Zha & Wun (No 4)
[2023] FedCFamC1F 830
•28 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zha & Wun (No 4) [2023] FedCFamC1F 830
File number(s): SYC 4269 of 2020 Judgment of: SCHONELL J Date of judgment: 28 September 2023 Catchwords: FAMILY LAW – INJUNCTIONS – Where the respondents sought to set aside ex parte injunctions made against bank accounts in Country AD – Consideration of who bore the onus in circumstances where there was a delay in the respondents’ bringing the application – Where the wife bears the onus as the moving party seeking the injunctions – Where the wife asserts that the asset pool is $897 million – Where the funds injuncted in Country AD total approximately $22 million – Where the respondents contended that the final relief sought by the wife is not imperilled as the funds account for about 2.6 per cent of the asserted asset pool – Where the submission is superficially simple in that it does not consider the wife’s capacity to recover any judgment sum in circumstances where the vast majority of the asserted assets are overseas – Where a judgment can be enforced in Country AD – Where the balance of convenience favours the continuation or granting of the injunctions – Where the Court is satisfied that the wife’s undertaking as to damages is sufficient – Where the Court is not satisfied that the wife failed in her obligations in seeking the ex parte injunctions – Application dismissed. Legislation: Family Law Act 1975 (Cth) s 114
Federal Circuit and Family Court of Australia Act 1975 (Cth) s 8
Cases cited: Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170; [1981] HCA 39
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856; [1999] FamCA 745
Comino v Kremetis (2023) 110 NSWLR 224; [2023] NSWSC 32
Hislop v Paltar Petroleum Ltd (No 2) (2017) 122 ACSR 358; [2017] FCA 1213
Re Idoport Pty Ltd (in liq) (2011) 83 ACSR 164; [2011] NSWSC 322
Re Sinanovic’s Application (2001) 80 ALR 448; [2001] HCA 40
Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730
Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436; [2004] NSWCA 195
Shamon & Shamon [2021] FamCA 417
Sieling and Sieling (1979) FLC 90-627; [1979] FamCA 23
Southern Equities Corp Ltd (in liq), Re; Bond & Caboche v England (1997) 25 ACSR 394
Sutherland v Pascoe (No 2) (2012) 297 ALR 328; [2012] FCA 1361
Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; [1912] HCA 72
Tsiang & Wu and Ors (2019) FLC 93-911; [2019] FamCAFC 128
Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955
Zha & Wun (No 2) [2022] FedCFamC1F 576
Zha & Wun [2021] FamCA 14
Zha & Wun [2022] FedCFamC1F 274
Division: Division 1 First Instance Number of paragraphs: 90 Date of hearing: 20 September 2023 Place: Sydney Counsel for the Applicant: Mr Richardson SC with Mr Reynolds Solicitor for the Applicant: Pickering Pendleton Solicitor for the First Respondent: Barkus Doolan Winning (did not participate) Counsel for the Second to Fourth Respondents: Ms Painter SC with Mr Turnbull Solicitor for the Second to Fourth 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 (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
28 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed 18 July 2023 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:
Presently before the Court is a further interlocutory application that is part of wider financial proceedings between the applicant wife (“the wife”), the respondent husband (“the husband”), the husband’s brother (“the second respondent”), his wife (“the third respondent”) and AB Pty Ltd, the fourth respondent.
The parties have since June 2020 been involved in complex litigation not just in this Court but also in courts in Country AD and China. The matter has been allocated final hearing dates for three weeks commencing 8 July 2024.
By Application in a Proceeding filed 18 July 2023, the second and third respondents and AB Pty Ltd (collectively “the respondents”) seek orders dismissing ex parte orders made by a senior judicial registrar on 10 March 2023. The application is opposed by the wife. The husband seeks to not be heard on the application.
