Zha & Wun (No 8)
[2024] FedCFamC1F 648
•25 September 2024
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 Place: Sydney Counsel for the Applicant: Mr Sirtes SC and Mr Richardson Solicitor for the Applicant: Pickering Pendleton Counsel for the First Respondent: Mr Williams KC and Mr Nehmy Solicitor for the First Respondent: York Law Counsel for the Second, Third and Fourth Respondents: Ms Painter SC and Mr Turnbull Solicitor for the Second, Third and 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:
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.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zha & Wun has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings for financial adjustment consequent upon the breakdown of the parties’ marriage. The proceedings have an international character. The parties, whilst residents of Australia, were born in China and have already been involved in matrimonial litigation in China that resulted in a judgment in favour of the applicant wife (“the wife”). In addition to those proceedings, there are now further proceedings in China between the wife and the respondent husband (“the husband”), and on the eve of the commencement of this hearing, the wife commenced proceedings in Country S. In addition, there were proceedings in Country AD that, as best understood, remain in abeyance.
The parties are at issue as to the date of commencement of cohabitation. The wife contends July 2009 whilst the husband contends August 2011. It is agreed they married in 2012 and separated in June 2018. There are no children of the marriage.
It is agreed that the husband and wife have property in China, Country AD and Australia. The wife contends that the husband’s assets include those held by others on his behalf in various locations including Country AD, Country S, Country AS, and Country WW. The wife’s assertions are denied. Broadly, the wife seeks a financial adjustment in the order of approximately $134 million consequent upon the breakdown of their relationship, whether it be nearly seven years as contended for by the husband or nine as contended for by the wife. The husband seeks a dismissal of her application and the transfer to him of shares in a jointly held private company.
Joined to the proceedings as the second, third and fourth respondents respectively are the husband’s brother, his wife and AB Ltd a company registered in Country WW of which the second respondent is recorded as the sole director and shareholder. These respondents seek a dismissal of the wife’s application and the discharge of injunctions against their property.
The parties are at issue as to the composition and value of property wheresoever located and held by whomever. Central to a determination of that issue is whether AB Ltd is the alter ego of the husband or alternatively held on trust for the husband. If it is, then the pool of assets is measured in excess of $650 million. The husband asserts on one version of the Balance Sheet that the pool of assets is approximately $50 million.
DOCUMENTS RELIED UPON
The wife relied upon the following documents:
(1)Further Further Further Further Amended Initiating Application filed 27 February 2024;
(2)Further Amended Points of Claim;
(3)Affidavit of the Wife filed 10 November 2023;
(4)Affidavit of Mr BA filed 10 November 2023;
(5)Financial Statement filed 8 July 2024;
(6)Case Outline;
(7)Written Submissions (Exhibit 250) (“WWS”); and
(8)Schedule of Factual Findings (Exhibit 251) (“WFF”).
The husband relied upon the following documents:
(1)Further Amended Response filed 24 June 2024;
(2)Defence to Further Amended Points of Claim;
(3)Affidavit of the Husband filed 28 March 2024;
(4)Financial Statement filed 13 June 2024;
(5)Case Outline;
(6)Written Submissions (Exhibit 252) (“HWS”);
(7)Husband’s Response to Wife Factual Findings (Exhibit 283).
The Second, Third, and Fourth Respondents relied upon the following documents:
(1)Amended Response to Further Further Further Further Initiating Application filed 12 June 2024;
(2)Defence to Further Amended Points of Claim;
(3)Affidavit of Mr A filed 28 March 2024;
(4)Affidavit of Ms Yang filed 28 March 2024;
(5)Affidavit of Mr BB filed 28 March 2024;
(6)Affidavit of Mr ZZ filed 28 March 2024;
(7)Case Outline;
(8)Written Submissions (Exhibit 255) (“RWS”).
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.
As AB Ltd cannot conduct business in China, it has entered into agency agreements with two companies; AG Co. Ltd a Chinese registered company located in City R, and BD Ltd, a Chinese company located in City BF. The agency agreements date back to at least 2008. According to the husband’s brother, the agency agreements manage AB Ltd’s relationships with its customers.
AG Co. Ltd was established in 2003. At that time, the husband was not a shareholder. The husband in his affidavit says:
107.In [mid] 2007, I was appointed in charge of the [AB Ltd, City R] Virtual office. I was on probation for the first 6 months and was not paid during the period of probation.
108.At the beginning of 2008, [Ms Zha] joined [AG Co. Ltd] with a small team, managing the [Country S] orders from the [AB Ltd] Virtual office.
109.At that time, the team was moved to [AG Co. Ltd]. [AB Ltd] and [AG Co. Ltd] entered into a Service Contract. I was employed as the Senior Production Manager.
…
188.Within 2 days before submitting the bank application, I was offered the opportunity as the Head of the [AB Ltd] [City R] Virtual office. The role, which was to start on a probationary basis, presented a novel and entrepreneurial challenge that I was eager to embrace. My excitement for this new venture and the unconventional nature of both my roles – each with their distinct compensation models not tied to a fixed salary – led me to believe and understand that "self-employed" was the most accurate descriptor of my professional status at that time.
…
205.I was working as [a senior manager] of [AG Co. Ltd] and managed a team of 4 or 5 people. As part of the service the team provided to [AB Ltd], we liaised with wholesalers and retailers about demands, prepared the graphic for the artwork, repeated orders to the factory, checked samples, calculated the price of goods (within the parameters of the authority provided by [AB Ltd]), received and dealt with complaints from clients about the quality of the product or delivery time, contacted the client for sales.
The husband is the CEO of AG Co. Ltd and the principal shareholder owning 68 per cent. The brother currently holds 5 percent of the shares but at one stage held up to 31.5 percent which he transferred to the husband in 2018.
The husband and his brother say that the husband does not hold shares in BD Ltd.
Iin relation to AB Ltd the wife says:
64.The husband told me that he established [AB Ltd] in [Country WW] in the Second Respondent’s name for a number of reasons including:
64.1Following the commencement of our relationship in 2009, the husband said to me words to the effect of:
64.1.1I don’t pay much tax because I set up the most valuable company in [Country WW].
64.1.2The most valuable company is in [Mr A Wun]’s name. they won’t be able to trace the income to me.
64.2The husband said to me words to the effect of: the companies I buy [products] from all want US dollars. They don’t want RMB. I don’t want the income coming into China and then having to transfer it out again.
In furtherance of her claim, the wife draws a parallel to the name that the husband uses and the name of the company. In her affidavit she says:
65.During the relationship, the husband and I had a conversation during which he said to me words to the effect of: “my English teacher gave me the name “[AB Ltd]” because “[…]” sounds like victory and the teacher thought I would conquer […] hence the name “[AB Ltd]”.
66.The husband uses “[AB Ltd]” to refer to himself in a number of manners, including:
66.1his personal email address […].
66.2the name he uses when he appears at hearings which take place by Microsoft Teams in these proceedings…
The wife says of AG Co. Ltd the following:
50.In [early] 2003, [AG Co. Ltd] was established. At the time, the Second Respondent held 207.5 of 500 shares in [AG Co. Ltd]. The other shareholders were [Mr BK], who held 135 shares and is still a shareholder and [Mr BL], who held 157.5 shares and is no longer a shareholder…
51.The husband told me he used [AG Co. Ltd] as a supplier to supply goods manufactured at [BH Ltd].
…
147.During the course of our relationship, the husband said to me words to the effect of: [AG Co. Ltd] is like the head of the robot, the factories, suppliers and retailer are like the robot’s limbs. I use [AG Co. Ltd] to control everything. It doesn’t get any income because [AB Ltd] collects all the income so I don’t pay tax in Chine. [AG Co. Ltd] pays all the expenses in China.
…
149.The husband presently holds a 68% interest in [AG Co. Ltd]. The Second Respondent holds a 5% interest in [AG Co. Ltd].
The brother says the husband’s involvement in AB Ltd is as follows:
79.I have never authorised the Husband to tell anyone else that he is employed by [AB Ltd], is a director of [AB Ltd] or the CEO of [AB Ltd]. [AB Ltd] has never employed the Husband.
80.The Husband has never been a director of [AB Ltd]. The Husband has never been a CEO of [AB Ltd].
…
82.I never authorised the Husband to say that he was employed by or self-employed by [AB Ltd]. I never authorised him to say that he was a director or CEO of [AB Ltd].
…
95.I did not authorise the Husband to enter into contracts on behalf of [AB Ltd] generally. [In] March 2023, I wrote to the Husband that he was not to use the title CEO or Director in relation to [AB Ltd] ([…]).
I am not satisfied for the reasons set out below that the husband’s involvement with AB Ltd is as limited as presented by the husband and his brother.
As part of her case, there are a number of entities that that wife claims the husband has an interest in. She says, the husband has not complied with his obligations of disclosure and consequently the magnitude of the husband’s wealth is difficult to capture. In demonstrating his business dealings, she details numerous aspects of the supply chain she says that the husband controlled before, during and after the breakdown of their relationship. She says in her affidavit:
8.During the marriage, the husband’s primary line of work was operating a supply chain which manufactures and supplies […] products to wholesalers and retailers globally. The supply chain includes manufacturers, suppliers, logistics/shipping and retailers. I describe this supply chain below.
