Zhai and Juan
[2010] FMCAfam 373
•19 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ZHAI & JUAN | [2010] FMCAfam 373 |
| FAMILY LAW – Property – pool of assets and liabilities – contribution – lengthy separation – just and equitable order. |
| Family Law Act 1975, s.79 Evidence Act 1995 (Cth), s.157 |
| Beneke & Beneke (1996) FLC 92-698 Odgers, S, Uniform Evidence Law (7th Ed.), 2006, Lawbook Co Pyrmont |
| Applicant: | MR ZHAI |
| Respondent: | MS JUAN |
| File Number: | SYC 5092 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing dates: | 1, 2 & 3 March 2010 |
| Date of Last Submission: | 3 March 2010 |
| Delivered at: | Sydney |
| Delivered on: | 19 April 2010 |
REPRESENTATION
| The Applicant: | Self-represented |
| Counsel for the Respondent: | Ms Reynolds |
| Solicitors for the Respondent: | Monaco Lawyers |
ORDERS
The Initiating Application filed by the husband on 12 August 2009 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Zhai & Juan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5092 of 2007
| MR ZHAI |
Applicant
And
| MS JUAN |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration of property interests under s.79 of the Family Law Act 1975, commonly known as an application for property settlement. The pool of assets is modest. The ferocity with which this litigation was conducted was completely disproportionate to the assets in question. The truth is elusive. Neither party was impressive in their evidence. Almost all relevant facts, and many irrelevant facts, were hotly disputed between the parties.
The applicant husband is 45 years old. He describes himself as being unemployed and conceded in cross-examination that, in effect, the focus of his life for the last few years has been this litigation. He represented himself at all times. He is intelligent and articulate and demonstrated an impressive knowledge of family law and procedure, but an appalling inability to present his evidence objectively, cogently and in a form that was of assistance to the court. Amidst the ocean that comprised the hundreds of pages of his affidavits, there were a few tiny islands of relevant evidence. He had no sense of responsibility to present all relevant evidence to the Court, whether it assisted his case or not, and for him the duty of disclosure was but a mere eddy amongst the great oceanic currents upon which he was navigating. Regrettably, for the husband, the truth was a commodity as disposable as a paper tissue in the face of a cyclone.
The Respondent wife is 37 years old. She describes herself as a homemaker. She was represented – by several different firms of lawyers during the course of the proceedings. Her case was a somewhat fluid one, changing at times to meet the ebb and flow of the evidence. Her affidavit evidence was the anchor of her case, but it seems to have drifted several times during the currents of this case. At least her affidavit evidence was, for the most part, cogent and relevant. It was very hard to consistently accept the veracity of her evidence.
After hearing all the evidence in this case the court was left with the profound feeling that the truth was out there somewhere, but it was certainly not to be found in the courtroom.
Background
The parties cannot agree on when they first met or cohabited, but in the end result not much turns on this. There is agreement about the date of marriage in Shanghai, China in December 1996, final separation in Melbourne in about October 2000, and divorce in February 2002.
Proceedings were first commenced in the Family Court of Australia in 2007, then transferred to the Federal Magistrates Court of Australia. There were initial difficulties in effecting service on the respondent wife, the details of which are not relevant in the present context. Leave was granted for the husband to commence proceedings out of time. There was an undefended hearing of the husband’s s.79 application at which orders were made. This was later set aside. Whilst the procedural history of this case is long and convoluted, it is not necessary to understand it in the present context. The parties are diametrically opposed on the two central issues in this case:
1.The constitution of the relevant pool of assets and liabilities; and
2.The assessment of contribution.
There are few factual issues in respect of which they agree. Much additional complexity arises from the very lengthy period since the date of separation and the date of hearing – nearly a decade. It is necessary to make findings of credit about the parties and their witnesses. It is likewise necessary to make some findings about what assets and liabilities relevantly existed at the date of cohabitation, date of separation and at the hearing. Neither party sought an adjustment under s.75(2) of the Act. Much additional complexity was caused by both parties relying on Chinese documents that had been translated. Both parties raised serious issues about the authority of the documents relied on by the other. The claim of “fabrication” and “fantasy” was a common one made in cross-examination.
Both parties claim that they made a greater financial contribution at the commencement of their relationship, and as at the date of separation. Both parties sought to minimise their financial circumstances at the date of the hearing. Both parties have litigated issues relevant to the present proceedings in Chinese courts, either before or during the currency of this case.
Whilst nothing turns on this, the parties probably commenced cohabitation in China in about 1993 or 1994. There is a dispute about where they lived after cohabitation, and what financial assistance may have been provided to them by their respective families during cohabitation and at the time of marriage in 1996. Both parties worked, it would seem, between cohabitation and 1996 in the case of the wife, and 1999 in the case of the husband. In 1996 the wife migrated to Australia, returning back to China from time to time. The husband joined her in 1999. When in Australia the parties both worked and studied from time to time. One of the major issues in dispute is the ownership of properties what will be described as Rooms [1] and [2], [Property N], in Shanghai, and how they were acquired. When they separated in 2000 the wife asserts they entered into an informal property settlement. The husband disputes this.