The respondents relied upon the following documents:
(1)Application in a Proceeding filed 18 July 2023;
(2)Affidavit of second respondent filed 18 July 2023;
(3)Affidavit of third respondent filed 11 July 2023;
(4)Affidavit of Ms AJ filed 19 September 2023;
(5)Financial Statement of husband filed 29 July 2022;
(6)Transcript of proceedings on 10 March 2023; and
(7)Case Outline document filed 9 August 2023.
The wife for her part relied upon:
(1)Response to Application in a Proceeding filed 9 August 2023;
(2)Further Further Further Amended Initiating Application filed 25 May 2023.
(3)Affidavit of wife filed 24 February 2023;
(4)Affidavit of wife filed 9 August 2023;
(5)Affidavit of wife filed 18 September 2023;
(6)Case Outline document filed 20 March 2023;
(7)Case Outline document filed 9 August 2023;
(8)Judgment of Zha & Wun [2021] FamCA 143 delivered by Watts J on 19 February 2021;
(9)Judgment of Zha & Wun [2022] FedCFamC1F 274 delivered by Altobelli J on 29 April 2022;
(10)Judgment of Zha & Wun (No 2) [2022] FedCFamC1F 576 delivered by me on 10 August 2022; and
(11)Orders made on 10 March 2023 and 9 June 2023.
BACKGROUND
To put in context the orders sought, some background is necessary.
The wife was born in 1984 and is currently 39 years of age.
The husband was born in 1972 and is currently 51 years of age.
AB Pty Ltd was incorporated in 2005. The second respondent is the sole director and shareholder of the company.
The parties commenced cohabitation in either 2009, 2010 or 2011, married in 2012 and separated on a final basis in 2018. There are no children of the relationship.
It is the wife’s position that the pool of assets for division is approximately AUD$897 million. She contends that AB Pty Ltd is held on trust for the husband, is his alter ego or that it is a sham.
The respondents submit that the husband asserts that the net pool of assets is valued at approximately AUD$22.5 million.
On 30 June 2020, the wife commenced proceedings in the Family Court of Australia (as it then was) seeking property orders against the husband and the second and third respondents.
In mid-2020, proceedings were commenced in China between the husband and the wife.
The following month, the wife commenced proceedings in Country AD seeking orders against the husband and the second respondent. AB Pty Ltd was subsequently joined to those proceedings.
In early 2022, final reasons for judgment were delivered in the Chinese proceedings in respect of the properties held by the husband and wife in China. Both the husband and the wife appealed the decision, but the appeals were subsequently withdrawn.
Orders in the Chinese proceedings compel the husband to pay to the wife approximately $5,400,000. Part of that amount has been paid to the wife.
On 2 August 2022, in response to an application filed by the wife, the second respondent filed an undertaking with the Court that he would not deal with his interest in AB Pty Ltd without first providing written notice to the wife.
On 10 August 2022, AB Pty Ltd was joined to the proceedings in this Court.
On 10 March 2023, a senior judicial registrar made ex parte injunctive orders against the second respondent and AB Pty Ltd in relation to various Country AD bank accounts. The wife’s position is that the funds in those bank accounts are matrimonial assets of the parties and thus ought to be available for division between the parties.
Order 14 provided that “[l]eave is granted to the [s]econd, [t]hird and [f]ourth [r]espondents to relist the matter on 48 hours’ notice”.
In early 2023, similar ex parte injunctive orders were made by a court in Country AD.
In mid-2023, the second respondent filed an application in Country AD to discharge the injunctive orders.
On 18 July 2023, an application was filed in these proceedings to discharge the ex parte injunctive orders.
In mid-2023, the Country AD Court discharged the injunctions.
On 29 August 2023, the wife filed a Summons seeking a stay of the orders discharging the injunctions and filed an appeal against those orders. A stay was subsequently granted.
The wife contends that on 12 September 2023, the husband made a partial payment of the sum ordered to be paid to her by the Chinese Court. The wife asserts that the husband is in breach of those orders and currently owes her approximately AUD$4.12 million. She says that she has consequently commenced enforcement proceedings against the husband in China.