9.During the course of the relationship, the husband said to me words to the effect of: successful business people hold a share at every level of the chain. I have a share in each level. I have interests in the manufacturers, interests in the suppliers and interests in the retailers. This means I have some control every step of the way.
To provide context to the supply chain as described, she deposes that around 1999 or 2000, the husband began working for a factory producing household products known as BH Ltd. In 2016, BH Ltd was closed down. The wife contends the following:
44.[In mid] 1992, [BH Ltd], also known as [BH Ltd] was established. It operated a factory which manufactured and [household products]. The chairman was [Mr AO]. The sole registered shareholder was [Mr AO].
45.In 1996, the husband was working [for the government]. During the relationship, the husband said to me words to the effect of: after I finished worked with [a client], I worked with a partner to sell [products] to retailers. We didn’t have a factory. I used [BH Ltd] to manufacture the [products]. That’s how I met [Mr AO].
…
47.In [mid] 1999, the husband became a director and shareholder [BH Ltd]. In support of an application for employer sponsored migration in [early] 2008, the husband submitted three letters from [BH Ltd] dated 1 September 2005, 22 December 2005 and 16 October 2006.
…
49.In [late] 2002, the husband purchased the property at [BN Street, City R] with [Mr AO]. It was registered in their joint names. Up until [mid] 2021, the registered address of [AG Co. Ltd] was [BN Street, City R]…
Regarding BH Ltd, the husband deposes:
91.In 1999, I joined [BH Ltd], a medium-sized [company] as a [senior manager]. The Chairman was [Mr AO] and [Mr BF] was the Director. I was promoted to the position of Director a few months later. I was then granted performance share rights 30% and asset rights 10%.
92.In 1999, [Mr AO] and [Mr AP] set up [AN Company] in [Country UU] as a distributor, and commenced to purchase [products] from [BH Ltd]. I was the Sales Manager of [BH Ltd] at the time.
AQ Company was established in China in 2003. The wife says in her affidavit:
56.[In] 2003, [AQ Company] was established. [BH Ltd] was a 25.2% shareholder in [AQ Company]. Directors of [AQ Company] included the husband, [Mr AO], [Mr BF] and [Mr BO]…
The husband says of AQ Company:
97.In [mid] 2003, [AQ Company] was established. [BH Ltd] held 25.2% of [AQ Company] with the remainder of the shares being held by several individuals, including members of [Mr AO]'s family. The purpose of purchasing [AQ Company] was to extend the manufacturing capacity of [BH Ltd].
The husband says that at the same time, AQ Company, Country S (“AQ Company, Country S”) was established:
99.[In late] 2003, [AQ Company, Country S] was established. The sole initial investor in [AQ Company, Country S] was [AQ Company]. [Mr BF] was the Director. In 2004, [AQ Company, Country S] invested in [BP Ltd]
The wife says the following of AQ Company, Country S:
128.2[AQ Company, Country S] is responsible for all [products] manufactured in [Country S] and supplied by [AB Ltd] and [AN Company]. The sole registered director and shareholder of [AQ Company, Country S] is [Mr BF]…
In her affidavit, she further says:
430.5the husband was a director of the sole investor in [AQ Company, Country S], being [AQ Company].
BR Ltd was established in China in 2003.
AQ Company, Country S was established in Country S in 2003, in which the sole investor was AQ Company. The wife says:
57.[In] 2003, [AQ Company, Country S] was established in [City BM, Country S]. The general director and sole shareholder is [Mr BF]…
The husband details a connection between AB Ltd and AG Co. Ltd. In his affidavit, he says:
104.In [early] 2005, [Mr A Wun] registered [AB Ltd]. [BH Ltd] continued to supply [products] to [AB Ltd] and remained the only source of supply in China.
…
107.In [mid] 2007, I was appointed in charge of the [AB Ltd] [City R] Virtual office. I was on probation for the first 6 months and was not paid during the period of probation.
108.At the beginning of 2008, [Ms Zha] joined [AG Co. Ltd] with a small team, managing the [Country S] orders from the [AG Co. Ltd] Virtual office.
109.At that time, the team was moved to [AG Co. Ltd]. [AB Ltd] and [AG Co. Ltd] entered into a Service Contract. I was employed as the Senior Production Manager.
In late 2006, the husband obtained a 36% interest in BG Company, a factory to provide products for BH Ltd. Currently the factory provides products for BI Ltd.
BJ Ltd was established in Country WW in 2008 in which the husband was the sole director and shareholder.
BV Ltd was established in 2012 in which the husband became a 50% shareholder. The wife says of the husband’s involvement in BV Ltd:
357.The husband is a 50% shareholder of [BV Ltd]... The husband has made no disclosure whatsoever in the Australian Proceedings in relation to his interest in this company. The documentation I have in relation to this company are listed to publicly available searches, and some documents I have obtained through the Chinese Proceedings. I have received no tax returns, financial reports or any other documentation which would enable me to understand the financial circumstances of the husband’s interest.
The husband contends:
97.In [mid] 2003, [AQ Company] was established. [BH Ltd] held 25.2% of [AQ Company] with the remainder of the shares being held by several individuals, including members of [Mr AO]'s family. The purpose of purchasing [AQ Company] was to extend the manufacturing capacity of [BH Ltd].
…
99.[In late] 2003, [AQ Company, Country S] was established. The sole initial investor in [AQ Company, Country S] was [AQ Company]. …
114.[AQ Company] was sold [in] 2010.
…
239.In response to paragraph 143: [Ms Zha] and I are the shareholders of [BV Ltd].
A 50 percent interest in BI Ltd was purchased by the husband in 2016. The wife contends the following:
128.1[BI Ltd] operates a factory manufacturing [products] in [City BQ], China. The husband is a 50% shareholder in [BI Ltd].
The husband says:
120.As a result of the closure of the [BH Ltd] factory, [BJ Ltd] ceased operating. The company had no assets at the time. The company has not traded since then.
121.I then invested in [BI Ltd], which became the main component of my business. I held 50% of the shares. I negotiated a sales contract based on the payment of a bonus. Similar to my employment with [BH Ltd], I did not receive a salary.
Numerous parcels of real estate were purchased by both parties. Between 2007–2008, the husband purchased the following properties:
(1)1 BS Street, Suburb BT, China;
(2)PP Street, City R, China;
(3)2 BS Street, Suburb BT, China;
(4)BW Street, Town BX, China;
(5)BY Street, Town BZ, China;
(6)BU Street, City R, China;
(7)1, 2 & 3 CA Street, City CB, China ;
(8)C Street, Suburb D NSW.
The wife contends that the parties commenced cohabitation in 2009 while the husband contends that parties commenced cohabitation in August 2011. In the period 2011 to 2014, the wife contends that she arranged for the parties’ home in City R to be renovated and leased and used the rental income for their day-to-day expenses and managed renovations.
The wife contends that in the period of 2014 to 2018, and after the parties relocated to live in Australia, the wife undertook the majority of work in relation to the acquisition of investment properties in Australia. In her affidavit she says:
451.When the husband and I first arrived in Australia in 2014 I arranged to refinance the property at [C Street, Suburb D] to borrow an additional $1,040,000 by way of mortgage. I then applied these additional funds towards our living expenses, as well as to invest in the following properties:-
451.1 [CD Street, Suburb M] NSW….
451.2 [CE Street, Suburb CF] ….
451.3 [CG Street, Suburb M] NSW …
During the relationship, the wife contends that she assisted the husband in managing their finances globally and attended to homemaking duties. She says in her affidavit:
456.I attended to the majority of preparing meals, cleaning and organising the house, washing, maintaining the interior of the house, gardening and grocery shopping. I assisted in caring for the son of friend of a husband who studied in Sydney [for 2 years] and provided accommodation to the husband's clients visiting Sydney. I took the husband to doctors and made traditional Chinese medicine to help his [medical conditions]. I also took his parents to travel and medical appointments and assisted them with their house renovations.
The parties were married in 2012 and separated in June 2018. There are no children of the marriage.
Proceedings were commenced by the wife in this court in June 2020. At or about the same time she commenced proceedings in China. Of those proceedings the wife says:
22.In June 2020, I commence proceedings in the [City R Court] (the Chinese Proceedings) seeking orders for the dissolution of marriage, preservation of matrimonial assets and property settlement. I commenced these proceedings as I am aware that any orders made in the Australian Proceedings are not enforceable in China, and any orders made in the Chinese Proceedings are not enforceable in Australia. A determination was handed down [in early] 2022. …
23.In early 2022, the husband appealed the determination handed down in the Chinese Proceedings […]. I subsequently appealed the determination as well. We both later withdrew our appeals.
The consequence of the Chinese proceedings was that the husband paid the wife AUD$5,723,24.
The wife also commenced proceedings in Country AD. Of these proceedings, the wife says:
24.On 30 June 2020, I commenced urgent ex parte proceedings in the Court of [Country AD] seeking injunctions preventing the husband from dealing with funds and securities he held in accounts in [Country AD] (the [Country AD] Proceedings). These proceedings are still on foot in circumstances where there are presently orders in place made in support of the injunctive orders made in the Australian Proceedings. There is no separate property claim filed in [Country AD]. The orders in that jurisdiction are to give proper effect to orders in these Australian proceedings.