Issues
Having regard to the broad and general statement of introduction and background set out above, the issues that arise are as follows:
1.Credit issues relating to the parties and their witnesses;
2.Constitution of the pool of assets and liabilities;
3.Assessment of contribution;
4.Determining a just and equitable order.
After setting out the applicable law, these reasons will deal with each of these issues in turn.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
1.Identify and value the property, liabilities and financial resources of the parties; and
2.Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
3.Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4.Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
A significant issue in this matter was the alleged non-disclosure of the husband. Attempting to deal with non-disclosure often puts the other spouse to considerable difficulty with regards to investigating their financial affairs. The Full Court in Weir (1993) FLC 92-338 at 79,593–4 made the following statement regarding the duty to disclose and the Court’s powers where non-disclosure has been found:
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759, and Mezzacappa and Mezzacappa (1987) 11 Fam LR 957; (1987) FLC 91-853. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s 75(2) factors.
Credit Issues
The husband’s evidence consisted of one Financial Statement, an affidavit of [name omitted], an accredited translator, and 8 affidavits of his own. I found the husband to be an unimpressive witness. He was frequently unresponsive, evasive and argumentative in cross-examination. His evidence about the ownership of Rooms [1] and [2] is simply incredible. I will discuss this in more detail below. His evidence was often inconsistent, particularly in cross-examination. His explanations were often unconvincing. His memory was selectively deficient at times, but remarkable at other times.
The Court has real concerns about the accuracy of his financial statement. It is hard to believe that such an intelligent, articulate and well-qualified man could be on unemployment benefits for so long.
The husband’s financial statement was sworn on 12 February 2010. He lists income of $290 per week, expenses of $280 per week, property owned of $1,680, and liabilities of $107,800. His only disclosed income is New Start Allowance. I am sceptical about this. In a document produced on subpoena by [omitted] University dated 23 November 2004, the husband provided to an official of the University a description of himself as “self-employed. Importing/Exporting”. In an application dated 8 October 2004, signed by the husband, he again describes himself as “self-employed”. The same results indicate that he graduated with a [qualifications omitted]. In terms of expenses, his evidence is vague. Only in cross-examination did he disclose that he pays rental. He refers to a CBA Mastercard debt. He discloses no other facility with another bank, and yet annexed to the affidavit of his forensic document examiner, Dr S, which is itself annexed to the husband’s affidavit of 19 September 2008, he annexes an ANZ Access Account card that did not expire until June 2009. The financial statement asserts a HECS debt of $33,300 but the husband acknowledged in cross-examination that it was actually $29,000, and that was at July 2006, meaning that his last two financial statements were incorrect in this regard. His assertions about loans from his mother are uncorroborated by any cogent evidence that receives meaningful weight in this case. His assertion of a liability of $18,000 for his forensic expert is plainly inconsistent with exhibit H4, the actual account dated 22 September 2008 for $12,797.80.
Whilst his approach to his written evidence was meticulous in the extreme, he failed to disclose there several thousands of dollars in Deutschmarks and Hong Kong dollars that he referred to in cross-examination.
I find that the husband ‘let down his guard’ and finally revealed his true feelings about this litigation at p.35 of the transcript (2 March 2010) lines 30-33. In response to a question about why he was not working he stated: “Because your vexatious, lecherous litigation [sic].” In fact, of course, the litigation was started by him. Beneath the husband’s outward layers of intelligence, politeness and articulateness, was a subterranean seething sea of suspicion and sentiment which caused him to surrender to subjectivity. All of the husband’s evidence therefore needs to be carefully assessed having regard to documents and other objective evidence. Where his evidence conflicts with that of the wife, hers is to be preferred but, as will be seen below, this is a general proposition with many exceptions.
The wife’s evidence consisted of her affidavit filed 12 February 2010 and affidavits of Ms Y, Mr Y and Mr D. Only the wife and Ms Y were required for cross-examination. In addition the husband sought to read as part of his case the wife’s financial statements filed 25 March 2008 and 4 September 2008, and her affidavits filed 25 March,
13 August and 4 September 2008. The husband’s reliance on the latter documents arose in closing submissions and in the context where he was asserting they contained evidence inconsistent with the wife’s oral and written evidence in her case. However he could neither specifically point me to these alleged inconsistencies, nor did he put these issues to the wife in cross-examination. Moreover, the wife’s counsel was not put on any notice of his intention to rely on these documents. Having regard to these matters, I disregard the evidence in question.
I have concerns about the wife’s evidence, but not nearly to the same extent as the husband. She was sometimes argumentative and unresponsive, but one must allow for the fact that she was being cross-examined by her former husband who was representing himself. The main concerns I have with aspects of the wife’s evidence is inconsistencies between her oral and written evidence, and occasional inconsistency between the case that she put to the husband in cross-examination, and the wife’s own evidence. The concerns I have about the wife’s credit are, therefore, situational rather than systemic. A close scrutiny of her evidence is required where there is a seeming inconsistency, but otherwise I prefer her evidence over that of the husband.
