively pressed his application under s 117(2).
In Strahan, the Full Court in the context of s 117(2) observed:
95.The next issue is whether, if an order is made under s 117(2) of the Act, it is also necessary for the Court to consider whether in the circumstances it will be possible to take into account in the final property proceedings any sum that might be payable under the order. In Zschokke at 83,217 the Full Court said that given it had accepted that an order or direction be made:
that the sums to be paid pursuant to the interim costs order should be taken into account (or at least had regard to) in the final determination of the property proceedings between the parties, it may well be necessary for the Court in deciding whether to make the interim order or an order for security under s 117(2) to consider whether in the circumstances of the case, it will be possible to take into account in the final property proceedings any sum that might be payable under the interim order (or the order for security).
The Full Court at 83,221 went on to say, “[h]owever, 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”.
96.In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:
•an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;
•there should be evidence of the applicant’s “likely costs of the litigation”: see Wilson and Chester;
•“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis: Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes (1995) FLC 92-558 per Cohen J;
•an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”;
•an order can be made “in respect of costs already incurred as well as of future costs”;
•“whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its’ quantum”;
•“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant's solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs”: Breen.
We observe that Brereton J at [33] also said that “many of the foregoing considerations [he described] are less important, though not necessarily irrelevant, where what is relied on as a source of power” is an interim property order under s 79 and s 80(1)(h).
While in Salvage & Fosse (2020) FLC 93-966, the Full Court observed:
7.The introduction of s 79 of the Act, followed by s 90SM and, the acceptance of the making of appropriate orders dealing with only part of the property in advance of the final hearing, saw these sections relied upon to support orders for the transfer of funds for the purpose of paying legal fees to be incurred in those proceedings. Where there are assets which will be divided between the parties but which are held by only one party, this is an obvious and principled approach because, it permits each party to deal with the property that he or she will receive as a result of the division of property as they see fit, including for the payment of legal fees. It recognises the inherent unfairness of a party being able to marshal all of the assets to prosecute their claim and leaving the other party to fend for themselves without that benefit.
8.… 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.
9.Such a concession merely accepts a now long-held and unimpeachable jurisprudence.
11.The considerations that apply to applications under s 79 and s 90SM and, s 117 of the Act, are quite different and some care must be taken in identifying the relevant principles that apply to each (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 ("Strahan") at [84]).
14.The critical question therefore is whether the applicant has "any real prospects of obtaining justice unless the order sought is made" (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant's case and the effect of the order upon the respondent.
15.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. This conclusion accords with Zschokke at FLC 83,217, where the Full Court said:
… We agree that, as was submitted by [c]ounsel for the wife, the requirement of justice (which was expressly drawn to attention by the Full Court in Hogan and also implied by Brennan J in Breen) must remain a "basic" condition in the making of an order of the type in question under s 117(2). (See also Strahan at [124]).
16.In this matter, the respondent faced the task of persuading not only the primary judge that she had a claim to set aside the Cohabitation Agreement of sufficient merit to justify an interim costs order but also that her subsequent property application was of sufficient merit and value to justify that course. There would be no point in providing funding to pursue a case to set aside the Cohabitation Agreement, unless the Court was satisfied that the respondent would be likely to receive a property settlement of such value as to justify that course.
17.The position is somewhat analogous to an application for leave to commence property proceedings out of time pursuant to s 44(3) (or s 44(6)) of the Act. In such proceedings, the Court looks at, amongst other things, the likely costs of the proceedings and the probable range of results. If the costs of the proceedings do not justify the likely return and would not have the effect of alleviating the applicant's hardship, then leave will not be granted (Gadzen & Simkin (2018) FLC 93-871 at [35]-[37]).
The authorities appear to me to establish the following for the making of order pursuant to s 117(2):
·The making of the order should satisfy the requirement of being just.
·The applicant for relief should have an arguable case. Therefore, there should be some assessment of the strengths of the case. Is the case sufficient to warrant an award for costs?
·There should be some evidence of the costs of the litigation.
·The amount ordered can cover not only existing but also future costs.
