HOME【Classic Cases】SXX & DXXn [2014] FamCA 1XX
ORDERS
(1) The Court declared that as between the parties, the wife is the sole owner of all the right title and interest in the property known as Property A, Shanghai, China.
(2) The Court declared that as between the parties, the husband is the sole owner of all the right title and interest in the property known as Property B, Shanghai, China.
(3) Within two months from the date of these orders the husband shall pay $271,739 to the solicitor for the wife.
(4) In the event that the payment required by order (3) is not made within that time, both parties shall forthwith take all necessary steps and execute all necessary documents to cause the property situated at C Street, Suburb D and being the whole of the land in title reference Folio Identifier: ... (“the property”) to be sold by private treaty as soon as practicable at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the sale be disbursed as follows:
Payment of agent’s commission and advertising expenses and legal expenses of the sale; and
The net balance then remaining to be divided between the parties as follows:
31.9 per cent to the wife; and
The balance to the husband.
(5) That in the event the property fails to be sold by private treaty within a period of three months hereof, then each party shall take all necessary steps and execute all necessary documents to cause the property to be sold by auction as soon as practicable at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:
Payment of agent’s commission and advertising expenses and legal expenses of the sale; and
The net balance then remaining to be divided between the parties as follows:
31.9 per cent to the wife; and
The balance to the husband.
(6) That on or before completion of the sale of the property the party or parties residing therein will provide vacant possession, remove all items not included in the sale and ensure that the property is left in a clean and tidy condition.
(7) That the orders below in this order have effect from the operative time:
That in accordance with s 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the Respondent/husband’s interest in the E superannuation fund, the wife is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using base amount of $28,700 and there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders;
That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the superannuation fund; and
That the operative time for this order is four business days after the date of service of the orders on the trustee of the superannuation fund.
(8) The parties shall forthwith take all necessary steps and execute all necessary documents to cause the Toyota Echo motor vehicle registration number ... to be transferred into the name of the wife.
(9) By consent the Court made declarations in accordance with a document titled “Declarations” dated 26 February 2014, as follows:
That the wife be declared the sole legal and beneficial owner of the following items:
Dishwasher;
Sewing machine;
Sony DVD;
Washing machine;
Small fridge;
T.V.; and
Bed and sofa located in the wife’s bedroom.
That the husband be declared sole legal and beneficial owner of all remaining chattels.
(10) That unless otherwise specified in these orders or other earlier order and except for the purposes of enforcing the payment of any moneys under these or any subsequent orders:
Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;
Any money standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears;
Each party hereby foregoes any claim they may have to any superannuation benefit that is belonging to or owned by the other save as provided for in these orders;
All insurance policies are to become the sole property of the owner named hereon;
Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
Any joint tenancy of the husband and wife in any real or personal estate is hereby expressly severed.
(11) That the respondent and applicant do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
(12) That in the event that either party refuses or neglects to execute any deed or instrument, the registrar of the court be appointed pursuant to s 106A of the Family Law Act 1975, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
(13) Leave is granted to the parties to restore the proceedings to the list within 21 days or such further time as the parties agree, in relation to the wording of these orders. That leave may be exercised on giving at least 48 hours’ notice to the Court and the other party.
IT IS NOTED that publication of this judgment by this Court under the pseudonym SXX & DXXn has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
FAMILY COURT OF AUSTRALIA AT SYDNEY
FILE NUMBER: SYC 5XX2 of 2011
Ms DXXn
Applicant Wife
And
Mr SXX
Respondent Husband
REASONS FOR JUDGMENT
INTRODUCTION
The marriage of Ms DXXn and Mr SXX spanned 24 years. The parties resolved arrangements about their daughter but could not agree on a settlement of their property. Although they were divorced, for convenience I will refer to them as the wife and husband.
