Zhuo & Ji (No 4)

Case [2025] FedCFamC1F 22

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Zhuo & Ji (No 4) [2025] FedCFamC1F 22  

File number(s): SYC 3409 of 2022
Judgment of: HARPER J
Date of judgment: 23 January 2025
Catchwords:

FAMILY LAW – PROPERTY – Adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) – Where final hearing proceeded as if undefended by the husband – Where there is extensive history of non-disclosure and breaches of Court orders by the husband – Where the husband’s conduct supports finding that there are non-disclosed assets – Where the wife is successful in seeking $5,886,842 in addbacks for property dissipated by the husband – Where money paid by the Second and Third Respondents is found not to be a loan – Contributions assessed as equal – Where the scale of the husband’s non-disclosure and breaches of Court orders justify substantial adjustment in the wife’s favour – Order for wife to receive entirety of all known assets – Order for husband to make a further cash payment to wife of $5,886,842 being the total value of property added back – Additional order for husband to pay spouse maintenance arrears of $188,998.41 plus interest.

FAMILY LAW – CORPORATE INSOLVENCY – Liquidator appointed as liquidator and receiver of trust assets held by trustee companies – Application for liquidator’s remuneration as liquidator and receiver – No material difference between principles applied to remuneration of liquidator and that of receiver and manager of assets of trust – Liquidator established prima facie case that remuneration is reasonable – Order for total sum of $563,580.74 in remuneration and disbursements paid to the liquidator.

FAMILY LAW – JURISDICTION – Liquidator’s claim for remuneration and disbursements made under the inherent equitable jurisdiction of the Court – Statutory jurisdiction of the Court under s 58AA and s 1377C of the Corporations Act 2001 (Cth) – Power of Court to make any order necessary to do justice includes power to approve remuneration and disbursements of liquidator and receiver.
Legislation:

Corporations Act 2001 (Cth) Pt 5.6, Div 6, ss 58AA, 198G, 459A, 459P, 461, 474, 488, 501, 553, 1321 (repealed), 1337C, Sch 2, Div 90, ss 60-10, 90-15, 90-20

Family Law Act 1975 (Cth) Pts VIII, VIIIAA, ss 75, 79, 80, 81, 114

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 9, 44

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Ch 6, rr 6.02, 6.03, 6.04, 6.06

Cases cited:

Agnarsson & Agnarsson (No 4) [2024] FedCFamC1F 407

Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69

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

Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347

Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102

Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303

Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Burke and Burke (1981) FLC 91-055; [1981] FamCA 44

Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102

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Zhuo & Ji (No 4) [2025] FedCFamC1F 22
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[2025] FedCFamC1F 22
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CaseChat Overview and Summary

In Zhuo & Ji (No 4), the Federal Circuit and Family Court of Australia considered a complex family law dispute involving significant financial assets, corporate insolvency, and jurisdictional issues. The case centred around the final property settlement between the parties, Ms Zhuo and Mr Ji, who had been married since 2008 and separated in 2022. The court had to address several legal issues, including the adjustment of property pursuant to section 79 of the Family Law Act 1975, the remuneration of a liquidator appointed for several insolvent companies, and the jurisdictional scope of the court to approve such remuneration.

The court's primary task was to determine the appropriate property adjustment between the parties, considering the extensive history of non-disclosure and breaches of court orders by Mr Ji. The wife successfully sought $5,886,842 in addbacks for property dissipated by Mr Ji, who was found to have concealed assets. The court also addressed the claim by the wife regarding money paid by the second and third respondents, which was found not to be a loan. The contributions of both parties were assessed as equal, and the court found that the scale of Mr Ji's non-disclosure and breaches justified a substantial adjustment in favour of the wife. The court ordered that the wife receive all known assets, Mr Ji pay the wife $5,886,842 in cash, and pay maintenance arrears of $188,998.41 plus interest.