Ms Y was cross-examined by the husband. I completely reject her evidence. She was unresponsive and argumentative bordering on contemptuous. Given the very limited scope of her evidence I found her behaviour in giving evidence by telephone quite astounding. These proceedings have clearly created enmity between the husband and members of the wife’s new extended family.
Curiously the husband did not cross-examine Mr D or Mr Y. I therefore accept their evidence. Mr Y is the wife’s de facto husband, and the father of their two children. He deposes that this relationship commenced in 2000, and that he and the wife purchased the home at Property B in 2001 though deliberately choosing to put the house in the wife’s name. He gives evidence about how the purchase was financed. In particular he says the wife contributed $7,000 only towards the purchase, being a first home owner’s grant, and he contributed the remaining non-borrowed equity of $23,600 “from my savings” (paragraph 6.4). He confirms that $120,000 was borrowed from Melbourne Home Loans, and $100,000 from his sister Ms Y. He deposes to the mortgage repayments coming from combined family income including Centrelink benefits and his income. This substantially corroborates the wife’s evidence about these issues. It also makes the husband’s case – that assets belonging to the husband and the wife at separation went into the equity of Property B – almost impossible to prove. Mr Y’s evidence also confirms one of the few issues in respect of which the parties to these proceedings agree i.e. that Mr Y holds for the wife 245,200 RMB, which was clearly property of the parties at the time of separation.
Contribution of the pool of assets and liabilities
The parties were unable to agree to a pool of assets – even one which identified points of disagreement. Having regard to the evidence the potential pool of assets and liabilities seems to be as follows:
| Property | Ownership | Value |
| 1. Property B VIC | W | $475,000 |
| 2. ANZ bank A/C | W | $712 |
| 3. A/C [Mr Y] ITF wife | W | $37,400 |
| 4. Furniture | W | $2,500 |
| 5. Superannuation | W | $4,000 |
| 6. Room [1], Shanghai | H | Not known |
| 7. Room [2], Shanghai | H | Not known |
| 8. CBA superannuation | H | nil |
| 9. Toyota Corolla | H | $800 |
| 10. Furniture | H | $880 |
| Liabilities | Ownership | Value |
| 11. Mortgage Property Bt | W | $90,000 |
| 12. Loan from Ms Y | W | $100,000 |
| 13. Mastercard | H | $8,800 |
| 14. AMEX | H | $1,000 |
| 15. HECS debt | H | $29,000 |
The value of Item 1, Property B, was for all practical purposes an agreed value. Whilst the husband’s agreement to this figure was conditional, none of the conditions precedent to this agreement became relevant.
I intend to disregard items 2, 4, 5, 8, 9, 10, 13 and 14 from the pool. Almost 10 years has elapsed since separation. In these circumstances it is hard to see why relatively minor assets and liabilities should be allowed to complicate the assessment of contribution, and distract the determination of already unnecessarily complex litigation. In particular, there is no evidence to indicate that items 13 and 14, credit card debts of the husband, were in existence at the time of separation. Whilst I exclude all of these items from the pool, I will still have regard to them in a general sense when determining whether orders I make are just and equitable.
The figure for item 11, the mortgage over Property B, is adopted from a concession made by counsel for the wife in closing submissions. It is the best evidence the Court has under the circumstances.
The figure for item 12, the loan from Ms Y is based on the combined evidence of the wife and Mr Y. Their evidence about the loan is consistent. The husband did not challenge Mr Y’s evidence. In so far as the husband challenged the wife’s evidence about this loan the Court prefers her evidence over his, particularly as it is consistent with that of Mr Y.
The major issue for determination about the pool of assets and liabilities relates to the properties known as Rooms [1] and [2] in Shanghai.
In the husband’s affidavit there appears to be no evidence about the husband having an interest in these properties. Prior to the actual hearing the husband’s case was resolutely that he had no interest in those properties. Indeed the husband went to considerable expense to obtain the report of Dr S dated 18 September 2008, a Handwriting and Questioned Document Examiner. This report, and its supporting affidavit, is annexed to the husband’s affidavit sworn 19 September 2008.
The context of this report was to respond to assertions by, and evidence of, the wife that the husband was the person who signed a contract to purchase Room [2] dated 15 April 1997. The named purchaser in this contract is clearly Mr Zhai, a person who has the same name as the husband in these proceedings. The husband insists that it is not him. Dr S’s report is a comprehensive forensic document examiner’s report which collected a number of specimen signatures provided by the husband, and compared them to a signature on a copy of the said contract. He concludes at paragraphs 21-23 of his report as follows:
In this case, I have concluded from the nature of the differences observed that there is no evidence that the writer of the specimen signatures wrote the original of this questioned signature. Because of the small amount of writing in the questioned signature and in particular because I have only examined a reproduction, I cannot determine in absolute terms, or in (subjective) probability terms, that this questioned signature was not written by the writer of the specimens in a quite different style from those evident in the specimens.
It should be noted (as explained in table at Appendix “2”) that “no evidence” cannot necessarily be equated with “did not write”. However, the simple explanation for the observations would be that a person other than the writer of the specimens wrote the disputed signature.