APPLICATIONS
The wife sought orders in terms of a Minute included in her Case Outline document dated 21 February 2014. In the course of final submissions the wife’s solicitor indicated that the orders sought by the wife were changed by the deletion of order 5 and by a change in the proportions specified at orders 1 and 4 to reflect an overall distribution of 55 per cent to the wife and 45 per cent to the husband. It was noted that the splitting order was not in enforceable form and that no notice had been given to the trustee of the husband’s fund. On 26 February 2014 a direction was made that the solicitor for the wife provide an amended minute of orders to the Court, the husband’s solicitor and the trustee within seven days. Thus, in addition to the agreed order in relation to chattels, the wife sought the following orders:
(1) That the Applicant is the sole owner of all her right title and interest in the property known as [Property A], Shanghai, China.
(2) That the Respondent is the sole owner of all his right title and interest in the property known as [Property B], Shanghai, China.
(3) That both parties take all necessary steps and execute all necessary documents to cause the property situated at [C Street, Suburb D] and being the whole of the land in title reference Folio Identifier: ... (“the property”) to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the sale be disbursed as follows:
Payment of agent’s commission and advertising expenses and legal expenses of the sale; and
The net balance then remaining to be divided between the parties as follows:
48.46% to the wife; and
51.54% to the husband.
(4) That in the event the property fails to be sold by private treaty within a period of 3 months hereof, then each party take all necessary steps and execute all necessary documents to cause the property to be sold by auction at the earliest possible date at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:
Payment of agent’s commission and advertising expenses and legal expenses of the sale; and
The net balance then remaining to be divided between the parties as follows:
48.46% to the wife; and
51.54% to the husband.
(5) That on or before completion of the sale of the property the party or parties residing therein will provide vacant possession, remove all items not included in the sale and ensure that the property is left in a clean and tidy condition.
(6) That the orders below in this order have effect from the operative time:
That in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the Respondent/husband’s interest in [F] and [E] superannuation fund, the wife is entitled to a base amount of $55,424-24 and there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders;
That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the superannuation fund; and
That operative time for this order is 4 business days after the date of service of the orders on the trustee of the superannuation fund.
(7) That other than as otherwise set out in this agreement the parties have the sole right title and interest in any other property which is at the date hereof in their possession title or name and they shall be solely liable for and indemnify the other against any personal liabilities.
(8) That the respondent and applicant do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
(9) That in the event that either party refuses or neglects to execute any deed or instrument, the registrar of the court be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
(10) That unless otherwise specified in these orders or other earlier order and except for the purposes of enforcing the payment of any moneys under these or any subsequent orders:
Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;
Any money standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears;
Each party hereby foregoes any claim they may have to any superannuation benefit that is belonging to or owned by the other save as provided for in these orders;
All insurance policies are to become the sole property of the owner named hereon;
Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
Any joint tenancy of the husband and wife in any real or personal estate is hereby expressly severed.
The husband sought orders in terms of a Minute included in his Case Outline document dated 20 February 2014 as follows:
That the wife withdraw the caveat lodged by the wife on [C Street, Suburb D] NSW 2... (“the matrimonial property”);
That the husband be declared the sole legal and beneficial owner of the matrimonial property;
That the husband be declared the sole legal and beneficial owner of the motor vehicle Toyota Tarago registration ...;
That the wife be declared the sole legal and beneficial owner of the of the motor vehicle Toyota Echo registration number ...;
....
That within 28 days of the making of these orders, the parties close the following bank accounts:
i) AMP bank, BSB and account number ...20;
ii) HSBC bank, BSB and account number ...12; and
iii) AMP bank, BSB and account number ...80.
That each party retain and be declared sole legal beneficial owner to all other real and personal property in their respective ownership or control and that each party be solely liable for and indemnify the other against any liability encumbering an item of property to which that party is entitled pursuant to the orders.
During the hearing the parties agreed that the contents of the [Suburb D] property would be divided in terms of their written agreement dated 26 February 2014.
DOCUMENTS READ
The parties relied on the following documents:
Documents relied on by the wife:
Amended Initiating Application filed 11 September 2012;
Financial Statement filed 29 January 2014;
Affidavit of the wife filed 29 January 2014;
Affidavit of AB filed 4 March 2013;
Affidavit of BC filed 4 March 2013; and
Affidavit of CD filed 4 March 2013.