BRIEF OVERVIEW OF SUBMISSIONS
Each of the parties’ respective senior counsel by the terms of their case outlines and submissions contended that the other carried the onus on the application. On the part of the respondents, it was contended that the wife, the moving party on the ex parte injunctions, was required to persuade the Court that the orders made in their absence should be continued. It was contended by them that the respondents carried no onus.
Senior counsel for the respondents submitted that there are several factors to militate against the continuance of the injunctions, namely:
(1)That the wife had deliberately failed to disclose various matters at the hearing of the ex parte injunctions;
(2)The overall weakness of the wife’s case against the respondents;
(3)That where the wife by her final relief seeks a cash payment of $25 million and the transfer of various parcels of real property in a pool of assets asserted by her to be $897 million, then the injunctions against the bank accounts holding approximately $22 million are unnecessary as they do not imperil her final relief;
(4)The asserted prejudice occasioned to the respondents by the injunctions; and
(5)The inadequacy of the wife’s undertaking as to damages.
Senior counsel for the wife contended that the considerable delay in the bringing of the application, the actual form of the order made by the senior judicial registrar and the orders as sought by the respondents were such that the onus fell to the respondents to demonstrate a change of circumstances sufficient to warrant the discharge of the injunctions.
Her senior counsel further submitted, contrary to the submissions of the respondent, that:
(1)The wife had not failed in her duty of disclosure to the senior judicial registrar,
(2)She had an arguable case for final relief;
(3)Despite the quantum of the asserted pool, the capacity of the wife to enforce any judgment she received meant that a failure to grant the injunctions imperilled her final application; and
(4)The respondents’ asserted prejudice was not made out.
Notwithstanding the respective divergent approaches on onus, the actual way the evidence was presented and the submissions marshalled by each senior counsel tended to blur the distinction on onus, and each largely argued their respective cases not so much from the position of onus but rather on traditional injunction principles.
For the reasons set out below, I am satisfied that the wife did carry the onus to satisfy the Court that the orders that had been made ex parte should either continue or be made afresh (a distinction without difference once the onus is recognised) following an opportunity for the unheard party to be heard.
I am also satisfied that the wife did not fail in her duty of disclosure and that, having regard to all the matters required to be considered in the granting of an interlocutory injunction, the orders as made by the senior judicial registrar go no further than is necessary to protect the wife’s position and that it is proper that they be continued.
APPLICABLE LAW
The circumstances in which this Court will grant an injunction are well settled.
Section 114 of the Family Law Act 1975 (Cth) (“the Act”) provides the Court power to grant injunctions.
In Tsiang & Wu and Ors (2019) FLC 93-911, the Full Court summarised the relevant law in relation to injunctions in the following terms:
20.The grant of an injunction is discretionary and the basis on which such an order is made is well established. A purpose, as in this case, is to preserve the status quo pending resolution of the controversy. An applicant must demonstrate first that there is a serious issue to be tried. While that statement has been the subject of various iterations, in essence it requires the demonstration of an arguable case or as was said in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
21.Next the applicant must demonstrate that the balance of convenience favours making the order sought. As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant.
22.In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:
… as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
...
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.
23.As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:
24.The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
24.In this case the identified risk was that the wife might dispose of assets in Australia and in her name in order to defeat the husband’s claim and, equally it was asserted that there was a risk that the second and third respondents too might deal with the partnership assets in a way so as to defeat the husband’s possible judgment or claim to that entity.
25.It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence.
26.Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).
27.As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:
119.The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. …
(Footnotes omitted)
The obligation cast on any party seeking ex parte relief was articulated in the High Court as long ago as 1912 by Isaacs J in Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 682, where his Honour stated that it included “bringing forward all the material facts which [the absent] party would presumably have brought forward in his defence to that application”.
The contemporary view is that the applicant for ex parte relief must disclose “all material including that which might lead the court to refuse the application”: Jacobson J in Sutherland v Pascoe (No 2) (2012) 297 ALR 328 at [58] citing Southern Equities Corp Ltd (in liq), Re; Bond & Caboche v England (1997) 25 ACSR 394 at 422–3, Re Idoport Pty Ltd (in liq) (2011) 83 ACSR 164 at [147].
In Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955, Allsop J (as his Honour then was) said that the obligation was not discharged by:
38.… stating matters obliquely, including documents in voluminous exhibits, and merely not mis-stating the position. It means squarely putting the other side’s case, if there is one, by coherently expressing the known facts in a way such that the Court can understand, in the urgent context in which the application is brought forward, what might be said against the making of the orders. It is not for the Court to search out, organise and bring together what can be said on the respondents’ behalf. That is the responsibility of the applicant, through its representatives.
A breach of this fundamental responsibility goes to the discretion of whether the Court should, on the return date, convert that which had been obtained ex parte into a continuing order.
On the return date, which ordinarily should be very promptly after the making of the order (after allowing sufficient time for its service), the onus remains with the moving party to persuade the Court (this time in the presence of the other side) that it should be renewed. As was observed in Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436, “[t]he party subject to ex parte relief should not have to apply to discharge it” (at [109]).
In Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730, McLelland J stated at 731:
… on the return of the summons or notice of motion the injunction should be discharged unless the plaintiff shows sufficient reason for its continuation. In other words, the mode in which the duration of the ex parte injunction is expressed should not C be allowed to affect the substance of the matter, or the onus, on the first occasion on which the defendant has any opportunity at all to put its case to the court.
The Court undeniably retains at all time control over its own processes.
As Kirby J observed in Re Sinanovic’s Application (2001) 80 ALR 448, in the context of an application seeking leave to reopen a special leave application “as a general rule, interlocutory orders may be varied or set aside in appropriate circumstances where the interests of justice so require” (at [7]) (footnote omitted).
While in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 (“Adam P Brown”), their Honours in the High Court stated at 178:
… 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)
Referencing Adam P Brown, McClelland DCJ observed in Shamon & Shamon [2021] FamCA 417 that:
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.
DISCUSSION
I am satisfied that a proper consideration of the authorities to which I have referred makes plain that the wife retains the onus. While it can fairly be said that the respondents have not acted with any great sense of urgency and the Court may have regard to the delay occasioned by the party affected by the injunctions (see Hislop v Paltar Petroleum Ltd (No 2) (2017) 122 ACSR 358 at [14]), it remains that the orders were made without hearing from the respondents and that the delay in bringing the application is not so great that it could be argued that there was some implied acquiescence to the status quo created by the orders. Consistent with long established principles, the party seeking the relief carries the onus.
That said, it would have been preferable for the orders to have provided a short, specified return date rather than placing the onus on the respondents to relist the matter. By adopting that approach, the Court retains control over its processes and the position of the affected parties is more promptly known. Such an approach is consistent with authority as to do otherwise casts the onus on the respondents (see Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 at [109]).
To ground the wife’s relief, she needs to establish that there is a serious issue to be tried, alternatively expressed as a prima facie case for relief. She must also establish that her claim for relief will be imperilled if the injunction is not granted. To that extent, the Court might be satisfied about risk of dissipation by an assessment of future possibilities of an event occurring, which may be established by the drawing of inferences.
The question of balance of convenience including prejudice to the respondents needs to be considered and the order made should be no more than is necessary. It is the party seeking the injunction who bears the onus of satisfying the Court that the circumstances justify the making of the order (Sieling and Sieling (1979) FLC 90-627 at 78,262).
The Court would in the exercise of its discretion also consider the arguments advanced by the respondents that the wife had failed in her duty of disclosure and address the question of an undertaking as to damages.
SERIOUS ISSUE TO BE TRIED / PRIMA FACIE CASE
The wife seeks an order for adjustment under s 79 of the Act. The husband has elected to take no part in this application so his view as to prima facie case is unknown.