The proceedings have been highly contested with a number of injunctions, restraints and costs decisions delivered in this matter.
THE WIFE’S CASE
The wife’s case was articulated by her senior counsel in WWS is as follows:
1. The Court ought to make findings as follows:
a.The fourth respondent, [AB Ltd], is the alter ego of the husband or, alternatively, the second respondent, his brother, holds the beneficial interest for the husband and specifically the Court ought to find:
i.The evidence of the second respondent, who is the legal owner of [AB Ltd] lacks credit (or, any credit);
ii.The evidence of the husband ought to be similar treated;
iii.Further, the evidence tells in favour of [AB Ltd] being the alter ego of the husband or it being held on constructive trust for the husband;
b.The husband has significant undisclosed interests in entities in the [Country AY] and in Australia (including partly-owned by [AB Ltd], despite the clear assertions to the contrary that [AB Ltd] has no interests in other assets);
c.The source of funds for the second respondent’s bank accounts (including his securities and trading accounts) in [Country AD] is [AB Ltd] and, therefore, the husband is beneficially entitled to those funds;
d.The husband was the source of the funds for purchase of the [Suburb P] properties;
e.The funds held in bank accounts and invested in securities in [Country AD] in the name of the second respondent and held for the benefit of the husband;
f.The respondents have manifestly failed in their duty of disclosure;
g.The wife made meaningful contributions, especially which would fall for consideration under s 79(4)(c);
2.The balance sheet contended for by the wife ought to be found to be the best attempt at stating the property of the marriage and, consistently with authority, the Court ought not to be unduly cautious about making findings relying on the wife’s balance sheet contentions.
…
4.The Court ought to make adjustive orders in favour of the wife, totalling a sum of about $100 million.
5.Alternatively and adopting the balance sheet contended for by the wife, the Court ought to assess contributions at 10% and s 75(2) factors at 10%, resulting in the wife being entitled to 20% of the identifiable pool (ie, the balance sheet contended for by the wife), resulting in her being entitled to a sum which exceeds the adjustive orders she seeks.
6.The Court is able to make orders, which will be enforceable in Australia and in [Country AD] for monies totalling $1,234,952 in Australia and $25,550,947 in [Country AD]. The sum of the real property in Australia is $21,847,700. The balance of any adjustive order may require the wife to take additional enforcement steps in Australia and in other jurisdictions.
7.The wife seeks injunctions to continue on a final basis and to dissolve on her being paid in full. Respectfully, this is necessary due to the husband’s demonstrated willingness to breach Court orders in Australia and in China.
8.Orders are sought for the husband to indemnify the wife and guard against any unintended income tax consequences being visited upon her in Australia, pursuant to Division 7A of the Income Tax Assessment Act 1936 (Cth) (ITAA1936), noting she is unable to control the source of funds for any payments made pursuant to final orders of this Court.
In WFF, her senior counsel recorded the submission that:
54.If the Court finds that [AB Ltd] is the alter ego or that the entity is held on trust for the total benefit of the Husband, the natural conclusion the Court must arrive at is that the assets of the Husband and the Brother were acquired with the income derived from this entity…
The wife’s senior counsel in final submissions resiled from any assertion of sham or express trust. Her senior counsel contended that the acquisition of the Suburb P Properties gave rise to a resulting trust and that in the event that the Court did not accept that AB Ltd was the husband’s alter ego, then it was held by the husband’s brother on a common intention constructive trust.
The wife sought orders as set out in Exhibit 248. In broad terms she sought the transfer to her of four properties in Australia, the transfer of the husbands shares in GG Pty Ltd and that he resigns as a director of that company, that she retains the balance of funds in account number …47 and that the husband pay her within 60 days the sum of $105,144,000. In addition, she sought orders and declarations in relation to assets held by the second and third respondents such that they transfer to her two properties at Suburb P or in the alternative the husband pay her a further $16,000,000 as well as other declarations, indemnities and orders.
THE HUSBAND’S CASE
The husband’s case was articulated by his King’s counsel in HWS as follows:
12.The wife’s relief in this Court starts from the premise of a short relationship, where cohabitation was for a period of 6 years and 10 months. Her wife ranging contentions are premised on a theory – being the only “theory” she gave evidence of – that the husband has, from at least 2005 when [AB Ltd] was incorporated (some four years prior to the parties’ first meeting), conducted his financial affairs in a manner designed to hide his true wealth by purchasing assets in the names of others to protect him in the event of divorce. That inference is rebutted by the evidence and conduct dealt with below.
13.In broad terms, the husband’s position on various issues may be outlined as follows:
(a) as to a contended beneficial ownership in [AB Ltd]:
(i)the evidence does not prove to the requisite standard of proof that the husband has a beneficial interest in [AB Ltd], or that the second respondent’s shareholding in same is a “sham”. The wife’s case is circumstantial, and suffers the failure to confront a number of the issues below;
(b) as to some balance sheet issues:
(i)the parties’ assets and alleged interests in property situate in China ought not be included in the balance sheet in this proceeding. Not only does that reflect the wife’s stated position in cross-examination, but it is a necessary approach to satisfy the justice and equity requirement of any sec 79 order. That is because it could never be just and equitable to make a sec 79 order by reference to property interests in China whilst simultaneously ignoring the quantum of the wife’s claim in the extant second China proceeding. The issue is solely of the wife’s own making, having commenced the second China proceeding whilst this proceeding was on foot;
(ii)in many instances, the wife seeks to include specie of property in the balance sheet premised upon a simple assertion that the husband has an interest in such property, or owns such property (including, for example, bank accounts in China), and where she does not lead any evidence, whether probative or otherwise; of same, and the husband was not asked a single question in respect of those alleged interests. An assertion is not evidence: see Alfasi & the Alfasi Group (2006) FLC 93-271 at 80,596 ([53]);
(c) the sec 79 issue:
(i)the determination of the wife’s wide ranging assertions of the husband’s alleged interests in property ultimately is of negligible effect to the overall sec 79 determination;
(ii)the period of cohabitation was in the order six years and ten months. The wife’s contributions were minimal, a matter reflected by recognition that in a trial affidavit of 102 pages (without annexures) her evidence as to contributions is limited to four and a half pages, and principally comprise asserted non-financial and homemaker contributions;
(iii)no further adjustment pursuant to sec 79 is warranted having regard to:
A.the parameters of what might conveniently be described as a “short marriage”, with a period since separation almost as long as the period of cohabitation;
B.that the wife entered the relationship with little by way of assets. In contrast, the husband held an interest in 11 real properties, substantial savings of RMB 6,062,984 (AUD $1,255,557), and interests in various companies;
C.the husband’s initial contributions were the foundation for the wealth accumulated by the parties during their short relationship. Even assuming for one moment that the husband was found to be the true beneficial owner of [AB Ltd], that interest would constitute an overwhelming contribution of the husband;
D.the only meaningful contributions were those of the husband. The wife’s contributions comprise asserted non-financial and homemaker contributions in the context of a short relationship bearing no children. She advances a “lump sum” rather than a percentage case for property division;
E.since separation she has received or retained approximately $5,556,272;
F.in addition, consequent upon the determination of the first China proceeding, the wife received the equivalent of AUD $5,723,240;
G.in the extant second China proceeding she seeks a cash payment equivalent to AUD $13,021,792 on account of asserted property interests in China; and [Country AD] she also has the [Country S] proceeding on foot.
(Footnotes omitted)
The husband sought orders as set out in Exhibit 249. In broad terms he sought the wife resign as a director and transfer her shares in GG Pty Ltd, remove various caveats, vacate a property at Suburb K and pay his costs.
THE SECOND–FOURTH RESPONDENTS’ CASE
The second-fourth respondent’s case was articulated by their senior counsel in RWS as follows:
1.The Wife has advanced wide, and ambit, claims against almost all the assets held by the second, third and fourth respondents (“Respondents”) which they hold throughout the world. If the Wife’s case is made out, the Respondents own almost nothing in the whole world. All that they have ever owned—including their family home—is held for the benefit of the Husband. And, that case is advanced based on little more than the Wife’s conjecture and beliefs.
2.Central to the Wife’s case against the Respondents is the ownership of the Fourth Respondent (“[AB Ltd]”). The Second Respondent (“[Mr A Wun]”) has always been the sole shareholder and director of [AB Ltd]. It was incorporated some four years before the Husband and Wife’s relationship commenced. That is not a propitious factual basis on which to assert that: (i) [Mr A Wun] has no beneficial interest in [AB Ltd], and (ii) the Husband sought to insulate [AB Ltd] from the Wife’s claims. It is certainly not a sound basis on which the Court could uphold the Wife’s claims.
3.The Court must keep firmly in mind that if Wife is to make good her case against the Respondents, she must demonstrate that:
(a)The Husband would have a claim which is bound to succeed against the Respondents;
(b)The claim would entitle the Husband to orders from a court of equity which would require the Respondents to convey to the Husband, immediately, all assets they hold in their own name(s);
(c)The Respondents have no defence or counter suit to that claim; and
(d)Having found all of those matters, in the circumstances of the facts of this case, and taking into account all the assets already obtained by the Wife, including by way of interim property orders, it would be just and equitable to order that those assets be transferred to the Wife.