At the application of the husband and without objection, the following documents of the wife were introduced into evidence:
Affidavit of the wife filed 2 December 2011;
Affidavit of the wife filed 5 August 2012;
Affidavit of the wife filed 8 July 2013;
Financial Statement filed 2 December 2011; and
Financial Questionnaire filed 30 January 2013.[1]
Documents relied on by the husband:
Amended Response filed 3 August 2012;
Financial Statement filed 23 January 2014;
Affidavit of the husband filed 23 January 2014;
Affidavit of Ms DE filed 23 January 2014;
Affidavit of EF filed 23 January 2014; and
Affidavit of Mr G filed 14 February 2014.
THE HEARING
The case was listed for hearing property settlement proceedings over four days commencing on 24 February 2014. The hearing was completed in three days and on 26 February 2014, judgment was reserved. On 18 March 2014 the wife filed an application seeking leave to re-open her case. On 24 March 2014 that application was withdrawn.
SHORT HISTORY
The wife was born in 1959 and as at the date of the hearing she was 54 years of age. The husband was born in 1955 and as at the date of the hearing he was 58 years of age. The parties commenced their relationship in 1982, were married in October 1986 and were divorced in April 2012.
CHILDREN
There are two children of the marriage namely H who was born in 1988 and is currently 25 years of age and J who was born in 1999 and is currently 14 years of age.
BACKGROUND FACTS
The parties were born in China and met there in about 1978.
In October 1986 the parties married in China and subsequently commenced cohabitation at the husband’s father’s property in Shanghai, China. On weekends the parties stayed at Property A, Shanghai, China (“Property A”) which was a property in which the wife’s father had the right to live and which was occupied by the wife’s brother.
At the commencement of the marriage the wife worked in the education industry and the husband worked in the hospitality industry. Neither the husband nor wife had any significant assets or debts.
H was born in 1988 in China.
In November 1988 the husband moved to Australia and obtained work in the hospitality industry. The wife and H remained in China. The husband deposed that he was earning around $450 per week at this time.
On 4 January 1990 the wife moved to Australia, leaving H with her parents. The wife did 580 hours of English lessons at night. At about the end of 1990 the parties were granted permanent visas in Australia.
The parties lived in a rented property in Suburb L from 1990 to 1996.
There is an issue about when the wife commenced to work once she had moved to Australia. The wife deposed that on moving to Australia she commenced working in the clothing industry in February 1990 and that her average income was around $500 per week. The husband disputes this and claims that he paid for the wife to learn a clothing industry skill and that the wife was not in paid employment until 1991 when they commenced a clothing industry business. However, it is the husband’s evidence that the wife was engaged in homemaker duties. It is not possible to determine which version of the facts is correct and given that contributions were made on either version, it does not matter.
In December 1991, H joined the parties in Australia.
In 1991 the parties registered a clothing industry business under the name of Business K and traded under that name until March 2006. The wife deposed that she purchased an industrial clothing industry machine and worked 12 hours a day for the business. The husband deposed that he purchased the equipment for the business. The husband assisted with the business around his work in the hospitality industry.
In approximately June 1994 the parties were granted permanent residency in Australia.
In late 1994 the husband resigned from his employment and commenced working full time for the family business, Business K.
Through BT Financial Services the parties invested $140,000 with Pont Securities in the name of the wife’s mother. The source of those funds was the savings of the parties and $16,000 from the husband’s family - $8,000 from his father and $8,000 from his uncle. In 1994 the husband purchased land at C Street, Suburb D, NSW (“the Suburb D property”). The land was purchased jointly with a friend AB at the price of $199,500. In July 1994, $70,000 was redeemed from the Pont Securities investment to pay for the parties’ share of the land. The land was subsequently subdivided and half of the property was registered under the husband’s name.
In 1995 the parties borrowed $130,000 in their names jointly. This money was used to build a house at the Suburb D property. The house was completed in December 1996.
