Zhou and Wei (No 3) - [2018] FamCA 1148

FAMILY COURT OF AUSTRALIA

ZHOU & WEI (NO. 3)

[2018] FamCA 1148

INJUNCTION – anti-suit injunction – where the husband issued property proceedings in China and wants to continue those but only for the property in China whilst litigating in Australia over the Australian assets – China is an inappropriate forum – injunction granted.

Family Law Act 1975 (Cth)

Dobson & Van Londen [2005] FamCA 479; (2005) FLC 93-225
Henry v Henry [1996] HCA 51
Kumar & Gupta [2008] FamCA 885
Skinner & Alfonso-Skinner [2010] FamCA 329
Teo & Guan [2015] FamCAFC 94
Voth v Manildra Flour Mills Pty Ltd [1990 HCA 55

APPLICANT:

Ms Zhou

RESPONDENT:

Mr Wei

FILE NUMBER:

MLC

140

2018

DATE DELIVERED:

11 September 2018

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

5, 6 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Teicher

SOLICITOR FOR THE APPLICANT:

Tao Jiang Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Lam

SOLICITOR FOR THE RESPONDENT:

MA & Company, Solicitors

Orders

That the husband MR WEI be restrained by injunction from continuing the proceedings issued in China in respect of the property of the parties in that country.
That all proceedings as between the husband and the wife be litigated in the Family Court of Australia.
That save as to issues of costs, all interim applications between the parties be otherwise dismissed.
That all extant applications be adjourned to a date to be fixed for final hearing before a judge as soon as practicable.
That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 8 October 2018 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 22 October 2018 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Zhou & Wei has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 140 of 2018