Regarding the liquidator's claim for remuneration and disbursements, the court found that the liquidator had established a prima facie case that the remuneration was reasonable. The court exercised its inherent equitable jurisdiction, as well as its statutory jurisdiction under sections 58AA and 1377C of the Corporations Act 2001, to approve the liquidator's remuneration and disbursements, amounting to $563,580.74. The court concluded that the principles applied to the remuneration of the liquidator and receiver were essentially the same, and that the power to make any order necessary to do justice included the power to approve the remuneration and disbursements.

In conclusion, the court made detailed orders regarding the property settlement between the parties, the payment of maintenance and addbacks, and the remuneration of the liquidator. The wife was awarded all known assets, and the husband was ordered to make substantial cash payments. The liquidator's remuneration and disbursements were approved, and the liquidator was discharged from his appointment as receiver upon compliance with certain conditions.

Orders

Orders of the court

SYC 3409 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS ZHUO

Applicant

AND:

MR JI

First Respondent

MS R

Second Respondent

MR AA JI (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

HARPER J

DATE OF ORDER:

23 JANUARY 2025

THE COURT NOTES THAT:

A. On 18 December 2023, Mr Caruana of RR Accountants was appointed as the liquidator (“the liquidator”) for the following six (6) entities:

(a) G Pty Ltd;

(b) G Holdings Pty Ltd;

(c) V Pty Ltd;

(d) L Pty Ltd;

(e) KK Pty Ltd; and

(f) DD Pty Ltd.

(together the “companies”).

B. On 15 March 2024, orders were made appointing the liquidator as receiver and manager of the assets and undertaking of the following trusts:

(a) the HH Trust;

(b) the SS Trust;

(c) the V Trust;

(d) the L Trust; and

(e) the DD Trust.

(together the “trusts”).

C. On 2 September 2024, orders were made for the companies identified at Notation A(a) – (e) inclusive to be wound up in insolvency pursuant to s 459A and s 459P(1)(e) of the Corporations Act 2001 (Cth) and for the company identified at Notation A(f) to be wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth).

D. On 4 September 2024, orders were made appointing the Applicant Wife (“wife” and “trustee”) as trustee for the sale of the property located at B Street, Suburb C (“[B Street] property”) with folio identifier ….

E. Pursuant to s 81 of the Act the Respondent Husband (“husband”) and the wife intend these orders to finally determine all financial relations and issues between them and avoid further proceedings between them.

THE COURT ORDERS THAT:

Spouse Maintenance

1. Within 14 days of the date of these orders, the husband pay the wife the cash sum of $188,998.41 into a bank account as nominated by the wife, being periodic and non-periodic spouse maintenance which ought to have been paid by the husband pursuant to the orders of 18 October 2022, plus interest to be calculated in accordance with r 10.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) from 18 October 2022 to date.

Cash Payment to the Wife

2. Within 60 days of the date of these orders, the husband pay the wife a cash sum of $5,886,842 into a bank account as nominated by the wife.

Sale of B Street Property

3. On settlement of the sale of the B Street property, the trustee shall do all acts and sign all documents necessary to direct the net sale proceeds to be paid in the following manner and priority:

3.1 Payment of trustee’s expenses, agent's commission and advertising and legal expenses of the sale;

3.2 Any outstanding auctioneer’s expenses or valuation fees relating to the sale of the property;

3.3 The usual council and water rate adjustment;

3.4 The sum required to discharge the mortgage secured over the property; and

3.5 The balance to be paid to the wife or as she directs.

General Orders

4. Subject to the above orders, the wife shall retain all interests in, and entitlement to:

4.1. All personal and real property now in her respective possession or control including but not limited to:

4.1.1. The property situated at and known as BS Street, Suburb C;

4.1.2. The property situated at and known as TT Street, Suburb UU;

4.1.3. Her interest in the business known as VV Pty Ltd;

4.2. All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name respectively; and

4.3. All interests in life insurance policies and superannuation funds standing in her sole name respectively.

5. Subject to the above orders, the husband shall retain all interests in, and entitlement to:

5.1. All personal and real property now in his respective possession or control;

5.2. All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name respectively;

5.3. His interests in companies and trusts in which he presently acts as officeholder and/or is a shareholder; and

5.4. All interests in life insurance policies and superannuation funds standing in his sole name respectively.

6. The wife is hereby declared solely liable for all liabilities in her sole name respectively and shall indemnify and keep indemnified the husband in respect of same.