The husband deposed that his father paid him $10,000 in 1997 and a further $10,000 in 1998.
The husband deposed that he worked casually doing deliveries three days per week from 1998 to 1999. The wife deposed that the husband worked in that role for only three weeks. No effort was made during the hearing to resolve that controversy.
In 1999 J was born. The wife deposed that her income reduced to $500 per week after the birth of J.
In 1999 the husband commenced employment with a government agency and he remained in that employment as at the time of the hearing.
In 2003 the wife ceased her clothing industry business and commenced selling Type I goods. The wife deposed that her average income was around $300 per week. There is also evidence that Business K ceased trading in 2006. It is not possible to resolve that issue.
In 2003 the Shanghai property originally associated with the wife’s father was transferred into the names of the wife and the parties’ son, H.
In October 2004 the mortgage secured on the Suburb D property was discharged.
In 2004, if not before, the wife commenced buying and selling Type M goods. The wife deposed that in 2006 she earned about $5,000 in commissions. The wife ceased selling Type M goods in 2007.
On 28 February 2005 the husband’s father transferred the title to a property situated at Property B, Shanghai, China (“Property B”) to the husband.
Between December 2006 and February 2012 the wife mainly lived in China. In the course of that period of five years and three months, the wife spent a total of about 41 weeks in Australia and otherwise lived in China.[2]
In early 2007 the parties agreed that they would create a business importing Australian Type N goods to China. A business named O Company Pty Ltd was registered by the wife under her sister’s name in China. The parties obtained money from their families in order to commence the business.
The husband found the first Type N goods supplier and the wife ran the business in Shanghai.
In 2007 the husband sold shares held in the wife’s name.
The wife deposed that she attempted to sell the business in about December 2008, without success. The wife agreed in February 2009 to transfer the business to a Mr P, who she had just met and employed. The wife says that she did that because she was unwell and she felt her marriage to the husband was breaking down.
As I understand the wife’s evidence, the transfer of the business to Mr P was for a consideration of ¥500,000 RMB which was to be paid by Mr P at a later date, from the sale of Type N goods.
The wife deposed that the business subsequently failed and apart from some funds used to repay the husband’s family and her wages, she received no payment for the business.
The wife commenced seeing a Psychologist in 2007 and was treated for depression in 2009.
The wife had suffered health problems from 2008 and had been warned that it was likely she had cancer.
In March 2009 the wife underwent lymphadenectomy and hysterectomy in Shanghai. The wife also received chemotherapy.
It is the wife’s evidence that she was unable to supervise the company and so became an employee. She was paid a wage by the company although she signed no employment contract. It is her evidence that until October 2009 she received an average income of ¥1,500 RMB per month and from January 2010 until October 2011 an average income of ¥2,000 RMB per month. The wife denies that she continued to manage the company, saying that after her operation she remained in hospital and could only work by telephone or computer.
The parties separated in June 2010.
In 2011 the wife repaid the husband’s sister $160,000 for the husband’s family’s original ¥300,000 RMB investment in O Company Pty Ltd. The wife said that some of the money came from her family and some from Mr P, from the sale of Type N goods.
In 2011 the husband sold the AMP and IAG shares in his name. He applied the $13,000 proceeds to living expenses and school uniforms.
The wife returned to Australia from China in October 2011 and attempted to return to live at the Suburb D property. In November 2011 the wife commenced receiving Newstart allowance payments from Centrelink of $480 per fortnight.
On 2 December 2011 the wife commenced these proceedings seeking an order that the matrimonial home be sold and proceeds divided equally between the parties.
On 27 February 2012 the court ordered among other things, that the wife was entitled to remain in the former matrimonial home and that the husband deliver the 2004 Toyota Echo motor vehicle to the wife.
Since then and apart from three trips to China (31/1/13 to 22/2/13, 16/9/13 to 9/12/13 and from a date in December 2013 to a date in January 2014), the wife has lived at the Suburb D property with the husband (separately under one roof) and children and remains there as at the date of the hearing.