4.If the Wife cannot demonstrate that the Respondents’ assets form part of the pool of assets of the marriage, their ownership cannot be disturbed in these proceedings.
…
7.Trusts, of whatever nature, and equitable interests in land and other property do not just arise because the Wife believes they do. She must demonstrate that the Husband’s asserted interest would be cognizable, and enforced by, a court of equity. Without any element of that, her claims against the Respondents must fail.
The respondents sought orders as set out in Exhibit 247 being the discharge of injunctions, the release from undertakings, for the wife to remove caveats and the payment of their costs.
ISSUES
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.
In establishing her case, she relies not only upon a plethora of documents but also upon inferences. In that respect, in WWS her senior counsel submits:
44.…“…each proven fact may gain support from the others and, although each, considered in isolation, might not provide a sound basis for inferring the ultimate fact to be proved, a combination of all facts might provide a compelling basis from which to draw that inference”.22
45.In Gare & Farlow (2023) 67 Fam LR 127, Austin J stated at [46] that an inference may be “deducted from a number of pieces of evidence” so long as the inference is reasonable drawn.
…
22 (Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 per Winneke P at 128 cited in Wei & Xia (No 5) at [163])
(Original emphasis)
In relation to her capacity to prove her case, she invites the Court to draw conclusions from what she asserts is the husband’s failure to fully and frankly disclose, not just documents, but information.
Consequently, the wife submits that the Balance Sheet as constructed by her represents her best attempt at recording the parties legal and equitable interests albeit constricted by the husband’s failure to disclose. In that respect, she submits that:
18.the Court ought to be satisfied that it is appropriate to take a …robust view in relation to findings regarding the husband’s financial position … the Court ought to err on the side of generosity to the wife, given the enormous disadvantage visited upon her by the respondents’ lack of candour (See Graf-Salzmann & Graf [2015] FCWA 68 at [291], a decision cited approvingly in Sanderson & Sanderson [2021] FamCA 342 per McClelland DCJ, which laid the foundations for this submission).
Each of the parties urge the making of findings as to credit. The wife submits that the case cannot be determined without making credit findings.
Over the ten days of evidence, I have listened carefully to and watched the parties, and their witnesses give their evidence. I have closely compared their oral testimony with their written evidence and the vast array of documents tendered in the proceedings.
Each of the parties were at times during cross-examination found wanting. Some explanations were implausible while others were inherently unbelievable. In the case of the husband and his brother, they admitted to mendacity. There is an inconsistent juxtaposition between on the one hand much of the oral and affidavit evidence of the husband and his brother compared with historical documents. This conclusion calls into question the inherent reliability of each party’s affidavit and oral evidence and the inability of the Court, despite urging, to accept and/or prefer on all issues the evidence of one over the other.
Particularly in a circumstantial case with numerous elements and one where credit loom large the Court “must feel an actual persuasion” of the case advanced by the party bearing the onus of proof. The concept of actual persuasion was elucidated by Emmett J in Warner v Hung (No 2) (2011) 297 ALR 56]:
48.Under s 140(2) of the Evidence Act 1995 (Cth) (the Evidence Act), the Court must, in deciding whether it is satisfied that a case has been proved to the requisite standard, take into account:
•the nature of the cause of action or defence;
•the nature of the subject matter of the proceeding; and
•the gravity of the matters alleged.
When proof of any fact is required, the court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361–2; [1938] ALR 334 at 342.
The Wife’s Credit
King’s counsel and senior counsel for each of the respondents urge a finding that the wife is either an unreliable or not credible witness. In that respect, the husband submitted in HWS:
60.The wife is not a reliable witness. She was evasive when answering questions and on occasions questions had to be asked on multiple occasions prior to the wife providing a direct answer to the question asked.
While the second to fourth respondents submitted in RWS:
81.The Wife was not a credible witness. Her evidence was at times incredulous, self-serving, and contradictory. The Court should only accept her oral evidence where it is against her own interests, or is supported by a credible contemporaneous document.
The wife’s evidence in relation to the various loan applications (Exhibits 9 and 10) was implausible and at times fanciful. In relation to the loan application for a property at Suburb CF, she admitted that the particulars on the loan application were false, contending they were made up by the lending manager. Part of the loan application included a letter purportedly from AG Co. Ltd, City R, which falsely represented the wife had worked for that company from mid-2012. The wife acknowledged that the contents of the letter were incorrect. It was not explored with her how such letter came to be included in the documents in support of the loan application.
The wife admitted that the loan application for the Suburb CJ property also contained information that was false. As with the Suburb CF application, it also contained a letter from a company representing that the wife had worked for the company. A friend of the wife was a director of that company.
When questioned as to how the bank might have a letter that falsely claimed that the wife had worked for the company (associated with a friend of hers) she said that it was created by the lending manager. I do not accept that evidence of the wife. It is implausible. Understandably, there was no re-examination on this issue. I am satisfied that the wife provided each of the documents to the lending manager knowing them to be false for the purposes of obtaining a financial advantage.
The wife was carefully cross examined by the second to fourth respondent’s senior counsel about the preparation of her affidavit, whether she had carefully checked the facts and included all relevant information. She was asked about the conversation that appears in her affidavit as follows:
199.In or about 2012, I had a conversation with [Mr CK]. I said to [Mr CK] words to the effect of: I am worried that [AB Ltd] is in [Mr A Wun]’s name. Why is it in [Mr A Wun]’s name? [Mr CK] responded with words to the effect of: Don’t worry. The money is under [Mr A Wun]’s name but the person who is actually in control and operating the account is [Mr Wun]. Don’t worry because [Mr A Wun] has no [input into the] decision as to where the money goes.
That conversation is the only direct evidence of someone who worked for AB Ltd actually asserting that it was controlled by the husband. It carries even greater significance where Mr CK is said to be the accountant for the AB Ltd. It was a very important conversation in the wife’s case. The wife’s affidavit evidence is that it occurred once in 2012. In cross examination the wife said that she had more than 30 such conversations with Mr CK about the ownership of AB Ltd. I find it implausible that had there been 30 conversations about such a central part of the wife’s case she would have overlooked including some reference to that fact in the more than 500 paragraphs in her affidavit.
The Husband’s Credit
In relation to the husband’s evidence, King’s counsel for the husband, while on the one hand submitting that the husband answered questions in a forthright manner and presented as more credible than the wife, acknowledged “that he had lied to the wife” (HWS, paragraph 69).
In breach of an undertaking given to a Chinese court in the Chinese proceedings, the husband transferred money to his brother (Exhibit 29). In late 2020, the Husband attempted to transfer his shares in KK Group (formerly known as KK Pty Ltd) to Mr ZZ, notwithstanding injunctive orders made on 7 July 2020 restraining him from doing so.
I am not satisfied these are the only matters going to the credit of the husband. I am satisfied that by a process of obfuscation and failure to comply with his obligations as to disclosure the husband has sought to obscure the true extent of his wealth.
The authorities make plain that a party to financial proceedings is required to make full and frank disclosure of their financial position (see Oriolo & Oriolo (1985) FLC 91-653; Weir & Weir (1993) FLC 92-338). That case law is reinforced by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). The duty of disclosure is absolute. It is a continuing obligation throughout the litigation and until the point of judgment. It does not relate simply to documents but includes information relating to all relevant and material facts.
In Kannis & Kannis (2003) FLC 93-135, the Full Court underscored the relevance and consequence of a failure to disclose as follows:
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour…
While in Wei & Xia (No 5) (2023) 67 Fam LR 421, Harper J observed relevantly to the issues raised in this case:
166.The jurisprudence in this Court about the consequences of breach of the duty by incomplete or inadequate disclosure are relevant to the assessment of evidence, the drawing of inferences and ultimately may bear on the question of discharge of an onus of proof.
…
174.A failure to disclose in financial proceedings in this Court may lead to unfavourable inferences against the defaulting party very similar to the adverse inferences which may be drawn in accordance with the Blatch v Archer principle discussed above, in the sense of having the effect of discounting the evidence of the non-disclosing party. They are separate bases which can lead to the same or similar result.
175.The line of authority concerning non-disclosure in financial proceedings under Pt VIII of the Act has also tended to concentrate upon the consequences of non-disclosure for ascertaining the property of the parties to the marriage. In other words, it is a specific type of inferential reasoning which comes into play for the purposes of identifying property of parties to a marriage, and then in justifying a robust approach to making just and equitable orders dividing that property. If there is persuasive evidence supporting a reasonably plausible conclusion of the existence of other undisclosed assets, it may be open to the Court to make a finding that such assets exist, or take account of the likely existence of other assets under s 79(4)(e) of the Act (s 75(2)(o) of the Act; HDM and MM [2006] FamCA 47 at [27]Gould and Gould (2007) FLC 93-333; [2007] FamCA 609 at [27] ). Thus, the Court may be persuaded that it would be appropriate to make an order beyond the ascertained property; provided that any order made on this basis can be seen to achieve substantial justice relative to the subject non-disclosure (Hicks and Thomas (as trustee of the bankrupt estate of Hicks) (2021) FLC 94-006; [2021] FamCAFC 19 at [87] ), or all known assets should be awarded to the innocent party, on the basis that the party who refuses to disclose the assets is in fact hiding them (In the Marriage of Chang and Su (2002) 29 Fam LR 406; (2002) FLC 93-117; [2002] FamCA 156 at [60] ). But also the authorities show any inference that a defaulting party is hiding property must be founded upon established facts. Concluding that other assets exist is, like any other fact, a finding, or requires findings, of fact about which the Court must feel “an actual persuasion”.