7. The husband is hereby declared solely liable for all liabilities in his sole name respectively and shall indemnify and keep indemnified the wife in respect of same.

8. The husband hereby release the wife from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the wife for or by reason of or in respect of any act, cause, matter or thing, including but not limited to any liabilities to the following:

8.1. WW Pty Ltd;

8.2. XX Pty Ltd;

8.3. YY Pty Ltd;

8.4. AB Pty Ltd;

8.5. PP Trust Limited;

8.6. W Financial Services;

8.7. National Australia Bank Limited;

8.8. ZZ Bank;

8.9. Westpac;

8.10. Commonwealth Bank of Australia;

8.11. T Trust Limited; and

8.12. AC Financial Services.

9. The husband hereby indemnify the wife for any other liabilities secured against any other real properties in which the husband has an interest, that are not otherwise subject to the liquidation/insolvency process or as identified in these orders.

10. Each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.

11. In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

12. The Response to Initiating Application filed by the Second and Third Respondents on 27 December 2023 be dismissed.

Liquidator

13. Pursuant to Order 5 of the orders made on 15 March 2024 and Order 4 of the orders made on 2 September 2024, the Fourth Respondent in his capacity as liquidator and receiver (“the liquidator” and “the receiver”) is authorised to pay the amount of $456,580.74 comprising:

(a) $183,058.00 on account of the receiver’s professional fees;

(b) $245,532.82 on account of the receiver’s legal costs and disbursements incurred with Cornwalls; and

(c) $27,989.92 on account of the receiver’s legal and conveyancing costs and disbursements incurred with AD Lawyers,

from the amounts now held by him as receiver on account of his remuneration, costs, and expenses incurred:

(a) In acting as the receiver of the assets and undertaking of the following trusts:

i. the HH Trust;

ii. the SS Trust;

iii. the V Trust;

iv. the L Trust;

v. the DD Trust; and

(b) In acting as the liquidator of the Fifth to Tenth Respondents.

14. The liquidator in his capacity as receiver is authorised:

(a) To retain the amount of $107,000 comprising:

i. $55,000 on account of the receiver's professional fees;

ii. $30,000 on account of the receiver's costs of obtaining third party taxation and accounting advice; and

iii. $22,000 on account of the receiver's legal costs and disbursements, from the amounts now held by him as receiver from which to pay his remuneration, costs, and expenses to be incurred in the liquidation of the Fifth to Tenth Respondents;

(b) Such remuneration, costs and expenses to be fixed in that amount; and

(c) To pay that amount over at the completion of the said liquidations.

15. The receiver is to pay the balance held by him and any further amounts that may be received by him (after payment in accordance with Order 13 and having retained the amount in Order 14) into such account as the Court may direct.

16. With effect upon compliance with Order 15, the liquidator forthwith be discharged from his appointment as receiver of the assets and undertaking of the trusts.

17. Without limiting the liquidator's powers, the liquidator must notify the parties within seven days of receipt of any proofs of debt and supporting documents submitted by secured or unsecured creditors related to the companies and associated trusts set out at Notations A and B above and provide the parties with all documents evidencing the purported creditor's claim.

18. In the event there is a dispute between the wife and the liquidator in relation to any proofs of debt referred to in Order 17, the wife has liberty to relist the matter on seven days’ written notice.

19. The liquidator must notify the parties within seven days of his anticipated completion of his appointment.

20. The liquidator be released from any and all claims held by the wife, the husband and the Second and Third Respondents whatsoever and howsoever arising from his appointment as receiver pursuant to the orders made on 15 March 2024.