General Comment on “No Evidence” Conclusions
The difficulty with signature examination cases such as this one is assessing whether the differences observed are such that a conclusion can be drawn on the balance of probability that the signature in question was written by a person other than the writer of the specimens. This may seem surprising: but the reason is that one has to distinguish between the “forgery” hypothesis and the possibility that the person, whose signature purports to have been written, wrote the signature in a different style (for whatever reason) from those exemplified in the specimens. (For example, I can quite easily make my signature look very different from normal and even look like a “forgery”.) Therefore it can often come down to the person deciding the case (judge, magistrate, investigator, etc.) determining which reason for the observed signature differences is the more plausible. This would in part be based on other information (evidence) in the matter (something of course that I cannot take into account).
Whilst Dr S suggests that there is no evidence to indicate that the husband signed the said contract, he cannot exclude the possibility that the person whose signature purports to have been written, wrote the signature in a different style. I note that it was not a part of the wife’s case that this alternative hypothesis in fact applied to the husband. Given that the signature to the contract appears to be dated 15 April 1997, there is also no discernable motive for the husband to have done so. If the evidence had stopped there, the determination of this issue might have been relatively simple. However it did not.
At this point it is, regrettably, necessary to extract a lengthy portion of the transcript of the husband’s evidence in cross-examination on
2 March 2010 commencing at line 33 on page 29 and concluding at line 30 on page 32.
Mr Zhai, you’ve got some evidence from a handwriting expert. Is that right?---Yes.
And is that because you say your signature is not the signature - sorry, that you didn’t sign a contract to buy Room [2] in China?---Yes.
Do you still say that?---Yes.
Do you know there was a court case in China, about Room [2] - - -?---Yes.
- - - last year? And the court gave a decision in November, last year - on 30 November. Did you know about that?---Yes.
Did you read the court’s decision about that?---Yes.
And part of what the court said was that Room [2] was a gift to you by your mother. Do you agree with that?---I guess I agree with that.
And the court said your mother told the court that - that she intended that property be a gift to you?---That’s your fabrication.
Did you give them evidence at that court, or do a statement or an affidavit for that court?---During the litigation in Shanghai, I have provided certain documents to the court, to prove that the full beneficial owner is Ms L, not me.
Ms L is your mother?---Yes.
Right. And you - was one of those documents a document that showed $90,000 came from her account? Sorry, from her sale of another property?---Actually, it is 98,000, plus a deposit of 2000 RMB, is from Ms L. And the balance was paid by Ms L. So she is the true owner of the alleged property, not me. Although, due to some reasons unknown to me, the registration legal title was spelled in the similar spelling of my name.
HIS HONOUR: Okay. Mr Zhai, this is obviously very important. I want to make sure I understand it. So you’re saying to the court that there is a property at Room [2] - we’ll call that the Room [2] property - that is beneficially owned by your mother, you’re saying?---Yes.
Because she put all the money in it?---Yes. Actually, she own previous property - - -
Yes?---Then because it’s too small, she sold that.
Okay?---And transfer the sales proceeds into the new property.
Okay. But you’re saying to me that the legal title was spelled in a similar name to your name?---Yes.
But it’s not you, you’re saying?---It’s not me.
Okay. So the legal title of this property that is owned by your mother, is in the name of somebody who has exactly the same name as you?---Yes.
But it is not you?---No.
Oh. Okay. Yes.
Carry on, Ms Reynolds.
MS REYNOLDS: So do you believe someone forged your signature, or do you believe there’s another person called
Mr Zhai, who wrote his signature on that?—-As matter of fact, I don’t care about such question. I don’t know. I’m not interesting to know.
Do you know of any other Mr Zhai, that your mother knows of?---You need to ask this question to Ms L, not me.
And Ms L’s going to be coming to court, is she?---Have you ask her to be here, to be cross-examined by you?
You seek to rely on her affidavit, don’t you?---I have relied on her affidavit, but not on this issue. On the 120,000 loan issue.
And does she live with you in Property C, in Property C?---No.
Where does she live now?---She is in China now.
Is she living in Room [2]?---I’m not aware of that - the current situation.
When she did an affidavit in December 2007, she said she was living in Property C, in your address at Property C, didn’t she?---By that time she did.
And when did she leave Australia after that?---I cannot remember that.
Have you been to Room [2]?---I do not remember that.
The - I want to suggest to you that, in the court case in China, you told them that your mother paid $90,000, or 98,000 yuan, on 15 October 1996, to buy Room [2]. You agree with that now, do you?---Yes.
Right. Have you ever told this court, in any of your affidavits or material, about that - about your mother paying for Room [2]?---Because the - that matter is for Ms L, I was not instructed by her. I need to obtain authority to say anything about that, because I never aware of that before the court proceeding in Shanghai, couple of months ago.
She used to live in Room [2] before she came to Australia in December 2007, didn’t she?---The details I cannot remember.
Where did you think she lived before she came to visit you in December 2007?---Probably somewhere in Shanghai.
So when do you say you found out that she had put money into Room [2]?---Couple of days ago, before the court proceeding, she disclose that to me.
And what date was that?---Couple of days ago.
Before today, or before the court decision, or before the court case commenced?---Before my - it should be couple days before the end of June last year.
