Zha & Wun (No 8)

Case [2024] FedCFamC1F 648

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Zha & Wun (No 8) [2024] FedCFamC1F 648

File number: SYC 4269 of 2020
Judgment of: SCHONELL J
Date of judgment: 25 September 2024
Catchwords: FAMILY LAW – PROPERTY – Final orders – Where the wife contends the property pool is in excess of $650 million – Where the husband contends a property pool of $50 million – Where the wife contends a company is the alter ego of the husband or alternatively is held on trust for the husband – Where the husband denies the company is his alter ego – Where the wife contends that the date of cohabitation is July 2009 – Where the husband contends the date of cohabitation is August 2011 – Where there have been other proceedings in Country AD, China, Country S – Where the husband’s brother, sister-in-law, and a company have been joined as the second, third and fourth respondents – Where issues of non-disclosure – Where issues of credit – Where allegations of asset protection by the husband regarding funds transferred by the husband to the accounts of others – Both wife and husband seek transfer of shares in jointly owned company in their favour solely – No adjustment pursuant to s 75(2) of the Family Law Act 1975 (Cth) – Financial orders made for payment of monies and transfer of shares in jointly held company to the wife
Legislation:

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) ss 4AA, 79, 75(2)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited:

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1

Ashton and Ashton (1986) FLC 91-777

Bosanac v Commissioner of Taxation (2022) 275 CLR 37; [2022] HCA 34

Chorn v Hopkins (2004) FLC 93-204; [2004] FamCA 633

D & D [2005] FamCA 356

Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154

E Pty Ltd and Ors & Zunino & Anor [2020] FamCAFC 216

Gadhavi and Gadhavi (2023) 67 Fam LR 174; [2023] FedCFamC1A 117

Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395

Horrigan & Horrigan [2020] FamCAFC 25

Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78

Kannis & Kannis (2003) FLC 93-135; [2002] FamCA 1150

Omacini v Omacini (2005) FLC 93-218; [2005] FamCA 195

Oriolo & Oriolo (1985) FLC 91-653

Singerson & Joans [2014] FamCAFC 238

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173

Warner v Hung (No 2) (2011) 297 ALR 56; [2011] FCA 1123

Wei & Xia (No 5) (2023) 67 Fam LR 421; [2023] FedCFamC1F 679

Weir & Weir (1993) FLC 92-338

Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Division: Division 1 First Instance
Number of paragraphs: 296
Date of hearing: 8 July 2024 – 18 July 2024 and 23 July 2024

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Zha & Wun (No 8) [2024] FedCFamC1F 648
Case
[2024] FedCFamC1F 648
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Ms Zha, the wife, and Mr Wun, the husband, were the central parties in a complex family law dispute involving allegations of significant property, asset concealment, and the control of companies. The wife argued that the property pool was in excess of $650 million and that a company, AB Ltd, was the alter ego of the husband or held on trust for him. In contrast, the husband contended that the property pool was around $50 million and denied any connection between AB Ltd and himself. The dispute also included differing dates of cohabitation, alleged non-disclosure, and asset protection strategies. Both parties sought sole ownership of shares in a jointly owned company. The court needed to decide on the value of the property pool, the nature of the relationship between the husband and AB Ltd, the date of cohabitation, and issues of non-disclosure and credit.

The court approached the case with caution, recognising the complexity of the evidence and the cultural factors influencing the witnesses' presentations. It noted that the wife's case relied heavily on circumstantial evidence, requiring a balance of probabilities assessment. The court found that the wife, husband, and husband’s brother were untruthful at times and their evidence was approached with scepticism. Other witnesses, including business associates, were deemed unreliable due to vague recollections and self-serving motives. The court concluded that AB Ltd was not the alter ego of the husband nor held on trust for him. The court also determined that the wife's evidence regarding cohabitation and asset concealment was not credible.

The court issued detailed financial orders, including the payment of $9,744,000 by the husband to the wife, the transfer of his interest in a company to the wife, and restrictions on dealing with certain properties and funds pending compliance with the orders. The court further restrained the parties from dealing with specific assets until the husband complied with the financial orders. The wife was granted the liberty to apply for the implementation of these orders, and the parties were directed to register the orders in the High Court of Country AD. Applications for costs were to be filed within 28 days of the orders.

Orders

Orders of the court

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:

25 SEPTEMBER 2024

THE COURT ORDERS THAT:

1. All existing orders are discharged.

2. Within sixty (60) days from the date of these Orders, the Respondent Husband (“the husband”) shall pay to the Applicant Wife (“the wife”) by way of cleared funds the sum of AUD$9,744,000.