21. The liquidator may apply to relist the proceedings for further directions on seven days’ written notice.

Costs

22. Any application seeking an award of costs is to be filed and served with an affidavit in support within 28 days of the date of these orders, and in the event no application is filed within the time specified, there shall be no order as to costs up to and including the date of these orders.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

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

Background

Background to the litigation

The final hearing of the proceedings has had a belaboured history, which has had some impact on the outcome. I will describe this history in more detail later.BRIEF BACKGROUND The parties commenced cohabitation in 2007 and were married in 2008. There are two children of the relationship who are presently three and seven years old. The parties separated on a final basis on 29 April 2022. In 2007 the wife purchased a property at AE Street, Suburb AF (“the [Suburb AF] property”) for $400,000 as sole registered proprietor. The parties contributed equally to the $100,000 deposit and the remainder of the purchase price was funded by way of a mortgage in the wife’s name as mortgagor. The husband registered KK Pty Ltd (“[KK Pty Ltd]”) in 2009. The parties resided in the Suburb AF property until 2010 when it was sold for $420,000. The net proceeds of sale were applied to the purchase of a property at TT Street, Suburb UU (“the [Suburb UU] property”) which was again purchased in the wife’s name. The purchase price was $605,000, which was funded, together with the other acquisition costs by the parties and a $440,000 mortgage. In her trial affidavit at paragraph 160 the wife states the husband sought reimbursement for his contribution from her parents, so in effect her parents provided $100,000. The Suburb UU property has not been sold and the wife’s mother has resided there since 2017. In late 2012 KK Pty Ltd purchased a property at LL Street, Suburb NN (“the [LL Street] property”). In her affidavit at paragraph 175(a) the wife claimed she, with the financial assistance of her family, transferred $116,160 to KK Pty Ltd to help purchase the property. I accept this is likely to be correct. In early 2013 the parties purchased a property at AG Street, Suburb AH (“the [Suburb AH] property”) in their joint names for $630,000. The purchase was funded by savings of the parties for the deposit, stamp duty and other purchase costs, together with a mortgage of $573,000. The parties received some rental income from the property which was applied to service the mortgage. In mid-2014 the parties renovated the property. The renovation was funded by a mortgage refinanced for $1,400,000 and a contribution of $206,000 by the wife’s parents. In mid-2013 Q Pty Ltd (“[Q Pty Ltd]”), a company controlled by the husband, purchased six lots of land in Suburb AJ. The wife gave evidence that $142,410 from the parties’ joint offset account connected to the mortgage in respect of the Suburb UU property, was contributed to Q Pty Ltd to pay for the deposit for the land. The lots of land were subsequently sold for approximately $4,500,000. The Suburb AH property was sold in late 2015 for $1,800,000. The net proceeds of sale of $400,000 were paid into an account held by the husband’s company G Pty Ltd (“[G Pty Ltd]”) and applied to the company’s purchase of a property at 2 JJ Street, Suburb O (“the [JJ Street] property”). In 2017 the wife purchased a unit at BS Street, Suburb C (“the [BS Street] property”) for $890,000 in her sole name with a mortgage of $708,000. The remainder of the purchase price was provided by her parents. The parties moved into the property following settlement.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Items 52, 64, 65, 66 and 69 cannot be given a value and will be excluded from the balance sheet although I note the details provided by the wife are examples of the non-disclosure by the husband. Item 53 relates to an unidentified property and will be excluded. Item 57 relates to a property owned by a company in which the husband was not the sole shareholder, and I do not accept the wife’s argument that I should infer full ownership. I will exclude item 57. Item 72 is a claim to $150,000 being the total of two transfers by the husband to BM Pty Ltd, a company in which he is a shareholder, but only as to 3,045 of 15,225 shares. I will exclude item 72.Conclusions and asset pool Based on these conclusions, the asset pool is as follows: Consequently, if there was no property adjustment, with the percentages rounded, the wife would hold 17 per cent and the husband hold 83 per cent of the net assets per cent. As noted, both parties agreed there should be a just and equitable property adjustment, and it was therefore not appropriate to leave the assets and liabilities undisturbed. I turn now to consider the application of Pt VIII of the Act and the factors set forth in s 79 and s 75(2).CONTRIBUTIONS I will deal first with s 79 of the Act. Section 79(4) sets out the considerations to be taken into account by the Court in determining what order (if any) should be made under s 79 in property settlement proceedings. There was no dispute that I should take a global approach to the asset pool (Norbis v Norbis (1986) 161 CLR 513). In accordance with s 79(4) of the Act, the Court must consider all the contributions overall, both financial and non-financial, to the acquisition, conservation, and improvement of the parties’ assets, as well as to the welfare of the family during cohabitation and after separation (Norman & Norman [2010] FamCAFC 66; Kowalski and Kowalski (1993) FLC 92-342; G and G (2000) FLC 93-043). A broad approach is preferred, rather than reference to precise mathematical calculations (Burke and Burke (1981) FLC 91-055), although an evaluation of each party’s respective contributions is necessary (JEL and DDF (2001) FLC 93-075). Assumptions about equality of contributions should not be made, and there is no assumption that equal division is the starting point for any exercise of the Court’s discretion (Mallet v Mallet (1984) 156 CLR 605 at 610, 613, 625, 635–636 and 646–647). In Dickons v Dickons (2012) 50 Fam LR 244, the Full Court said:20. …consistent with authority, the s 79 discretion involves as a necessary requirement that “... trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such an assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.” ([Aleksovski and Aleksovski (1996) FLC 92-705] at 83,437 [(“Aleksovski”)]). In Aleksovski, Kay J outlined the well-known “gold bar” analogy and said “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (at 83,443).21. Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79. That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?(See also Jabour & Jabour (2019) FLC 93-898 at [31]–[87]; Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[49]; Barnell & Barnell (2020) FLC 93-961 at [30]–[43]; Benson & Drury (2020) FLC 93-998 at [35]).