So did you think you should tell the court about this; that you’ve suddenly found out your mother owns - put the money into [2]?---As I was not aware of that until she disclose that to me.
And you’ve known it since June last year? That’s right, isn’t it?---Yes.
So why didn’t you tell the court?---Then I’ve filed all the documents, including today, the documents I need to inform the court - update the latest knowledge I acquired.
So you’ve know for nine months, and you waited til today, the second day of the hearing, to try to tell the court about it. Is that right?---Because today is the right time to do that. And before that, I think this issue is not relevant to this proceeding.
When you got the handwriting expert, you spent a lot of money on that, didn’t you?---Yes.
About $12,000?---Yes.
Did you talk to your mother before you spent all that money?---No, because I think that contract name is not mine. That’s enough for me to prove my innocency.
Mr Zhai, I suggest you’re lying to the court; you’ve known all along that Room [2] was in your name?---That’s your own opinion.
And I suggest you’ve known all along that your mother had bought that property, and put it into your name?---That is your own opinion.
This lengthy extract together with the totality of the evidence in this case, leads me to find as follows:
i)The husband agrees that Room [2] was a gift to him by his mother;
ii)It may well be the case that the purchase was funded in part or in whole by the husband’s mother;
iii)Room [2] is held in the name of the husband;
iv)He was aware of this since at least June 2009 and probably before that date;
v)The totality of the evidence indicates that the husband’s mother actually occupied this property for some time;
vi)The totality of the evidence indicates that Rooms [1] and [2] are actually part of a single residential flat;
vii)The husband’s insistence that he is not the [Mr Zhai] on the title to the property is manifestly absurd;
viii)The husband was under a clear duty to disclose to the court since at least June 2009 that he had an interest in Room [2], even if as trustee, but failed to do so.
The extract also demonstrates why the court concludes that the husband was often unresponsive, argumentative, inconsistent and indeed quite evasive at times in his oral evidence. The court recognises that at page 33 of the transcript the husband seeks to resile from the evidence he have in the preceding pages, labelling the assertions “fabrication” and “fantasy”. This later evidence is clearly inconsistent with the former. The court does not accept the husband’s evidence at page 33 on the ownership of rooms [1] and [1].
The wife’s evidence about Room [2] is found at paragraph 32 of her affidavit. She asserts that moneys provided to the parties by members of her family were applied towards the purchase of Room [2] on
15 April 1997. She annexes to her affidavit a number of copies of translated documents that, she asserts, establish the husband’s ownership of not only Room [2], but Room [1] as well.
As with many documents relied on by both parties in this case, there are issues about authenticity, reliability and weight. Referring to paragraph 35 of the wife’s affidavit, I place no weight on the documents being annexures E, F and G. I regard their authenticity as dubious. Annexure H is the contract to purchase Room [2], and is the document relied on by the husband in the evidence led by him of the forensic document examiner.
Annexures I, J and K purport to be records of a Chinese Court which Ms Reynolds submitted were admissible under Section 157 of the Evidence Act. The documents do appear to bear a seal which in conjunction with the contents of the documents leads me to conclude that it is a public document in relation to a court process. The husband objected that the documents were inadmissible under Section 91 of the Evidence Act. However, annexure I is not a judgment for the purposes of Section 91. Annexure I does not go to the substantive issue of the ownership of the properties and hence is not being tendered as evidence of facts going to that issue. I accept that annexure J falls into the category of document referred to at paragraph 1.3.6040 of Odgers, Uniform Evidence Law, 7th edition. In particular it evidences execution against the husband. Annexure K probably is a judgment for the purposes of s.91, and this means that I cannot take this evidence as proving, per se, the fact asserted i.e. the husband’s ownership of Rooms [1] and [2]. I accept this limitation. The weight to be given to this evidence is reduced because of this. The court notes, however, that there is ample other evidence to it to reach the same conclusion made by the Chinese court.
One confusing aspect of the wife’s case is that, despite the evidence referred to above, the cross-examination of the husband extracted above was conducted on a quite different basis i.e. an acceptance that the money used to acquire Room [2] came from his mother, rather than cross-examination that advances the wife’s own case about Room [2]. By contrast when the wife was cross-examined by the husband about Room [2] she re-asserted at page 78 of the transcript of 2 March 2010 that funds advanced to them by her family were used to purchase the property. Shortly later she explains the following at page 78 line 42 to page 79 line 9.
THE INTERPRETER: First of all I need to tell the court that [Ms Juan] never acknowledge that he has properties in China. He always say - keep on saying that the [Mr Zhai] in China is a different [Mr Zhai] - not the same person in this court. When I was in China, I already know there’s a room - the existence of [2], but I was never been told that who is the true owner of the room. And at that time I have enough money to gave him - to give him, to buy another set of room, and to renovate, and that because the time I have been started to live in Australia. And he also told me that to purchase properties in China is different from that in other countries, because it needs a long time to registrate - to register before we can actually buy the property. I understand there is the existence of [2] - Room [2], but I had never been told or I am never know that who is the true owner. In June 2003, he raise a court case or litigation against my mum, and I begin to realise that he is the true owner of [2]. But that was after our separation. Before the separation, he always hide behind me, my back, that he is the true owner.