In the wife’s affidavit at paragraphs 335, 336, 346, 347, 357, 497.1 to 497.2.3, she particularised specific incidents of non-disclosure. The husband’s affidavit specifically responded to many paragraphs. He elected not to respond to these paragraphs. Having adopted such an approach and in circumstances where he is represented by experienced family lawyers, I am satisfied that he accepts that he failed to provide disclosure in those specific requests.
The husband conceded that he transferred to his brother $5 million, contrary to injunctions made by a Chinese Court. This was but one of many instances of the disposal of property post separation by the husband. Part M of the husband’s Financial Statement required him to disclose the disposal of all property post separation. He failed to make any disclosure as required by Part M.
In cross examination, the husband admitted that he had held shares in a company incorporated in the Country AY called AZ Ltd. The company was incorporated by his brother and mother for investment. He said that in 2022, he transferred his shares to his 79 year old mother as she wanted to control the company. There had been no disclosure by the husband of his interest in that company or of its disposal in the currency of the proceedings.
For the above reasons and for those more fulsomely set out below, I am satisfied that the husband has misrepresented his true involvement in AB Ltd. I am satisfied that representations made by the husband to banks, customers of AB Ltd and others more accurately represents the truth than do the representations made by him and his brother in these proceedings.
Credit of Second Respondent (the Husband’s Brother)
Senior counsel for the second respondent submitted that the husband’s brother “…presented as a credible witness, willing to tell the truth, and make concessions against self-interest. His evidence should be believed.” (RWS, paragraph 89). I do not accept that submission.
I am satisfied that the second respondent is perfidious. In the proceedings in Country AD, he swore that he should not have to produce the balance sheet and profit and loss reports for AB Ltd as they were not relevant. A clear assertion that such documents existed.
In proceedings before this Court, he swore that AB Ltd did not create such documents and that they did not exist. The two propositions are irreconcilable. The second respondent during cross examination, admitted that the evidence he gave to Country AD Court was incorrect and then admitted that it was false.
In the same proceedings, he asserted that since the incorporation of AB Ltd the husband had never played any part in the operations of AB Ltd (Exhibit 75). Such assertion is inconsistent with his and the husband’s evidence to this Court.
The brother’s Australian Taxation Returns contained assertions that were untrue. In his tax returns where they called for an admission as to whether the taxpayer had assets of more than $50,000 outside of Australia, he consistently answered no when such proposition was patently untrue.
The husband’s brother asserted that AB Ltd did not have any assets apart from its customer’s goodwill and cash funds for customer orders. That evidence was inconsistent with AB Ltd having an investment in an Australian company CP Pty Ltd and with the husband allegedly owing AB Ltd $3,12,854 (husband’s Financial Statement sealed 13 June 2024, Note 50).
The husband’s brother gave evidence as follows:
45.The Husband is known as ‘[AB]”. I am known as “[…]”. The Husband has been called [AB] since he was at school or university. I cannot now remember the precise time.
46.I used the name “[AB]” in giving a name to [AB Ltd] in part because it was a name familiar to me. I did not use the name “[AB]” for any other reason.
Apart from the logical inconsistency inherent in paragraph 46 of his affidavit that he used the name AB Ltd in part because it was familiar to him and not for any other reasons, that evidence is inconsistent with other evidence.
During cross examination, the husband’s brother gave evidence as to the choice of the name for AB Ltd as follows:
THE INTERPRETER: At the beginning, when the agent for [Country WW] company registration asked me to choose the company name, I firstly chose the name of […]. But that name was not available at that time, already been registered. But the second time, when I went to the agent’s office the second time, the agent told me, “give me two options, let me check and see if they are available, and if both of them are available, you can choose”. So I gave the agent two choices, which were […] – the first one was […], which is my name, but it’s not available any more. And the second choice I gave was [AB]. And it’s also my brother’s name. So that’s why I gave the agent the second choice, which is [AB Ltd].
(Transcript 17 July 2024, p.594 lines 5–15)
He was then cross examined about a representation made in the Country AD proceedings.
HIS HONOUR: You will see that in paragraph 27 and 28, you have dealt – and 29, you’ve dealt in those three paragraphs as to the circumstances in which you came to call the company [AB Ltd]. Do you see that? See that?
THE INTERPRETER: Yes.
MR SIRTES: In paragraph 27, all you say is you didn’t choose the name [AB Ltd] for any special reason. You only chose it because it formed a catchy combination […], and [AB] was available for registration at the time. Do you see that?
THE INTERPRETER: Yes.
MR SIRTES: So there was nothing in there about you […] wanting to use the name […] that was taken and then settling on the name of [AB Ltd]. None of that was included there, was it?
THE INTERPRETER: Because this – a document was drafted by my lawyer in [Country AD], at that time the lawyer didn’t ask me this specific question and he just drafted the – by himself and according to his understanding. But after I read it I thought there is no problem with that, so I signed the document.
(Transcript of 17 July 2024, page 594 from line 35 – page 595 line 10)
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
The wife contends that AB Ltd is the alter ego of the husband. The concept of alter ego, if established, enables the Court to treat, in financial proceedings, the assets of a third party as the property of a party to the marriage (see Ashton and Ashton (1986) FLC 91-777 (“Ashton”)). In Ashton, Strauss J, with whom the balance of the Full Court agreed, held at 75,653:
… In my opinion, in a family situation such as the one here, this Court is not bound by formalities designed to obtain advantages and protection for the husband who stands in reality in the position of the owner.
That is, the Court looks to what is in essence the reality of the situation.
In Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 (“Ascot Investments”) the High Court observed that an exception to the inability of the Court to make orders against third parties could arise in circumstances where the third party is a “mere puppet of a party to a marriage” at [355].
In E Pty Ltd and Ors & Zunino & Anor [2020] FamCAFC 216 the Full Court observed as follows:
11.The scope of the court’s powers to treat property in the name of a third party as though it is the property (or a financial resource) of a party was considered recently in Harris & Dewell and Anor (2018) FLC 93–839 (“Harris & Dewell”). In Harris & Dewell the Full Court referred to Gibbs J’s seminal judgment in Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 (“Ascot Investments”) at 354–355:
20.The position is, I think, different… if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it…
21.Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it…
…
12.Pivotal to “alter ego” and “mere puppet” cases is evidence that the entity, for example, through a trustee, director or shareholder, acted at the spouse party’s bidding (Ascot Investments at 355). Thus, and by way of example, as the Full Court said in Stein and Stein (1986) FLC 91–779 (“Stein”), the court is concerned with the reality of the situation and, “[i]t is not open to a party to assert on the one hand that the assets acquired in a family trust are not his and at the same time deal with them as if they are” 75,674. Although the published cases are replete with unsuccessful attempts to establish an alter ego scenario, as Stein demonstrates, it can be done.
I am satisfied the concept of mere puppet can be extended to a situation where a spouse party exercises no legal control over the third party if the circumstances demonstrate that the ‘reality’ is that they do. In that event, any perceived impediment arising by the absence of legal control will not stand in the way of a finding that the third party is a mere puppet of the spouse party.
In the wife’s Further Amended Points of Claim, she asserts the following in relation to AB Ltd:
8.In or about the beginning of 2005, the husband established a separate company, [AB Ltd], for the purposes of receiving income from his business ventures,
9.[AB Ltd] was incorporated in [Country WW] [in early] 2005.
10.The husband advised the wife that he had previously chosen the name “[AB]” for the company, as this was the husband’s nickname.
11. The husband selected [Country WW] as the jurisdiction in which to establish the business because of the favourable tax rate or companies in [Country WW].
12.In 2009, shortly after the parties met, the husband told the wife word to the effect, “I don’t pay much tax because I set up the most valuable company in [Country WW]”.
13.The husband arranged for his brother, the second respondent, to be nominated as the sole shareholder and director of [AB Ltd].
14.At or about that time [AB Ltd] was established and incorporated:
a.the husband had a long-term girlfriend (not the wife); and
b.the husband told his family members at a family meeting that he wanted to “spread the risk” in the family in the event that he married and subsequently divorced in the future.
15.The husband advised the wife during the marriage of the conversation referred to in the preceding paragraph.
16.In appointing the second respondent as sole shareholder and director of [AB Ltd], the husband:
a.sought to protect his assets from being included in any future property settlement disputes;
b. was following a common business practice in China among successful business people of putting a business in a third party’s name as a way of reducing the risks associated with owning a business;
c.intended that the second respondent would hold the shares in name only and for the benefit of the husband, and that [AB Ltd] would be the husband’s alter ego and/or puppet (an intentions share and/or agreed to by the second respondent); and
d.sought to disguise the true ownership and control of his assets, [AB Ltd] and the assets held in the name of [AB Ltd], while maintaining de facto use and control of the same (an intention shared and/or agreed to by the second respondent).