The wife’s case is that the shares in AB Pty Ltd are held on an express, resulting, or constructive trust for the husband. Alternatively, she contends that “[AB Pty Ltd] is the alter ego of the husband” (wife’s Case Outline filed 9 August 2023, paragraph 14), or that the structure as presented would qualify as a sham designed to obscure the true position. She contends the evidence establishes that the husband plays a significant role in the management of AB Pty Ltd and that she has an arguable case to ground the relief she seeks. An arguable case will be established if there is “a sufficient likelihood of success to justify in the circumstances the preservation of the status quo” (Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]).
The respondents contend that the wife’s case against them is “weak” (respondents’ Case Outline filed 9 August 2023, paragraph 1). They say that the husband has no interest in AB Pty Ltd and never has; that the shares have always been held by the second respondent and that position existed well before the relationship between the husband and wife, thus being inconsistent with a sham; that here is no evidence of any oral statement or “conversation overheard” amounting to an admission that AB Pty Ltd is the husband’s company; that failures in disclosure by the husband cannot be visited upon the other respondents to support the basis of an injunction; that the husband has never “been involved in running [AB Pty Ltd]” (Exhibit 8, paragraph 26) and that “[AB Pty Ltd] has no employees. The [h]usband is not an employee of [AB Pty Ltd]” (affidavit of second respondent, paragraph 57).
The wife’s senior counsel took the Court to representations by the husband that he was the chief executive officer (“CEO”) of AB Pty Ltd and involved in the company’s management and purchasing on behalf of AB Pty Ltd (Exhibit 17); that he was employed by AB Pty Ltd (Exhibit 15 and 16); that he was a director of AB Pty Ltd (Exhibit 14); and that he had entered into contracts on behalf of AB Pty Ltd as the owner, director and/or CEO of that company (Exhibits 5 and 13). The wife further submitted that the second respondent does not appear in any of the material produced under subpoena by AK Pty Ltd, AL Group or AM Group, being companies with whom AB Pty Ltd conducts business (wife’s affidavit filed 24 February 2023, paragraph 31.10).
The wife’s affidavit records that the second respondent did not disclose his interest and/or role in AB Pty Ltd on his application for immigration (Exhibit 12), nor did he disclose the earnings he received to the Commissioner of Taxation or any taxation authority (wife’s affidavit filed 24 February 2023, paragraph 23). The wife also relies upon significant payments made by AB Pty Ltd to her and the husband during their marriage, totalling approximately $2.5 million (wife’s affidavit filed 24 February 2023, paragraph 29).
In relation to some of these propositions, the second respondent agrees that monies have been provided to the husband, and that he has asked the husband not to refer to himself as a director and/or CEO of AB Pty Ltd and to not use such an email address. The respondents repeated that the husband has never had any interest in AB Pty Ltd and that all the documents relied upon by the wife have an alternate and innocent explanation.
I am not determining the final factual contest. I only need be satisfied that there is a “sufficient likelihood of success” (Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]). Even a “weak” case (as submitted by the respondents) may ultimately be successful at trial. I am satisfied based on the submissions made by the wife that she has an arguable case.
BALANCE OF CONVENIENCE
By her written submissions and supported by her affidavit, the wife contends that the total pool of property available for division is approximately $897 million. According to her affidavit filed 24 February 2023, that is calculated as follows:
108. Annexed hereto and marked with the letter “MM” are three balance sheets setting the value of assets and liabilities located in Australia/[Country WW]/[Country S]/[Country UU], China and [Country AD]. By way of summary, I contend the value of the assets and liabilities are as follows:
108.1 In Australia/[Country WW]/[Country S]/[Country UU] – AUD$674,861,063
108.2 In China – AUD$195,887,779.56.
108.3 In [Country AD] – AUD$26,631,105.
The wife seeks orders on a final basis for a cash payment to her of $25 million and the transfer of various properties in Australia.
The funds the subject of the ex parte order total $22,660,711 (wife’s affidavit filed 9 August 2023, paragraphs 14 and 15). The funds are in various bank accounts in Country AD, some of which are in the name of the second respondent and others in the name of AB Pty Ltd.