When the Court sought to clarify the wife’s evidence (pp.79-80 transcript) she explained that at the time of separation she did realise that rooms [1] and [2] existed but she did not know who the owner was.
The husband also relies on an affidavit sworn by the wife on
22 March 2006 in Melbourne before a Notary Public in which the wife refers to an agreement for property settlement between the parties, but makes no mention whatsoever about Rooms [1] and [2].
The wife’s evidence conflicts with the way in which the husband was cross-examined, and leaves me with the impression that even she is not entirely clear about the husband’s precise interest in Rooms [1] and [2]. Certainly there is little clear evidence advanced by the wife in relation to the acquisition of Room [1]. There is an inference that it was acquired at a later date. There is a suggestion from possibly unreliable Chinese documents that Rooms [1] and [2] were consolidated into one apartment. The wife asserts, and I find the husband concedes, that at some stage, though not necessarily currently, the husband’s mother was in occupation.
The state of the evidence about Rooms [1] and [2] on Shanghai is unclear. What the Court is confident about, however, is that the husband knows far more that he has disclosed to the court. It does not necessarily follow that the wife made the contributions to the acquisition, maintenance and improvement of the property that she asserts. This will be discussed in the context of assessing contribution.
The court finds that the husband has failed to discharge his duty of disclosure to the court about his true interest in these properties. He repeatedly asserted that the onus of proof was on the wife to establish the husband’s interest in these properties. In the circumstances of this case, and in the context of the husband’s non-disclosure, the onus shifted to him. He did not call the one witness who could have supported his version of events – his mother. He chose not to read her affidavit as she was not available for cross-examination. I had intimated that I was open to an application for her to give evidence by telephone. An inference is available that her evidence would not have assisted his case about the ownership of these properties.
The properties known as Rooms [1] and [2] Shanghai should be included on the pool of asserts as assets owned by the husband. There is no reliable evidence as to value. In the wife’s case outline she asserts that each has a value of $85,000. In closing submissions her counsel said $35,000 each. I place no weight on any Chinese evidence about value. The Court does not know what the value of these properties is. It was the husband’s duty to disclose this information, and he has failed to do so.
The pool of assets and liabilities in this matter will therefore be:
| Property | Ownership | Value |
| 1. 2C Property B | W | $475,000 |
| 2. A/c [Mr Y] ITF wife | W | $37,400 |
| 3. Room [1] Shanghai | H | Not known |
| 4. Room [2] Shanghai | H | Not known |
| Liabilities | Ownership | Value |
| 5. Mortgage, Property B | W | $90,000 |
| 6. Loan from Ms Y | W | $100,000 |
| 7. HECS debt | H | $29,000 |
Assessment of contribution
Doing the best the court can with the husband’s evidence, he seems to be saying that at cohabitation the parties had no, or minimal assets. By 1999 when he arrived in Australia he brought with him savings of US dollars $18,000 in cash which were deposited into a series of HSBC Bank accounts in the names of the husband and wife. There is no admissible documentary evidence to establish this, but I am inclined to accept it because of documents produced by the husband, evidence the wife herself gives (discussed below) and further because of the absence of any serious cross-examination of the husband about these issues.
Again, doing the best the court can with the husband’s evidence, he also seems to be saying that before he arrived in Australia, and certainly by December 2008, he had sent or caused to be sent to Australia a further $60,000AUD (see page 40 transcript, cross-examination of husband, 2 March 2010). The husband agreed in cross-examination that by the time of separation in 2000, on year after he had arrived in Australia, in fact only $45,000 remained, the rest having been used for living expenses in the period after the arrival in Australia of both parties in Australia (p.45 of transcript). The court is inclined to accept this evidence of the husband. It is consistent with other aspects of his case, is consistent with evidence the wife herself gives, and seems to be generally accepted in the wife’s case.
The husband asserted for the first time in cross-examination (p.44 transcript) that in addition to the US $18,000 he brought with him to Australia in 1999 he also brought Deutschmarks and Hong Kong dollars. I do not accept this evidence. There is no mention of this anywhere in the husband’s affidavits. To use one of the husband’s favourite words in his evidence it is “fabrication”.
The husband also asserts, and it is common ground in the wife’s case, that there was by the time of separation also a term deposit of 250,000 RMB. Each party has a different version about how this fund was created, who held it, what happened to it and why, but the fact is that each agrees it should be included in the balance sheet. For this reason there is no need to go into this hugely contentious territory.
The husband’s case is, doing the best the court can to understand his evidence, that he contributed all of the funds referred to above, and that on separation he was left with his car and some furniture. Moreover, the husband’s case is that the wife used funds available at separation as a contribution towards the purchase price of the Property B property.
Unsurprisingly, the wife’s evidence about her contribution is completely different. Whilst she agrees that, at the date of cohabitation, neither had any assets of significance, and she agrees that the husband worked throughout the entire period from cohabitation (which she says was in 1993) to the time he came to Australia (in 1999), there is very little else in common.
She sets her working history at paragraph 18 of her affidavit. The court accepts her evidence in this regard, not necessarily because of the Chinese documents which she annexes to her affidavit, but because the court prefers her evidence to that of the husband. The husband says her evidence is untrue. The court prefers the wife’s evidence notwithstanding.