MS ZHOU

Applicant

And

MR WEI

Respondent

REASONS FOR JUDGMENT

Ms Zhou (“the wife”) and Mr Wei (“the husband”) married in 2001 and from their relationship there is one child B otherwise known as B who was born in 2009. Parenting orders have been made in relation to B.
The reasons now set out arise out of an interlocutory application in the Judicial Duty List. They began late in the day of 5 September 2018 and were adjourned over to the following morning where they were completed. Both parties appeared represented by counsel and solicitor respectively. Both parties relied on affidavit material and written submissions which had arisen out of an order made by Macmillan J on 4 July 2018. Part of the written material is an affidavit by Mr L who is a City M lawyer and to whom both parties referred as an expert on Chinese law.
The nub of this dispute is that the husband in 2017 commenced property proceedings in the People’s Republic of China about a division of real property in that country. Both parties own real property there. There is no dispute that there is also real property in Australia. Other proceedings in Australia included the parenting dispute over B and the parties are now divorced upon the wife’s application that was issued in a court in China. The husband wants the real property dispute separated into two parts so that the Chinese courts can hear those matters pertinent to the property in China and then both husband and wife will litigate about the property in Australia. The wife opposes that position and seeks that all litigation be in Australia. In essence, this is not just a forum dispute but also an anti-suit injunction claim by the wife.
It is largely uncontroversial that although the husband issued the proceedings in China, they have not been officially (or otherwise) served on the wife. The evidence remains unclear but his solicitor submitted that there was some administrative direction issuing out of the court in City M and the wife had months to respond. It was said that the case is listed for hearing in November and could then proceed. In my view, that perception is so vague and imprecise that I am not sure what lies ahead and could not be confident that November is when the trial would proceed if the wife participated.
The expert, Mr L, noted that there were a number of properties in China in different districts. He said:
In This Dispute, 6 of the disputed real estates (sic) are located in N District and O District in City M. The other 4 disputed real estates (sic) are located in P district and Q District of R Province.
Thus, it is very likely that 5 separate proceedings regarding division of real estate have to be taken in the district courts where the properties are located, under the doctrine of exclusive jurisdiction.
I pressed the solicitor for the husband to explain how he interpreted what Mr L had said because the husband’s case is that the proceedings have all been drawn into the court of the O District of City M. The solicitor submitted that there was some conflict in the evidence of Mr L but I do not accept that to be the case.
Although counsel for the wife submitted that it was conceivable that there would be five different provinces involved in the proceedings, my interpretation of Mr L’s evidence is that whilst there may be five separate proceedings relating to the division of real estate (because they are in five different districts), in reality, there are only two districts where the proceedings have to occur. They are City M and R. Mr L’s evidence is silent on that issue but I consider it is the only appropriate inference to draw. In my view, that does not assist the husband.
Mr L’s evidence dealt with the property in China indicating that there were principles under Chinese family law that the court should understand. He said the main principle “relevant to this dispute” was that assets acquired during the marriage were deemed as “jointly-owned” unless a party could prove that the asset was a variation of his or her own personal assets. That is different from the law of Australia. Mr L went on to say that given the assets were acquired after the marriage, they would be considered as jointly owned.
As to how that property would be divided, Mr L said that the parties at the time of divorce had to seek agreement regarding the disposition of that “jointly possessed property” and failing agreement the court was to make its “judgment” on the basis of the actual “circumstances” of the property and on the principle of taking into consideration “the rights and interests of the child and the wife”. Whilst that has a familiar ring about it in relation to s 79(4)(e) of the Act in Australia, it remains unclear just what approach the court might take in China in relation to the “circumstances of the property”.
Mr L went on to say that there were varying reasons why jointly owned assets should not be divided equally. This seemed to be a reference to the equivalent of the Australian s 75(2) factors but he then added that on the other hand, in other cases, more than half of a jointly owned asset has been given to a husband by precedent, taking into consideration the greater financial contribution of that husband. Thus, there are some similarities between the two laws. Mr L said that the court would have a discretion with regards to the division of one of the properties in which the wife has an interest with her parents. He posited one possible outcome but I could not confident that I could rely on that as a potential outcome with any certainty.