The parties were divorced in April 2012.
Notwithstanding that the parents both mainly lived at the Suburb D property, on 11 March 2013 parenting orders were made in terms agreed by the parties as follows:
That the parties have equal shared parental responsibility in relation to the child [J] born ... 1999.
That the child live with the father and spend time with mother as follows:
during school terms, from 9.00am Saturday until 5.00pm Sunday with the mother to collect the child from the father’s home at the commencement of the time and return her to the father’s home at the conclusion of time;
in the first week of each Term 1 and Term 2 school holiday;
for the first half of each December school holiday period in odd numbered years;
for the second half of the December school holiday period in even numbered years;
for 2 hours on the child’s birthday;
from 9.00am to 6.00pm each Mother’s Day.
That the mother’s time with the child in order 2 above shall be subject to the child’s wishes.
That the mother’s time with the child be suspended between 9.00am and 6.00pm each Father’s Day, with the father to collect and return the child if applicable.
That the mother shall collect and return the child from and to the father’s home for the purposes of spending time with the child.
That each party shall provide to the other party current addresses, home and mobile telephone numbers and shall notify the other party with 7 days notice of any proposed change to these contact details.
That each party immediately notify the other if the child is seriously ill or in the event the child requires hospitalisation.
That each party is permitted to take the child on holiday outside the Sydney area during times in which the child is in either party’s care, subject to providing the other party with details of the proposed trip 14 days in advance of any proposed trip.
That the mother’s time with the child is suspended during periods that she is not in Australia.
That the mother provide the father with no less than 14 days notice of any trip to China that will result in the mother not being able to spend time with the child in accordance with these orders.
That the parties provide the other with no less than 21 days notice in the event the party intends to relocate outside the Sydney metropolitan area.
That during times the child spends with the mother, the mother shall ensure that the child attends upon any extra curricular activities in which the child may be involved.
The each party shall encourage the child’s relationship with the other party.
That each party be restrained from denigrating the other party in the presence of or within hearing of the child.
That all previous parenting orders be discharged.
In January 2014 H moved out of the Suburb D property. The husband gave evidence that H said to him that the move was only temporary and that he would be back.
As at 23 January 2014 the husband owed about $100,000. He owed $30,000 to his older sister, $41,500 to Mr Q, $5,000 to his son, $10,000 to Mr R and $15,000 to Mr S. The husband has paid over $80,000 to his lawyers.
CREDIT
The Evidence of the Witnesses
There are issues that fall to be determined solely by reference to the uncorroborated testimony of the parties. It is therefore necessary to make credit findings.
Both parties gave evidence through an interpreter. I gather that each of them has some facility in English. The husband’s affidavit was translated for him when he executed it. The wife’s documents were not translated to her. She was asked (through an interpreter) why the documents were not translated prior to her executing them and the effect of her evidence was that she used a computer application to check some words. I note that the wife said that her roles in the Type N goods business relied in part on her facility in English.
Unfortunately, during her oral evidence the wife repudiated several entries in her own affidavit. A reference to a psychiatrist should have been a reference to a gynaecologist. A reference to “owned” should have been a reference to “had a right to occupy”. The wife said that paragraph 97 of her affidavit is wrong. The company ceased trading in January 2011, not November 2011. During cross-examination the wife said that the husband did not do very much in the clothing industry business and a few minutes later she estimated that on average he spent three hours a day (in addition to his main job) assisting with the business. Minutes later she said something that suggested that he undertook housework and thereby supported her in the business. During her cross-examination the wife was warned about unresponsive and rambling answers to direct questions. She became emotional on a few occasions. On occasions she stood in the witness box and raised her voice. She seemed frustrated with the husband’s counsel’s questions about what to her may well have seemed unremarkable business practices.
During his cross-examination the husband said that he could not recall some facts, particularly from early in the marriage. However, the husband was not successfully challenged on any significant issue.