The wife asserts that her mother provided them with free accommodation from late 1993, to her leaving for Australia in 1996, and the husband’s migration in 1999. The court does not accept this evidence. It is an assertion that could have easily been corroborated by the wife’s mother, but was not. It must be remembered that this is a case where both parties were ready, willing and able to advance foreign documents, witnesses and evidence in their case. In any event the wife’s assertion is inconsistent with her own counsel’s cross-examination of the husband, all of which seemed to reinforce that he travelled frequently in the course of his work. Even though this is a Pellegrino-type contribution (Pellegrino & Pellegrino [1997] FamCA 52), on the facts of this case it would not have received much weight.
From the husband’s perspective, the most contentious evidence of the wife about contribution is found at paragraphs 28-35 of her affidavit in which she asserts what her family made substantial contribution for the benefit of the parties.
In summary, the wife’s evidence is that:
1993 her parents provide 20,000 yuan
1995 mother provides 50,000 yuan
1996 sister provides USD $5,000
1996 her parents provide 88,000 yuan
1996 sister provides USD $10,000
1996 friends and relatives provide 70,000 yuan
Thus the wife asserts that between 1993 when cohabitation commenced and their wedding in 1996, she contributed through the generosity of her family, 228,000 yuan and USD $15,000.
The wife asserts that all of those funds were provided to the husband. In 1997, she asserts, 70,000 yuan was used to purchase Room [2] Shanghai. The purchase price was 140,000 yuan, the balance was provided by mortgage which was paid off during the marriage.
In order to better understand and test the wife’s evidence, it is useful to now consider what she asserts was the agreed distribution of matrimonial assets at separation in October 2000. She sets this out in a table at paragraphs 36 of her affidavit.
| Description | [Mr Zhai] ($Aus) | [Ms Juan] ($Aus) |
| 1. | Room [1], Property N, Shanghai (200,000RMB) (exchange rate 4.5RMB:$1 as at October 2000) | 44,450 |
| 2. | Room [2], Property N, Shanghai (200,000RMB) (exchange rate 4.5RMB:$1 as at October 2000) | 44,450 |
| 3. | Funds in the CBA and ANZ | 40,000 |
| 4. | 250,000RMB in China (exchange rate 4.5RMB:$1 as at October 2000) | 55,555 |
| 5. | Furniture in Australia | 8,540 |
| 6. | Funds in HSBC bank | 10,623 |
| 7. | Toyota Seca motor vehicle | 10,000 |
| Total | 158,063 | 55,555 |
The wife explains why she was content with this settlement at paragraph 37 of her affidavit:
As the relation was not very good and I just wanted out of the relationship, it was agreed that he could keep the properties in China and as his mother was getting old the properties which were joined would give her a safe and comfortable place to live. As [Mr Zhai] was studying, I agreed and did not have much income, I agreed that he could keep the furniture, his car and funds in HSBC bank. I would keep the 250,000 RMB, which had been paid to my mother in 1999, which amounted to approximately $50,000. I would otherwise pay him $40,000 and together with the amount of $10,623.39 in the HSBC back would give us equal amounts of cash.
In circumstances where the wife is clearly asserting that she has made, by far, greater financial contributions in a relatively short marriage without children, she agreed to a split of assets that left her with about 25% of the pool. The Court finds this difficult to accept. It is quite simply implausible. Even if one hypothesised about the role that guilt might have played, the wife’s actions do not have the ring of truth about them. As was foreshadowed in the introduction to these reasons, the truth was often elusive in this case.
There are a number of concerns in relation to the contribution alleged by the wife through her family. It is strenuously denied by the husband. It is uncorroborated. And yet some part of it is probably true. For example it is more likely than not that when the parties were married in December 1996 cash wedding gifts were received. Moreover, the court accepts that Room [2] was in fact purchased in the name of the husband in 1997, despite his contrary assertions. What is unknown on the evidence is the precise role that the husband’s mother played in the financing and acquisition of Rooms [1] and [2]. It is more likely than not, the court finds, that some joint funds (including, possibly, some or all of the monies referred to at paragraphs 28-31 of the wife’s affidavit) were applied towards the purchase price of Room [2]. The circumstances of the acquisition of Room [1] are unknown. The Court accepts the wife’s evidence that Rooms [1] and [2] were joined to provide the husband’s mother with a safe and comfortable place for her to live.
Making a precise assessment of contribution in this case is almost impossible because the court is not satisfied that either party is being truthful about the contribution they made or which was made though them. The court must simply do the best it can in unsatisfactory circumstances. Making fine distinctions is difficult, but it seems that both worked when they were in China, and contributed equally. Both worked and studied during the relatively short period they were together in Australia, and contributed equally. During the period 1996-1999 the husband was in full time work but otherwise dependent on him. In a broad sense, any greater financial contribution made by the wife through the generosity of her family (unquantifiable as it is) weighs in the metaphorical balance as equal to the greater financial contribution made by the husband when the wife was in Australia. Whilst a conclusion of equality of contribution is nothing more than an educated guess on the facts of this case, it is the conclusion necessitated by the poor state of the evidence, and the unreliability of the parties.