·The concept of reversibility or the capacity to take the amount into account is not fatal to the making of the order.
·There does not need to be evidence that the lawyers will not act if the funds are not paid.
·Consideration of the matters in s 117(2) of the Act.
These are interlocutory proceedings and I am unable to make findings of fact in relation to the various competing assertions between these parties, which are many.
As stated earlier, Watts J made orders by consent on 25 January 2021 dealing with the various properties and on 19 March 2021 dismissed the husband’s application that the ex parte orders be set aside.
In his judgment of Zha & Wun [2021] FamCA 143, referenced in the husband’s Case Outline, his Honour said:
133 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.
No appeal was lodged against that decision.
The husband seeks to vary a longstanding position created as a consequence of a consent order between he and the wife.
In Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 (“Adam P Brown Male Fashions Pty Ltd”) at 178, their Honours in the High Court stated:
Just as an interlocutory injunction continues “until further order”, so must an interlocutory order based on an undertaking. A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust: cf. Woods v. Sheriff of Queensland; Hutchinson v. Nominal Defendant; Chanel Ltd. v. F. W Woolworth & Co. Ltd. Of course, the changed circumstances must be established by evidence: Cutler v. Wandsworth Stadium Ltd.
(Footnotes omitted)
The husband has not established before me a change of circumstances sufficient for the Court to intervene. As McClelland DCJ observed in Shamon & Shamon [2021] FamCA 417 in referencing Adam P Brown Male Fashions Pty Ltd:
96.… The High Court in that decision applied Cutler v Wandsworth Stadium Limited [1945] 1 All ER 103 in confirming that the onus rests on the person seeking to vary the consent or interim order to establish those changed circumstances.
The only change in circumstances that would appear to arise is the mortgage arrears and a liability for legal fees. The loan to Mr T was not sought to be repaid at present.
The husband contends that he has not been able to meet the mortgage payments and meet the other expenses as he is living in China and has not been able to travel to Australia. In that respect, the husband gave evidence in his affidavit to the following effect:
33. I have been informed by my solicitors and verily believe that:
a. given the freezing orders made in the proceeding, NAB required both Ms Zha and I to attend a branch of the NAB in order to authorise payments from my NAB account, which is subject to freezing orders of this Honourable Court;
b. as I am based in China and unable to attend any NAB branch as required in the current pandemic environment, NAB required a power of attorney from me to authorise a third party to attend the branch on my behalf; and
c. NAB also required, in advance, written statements and documents evidencing any amount to be paid in compliance with the Orders for its review.
34. I instructed my solicitor, Mr AF, who has been appointed as my attorney to liaise with the mortgagee banks to confirm mortgage repayment amounts in arrear, and enquire if they could issue loan statements via email to my solicitors. As stated above, one of the implications of the freezing order is that my mortgages ran into default, as the mortgagee could not direct debit the repayments from my accounts as they are frozen. This has resulted in additional costs and expenses and hardships for me, and threats of foreclosure and legal actions from the banks.
35. Due to the fact that mortgage payments are due and payable monthly and periodically, I have incurred significant additional costs for my solicitors to engage in regular correspondence with Ms Zha’s solicitors and telephone calls with each of the mortgagee banks with respect to assessing what needs to be paid and whether there are sufficient funds to pay for them.
The husband has chosen to call no evidence from his solicitor as to what his solicitor has actually done to implement an appropriate process and/or procedure that would ensure compliance with the orders. It was entirely within the husband’s domain and control to have his solicitor give that evidence and he has chosen not to.
The husband’s counsel frankly conceded that he could not contend that all of the husband’s property, asserted by him to have a value of $40 million in his Financial Statement, was injuncted but contended that his access to liquidity was constrained. In fairness to counsel for the husband, such a submission does not assist in determining whether or not the husband actually has a need for $400,000 as against the consensual position that the husband entered into providing that the wife receive the rental income from the very properties that he now seeks to sell.