The wife gives no evidence to support paragraph 10.
The conversation at paragraph 12 of the Further Amended Points of Claim is denied by the husband. There is no direct evidence that the husband arranged for his brother to be nominated as the sole shareholder and director of AB Ltd. The brother says it was established by him in Country WW to enable easier trade with the Country UU because at that time there were exchange rate controls imposed by the Chinese government which limited the amount of foreign currency that could enter and leave China.
There is no evidence to support the assertion in Paragraph 14(b) of the Further Amended Points of Claim. The proposition advanced by the wife at Paragraph 16(a) of the Further Amended Points of Claim was explored extensively in cross examination and was the subject of submissions by the wife. In her submissions, the wife contends that the establishment of AB Ltd in Country WW was part of an asset protection measure strategy by the husband in part informed by the fact that he was at that time in a relationship with a woman to whom he would ultimately pay RMB20,000,000. This case theory requires on one view the satisfaction of two matters; firstly, that there is a coherence in the husband’s approach and secondly, that a de facto partner under Chinese law has a claim on the other de facto partners assets. There is no evidence that under Chinese law non-married parties can make a claim on the property of the other.
This case theory of asset protection measure sits inconsistent with the husband purchasing property in the joint names of himself and his brother and in his sole name in 2007 and 2008. In that respect, the wife urges factual findings that between 2007 and 2008, the husband purchased real estate in China in his own name having a value for the purposes of the hearing of in excess of $33 million, property jointly with his brother having a value of $25 million and in Australia having a value of $3,000,000 (WFF, paragraph 15). The husband’s affidavit records that during the marriage he purchased a further 10 properties in NSW.
In addition to real estate, the husband was already the holder of shares in BH Ltd in 1999, AG Co. Ltd in 2003, and KK Pty Ltd in 2004. Following the incorporation of [AB Ltd], he acquired shares in BG Company in 2006, CC Pty Ltd in 2010, BV Ltd in 2012, BI Ltd in 2016, AA Pty Ltd in 2017, EE Pty Ltd in 2017, LL Pty Ltd in 2017, and BB Pty Ltd in 2017. In addition, post the parties separation the husband acquired the brother’s shares in AG Co. Ltd. This sits inconsistently with the wife’s case theory.
There is no evidence to support the contention advanced in Paragraph 16(b) of the Further Amended Points of Claim.
The respondents submit that contention that the husband is the true owner of AB Ltd is inconsistent with representations to the contrary made by the husband in Exhibits 30 and 31. The emails which comprise Exhibits 30 and 31 are self-described by the husband as a “Table of Family Assets” or the “Family [Business]” emails. The husband says that he sent the first email to show how wealthy he was but also said that the contents of the email were not entirely truthful where, for example, it indicated that he had a Country UU income. The wife’s submission on this issue is to the following effect:
111.When questioned as to why the Husband consistently represented to the Wife in 2011 that he derived a salary from [Country UU], and that, as opposed to representing a monthly salary as represented for other entities, representing a yearly income (i.e., akin to dividend payments) during the course of cross examination, the Husband provided as follows “So when my wife check my bank accounts, she can easily see my salary income and how – yes, she can easily see my monthly salary income at the end of each month. So if – for [Country UU] salary, if I did the same thing as a salary – as – as a monthly salary income, it would be very easy for her to find out that is what I made up. So if I put down the annual income, at least I got one year. And probably, by that time, we got married already” (T331.10).
112.When questioned as to why he would include a [Country UU] salary at all, when he asserts no interest or income from [Country UU], the Husband provided during the course of cross examination: “So for – for Chinese, if you have a salary from [Country UU] company, the – the value is actually greater than the same amounts that you can receive in China, especially at 2011 – the social – the social value.”(T316.01)
113.Notably, the inclusion or exclusion of the salary derived by the Husband in his representations to the Wife would not significantly alter his financial circumstances. It is unclear what ‘social value’ could be derived from this. The Husband asserts that some of his representations were honest, some were dishonest, and some were exaggerations (Husband TA, 196 to 200) (T317.05). The far simpler explanation is that the Husband was being truthful and is now trying to demur from his position (T317.01). When this was raised with the Husband during the course of cross examination, the Husband represented that “So at that time, I would not consider my behaviour as dishonest. I did exaggerate what I had at that time. I did make up something, but I would not say the entire thing that is dishonest. And if I do want to lie, I would not even provide this document”. (T317.05)
The husband’s evidence demonstrates his preparedness to lie and mislead. The husband admits that the document is not an entirely truthful representation of his asset and income position. I consequently do not conclude that the absence of a reference to AB Ltd is evidence supportive of the husband’s case. It is merely evidence that there is no reference to AB Ltd.
The wife’s assertion in Paragraphs 16(c) and 16(d) of the Further Amended Points of Claim are I am satisfied for the reasons advanced below the most plausible explanation. Such an explanation is consistent with aspects of her evidence and her case as presented in cross examination of the husband. In her affidavit she says:
64.The husband told me that he established [AB Ltd] in [Country WW] in the Second Respondent’s name for a number of reasons including:
64.1Following the commencement of our relationship in 2009, the husband said to me words to the effect of:
64.1.1.I don’t pay much tax because I set up the most valuable company in [Country WW].
64.1.2.The most valuable company is in [Mr A Wun]’s name. They won’t be able to trace income to me.
64.2The husband said to me words to the effect of: the companies I buy [products] from all want US dollars. They don’t want RMB. I don’t want the income coming into China and then having to transfer it out again.
The wife submits that the Court should find that the husband’s brother has had nothing to do with AB Ltd since its inception. She submits that his sole involvement was to be recorded as a director and shareholder. She further submits that as of 2005, the husband’s brother had only ever been an employee and had not “exhibited a jot of entrepreneurial flair” (WFF, paragraph 64) and had no experience with the business. This, she submits, is to be compared with the husband who by 2005 was the part owner of a factory, a shareholder in a company, the owner of real estate and earning between $1,000,000 and $2,000,000 per annum. Her senior counsel submits that the evidence that the husband’s brother set up AB Ltd is no more than a mere assertion. The wife also casts doubt on the husband’s brother’s ownership of AB Ltd in the context of having established this profitable enterprise, he then emigrates to Australia and takes a job earning a very modest salary.
Counsel for the second to fourth respondents respond to this submission, asserting that the husband’s brother had, prior to incorporation of AB Ltd, seven years of experience exporting goods from China and had experience in the business through his employment. In relation to the brother’s past involvement in the business, the transcript records as follows:
MR SIRTES: But you don't say that prior to 2005 when you established - when you say you established [AB Ltd] you had any business involved in [products] at all, do you?
THE INTERPRETER: Actually, [BR Ltd] - that company had the business in [the] industry.
MR SIRTES: You don't say that in any of your affidavits sworn these proceedings, do you?
THE INTERPRETER: But in my affidavit, I said - but in my affidavit, I said from the 2000, or beginning of 2001, I started into do the business when it was in [CQ Company].
MR SIRTES: Now - but that wasn't your business, that was a business of [CQ Company], wasn't it?
THE INTERPRETER: But I receive dividends from [CQ Company].
MR SIRTES: Why would you receive - why would you receive dividends if you weren't an owner in that company?
THE INTERPRETER: Actually, at that time in China, the practice was if you worked - if you work at a state-owned foreign trade company, you can get a salary plus dividends or commission.
(Transcript dated 16 July 2024, p. 537 lines 20–45)
The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 emphasised and reinforced that the proper approach to the assessment of contributions is:
35.… well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. …
I am also mindful of what the Full Court said in Singerson & Joans [2014] FamCAFC 238 at [66], namely that for the purposes of s 79 of the Act, there is nothing to suggest that any category of contribution needs to be quarantined and applied solely to particular assets. In my view, the authorities require evaluation of all contributions to the property of the parties. This view has been confirmed by subsequent Full Courts such as in Jabour & Jabour (2019) FLC 93-898, where their Honours observed that a primary judge should be cautious in emphasising the importance of an increase in value of a particular item of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (at [35]). The consistent theme from the authorities is that the multifarious contributions throughout the relationship and subsequently, of all types, are to be assessed in a holistic way.
One of the issues in the proceedings is the date on which the party’s commenced cohabitation. The wife contended that they commenced living together from July 2009 while the husband contends August 2011.
There was no submission advanced as to what was meant by cohabiting. I will presume that it was intended by the way the affidavits were drawn to equate with a relationship that would meet the criteria of a couple living together on a bona fide domestic basis in accordance with s 4AA of the Act.
In the wife’s Further Further Further Further Amended Initiating Application sealed 27 February 2024 she posited they commenced cohabitation on 1 July 2009. Despite the specificity of such a date, at paragraph 18 of her affidavit she contended more generally that they commenced living together from July 2009.
The husband, for his part, contends in his Further Amended Response sealed 24 June 2024 that the parties commenced cohabitation on 5 August 2011. It is an agreed that as and from that date they were living together in China.