3. Simultaneously with Order 2, the husband shall transfer his interest in GG Pty Ltd to the wife and resign any office he holds in that company and to give effect to this order the husband shall do all things and sign all documents presented to him by the Wife.

4. Pending the husband’s compliance with Order 2 and 3, the husband is restrained from dealing in any way with his interest in:

(a) C Street, Suburb D, NSW (Suburb D property);

(b) J Street, Suburb K, NSW (Suburb K property);

(c) E Street, Suburb F, NSW (Suburb F property); and

(d) L Street, Suburb M, NSW (Suburb M property)

(e) Funds held by the husband in Z Bank accounts #...88 & #...80 in Country AD.

5. Pending the husband’s compliance with Order 2 and 3, the husband, the Second Respondent and the Fourth Respondent are restrained from dealing in any way with funds held by AB Ltd in Z Bank accounts …138, …238, …338 and …80 in Country AD.

6. The parties do all acts and things and sign all documents necessary to cause these Orders to be registered in the High Court of Country AD.

7. The wife is granted liberty to apply on seven days’ notice in writing in relation to the implementation of these orders.

8. In the event that any party wishes to make an application for costs, they are to file such an application with my associate within 28 days of these orders.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

In addition to the above, over 280 documents became exhibits in the proceedings. BACKGROUND FACTS The wife was born in 1984 and is 40 years of age. The husband was born in 1972 and is 51 years of age. The husband studied between 1991-1995. After graduating from university, the husband worked at a government agency. The wife studied at university in City BC, UK between 2009–2010 and in 2019. She says that she was unable to continue her studies, at the request of the husband. To this point, she says: 441.…We lived in my [City BC] university accommodation for about [12] months while I continued to study. During that time the husband requested that I move back to China, saying: We have to go back to China, I can’t run my companies whilst we are living in England…442.If I returned to China I would not finish my studies. However, I still decided to return to China with the husband because he promised to move to Australia with me within 2 months of returning to China. I believed that I would be able to transfer my credits to continue studies in Australia. I thought that the husband would support me emotionally and financially, and believed we could start a family.443.[In] August 2011, the husband and I left UK and we arrived in China. The husband and I did not relocate to Sydney for a further three years. As a result, my [postgraduate study] suspension period lapsed and my credits could not be transferred to a university in Australia. Of this, the husband says in his affidavit: 30.I travelled to the United Kingdom in […] 2010. I disclosed my plan to [Ms Zha] beforehand and she did not oppose the plan. I purchased a plane ticket and sent to [Ms Zha] my itinerary. [Ms Zha] met me at the airport when I arrived in the United Kingdom. I stayed at a hotel for the first few days. I then moved in with [Ms Zha] at her accommodation at the university. I stayed in the United Kingdom with [Ms Zha] until [late] 2010.…350.There was no reason why [Ms Zha] could not return to China if she was unhappy living in Australia. [Ms Zha] did not say anything to me to suggest that she was unhappy about being in Australia.351.[Ms Zha] wanted to emigrate to Australia. I said to her words to the effect of "Because you want to emigrate to Australia, I will try my best to spend more time with you here."352.In response to paragraph 441: I deny saying the words attributed to me or words to the effect. Central to her case is the contention that the husband controls AB Ltd such that it is his alter ego. It is not in issue that AB Ltd was incorporated in Country WW in 2005. Nor is it in issue that the husband’s brother has been recorded as the only shareholder and sole director of AB Ltd since its incorporation. AB Ltd does not operate in China, is not registered in China and seemingly has no employees. AB Ltd conducts an international enterprise as a wholesale supplier of products from various manufacturers and on-sells them. The principal manufacturers are AQ Company and BD Ltd. The husband’s brother contends that he has been dealing with AQ Company since 2005. He says that he has never dealt with the husband in relation to AQ Company. Mr BB, who asserts he is the sole director and shareholder of AQ Company, says that he has had no dealings with the husband in relation to AB Ltd.