As to the husband’s asserted liquidity problems, the wife’s counsel made reference to paragraphs in her affidavit to the following effect:
78. I say that Mr Wun has control of significant funds, particularly in China and other jurisdictions outside of Australia. He is at liberty to divert these funds at his discretion, whilst continue to fail to provide full and frank disclosure in the Australian proceedings and take steps to allow mortgages and outgoings relating to properties in Australia to be in arrears. Bank statements disclosed by Mr Wun in the proceedings in China show the following:
(a) Mr Wun received payments totalling RMB 5,102,413.00 (approximately AUD $1,020,000) from [AG Co. Ltd] during the period July 2020 to December 2020 (6-month period);
(b) Between 9 July 2020 to 22 July 2020 (13 days), Mr Wun received payments totalling approximately RMB 36,540,000 (approximately AUD$7,595,000) and described as "Equity transfer payment" from [AH (Partnership) (AH)], a company in which Mr Wun is a 1% shareholder. Mr Wun and Mr A Wun’s mother, Ms AI is the other 99% shareholder. In the proceedings in China, Ms AI’s asserts that her shares are held beneficially for Mr A Wun. I say that Ms AI holds her shares beneficially for Mr Wun and that Mr Wun controls AH;
(c) During the period from 9 July 2020 to 28 December 2021:
(i) Mr Wun transferred to Ms AI a total of approximately RMB 7,552,293 (approximately AUD $1,567,405).
(ii) Ms AI transferred to Mr Wun a total of approximately RMB 26,803,793 (approximately AUD$5,564,700)
(iii) Mr Wun transferred to Mr A Wun the sum of approximately RMB 66,187,293 (approximately AUD$13,738,926 AUD). Most of these transfers to Mr A Wun came immediately following the receipt of funds from third parties including [AG Co. Ltd], AH or Ms AI.
79. Over a 5-day period from 23 December 2021 to 28 December 2021, Mr Wun received transfers from Ms AI totalling approximately RMB 21,399,793 (approximately AUD $4,445,014).
(a) One of these payments was for RMB 4,000,000 which was received on 24 December 2021 and transferred that same day to AH.
(b) A total of RMB 16,494,293 (approximately AUD $3,424,193) was transferred to Mr A Wun over the same period of 5 days.
I am not satisfied in light of the wife’s evidence that the position as found by Watts J in March 2021 has changed.
The husband bears the onus to establish that there are circumstances that are sufficient to warrant reconsideration of the order. He has not established those circumstances before me.
I am not satisfied that it is in the interests of justice to make the order the husband seeks. I dismiss the husband's application.
Relief sought by the wife
The wife sought orders that she be reimbursed funds totalling approximately $43,000 as well as monies that were said to be outstanding from the rental of a property in City R, which she said totalled some $221,000. The wife contended that these monies as well as outstanding land tax and mortgage arrears should be paid from funds in various bank accounts, which the wife contended had a balance of approximately $1.158 million.
The fact remains that expenses have been incurred and that land tax and mortgage arrears are currently outstanding. The wife is entitled to the benefit of the rents in relation to these properties and, in circumstances where the husband contends that mortgagees are seeking to move against the properties, then the wife’s position under the orders need to be protected.
In circumstances where land tax and mortgage arrears have to be met, the process proposed by the wife to meet those expenses seems sensible. It was not suggested otherwise by the husband’s counsel.
No challenge was made to the wife’s contention that there is owed approximately $43,000 by way of outstanding expenses. I will order that to be paid.
In relation to the rental income for the City R property, the wife’s entitlement to that rental income arises as a consequence of the orders made on 19 March 2021. The wife contends in her affidavit the following:
49. The total amount of unpaid rent to me for the period from 16 February 2021 to date (around 67 weeks) is $221,100. I seek that Mr Wun make this outstanding payment to me, which I should have received, pursuant to Orders made by this Honourable Court.