The wife in her affidavit says that she met the husband in May 2009 and that in June 2009 the husband travelled to spend time with her at City EH after which she says the relationship became serious. In July 2009, she says she travelled to City R, staying at the husband’s residence until late 2009 when they travelled to Australia. She says they stayed with his brother and his wife in the husband’s home at Suburb D, NSW. The wife says the husband travelled on business trips to China and that she felt isolated and unhappy and that the husband was rarely at home. She says that she and the husband then separated in November 2009. She then moved to the UK and that “the husband travelled to the UK [in] October 2010, and we reconciled” (affidavit of wife filed 10 November 2023, paragraph 441).
Notwithstanding having sworn that the parties were separated between November 2009 and October 2010, when it was put to her that she was separated between November 2009 and September 2010 the wife said, “we were separated for a few months but not during this time” (Transcript of 9 July 2024, page 114 line 20). Her answer in cross examination is inconsistent with her affidavit.
In her affidavit, she says the parties reconciled in October 2010 and:
441.We lived in my [City D] accommodation for about [12] months whilst I continued to study.
Given the earlier assertion that the relationship resumed in October 2010, if they lived together for 10 months then it would be an almost continuous period of living together until the return to China in August 2011.
It was put to the wife that the husband travelled to the UK on four occasions between October 2010 and August 2011 and that he visited her occasionally. The wife says that the time he visited was more than half a year and that he lived for that period mostly in the UK (Transcript of 9 July 2024, page 114 lines 40–50). The use of the word “mostly” is on one view inconsistent with her earlier assertion that they lived together for 12 months.
The wife in her submissions in support of an earlier cohabitation date refers to an email sent by the husband in March 2011 with the subject “Let begin our Happy Life”. The email attached a document described as a “Table of Family Assets” (Exhibit 30). The husband agreed in cross-examination that the purpose of sending the document was to give her comfort that she was going to spend her life with someone who was a man of means. It was submitted that in doing so:
14.That the husband was divulging private financial information from early 2011 to the wife, supports a finding the relationship commenced in either 2009 or 2010.
The difficulty with that submission is that the wife’s evidence is that the parties cohabited from July 2009 not “either 2009 or 2010”.
The wife was cross-examined on her “Application for Migration to Australia” (Exhibit 16). The wife admitted in cross-examination that she completed the application and that she did so truthfully. One of the questions in the application was “Date applicant and sponsor committed to a shared life together to the exclusion of all others” to which the wife answered, “4 October 2011”. This date is even later than the date advanced by the husband.
There was a paucity of evidence as to the nature and characteristics of the party’s relationship between July 2009 and November 2009 and then between October 2010 and August 2011. The evidence, such as it is, consists of not much more that a series of bald statements as to a date.
The highest the wife’s evidence gets is that from June 2009 the relationship “became serious”, that she travelled to Australia with the husband and that he appears to have stayed in Australia only for a short time given her evidence that she was lonely, and that he was away for business. The relationship such as it was ended on her evidence in November 2009. I am not satisfied that I could find that the parties cohabited in the period between July 2009 and November 2009 notwithstanding the wife accompanying the husband to Australia in September 2009. The wife carried the onus of proof to establish the elements of the relationship between the parties at that stage to invite a conclusion they were a couple living together on a bona fide domestic basis. I am not persuaded on the limited evidence adduced that she has discharged the onus of proof. I am not satisfied that the wife really knows when the parties commenced cohabitation in this second period.
In the husband’s affidavit he states:
31.In about 2010 or 2011, I purchased 2 properties situated at and known as [1 & 2 EG Street, City EH], China, [Ms Zha]'s home town. The properties were registered in [Ms Zha]'s name. I also paid to fit out one of the properties.
I am satisfied that the purchase by him of real estate in the name of the wife “in about 2010 or 2011” is consistent with a degree of commitment to their relationship. Curiously, the wife does not refer to this evidence. It certainly is the case that the email forwarding the family assets document (Exhibit 30) in March 2011 indicated as far as the husband was concerned that the party’s relationship was significant and that he had by that time formed an intention of a future life together as a couple with the wife.
Taking account of all of the evidence on this issue on balance I am satisfied that at least by March 2011 there was a degree of commitment to a life together as a couple such that they could be described as a couple living together on a bona fide domestic basis. There is no issue the parties separated in June 2018.
Consequently, I find that the parties were in a relationship for approximately seven years and three months.
There are no children born of the relationship. The wife asserts in her affidavit that as at July 2009 she held a property in her sole name. She does not provide any particulars as to the identity of that property nor any evidence as to its value.
The husband contends in his written submissions that his assets at or about the commencement of cohabitation were valued at in excess of $16,590,000. I accept the wife’s contention that the task of identifying the totality of the husband’s assets at the date of cohabitation, during the relationship and post-separation is impossible as a consequence of his failure to disclose. The wife concedes that during the course of the relationship, the husband made almost the entirety of the direct and indirect financial contributions.
The wife says in 2013 she sold a property that she owned in China prior to the commencement of her relationship and used the sale proceeds to pay the deposit for the Suburb K property. The deposit paid would appear, from the wife’s unchallenged evidence, to be approximately $260,000. I accept that the wife also contributed during the twelve months that she operated a business in Sydney but otherwise was not in employment.
I am also satisfied that the wife made contributions to the welfare of the family constituted by the husband and wife, notwithstanding that the parties at times had domestic assistance and that the husband travelled overseas for periods over the course of the parties’ relationship.
During the course of the relationship a number of parcels of real estate were purchased in the name of the husband, in the name of the wife, in their joint names and in the name of a company held by the parties jointly. I am satisfied that the funds to enable the purchase of those properties were provided from the assets and/or financial resources of the husband, other than in relation to the purchase of the Suburb K property. The husband’s initial contribution was significant, and I recognise consistent with cases such as Gadhavi and Gadhavi (2023) 67 Fam LR 174 the context of the husband’s initial contributions, the opportunity that it provided and the impact of that contribution on the subsequent wealth of the parties at the time of hearing. The husband’s contributions are substantial, significant, and dwarf the wife’s contributions. The entirety of the wealth of the parties (whatever and wherever it may be) is the consequence of the initial contributions of the husband as well as his financial contributions over the course of the relationship.
I also recognise the wife’s contributions during the course of the relationship including her involvement in arranging for the home in City R to be renovated and her management of the renovations to that property which do not appear to be denied by the husband. The wife gives evidence that whilst in Australia she undertook the majority of work in relation to the acquisition of investment properties, including sourcing the properties, undertaking extensive internet research, reviewing properties, dealing with mortgage brokers, obtaining home loans and attending inspections/auctions without the husband being present. The husband does not deny in his affidavit the assertions made by the wife despite having an opportunity to do so while electing to respond to other paragraphs of her affidavit.
The wife gives evidence, and I accept that during the parties’ relationship she attended to the majority of the tasks engaged in preparing meals, cleaning and organising the home, washing, maintaining the interior of the home, gardening and grocery shopping.
She also says that she took the husband to doctors and made traditional Chinese medicines to help his medical conditions as well as taking his parents to travel and medical appointments and assisting them with their home renovations. None of these contributions are the subject of challenge by the husband.
While the wife submits that during their relationship the husband built up AB Ltd and that the parties were a “union in every sense and the case law is unambiguously clear about the equality of weight to be afforded to the husbands and wife’s respective contributions” (WFF, paragraph 191). I do not approach the assessment of contributions or any aspect of it adopting notions of equality.
The parties separated in June 2018. In the period subsequent to the parties’ separation the wife contends that she continued to manage the properties in Australia as well as three properties in China with minimal, if any, assistance from the husband. The husband does not deny this contribution. However, it is to be recognised that subsequent to separation the wife had access to significant sums of money provided by the husband. In that respect there does not appear to be any issue with the contributions asserted by the husband in his submissions to the following effect:
146.Since separation in June 2018 the husband will contend that the wife has received $5,556,272 in Australia comprising the following payments:
(a)$795,000 between 8 June 2018 to 17 July 2019;
(b)$213,149 on 13 June 2018;
(c)$1,339 on 6 July 2018;
(d)$700,000 held by the wife in her savings account in August 2018.
(e)$686,734 redeemed by the wife from the [BBB Investment Fund] in May 2020 and July 2020;
(f)$50,243 by way of partial property settlement pursuant to Orders made 20 November 2020;
(g)$500,642 by way of partial property settlement pursuant to Orders made 19 March 2021;
(h)$612,812 from net proceeds of [DA Street, Suburb DB] on 11 May 2022;
(i)$215,255 pursuant to Orders made 10 August 2022;
(j)$781,098 from net proceeds of [CH Street, Suburb CJ] on 28 September 2023; and
(k)$1,000,000 pursuant to the orders dated 25 June 2024.
147.In addition, the husband paid to the wife the sum of ¥26,500,000 ($5,723,240 AUD) as a consequence of the determination of the first China proceeding on 18 January 2022.
(Footnotes omitted)
I recognise that of the $795,000 referred to at 146(a), a significant portion of that sum was applied in reduction of the mortgage over Suburb CJ, albeit recognising that the wife then retained the net proceeds of Suburb CJ. I also recognise that the payment of $1,000,000 on 25 June 2024 aligned with a payment by the wife to the husband of a correspondingly equivalent amount from her accounts in China.