I take notice that notwithstanding the skill of the interpreter, the process of translation is imprecise and that sometimes concepts do not translate well from one language or culture to another. I also accept that business and regulatory practices in Australia and China are different. It seems to me that in those circumstances, I should be very careful before finding that either of the parties intended to mislead the Court. That is not to say that the evidence of the parties is entirely reliable or that their evidence should be accepted in the face of contradictory testimony or other evidence.
THE LAW
The Approach In Proceedings Under Section 79
In the context of these proceedings s 79 of the Family Law Act relevantly provides:
FAMILY LAW ACT 1975 - SECTION 79
Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or
....
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; ...
....
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
....
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(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; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(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 application of s 79 has been the subject of extensive judicial interpretation and comment. In Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395; (2003) FLC 93-143 the Full Court said:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro [1992] FamCA 64; (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend [1994] FamCA 144; (1995) FLC 92-569; Biltoft and Biltoft [1995] FamCA 45; (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF [2000] FamCA 1353; (2001) FLC 93-075 and Phillips and Phillips [2002] FamCA 350; (2002) FLC 93-104.
In Hickey the Court was not asked to separately address whether an order should be made at all. Similarly, that issue was not formally raised in these proceedings. Although not expressed in that way, it is the husband’s application that the parties should largely retain what they have. The only change of ownership proposed by the husband relates to chattels.
As was observed in Stanford v Stanford [2012] HCA 52; (2012) 87 ALJR 74; 293 ALR 70 the requirement for the Court to consider whether an order should be made is often readily satisfied. Here, after a long marriage, the parties’ relationship has broken down. Although they mainly live under one roof, that arrangement was imposed by Court order and was not a result of the parties’ agreement or acquiescence. Most of their joint funds are tied up in a property in the husband’s sole name. Both parties have invoked s 79, seeking, apart from other orders, orders about that property.
Apart from furniture, in respect of which changes to ownership requires little or no formality, the parties do not hold any property in joint names. Therefore the exhortation in s 81 does not arise. If the wife’s case is made out then s 79 orders are necessary to meet the requirements of s 79. Even if the wife is not successful, on the husband’s case, an order is required under s 79, albeit in respect of a motor vehicle. As will become apparent later in these reasons, a payment is required from the husband to the wife. I am satisfied that it is just and equitable that the parties have relief under s 79.
I turn to the task of identifying what orders will alter the interests of the parties in property in a just and equitable way.
There is no mention of steps or stages in s 79, let alone of the sequence set out in a) – d) below. Despite the guidance in Hickey, the Full Court has regularly noted that the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.[3]
I will address the following matters:
Make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing;
Identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties;
Identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties; and
Consider the effect of those findings and determinations and resolve what orders are just and equitable in all the circumstances of the case.
THE PROPERTY OF THE PARTIES
In determining what orders are appropriate, it is necessary to make a finding as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.
The husband and wife agreed on a balance sheet[4] as follows:
Owner
Description
Value
1
H
C Street, Suburb D
$850,000
2
W + son
Property A, Shanghai, China
$246,886.93
3
H
Property B, Shanghai, China
$250,945.45
4
H
Toyota Tarago
$3,100
5
H
Toyota Echo
$4,050
6
H
HSBC and Westpac Bank savings
$200
7
W
HSBC and Westpac Bank savings
$246
Total
$1,355,428.38[5]
Liabilities
Owner
Description
Value
8
H
Credit cards
$3,000.00
Total
$3,000.00
Superannuation
Owner
Description
Value
9
W
Wife’s superannuation interests
(F Super Fund)
$9,322.42
10
H
Husband’s superannuation interests
(F Super Fund @ $14,958.72 and E Super Fund @ $93,440.06)
$108,398.78
Total
$117,721.20
Total Pool
$1,470,149.58[6]
The parties gave evidence about having other debts. Those debts were not included in the agreed balance sheet.
CONTRIBUTIONS
The obligations placed on the Court by s 79 call for an assessment of the respective contributions by and on behalf of the husband and wife. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets.[7] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the husband and wife in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of husband and wife.