The respondents contend that the wife would suffer no prejudice by discharge of the injunctions, which restrain only about 2.6 per cent of the total pool of assets asserted by the wife. Given the enormity of the asset pool asserted by her and the relatively small amount sought to be restrained, it was submitted that there could be no prejudice to her by discharge of the injunctions.
This submission is superficially simple. A proper assessment of the assets of the parties and their location draws sharply into focus the wife’s capacity to recover any judgment sum.
The wife submits that the value of the husband’s property in Australia and Country AD is approximately $4.1 million. All the remaining property except for the injuncted bank accounts is in China, Country WW, Country S, and Country UU.
While the Court is capable of exercising jurisdiction in respect of assets located outside of Australia, the orders can only be made in personam. Senior counsel for the wife took the Court to a section of the relevant Country AD legislation, which provides broad discretionary relief to courts in Country AD in relation to proceedings that have been or are to be commenced in a foreign court, and are capable of giving rise to a judgment that may be enforced in Country AD. Such relief includes appointing a receiver and/or granting an interlocutory injunction.
He further submitted that there are two avenues of enforcement available in Country AD in relation to a money judgment, being by statute and by suing on the judgment at common law. In that respect, senior counsel for the wife took the Court to a section of another relevant Country AD legislation, which enables the registration and enforcement of money judgments from other superior foreign courts including courts of Commonwealth countries and specifically, the Family Court of Australia as specified in the first schedule to the legislation.
To quell any controversy about whether that legislation applies to the Federal Circuit and Family Court of Australia, senior counsel for the wife submitted that in line with Chen J’s decision in Comino v Kremetis (2023) 110 NSWLR 224 at [28], s 8(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) changes the name of the Court but otherwise preserves the Court, albeit that, through other provisions, its original jurisdiction differs.
In summary, senior counsel for the wife submitted that a combination of the pieces of Country AD legislation, would enable money judgments of this Court to be registered and enforced in Country AD.
Senior counsel for the respondents agreed with the submissions made in relation to the law in Country AD. She submitted that at the conclusion of the proceedings, the Court will likely make orders in relation to assets held overseas which will bind the husband and wife personally. As such, it was submitted that the husband will be bound by the rulings of this Court and will consequently be subjected to punishment for any disobedience of those orders, which it was submitted is the natural and ordinary position. She submitted that the injunctions affect the interests of the respondents who are third parties, and that they are unfairly and disproportionately affected by the range, depth and breadth of the injunctive orders.
On balance I find that if the injunctions were discharged, then the wife’s final relief would be imperilled in that it would be difficult, if not impossible, to enforce her judgment overseas and that the limited pool of assets in Australia could leave her in the invidious position of having a judgment but with no means of enforcement, short of punitive action against the husband, assuming he were in the jurisdiction.
I am, however, also required to consider any prejudice to the respondents. The respondents contend that the injunctions are having a prejudicial effect on AB Pty Ltd. In relation to AB Pty Ltd, the second respondent in his affidavit says as follows:
21. In brief outline, [AB Pty Ltd’s] business is the wholesale supply of [products] to many suppliers in many countries around the world. The business is supply only. [AB Pty Ltd] does not manufacture any products. [AB Pty Ltd] buys products from manufacturers, and then supplies them onwards to its customers – who themselves are retail outlets – around the world.
…
141. In response to paragraph 21 of the Wife’s Affidavit, I say that [AB Pty Ltd’s] financial records are contained in these records and in its bank account statements. [AB Pty Ltd] does not produce any management accounts or financial statements, such as profit and loss statements or other documents setting out its financial position. It has a simple ordering system where orders are placed […].
…
143. [AB Pty Ltd] is registered and incorporated in [Country WW] and so is not required by their law to prepare any profit and loss statements and or financial statements and nor is it required under Chinese law.