I am not satisfied that the wife’s entitlement to the unpaid rent dates back to 16 February 2021 in circumstances where the order was not made until 19 March 2021. The husband’s evidence is as follows:
52. I refer to paragraphs [50] and [53] of Ms Zha 's affidavit affirmed 2 June 2022 where she deposed that the rental for the PP Street property, in the sum of CNY 396,000, was paid to me on 15 February 2021, and that by receiving the rent, I had breached Order 4 of the Orders made on 19 March 2021. I deny that I breached the Orders made on 19 March 2022 as I did not know in February 2021 that those Orders would be made until a month after in March 2021.
53. Following the making of the Orders on 19 March 2021, I did not and have not contacted the tenant in relation to the rental payments. I have not received rental from the tenant after the payment of CNY 396,000 in February 2021 that is referred to at paragraph 50 of Ms Zha’s affidavit, and I have not prevented nor taken any step to prevent Ms Zha from receiving the rental income of the PP Street property. As she had done so previously, I understood that Ms Zha would take the steps that she sees fit to collect the rental from the tenant.
In the absence of cross-examination and the ability to make findings on disputed facts, I am unable to determine the conflict that arises as between the husband and the wife. In those circumstances, therefore, and where it would appear that the rent was paid six months in advance, then on one view of it, the husband has not acted contrary to the orders made 15 March 2021. This is a matter that can be pursued at a final hearing.
Be that as it may, certainly from about 15 August 2021, the wife was entitled to the rent. Her unchallenged evidence is that she has not received any rent. It is agreed that the rent is approximately $3,300 per week. Accordingly, doing the best I can on the disputed evidence, I determine that the wife is entitled to a sum by way of arrears of rental income for 12 months up to 15 August 2022 for the City R property at $3,300 per week, being a sum of $171,600. The ongoing amount of $3,300 can be met from the same bank account.
Accordingly, I will make an order to give effect to that.
The wife otherwise sought to rent a property at Suburb K. The husband opposed this relief saying:
67. … I do not consent to Ms Zha renting out the Suburb K Property. I am concerned that renting it out may decrease the value of the property, including that it may be damaged by tenants.
There is no evidence to support this speculated assertion.
The wife has the benefit of occupation of that property pursuant to Order 1 of the orders dated 25 January 2021. The wife seeks to rent the property and retain the rental income.
In circumstances where the husband sought a sale of the property, it seems that there is no proper objection to the wife continuing to have use of the property in the manner in which she sees fit.
Accordingly, I will make that order as well.
Orders as sought against the second and third respondents
The wife seeks orders that the second and third respondents comply with consent orders made by Henderson J on 17 August 2020, namely, that the second and third respondents comply with their obligations of disclosure as required by the then r 13.04 of the Family Law Rules 2004 (Cth) (now r 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”)).
Despite that order being made, it would appear that the second and third respondents have not complied with the order. On 1 February 2022, the matter came before Altobelli J on a Review Application filed by the second and third respondents who sought to review orders made by a senior judicial registrar on 16 November 2021. The application did not seek any relief dealing with the orders made by Henderson J. The Review before his Honour principally related to a contention that the wife should file a Points of Claim document to enable the second and third respondents to properly understand the claims that were being agitated against them. His Honour recoded the assertions as made by the second and third respondents in his judgment of Zha & Wun [2022] FedCFamC1F 274 as follows:
13.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.
In relation to the orders previously made by Henderson J, Altobelli J recorded the following:
21On 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 second and third respondents argument is neatly encapsulated in their Case Outline as follows:
1. In relation to the Disclosure Issue, the Second and Third Respondents have provided two tranches of disclosure to the Applicant Wife pursuant to the regime ordered by the Court (Justice Altobelli) on 29 April 2022. Those Orders were made in his Honour’s judgment of the same date: Zha & Wun [2022] FedCFamC1F 274. The effect of the Judgment and operation of the Orders necessarily varied and superseded the earlier disclosure Orders made by Henderson J on 13 August 2020 (ordering general disclosure) which are no longer operative. …
Before me it was contended by the second and third respondents that a proper reading of his Honour’s judgment and orders must necessarily lead to the conclusion that his Honour’s orders supplanted the orders made by Henderson J for the second and third respondents to comply with their obligations of disclosure under the then r 13.04 (now r 6.06 of the Rules). Counsel who appeared for the second and third respondents took the Court through the various paragraphs in his Honour’s judgment and parts of the transcript submitting that his Honour was asked, if not at least implicitly, to discharge Henderson J’s order.