As to whether the Court should apply the considerations in s 79(4) to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan [1987] FamCA 8; (1987) FLC 91-814; In the Marriage of Norbis [1986] HCA 17; (1986) FLC 91-712 and In the Marriage of Zyk (1995) FLC 92-644.
In In the Marriage of Coghlan [2005] FamCA 429; (2005) FLC 93-220 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests at [61] that:
... This approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
Here there is no controversy about superannuation. The parties agree that superannuation should not be in a separate pool. The wife seeks a splitting order in respect of the husband’s interest and in the event that a payment is required by him to the wife, the husband stated through his counsel that he would prefer that it be reflected in a splitting order.
However, there are issues between the parties in relation to the treatment of the Shanghai properties.
I was initially told that it was agreed that the contributions made by the parties were equal until 2007. After the wife’s solicitor had made his submissions, the husband’s counsel explained that the husband’s agreement did not apply to his Shanghai property. The wife’s solicitor had an opportunity to address, what I thought was a new position, in reply and he did not resile from the wife’s contention that the contributions were equal to 2007. Nevertheless, there is no agreement about the balance of contributions up to 2007 or at all.
It was submitted for the husband that his Shanghai property must be treated differently to that of the wife. The reasons advanced for that approach are that the husband’s property vested in him just before separation; there was no consideration for that vesting and therefore no contributions could be said to have been made by the wife; and in any event, the husband does not have an unfettered right to the property. Those contentions are born out in the unchallenged evidence of the husband and his sister, Ms DE. The property belonged to the husband’s father. In 2005 the husband and his siblings signed an agreement about the fate of the property when their father died. The property was transferred into the name of the husband in 2005. The husband’s father died in December 2009 and the property became vacant. In accordance with the agreement, the property was then rented out. The husband’s sister manages the property and the rent is to be applied to the purposes specified by the husband’s father, which include maintaining the husband’ paternal grandparents’ home and family graves. Those purposes do not include any payment to the husband.
In that context, it is submitted that the husband’s Shanghai property should be treated separately from the rest and in that regard, the wife should be found to have made no contribution to the property.
That approach is opposed on behalf of the wife, who contends that there should be one pool.
The approach proposed on behalf of the husband is sensible. The property effectively came into the marriage six months before final separation, no contributions were made to it, let alone any contribution by the wife and the husband has a heavily qualified benefit, if any, from that property.
In accordance with the generally accepted approach, the property came into the marriage through the husband and should be seen as a contribution made by him or on his behalf.
The history in relation to the Shanghai property in the name of the wife and the parties’ son, H, is highly controversial. Although several affidavits and other documents were filed by the wife in these proceedings from 2011, the first evidence about the property comes in her January 2014 documents. When taken to the reference in her affidavit to her owning the property when the parties were married, the wife said that the evidence was wrong. The effect of her evidence that she then only had a right to live there.
It is an agreed fact that in 2003 the title of the property vested in the wife and H.
It is the evidence of the wife, given for the first time in her oral evidence at the final hearing, that her father had the property allocated to him because of his work as a government official. He died in 1997. It is the wife’s evidence that he left the property to her. She contends that because she was out of China at the time of his death, the property was occupied by her brother. She said that in about 2000 it became possible to privately own real property in China. Her brother paid an amount for the title to the property, based on the number of years he had been in paid employment. She contends that the property was then in the name of her brother. It later went into the name of his partner or girlfriend. In 2003 the property was transferred into the names of the wife and the parties’ son, H. At that time H was 14 or 15 years of age.
The husband asserted that the wife did not inherit the property, rather that she bought the property at a price of ¥140,000 RMB. He deposed to a conversation with the wife in about 2003 wherein she told him that she could buy the property from her sister in law for a very good price. The husband says that he told her that he had no objection, provided she had enough money for the purchase. He said he suggested that both children should be on the title and that the wife insisted on only H being included. The husband deposed that the wife gave him copies of the contract for sale and an invoice. The husband produced those documents in these proceedings together with further documents he obtained from the Shanghai City Property Registry. Those documents and English translations are exhibited to the husband’s affidavit. When asked about this in cross-examination the wife gave evidence that there was a transaction fee paid of the order of ¥4,200 RMB but that despite what was recorded on the sale documents, no consideration passed for the transfer.