In relation to the effect of the injunctions on AB Pty Ltd, the second respondent says:
38. [AN Company] has not placed an order for [products] with [AB Pty Ltd] since November 2022, because of the concern about supply. In 2021, [AB Pty Ltd] received about USD$100 million worth of orders for [products] to be supplied into [Country UU]. In 2022, [AB Pty Ltd] received about USD$50 million worth of orders for [products] to be supplied into [Country UU]. As I say above, there have been no orders from [AN Company] for [products] to be supplied into [Country UU] during 2023. In my view, that fall in orders and sales is because [AB Pty Ltd] was joined as a party to these proceedings.
39. After I found out about the Freezing Order, I rang [Mr AO] and [Mr AP] and said to them:
“The Australian and [Country AD] courts have frozen bank accounts belonging to [AB Pty Ltd]. It is going to affect my ability to trade.”
40. [Mr AO] said to me:
“We can't place orders with you now. How do we know whether you are going to be able to pay the manufacturers? Any money we would pay you might get caught up in your bank accounts because of the freezing orders.”
…
47. At present, [AB Pty Ltd] owes about USD$7 .5 million to [AQ Company] in [Country S], on account of [products] supplied to [AN Company] in [Country UU]. In addition, [AB Pty Ltd] owes approximately USD$1.5 million to [AR Company], on account of [products] supplied to distributors in other parts of the world.
…
180. The total expenses that [AB Pty Ltd] had to meet for the 12 months based on the above figures are USD$7,608,000 per month.
…
184. The impact of the Freezing Order restraining me from encumbering, assigning, disposing, withdrawing and or causing the total balance of these accounts in the name of [AB Pty Ltd] from being reduced below will in fact cause the business to eventually cease operating as I will not be able to pay for the candles to meet the orders.
185. [AB Pty Ltd] would therefore lose all its customers and once lost, it would not be able to restore the business as the customers would have lost faith in [AB Pty Ltd] and in particular my ability to meet the Orders as they have placed their trust in me in doing so.
186. [AB Pty Ltd] needs on average of a total ofUSD$8,000,000 per month in order for it to remain trading and operating.
187. Currently, [AB Pty Ltd] owes [AQ Company] the amount of USD$7,553,228 which is overdue. …
The wife puts these assertions in issue. She firstly poses the question of how it is that the second respondent can make these assertions in the absence of there being any documents as contended for by him. Secondly, she challenges the very assertion that there are no documents as being inconsistent with assertions he has made on earlier occasions. In that respect, the second respondent in affidavits in the Country AD proceedings has said as follows:
20.[AB Pty Ltd] is an actively trading company and its primary business is in the manufacture and wholesale of [products], to different […] retailers. Its main markets are Australia, Southeast Asia, Europe and the North and South Americas.
(Exhibit 8)
36.In paragraph 25.4.2 and 25.4.3 of LA 1st, the Plaintiff alleged that [AB Pty Ltd] has failed to file to [AB Pty Ltd’s] balance sheets, detailed profit, and loss accounts, and identify all retailers with whom [AB Pty Ltd] have traded with in the Australian Divorce Proceedings. I must stress that, these documents belong solely to [AB Pty Ltd], I do not see any reasons why the [AB Pty Ltd] needs to disclosure those sensitive and confidential business information regarding to [AB Pty Ltd’s] client. As the disclosure of documents concern the Australian Divorce Proceedings only, I will leave it to my Australian legal team to deal with the matters.
(Exhibit 6)
(As per the original)
The wife submits that despite prior assertions by the second respondent as to the existence of financial accounts for AB Pty Ltd, none have been produced to evidence the asserted financial detriment. Those documents (which on one view of the evidence exist but are not disclosed) would provide a firmer foundation for what are at best broad sweeping generalisations absent objective substantiation.