In relation to how Chinese family law viewed the recognition and enforcement of Australian judgments in China, Mr L said that it was unlikely that they would be enforced as there were no applicable treaties or established principle of reciprocity between the two countries. In my view that has little impact here because both parties agree that any order made under Australia law would be an in personam order. Both husband and wife reside permanently in Australia. Their child is in Australia. The husband’s business is in Australia. The wife’s employment is in Australia. An in personam order would oblige either party to sign a necessary transfer.
The more interesting question which did not seem to be addressed by Mr L was whether the Chinese authorities would recognise a transfer if one of the parties signed it. Counsel for the wife submitted that there was no reason for the court to presume that the Chinese authorities would not recognise the relevant signature of the transferor. That conclusion can be drawn from the reference to the resolution of the legal dispute in China by agreement between the parties.
The application by the wife for substantive relief sought a number of property orders. In respect of a division, she sought that all property be divided as to 90 per cent to her and 10 per cent to the husband. There was then a curious order that reads:
That this Honourable Court declares that any orders made in The People’s Republic of China between the parties in relation to family law proceedings shall not be recognised eon (sic) Australia or be enforceable.
I am not sure what that means but more importantly whether the court here would have power to make such a declaration. It could not be interpreted as an anti-suit injunction because it is looking retrospectively at events in the Chinese courts. That amended application was filed on 7 May 2018 after the wife had commenced the proceedings by an earlier initiating application on 8 January 2018.
On 28 May 2018, the husband joined issue with the wife by filing a response. He sought the exercise of the court’s discretionary powers to alter the interests of property in Australia including default orders. He then sought an order that:
Save for the Property (which he had earlier defined as the one real property at Suburb D), that each party be solely entitled to the exclusion of the other to all other properties in the possession of each party.
On the same day he sought interim orders but did not seek any injunctions of an anti-suit nature. Indeed, the application has a specific provision relating to “other court cases and orders” and he made no reference to the Chinese proceedings.
The husband’s submission is that it would be unfair to preclude him from continuing with the proceedings in China because he has already incurred legal costs there. As counsel for the wife however pointed out, the expert has indicated that if they were terminated, the husband could seek 50 per cent of those fees back. In my view any further shortfall could be adjusted in a property settlement if there was some justification for so doing.
The solicitor for the husband submitted that the proceedings had been commenced in China in April 2017 whereas the wife had only commenced them in Australia in January 2018. Whilst that is so, it provides little comfort because the husband still wants to litigate some of the property proceedings in Australia as indicated by the orders that he is now still seeking.
In relation to the question of the wife’s knowledge of the Chinese proceedings, the solicitor for the husband pointed out that the very nature of the orders sought by the wife in the Australian court indicated she was aware of the existence of what was happening in China. Whilst it is unclear just exactly what the wife did know, there can be no doubt that there is no evidence of formal service of any proceedings on the wife subsequent to them being issued notwithstanding it was almost 18 months ago.
More significantly, when the solicitor for the husband was asked why the husband commenced the proceedings in China as he did rather than holistically in Australia bearing in mind all of the other issues which were extant between the parties in Australia, his response was that the husband was under a lot of stress and had no legal advice in Australia at the time. Accepting that to be the case, it does not explain why he did not have legal advice about the efficacy (from a Chinese lawyer’s perspective) of dealing with the matters holistically. It must undoubtedly be accepted, and it was certainly conceded by the solicitor for the husband, the Chinese courts would not deal with the Australian property because they do not consider it to be within their remit.
The wife’s submission was that she could not understand why the husband had adopted the position he had. As I have already observed, it is common ground that the parties reside in Australia, have a child here and business interests here. Their financial relationship is largely Australian based. Whilst the wife certainly has rental income from the properties in China, because of the nature of the in personam orders that would be made in this court, not only would the husband have a right to discovery about those issues but they could all be dealt with as part of any valuation exercise.
Counsel for the wife submitted that both parties had submitted to the jurisdiction to the Australian courts and there was no reason for the matters to be all dealt with other than as one hearing. In my view there is much to be said for that. It is clear that there is significant property in Australia in value terms. It is a substantial portion of the total property of the parties.
Unlike the Chinese law which makes reference to what might be described as presumptions about jointly owned property, the Australian law is directed to the alteration of all property of the parties regardless of the legal or equitable ownership of it.