Evidence

Evidence Before The Court

The above assertions identify the following as some of the issues for determination:(1)when the parties commenced cohabitation;(2)whether AB Ltd is the alter ego of the husband or held on trust for the husband;(3)whether the assets of the second and third respondents and their mothers are held pursuant to a common intention constructive trust or impressed with a trust on behalf of the husband.(4)whether the property of the second and third respondents at Suburb P is held by way of a resulting trust on behalf of the husband;(5)whether a company in Country S is the alter ego of the husband or the property of the husband or AB Ltd.(6)whether the husband has complied with his obligation of full and frank disclosure.OVERVIEW AS TO EVIDENCE I have read all of the evidence relied upon in the proceedings, including the Exhibits, but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case. I recognise that English is not the first language of the parties or their witnesses. The affidavits of the second and third respondents and their witnesses appended a jurat recording an interpretation in Mandarin. The same applied to the witness in the wife’s case. The wife and husband’s written evidence was given in English. All parties and their respective witnesses gave their oral evidence through an interpreter, albeit much of the evidence of the husband was given in English. In that regard, I respectfully adopt the observations of Harper J in Wei & Xia (No 5) (2023) 67 Fam LR 421 where his Honour observed:180.All parties and witnesses gave evidence through interpreters, in the Mandarin language. Where a witness is from a Chinese cultural background, their native tongue is not English, and they are cross-examined through an interpreter, allowance must also be made for the influence of cultural factors in their presentation in the witness box. This counsels greater caution in drawing inferences from their demeanour, either for or against their credibility. As pointed out by Black J in QB Foods, there is ample authority which directs a trial judge to engage in a comparison of a witness’s oral evidence with intrinsic merit or demerit in the overall evidence and known facts. The circumstances of this case particularly compel such a comparison. The wife conceded that she advances a circumstantial case (WWS, paragraph 28) to establish alter ego, common intention constructive trust and resulting trust. Pursuant to s 140 of the Evidence Act 1995 (Cth) the wife bears the onus of proof to establish her case. Justice Carmody in D & D [2005] FamCA 356 observed in the context of a circumstantial case that:149.…proposition is proved on the balance of probabilities in a circumstantial case when the combined weight or preponderance of the totality of the available evidence favours it as the most likely explanation. The more information consistent with one of a number of competing hypotheses, the more probable that explanation becomes.

Decision

Reasons for decision

The disparate versions are irreconcilable and demonstrate the extent of his mendacity.Conclusions as to credit It is undoubtedly the case that a court may accept some part of a witness’s case whilst rejecting other parts. For the reasons referred to above I find that the wife, the husband and his brother are witnesses who’s oral and affidavit evidence has to be approached with a great deal of caution. They each have a clear motivation to give self-serving evidence and the findings and admissions referred to above reveal they have been at times untruthful. The consequence is that in making findings of fact I place less reliance on their oral and affidavit evidence except where it corresponds with undisputed facts or matters that are inherently plausible or aligns with documents of unquestionable providence.Other witnesses The third respondent is the brother’s wife. I am satisfied that she had little understanding of the issues involved and was vague as to the detail of the matters about which she gave evidence. Mr ZZ gave evidence of various business dealings with the husband and his brother. His affidavit recorded that the husband told him in 2005 that AB Ltd was the husband’s brother’s company. He was cross examined at length about a transaction in early 2018 where AB Ltd lent nearly $300,000 to CC Pty Ltd, a company incorporated by him and in which the husband was a shareholder. The money was lent to enable it to acquire shares in HH Pty Ltd in circumstances where the shareholder was the husband, not the brother (Exhibit 206). In relation to his evidence, the wife’s senior counsel in WFF submitted:189.Generally, [Mr ZZ] ought not be treated as an independent witness but as a factotum for the Husband. At best, his memory of events was vague and unreliable. At worst, he feigned convenient memory lapses to avoid answering difficult questions he perceived may not assist the Husband’s case narrative. I am satisfied that Mr ZZ’s evidence was vague and find it remarkable that he could recall a conversation in 2005 where the husband told him [AB Ltd] was his brother’s company in circumstances where his recall of more recent events was almost non-existent. In circumstances where his evidence bordered on the enigmatic on almost every other issue, it would be difficult to place any weight on his recall reliability. I was left wondering why he was even asked to provide an affidavit. I am satisfied that he is an unreliable witness and place no weight on his evidence in so far as it is relied upon for the proposition that AB Ltd is in reality the property of and controlled by the second respondent. Mr BB gave evidence by audiovisual link in relation to the factory in Country S. This was the factory that the wife asserted that the husband told her was his, and that she visited with her parents. Mr BF denied any suggestion that the factory was owned by the husband or AB Ltd. The wife accurately submits that he was vague in his ability to recall the quantum of debt owed by AB Ltd to his company saying it was less than half that contended by the brother. The wife also submits that there are other instances where he was demonstrated to be unreliable. While I accept that his memory was found wanting on certain matters of recall and he admitted that he provided the affidavit as a “favour” to the husband (Transcript dated 16 July 2024, p. 568 lines 20–25), I am not persuaded overall that I could positively find that the Country S factory is owned by AB Ltd or the husband purely on the cross examination of Mr BF. As with Mr ZZ I am satisfied that he is an unreliable witness and place no weight on his evidence in so far as it is relied upon for the proposition that AB Ltd is in reality the property of and controlled by the second respondent.IS AB LTD THE ALTER EGO OF THE HUSBAND OR HELD ON TRUST FOR THE HUSBAND

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.