It is also submitted that the asserted prejudice is inconsistent with the over four-month delay in seeking to have the matter brought back before the Court. If it were as urgent and detrimental to AB Pty Ltd as contended, then it is not adequately explained why there was not a prompter re-listing of the matter, particularly given the 48-hour notice provided in the orders. While senior counsel for the respondents sought to explain the delay in part by a change in counsel, there has been no change in the respondents’ solicitors who are experienced family law solicitors that appear regularly in this Court.
Taking all the above into account, I am satisfied that the balance of convenience favours the continuation or granting of the injunctions.
UNDERTAKING AS TO DAMAGES
The respondents contend that the wife’s undertaking as to damages is not sufficient to provide them with the requisite measure of protection given the losses that they may suffer.
Her current assets in Australia are something in the order of approximately $1 million. She also has the benefit of a judgment against the husband which remains unsatisfied as to approximately $4.1 million.
I further note the observations of the Full Court in Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856. Given what I have observed about the state of the evidence raised by the second respondents, I am satisfied that the wife’s asset position and the undertaking given provides a sufficient measure of protection to the respondents.
FAILURE TO DISCLOSE
The respondents submit that the Court should in the exercise of its discretion decline to continue or make the injunctions because the wife did not comply with the obligations of disclosure that fall to a party seeking ex parte relief.
In that respect, it was submitted that she had failed to bring to the attention of the senior judicial registrar the husband’s assets in Australia as set out in his Financial Statement, that her relief against AB Pty Ltd was sought in the alternative; that she failed to inform the Court as to any potential hardship that would be occasioned to AB Pty Ltd and in fact submitted that it would cause no hardship or prejudice to them; that some of the documents she relied upon were not seen or known to the second respondent; and that she had relied on a contract between AB Pty Ltd and AL Group, which she alleged was signed by the husband on behalf of AB Pty Ltd when a proper reading of it shows that he was merely a witness.
I am not satisfied that the senior judicial registrar was misled. The wife’s Case Outline filed 20 March 2023 annexed to it a schedule of assets that were said to be “known and quantifiable assets in Australia and [Country AD] from which payment of $25,000,000 could be satisfied” (at paragraph 48). Senior counsel for the wife submitted that the schedule fulfilled a specific purpose. In relation to the proposition that the wife failed to disclose the husband’s Financial Statement to the senior judicial registrar, senior counsel submitted that whilst there was no specific reference to the husband’s Financial Statement, the schedule that formed part of the wife’s affidavit identified various assets including what she said constituted the pool (Exhibit 7).
In relation to the prejudice to the AB Pty Ltd, the wife’s Case Outline filed 25 March 2023 contended that no hardship or prejudice would be occasioned to AB Pty Ltd. This submission needs to be seen within the context of the contentions advanced by the wife that, in the (likely) short amount of time pending the matter returning to the Court for a hearing, there was an account in Country AS that could be used instead of the Country AD accounts, and that the second respondent had failed to provide disclosure which made it difficult to ascertain any potential hardship. As to the contract with AL Group, the wife’s evidence was not as the second respondent asserted it to be, but rather that the husband represented that he was the CEO of AB Pty Ltd, consistent with what is recorded in the contract.
I am not satisfied that there has been the failure to disclose as asserted. Even assuming that there was, I have heard the matter on the basis that the wife carried the onus, and the issues of disclosure are but one part of the exercise of my discretion.
COUNTRY AD JUDGMENT
I recognise that the Court in Country AD has discharged the ex parte injunctions made by that Court. I am, however, not bound in any way by that determination.
CONCLUSION
Having regard to all the evidence, I am satisfied that the wife has demonstrated that she has an arguable claim for the relief that she seeks, that the balance of convenience favours the wife notwithstanding the asserted prejudice to the respondents, and that the wife has proffered an undertaking as to damages.
I am not satisfied that the wife failed in her obligations in seeking the ex parte orders.
I am satisfied that it is proper that the injunctions continue.
Accordingly, the Application in a Proceeding will be dismissed.
I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 28 September 2023
SCHEDULE OF PARTIES
SYC 4269 of 2020 Respondents
Fourth Respondent:
AB PTY LTD
2
18
2