I am satisfied that the contribution assessment overwhelmingly favours the husband. The husband’s contributions are the foundation for the net assets of the parties.
The wife contends the Court should strike a dollar sum in recognition of her contributions. Alternatively, she submits that the Court should assess her contributions at 10%. In that respect she asserts a pool of in excess of $640,000,000. By that measure her contributions would in a dollar sense be assessed numerically at $64,000,000.
The husband submits:
149.Whilst the nature of the contribution assessment is a holistic one, this is not a case of there being a broad brush approach to a myriad of contributions, and to use the words of Campton J, “in a short relationship there is less opportunity for a myriad of contributions.”236 Here, the shortness of the relationship, and the limited evidence offered by the wife on this issue, render her contributions readily identifiable, and most modest in terms.
236 Caughey & Peckham(No 4) [2024] FedCFamC1F 197 at [18].
I do not adopt all of that submission. There can still be a myriad of contributions even in a short relationship. The contributions during the relationship and subsequently are the matters to be assessed.
The husband contends that the Court should not make any adjustment by way of contribution by virtue of the shortness of the relationship, the limited evidence of the wife and the significant benefits she has received from the husband including a payment pursuant to the proceedings in China of AUD$5,723,240 to the wife.
I am satisfied that there should be an adjustment to the wife for her contributions over the course of the parties’ relationship and to the date of hearing. The proposal of the husband undervalues the wife’s contributions and does not pay significant recognition to them. The wife’s assessment at something in excess of $64,000,000 is completely unrealistic even assuming a pool of the magnitude found and bears no sensible or rational relationship to the contributions of the wife over the little over 7 years in which the parties were in a relationship and the post separation contributions which overwhelmingly favour the husband.
I recognise that the wife currently has property having a value of around $9.8 million. Notwithstanding holding property of that value, I am satisfied that there needs to be a further adjustment in the wife’s favour. I have decided in the exercise of my discretion weighing up all of the contributions that a sum of $10,000,000 is an appropriate sum to recognise the contributions of the wife.
SECTION 75(2)
The husband contends that there should be no adjustment under s 75(2) given the disparity as to age, the assets of the wife and her capacity for gainful employment.
The wife contends that there should be an adjustment under s 75(2) in her favour. She contends that the basis for any adjustment is the disparity as to income of the parties, her stated health and the consequence of the non-disclosure of the husband. She contends that the Court should adopt a robust approach.
In that respect, the wife submits in WWS:
199.In Stone & Stone [2015] FamCAFC 18, the Court awarded an 8% adjustment mostly for non-disclosure and as a “hedge” against the husband having successfully concealed further assets or income. This is a case which ought to guide the Court in assessing what sort of an adjustment ought to be ordered under s75(2), and, in particular, having regard to s75(2)(o). Similarly, in Bence & Bence [2020] FamCA 748, the Court awarded a 10% adjustment in respect of issues, including non-disclosure. Notably, too in Wei & Xia, the Court there took into account non-disclosure. In that case, however, the Court regarded the wife’s claims of non-disclosure as being “overstated”. In this case the non-disclosure is egregious and a hallmark of the Court’s inability to properly assess contributions.
(Footnotes omitted, original emphasis)
I accept the wife’s income is sourced from rental properties in Australia and China. I do not accept that the husband has frankly disclosed the extent of his income.
The wife has current property having a value of $9,861,915 albeit I recognise that nearly $2.9 million of that amount represents paid legal fees. The effect of the contribution-based finding is that the wife will have property of $19,861,915.
I accept that the wife is 11 years younger than the husband.
I accept the evidence of the wife’s psychological consultant. He contended that the wife suffers from interpersonal withdrawal and hyper defensiveness which are some symptoms of the post‑traumatic stress response. He contends she needs ongoing support, has emotional fluctuations and needs regular and stable psychological counselling.
There is no evidence that her psychological condition prevents her from undertaking some form of employment.
I also note that the wife has commenced further proceedings in China and also in Country S. There is no single expert evidence of a lawyer from either China or Country S that would permit me to make any assessment as to the merit or outcome of such proceedings.
I do not know what the true extent of the husband’s wealth is. I accept that the husband’s non‑disclosure is significant and egregious. To the extent to which the wife was put to significant cost in determining the pool is a matter more properly considered in the context of costs as opposed to s 75(2).
I am conscious of the authorities that the wife’s senior counsel has referred to in support of a s 75(2) adjustment. There is however a difference between a robust approach to findings and the factors going to a consideration of the matters under s75(2). The notion that an adjustment under s 75(2) is warranted because of a failure to disclose must be principled, not reactive, and must also have regard to the ultimate findings at the contribution stage.
Recognizing as I do that the husband has assets in the many hundreds of millions of dollars, the wife will have assets of nearly $20 million, which is a large sum of money by any measure. In those circumstances I am not satisfied that there is a warrant for a further adjustment under s 75(2).
CONCLUSION
The effect of my findings would be to provide for a property settlement to the wife of $10,000,000 in addition to the assets she already holds. The wife seeks to retain the husband’s shares in the company GG Pty Ltd which are valued at $256,000. I will order they be transferred to the wife.
To give effect to my findings, I propose to order the husband to make a payment of $9,744,000 to the wife within 60 days. Pending that payment, I intend to leave in place the injunctions restraining the husband from dealing with his Australian assets and his funds in Country AD and the brother to the extent to which it is necessary in relation to the assets of AB Ltd in Country AD pending compliance with my orders. Such a course is proper and necessary in light of his demonstrated failure to disclose and past history of noncompliance with orders. The wife will have liberty to apply on seven days’ notice for the purposes of enforcement.
WHETHER THE PROPOSED ORDERS ARE JUST AND EQUITABLE
I am satisfied, having regard to the length of the parties’ relationship, the respective contributions of the parties and the matters under s 75(2)(o), that a transfer of shares in GG Pty Ltd and a payment by the husband to the wife of $9,744,000, taking into account the existing and known property of the wife and the existing and known property of the husband and his non-disclosure, represents a just and equitable determination.
REFERRAL TO THE AUSTRALIAN TAX OFFICE (‘ATO’)
The wife urged a ‘referral’ of all four respondents to the ATO (WFF, paragraph 210). The submissions in support of such referral related only to the second respondent and turned on whether he was an Australian resident for tax purposes between 2012 and 2020. It was urged that as he represented himself to be a resident of Australia in various outbound and inbound passenger cards on leaving and arriving in Australia then he was also a resident for tax purposes.
Senior counsel for the second to fourth respondents submits in RWS that:
76.For the years 2012 to 2020, [Mr A Wun] was a “non-resident” (of Australia) within the meaning of the Income Tax Assessment Act 1936 (Cth) (“ITAA 1936”), s 6(1) and a “foreign resident” within the meaning of the Income Tax Assessment Act 1997 (Cth) (“ITAA 1997”), s 995-1(1). His acquisition and retention of Australian citizenship from 2012 did not affect his residency for income tax purposes. The four-fold residence test in s 6(1) does not depend on acquisition or maintenance of Australian citizenship. (An Australian citizen can be a non-resident or a foreign resident for taxation purposes.) Rather, for income tax purposes, he would only be an Australian resident if he met one of the four tests in s 6(1). [Mr A Wun] did not. That is for the simple reason that he continuously lived outside Australia for eight years.
The second respondent admitted that he received dividends of over $20 million from AB Ltd over the years between 2012 and 2020 and admitted that no income tax was paid on that income (Transcript of 15 July 2024 page 447, lines 40–45). He asserted that he was advised that he was not required to return that income in Australia. In RWS, his senior counsel submits that the Court cannot draw any final conclusions about the second respondents tax affairs for two reasons:
79.…
a)These proceedings are not about his tax affairs. They are property settlement proceedings between the Husband and the Wife. Only a full exploration of all relevant evidence (which is not before this Court) in proceedings presumably between the Commissioner and [Mr A Wun] could allow a court to make findings as to his tax affairs; and
b)[Mr A Wun]’s alleged non-compliance with his Australian tax obligations was first raised in cross-examination. And it was raised on the false premise that he was required to record his foreign income in his Australian tax returns for the years 2012 to 2020. That approach deprived him of procedural fairness in being able to respond to the allegation, such that no finding should be made about his tax position.
80.Similarly, for those two reasons, and because he has ostensibly complied with his tax obligations on the evidence before this Court, no referral should be made to the Commissioner. This is not a case of tax evasion, and there is certainly insufficient evidence to support such a finding…
(Footnotes omitted)
I have not found that the second respondent has evaded his tax obligations. I simply do not know. I am not satisfied that the evidence is such, despite a clear admission that no tax was paid on over $20 million of dividend income, that the second responded has evaded tax due to the ATO. I am satisfied I would need more than mere suspicion and conjecture to warrant a referral.
COSTS
Each party has sought costs against the other, albeit there have not been any submissions made as to costs. In the event that any party wishes to make an application for their costs, they are to file such an application within 28 days of these orders.
DISPOSITION
In light of the above matters, I propose to make orders to give effect to these reasons.
I certify that the preceding two hundred and ninety-six (296) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 25 September 2024
SCHEDULE OF PARTIES
SYC 4269 of 2020 Respondents
Fourth Respondent:
AB LTD
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