Counsel for the wife pointed to a disadvantage to the wife in that she could not conduct the Chinese proceedings from Australia and, in circumstances where it was not known how many hearings and/or places that proceeding would be conducted in, there was no evidence before the court as to what impact there would be on the wife’s interests if she did not always attend. It was submitted that there was an obvious added problem if the wife had to go to China because she has nine year old B for whom she has sole parental responsibility under existing orders. Whilst it was conceded that the wife has remarried and therefore her husband could assist in the care of B, it was submitted that it was inappropriate for the wife to simply abandon those responsibilities in circumstances where it was unknown just how much was involved in the Chinese proceedings. In Australia, the position about hearings and even timing of those hearings would be much clearer.
It was therefore submitted that the Australian courts can give complete relief and that should override the issue of the fact that the Chinese cannot.
I turn then to the law.
Having regard to the matters above and the law to which I shall turn, it is important to carefully examine the position of the husband. His solicitor relied upon Henry v Henry [1996] HCA 51, Kumar & Gupta [2008] FamCA 885, Teo & Guan [2015] FamCAFC 94 and Voth v Manildra Flour Mills Pty Ltd [1990 HCA 55. At the second day of the hearing, he referred the court to Skinner and Alfonso-Skinner [2010] FamCA 329. All of those cases provide assistance in the determination of this matter and the question also remains as to whether, and if so to what extent, they are binding.
The solicitor for the husband set out that based on Teo & Guan (supra) this court has the jurisdiction to grant an injunction in the same circumstance as that which would be granted by a court of equity. There is no doubt about that but the importance of the injunction lies in its extent. The powers in s 114 of the Act are extensive. However, it was submitted that the court had to consider in a case such as this why it was that foreign proceedings might interfere with pending local proceedings or have a tendency to do so as well as decide whether the continuation of the foreign proceedings were prima facie vexatious and oppressive (see the argument in Kumar & Gupta (supra)).
It was submitted that the Chinese proceedings were commenced well before the Australian proceedings and if the proceedings there continued, any order made by this court in respect of the real property, it would be in direct conflict with the Chinese laws and be “manifestly futile for the parties to enforce”. I reject that argument on the basis that as the submission had earlier conceded, any order of this court would be an in personam order and as already indicated, both parties had submitted to the jurisdiction of this court. The solicitor was unable to indicate what the problem would be in relation to this supposed conflict with Chinese laws in circumstances where the orders were in personam. To the extent that the wife might need to rely upon s 106A, or for that matter the husband as against the wife, the wife was certainly not concerned about such a problem. It is difficult therefore to see what this conflict was of recognition. The solicitor was unable to point to anything to support the argument.
It was submitted by the solicitor on behalf of the husband that there was no prejudice to either party if the Chinese proceedings continued because there were similar provisions in both pieces of legislation. I have already dealt with that issue earlier and in my view, there is a problem because even though the laws would prima facie appear to be similar, I am unsure about the presumptions (if any) to which I have referred but also how this court would then deal with the Australian assets knowing that a judicial determination had been made in respect of the other assets in China. The glaring difference between the two systems is that the Australian law requires the court to consider all of the property of the parties whereas it would seem that on the husband’s view, only the Chinese property would be under consideration. It is equally uncertain how the Chinese courts would deal with for example, s 75(2)(n). Section 75(2)(n) requires the court to consider the terms of any order made or proposed to be made under s 79 in relation to the property of the parties. The husband did not indicate how that would be dealt with if his wish were granted that the Australian court only dealt with the Australian assets.
It was then submitted that there was no prejudice to the parties because the Chinese proceedings would be proceeded “expeditiously”. Albeit the indication is the next hearing in City M is in November 2018, the solicitor for the husband was unable to explain how the five provinces or the two potential court places would play out. There is insufficient evidence to indicate the nature and extent of the proposed hearing in November and in any event, there is still the problem of the fact that it only relates to the Chinese properties.
Based on those matters, it was submitted that “the application for bifurcation” was the “only equitable and reasonable resolution” of the proceedings. I reject that.
In Henry (supra) the High Court observed that no question arises unless there is an argument about jurisdiction. That is not relevant here for reasons that I have already indicated because I do not see there is any conflict between jurisdictions.
Fundamentally, the opposite argument to that which is normally seen in cases such as Henry (supra) and Skinner (supra) arises because the husband is arguing that there should be two forums.