Queen’s Counsel for the wife contended that the submission advanced by the second and third respondents was not available upon a proper construction of his Honour’s judgment. He contended that had his Honour intended to discharge Henderson J’s order, he would have done so. He further submitted that it was not suggested by counsel for the second and third respondents that the documents, the subject of the order for disclosure, do not exist, nor was it contended that there had ever been filed an application seeking a discharge of Henderson J’s order.
I agree with the submissions of Queen’s Counsel for the wife. It is quite clear, on a reading of Altobelli J’s judgment, that his Honour was conscious of the order that Henderson J had made. His Honour specifically referred to it in the course of his judgment and was taken to it by counsel for the second and third respondents during the course of submissions. Had his Honour (an experienced trial judge) intended to discharge Henderson J’s order then, in my view, he would have done so. Reading his Honour’s judgment and the orders that his Honour made as whole does not lead to the conclusion that his Honour’s orders could be construed as supplanting Henderson J’s order. I will extend the time for compliance with her Honour’s order by 28 days.
Joinder of the fourth respondent
The putative fourth respondent is a company of which the second respondent is the sole director and shareholder. The wife, by way of Points of Claim, contends that the second respondent holds the shares in the fourth respondent in name only and for the benefit of the husband.
As Hartnett J stated in Kachmar & Madero [2022] FedCFamC1F 476:
3.Section 79(10)(b) of the Family Law Act 1975 (Cth) (“the Act”) outlines that “any other person whose interests would be affected by the making of the order”, as sought by the parties, are entitled to be joined to the proceeding.
4.The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Family Law Rules”) sets out the procedure for the joinder of a party to the proceeding. Rule 3.01 states that:
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
5.The word “necessary” was described by Warnick J in Wayne & Dillon & Anor [2008] FamCAFC 204, (I note in reference to Federal Magistrates Court Rules, as they were then, which are similar to the current rules), as meaning:
...something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute.”
6.Pursuant to r 3.03(4) of the Family Law Rules, a party who seeks to join a third party to the proceeding after the first court date must be granted the leave of the Court to do so. The party must also, pursuant to r 3.03(5):
(a) file:
(i) an Application in a Proceeding; and
(ii)an affidavit setting out the facts relied on to support the addition of the proposed new party, including a statement of the proposed new party’s relationship (if any) to the other parties; and
(b) serve on the proposed new party:
(i) a copy of the Application in a Proceeding; and
(ii) the affidavit referred to in subparagraph (a)(ii); and
(iii) any other relevant document filed in the proceeding; and
(c) serve on the other parties:
(i)a copy of the Application in a Proceeding; and
(ii)the affidavit referred to in subparagraph (a)(ii).
The wife contends that the husband established a company in Country WW for the purposes of receiving income from his business ventures, which is said to be the putative fourth respondent. The wife contends that the husband selected the Country WW as the jurisdiction in which to establish the business and that the name ‘AB’ was his nickname at high school. The wife asserts that the registered office for the company in City R is a property held as to 50% by the husband, that the husband has opened a number of bank accounts in the name of the fourth respondent, that the husband has identified himself as being self-employed by the fourth respondent and has directed monies said to be owed to him to be paid into bank accounts of the fourth respondent.
The wife by way of Points of Claim contends that an express trust exists between the husband and the second respondent, alternatively a resulting or constructive trust and/or in the alternative that the second respondent’s holding of the shares in the fourth respondent is a sham. The wife seeks a declaration in her final relief that the shares held by the second respondent in the fourth respondent are held on trust for the husband.
I accept, notwithstanding the proceedings have been on foot for two years that they remain still very much at a preliminary stage and that it is assumed that there will be changes and variations to the final relief sought by each party as the litigation progresses.
I am satisfied that it is necessary that the fourth respondent be joined as a party to the proceedings.
I will make orders to that effect.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 10 August 2022
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