Ratio Decidendi

Legal Principle Established

The husband paid the eldest child’s private school fees in the amount of $25,900 for his first year of school. Financial contributions post-separation Post-separation the wife claims to have paid all outgoings for the Suburb C property due to the husband’s non-compliance with spousal maintenance. The wife stated that with the assistance of her parents she meets the majority of family expenses with the exception of school fees. The husband’s non-disclosure made it impossible to form a clear view about his post-separation contributions, although I infer he made some such contributions.(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage I take account of the wife’s non-financial contributions in managing the construction project at the Suburb C property such as through obtaining council approvals and hiring the building and engineering professionals required.(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent I accept that the wife was the primary caregiver of the two children during the relationship and post-separation. I acknowledge that the husband does see the children in accordance with an informal agreement between the parties, but I find the wife made far greater contributions in the capacity of homemaker and parent.(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and The orders will not have an effect upon the earning capacity of either party. (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and The husband is required to pay spousal maintenance to the wife of $2,152 per week pursuant to Court orders made on 18 October 2022. The orders require the husband to also pay for non-periodic expenses including all outgoings for the Suburb C property, home insurance and private health insurance for the wife and children, and vehicle expenses. The wife claims the husband is in default of these obligations and owes her $188,998.41. She states the husband’s non-compliance has made her reliant on her mother for financial help for living expenses. (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage. The husband does not currently pay child support to the wife. The wife stated she intends to seek review of a prior child support assessment from June 2022 which she claims was based on incorrect income and parenting arrangements. ASSESSMENT OF CONTRIBUTIONS Overall, I am unable to find in the evidence a basis to differentiate the contributions of the parties. I find they should be assessed as equal. I now turn to s 79(4)(e) and the s 75(2) factors.SECTION 75(2) ADJUSTMENT