In Dobson & Van Londen [2005] FamCA 479; (2005) FLC 93-225, the Full Court observed that regard had to be taken of the relationship between property settlement orders within the two countries. The Full Court said that it should be considered vexatious and oppressive to commence and prosecute proceedings for other matters than property settlement when both parties were seeking a property settlement (for example) in Australia and when there were identical issues relating to the parties’ financial positions that had to be examined in both proceedings. That vexatiousness and oppressiveness arose when all of the matters of a financial nature could be dealt with in Australia.
As Murphy J observed in Skinner (supra) at 61:
If, as plainly seems to be the law, this court must first consider whether “it is appropriate in the sense that it is clearly inappropriate, for it to determine the matter in issue before granting an anti-suit injunction, attention must turn to the test to be employed in arriving at that assessment.
Having regard to what was said in Dobson (supra), the question must be asked as to the efficacy of running two proceedings on the same issues albeit in respect of different properties. Is that vexatious and oppressive? In Voth v Manildra Flour Mills Pty Ltd (supra) the High Court said that a stay should be granted if the local court was clearly inappropriate as a forum in circumstances where the continuation of the proceedings in that local court would be oppressive in the sense of seriously and unfairly burdensome, prejudicial or damaging. “Vexatious” was used in the sense of “productive of serious and unjustified trouble and harassment”. The High Court in Voth referred to the discussion in the English authorities in the relation to the “connecting factors”. I turn to those below.
It is submitted on behalf of the wife that what the husband is endeavouring to do is seriously and unfairly burdensome to her because the laws are not the same. If the law in both countries could be seen to be the same, each court might look to the other to see how to deal with that portion of the dispute to which their jurisdiction has been engaged. Such an approach must create uncertainty. The two hearings, the cost involved and the travel contemplated must be seen as burdensome and unfair to the wife because of the reasons to which I earlier referred about her attending China.
Whilst in Henry (supra) the High Court referred to the fact that it was prima facie vexatious and oppressive to commence a second or subsequent action, the evidence does not enable me to find that the wife commenced the proceedings in this court on the basis of having knowledge of what was happening in China but in any event, the concept considered by the High Court must to some extent be distinguishable by virtue of the fact that the husband only wants part of the parties’ dispute to be so litigated. In other words, the matter in issue from the husband’s perspective is entirely different from that of the wife.
As the High Court said in Henry, it followed that the very fact that there were simultaneous proceedings in different countries in respect of “the same controversy” was highly relevant to the question of whether the local proceedings were oppressive in the Voth sense. Their Honours said that it followed that the court should strive, to the extent that Voth permits, to avoid that situation arising. Thus, this court should strive to avoid the very situation that the husband wants to promote.
In Henry also, the High Court identified the “non-exhaustive” list of matters relevant to the application of the clearly inappropriate forum test. They assist in this determination.
The first is whether or not each court will recognise the other’s orders and decrees. For reasons I have already set out, there is nothing in the evidence that indicates that that will be a problem.
The second relates to which forum can provide, more effectively, a complete resolution of the controversy. That is also not controversial here because it is only the husband who wants to create the two forums.
The third relates to the order in which the proceedings were instituted and there can be no doubt that the husband commenced first but just why those proceedings were not properly served remains uncertain. In my view, having regard to the delay since those proceedings were commenced and the fact that there had been proceedings in this court in the interim period up to now (see for example the parenting proceedings) that problem could have been cured if the husband and his lawyers had been serious about it. It seems to me I should take little notice of the fact that the husband issued first in time.
The fourth step is the question of the stage at which the proceedings have reached. Even on the husband’s argument, the Chinese proceedings have not advanced much at all and indeed, there is the unknown question of whether or not the hearing is all in City M or, in City M and somewhere else. As such, there is no prejudice to either party in terms of the Chinese proceedings being “well down the track”.
The fifth question relates to the costs that have been incurred. I have already dealt with that question and I rely on the expert evidence. The relevance of the costs can also be raised in any final hearing in this court.
In my view the sixth issue is significant. That relates to the question of the connection of the parties and their marriage with each of the jurisdictions. Whilst both parties have property in China and a divorce was granted in China, both parties agree that they are resident in Australia and are raising their child here. It seems to me that Australia is the dominant place of choice of the parties.
The seventh issue related to the issues on which relief might depend on each of the jurisdictions. Notwithstanding the expert evidence, my view is that the holistic resolution between the parties, bearing in mind the in personam nature of the court orders, it is much more sensible for one court to deal with each of the issues as the totality of the property of the parties can be taken into account and the husband agrees China cannot.
The final issue relates to the resources of the parties and their understanding of language. That relates to the question of their participation. In my view, the wife is at a disadvantage for reasons I have already articulated having regard to her responsibilities to the parties’ child. The husband has no such similar disadvantage or at least he does not argue that there is such a disadvantage. In my view the balance of convenience therefore favours the wife.
Having regard to all of those matters, it is my view that Australia is not the clearly inappropriate forum having regard to the general circumstances of the case and most importantly, all of the extent of the issues involved.
Having regard also to the fact that the husband is an Australian resident and has engaged in the proceedings here and intends to do so in respect of the Australian property, an injunction against him causes him no inconvenience or disadvantage. Accordingly, the injunction should issue.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 11 September 2018.

Associate:

Date: 11 September 2018