A conclusion of the equality of contribution means little unless understood in the context of what the parties had at separation in 2000, almost a decade ago. The wife’s evidence in this regard, at paragraph 36 of her affidavit (the table extracted at paragraph 47 of these reasons) seems to be the best evidence in this regard, except as to values of property. It accounts for the 250,000 RMB. It incorporates over $50,000 of cash savings, and items such as furniture and a motor vehicle. It captures the essence of the contributions asserted by both parties.
The wife asserts that she paid to the husband cash totalling about $50,000 between 1999 and 2000, and that would leave him with about that sum in savings. Her evidence in this regard is at paragraphs 27-39 of her affidavit. The court does not accept the wife’s evidence in this regard. She asserts that the purpose of these payments was to, in effect, implement an informal property settlement. She says that in “October 2000 we agreed to a final distribution of our assets, which we had been splitting for some time” (paragraph 36). On her own evidence the alleged payments commenced in June 1999, a few months after the husband arrived in Australia and 16 months before final separation. That is not a payment consistent with the wife’s assertion that it was, in effect, a final property settlement. An even greater problem for the wife is that the documents she relies on to prove the payments to the husband, simply fail to do so. Two out of the five transactions are not evidenced by statements. None of the other three establish payment to the husband.
The court finds that, on the balance of probabilities, the wife retained these funds at separation. It is interesting to note that on the wife’s own evidence about the assets at separation, the court’s finding means that they each kept about half of the value of the assets based on the wife’s own figures.
The most likely scenario, therefore, is that at about the time of separation the husband retained whatever interest he had in Rooms [1] and [2], his furniture and his car. The wife retained cash of about $50,000 and the RMB 250,000 investment.
The husband asserts that she then used this cash towards the purchase of the Property B property, less than one year after separation. This is possible. However such a finding is not open to the court in view of the wife’s evidence denying this, corroborated by the unchallenged evidence of Mr Y explaining the source of funds used to finance Property B. In fact nothing turns on this as will become apparent below.
Having regard to all the matters set out above, the court finds that contribution is assessed to be equal, and that at about the time of separation, at least on the wife’s own figures, their assets were divided equally. Of course contribution needs to be assessed as at the date of hearing, nearly a decade after separation. Neither party submitted that they had made post-separation contributions and even if they did it is hard to imagine what shape this would take in the facts of this case. Little is known about Rooms [1] and [2]. The
Property B property was purchased after separation using none of the assets held at separation. The RMB 250,000 investment is agreed to be still intact. There is a real sense that the court has not been appraised by either party of what really happened in a financial sense during their cohabitation, marriage, separation and subsequently.
In view of these findings the court asks itself the question – should any orders be made under s.79? Section 79(1) states that the court “may make such order” as it considers appropriate. The discretionary nature of a s.79 order is again emphasised in s.79(4) where it states that in “considering what order (if any) should be made”. Any order the court makes must be just and equitable: s.79(2). On the facts of this case the only order the court makes is one dismissing the husband’s application. This is the order sought by the wife. She does not ask the court to make any declaration under s.78, or any order that each party keep what they have. In these circumstances no further order will be made.
Just and Equitable?
Is the order dismissing the husband’s application just and equitable? In Ferguson & Ferguson (1978) FLC 90-500 at 77,516 the Full Court stated:
… the main purpose of s.79(2) is to ensure the Court will not alter the property rights of the parties, unless justice requires it to do so, and that if the Court decides that it is requisite to make any order under the section, the Court must be satisfied that the alterations so ordered will go no further than the justice of the matter demands. Whether it is just and equitable in all the circumstances to make any and what order, involves a consideration of the matters which the Court is required to take into account under s.79(4), because that subsection expressly enumerates the kind of matters which the legislature considered relevant in determination of a claim for alteration of interests in property…
This statement was approved by the Full Court in Beneke & Beneke (1996) FLC 92-698.
Clearly what is just and equitable depends on how s.79(4) is applied to the facts of each case. In this case the great difficulty confronting the court is the unreliable state of the evidence, and the real credit issues that permeate the evidence of both husband and wife. The court has found that the husband has not been frank about his disclosure in relation to his true interest in the properties at Room [1] and [2] Shanghai. It is highly likely that both parties, for their own reasons, have presented to the court a highly subjective and fragmented version of the contributions they have made, and their financial circumstances at all relevant times including the present. In these circumstances the court can only do the nest it can on the available evidence. A finding that contribution was equal leads, in the courts view, to a finding that the distribution of assets at separation as noted in these reasons, is also just and equitable. This is the best the court can do under the circumstances. True it is that, based on what the husband has disclosed to the court, he will be left with liabilities to a forensic document examiner, a HECS debt and to his mother. This does not change the court’s finding about justice and equity on the facts of this case. The HECS debt arose, for the most part, after separation. Having regard to the husband’s evidence in cross examination, the forensic documents examiners report was unnecessary. The alleged loan from his mother is not established on the evidence, and in any event some of it arises after separation. Accordingly the proposed order is just and equitable.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
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