The property is included in the agreed balance sheet and at its full value. Therefore there is no contention that the wife’s beneficial interest in the property for the purposes of these proceedings, is other than as to 100 per cent. The wife did not argue, for example that only one half of the value should be included on the balance sheet, reflecting the wife’s legal interest. A foray was made in that direction during final submissions based on the last sentence of paragraph 79 of the husband’s affidavit. It reads:
I accepted that she had bought the property and that it was family property and it will eventually belong to our child.
As I said at the time, that cannot be read as a concession from the husband that H is presently entitled to the property or beneficially entitled to one half of the property. In my view it reflects an acceptance by the husband that the wife intends that H will inherit the property. Just as the husband might also intend to leave his estate to one or both of the children.
The documents exhibited to the husband’s affidavit evidence an agreement to purchase the property for ¥140,000 RMB and at page 45 of the exhibits, a document records that ¥140,000 RMB was “received”.
I understood the learned solicitor for the wife to say that those documents should speak for themselves. If that be the case then that is an end to the matter and I should find that the wife paid ¥140,000 RMB for the property. As with any translation, it is possible that the English versions of the documents are inaccurate or misleading. However, that was not argued before me.
Although not raised in submissions, I note that the document bearing the reference to ¥140,000 RMB being received is dated 28 January 2003. The document translated at page 37 of the exhibits suggests that the deposit of ¥20,000 RMB was due on 27 January 2003 and the balance of ¥120,000 RMB had to be paid by 30 January 2003. Even then, that would not rule out a payment of ¥140,000 RMB on 28 January 2003.
No evidence was called from H or from the vendor on these issues.
It is more probable than not, that the wife paid ¥140,000 RMB for the transfer of the property.
The parties were still married in 2003 and were living together in Australia. In the absence of other evidence, I take it that the funds applied to that purchase were joint funds. On the husband’s evidence this was an agreed venture. In my view the parties’ contributions to that asset were equal.
For the purposes of the application of the provisions of s 79(4) to the assets I will deal with them in three pools:
Pool 1 – The Husband’s Shanghai Property
I have found that the only contributions to that property were made by or on behalf of the husband. No orders are sought in relation to the property.
Pool 2 – The Wife’s Shanghai Property
I have found that the contributions to that property were equal. No orders are sought in relation to the property and therefore any adjustment in the overall settlement will need to be made out of other assets.
Pool 3 – The Remaining Net Pool Of Assets
It is submitted on behalf of the husband that the contributions to the third pool of assets were made in the proportions 65 per cent by and on behalf of the husband and 35 per cent by and on behalf of the wife.
The wife’s case was run on the basis of one pool and it was conceded that the contributions favour the husband. The submission for the wife that that the husband’s contributions were 52.5 per cent compared to 47.5 per cent by the wife.
Section 79(4)(a) Contributions
Financial contributions to property, both direct and indirect were made by each of the husband and wife.
Each of the parties had paid employment and worked in the family businesses. The husband worked for wages in the hospitality industry and later for a government agency. The wife worked in the education industry in China and upon moving to Australia in 1990, she trained and worked in the clothing industry. She also sold Type M goods on commission and Type I goods. The rates of income of the parties were modest but important. The parties established and worked in a clothing industry business for several years, with the wife being the main worker. In addition to his main employment, the husband assisted in the business for an average of three hours a day. The business was successful. By 1994 the parties had saved enough, with $16,000 from the husband’s family, to purchase the land on which they built the former matrimonial home. $10,000 was provided by the husband’s uncle towards the building costs and the parties borrowed $125,000 from Westpac to complete the work. A further $20,000 later came from the husband’s father and by 2004, the mortgage was discharged.
Between 2007 and 2011 the wife mainly lived in China and ran or was involved in O Company Pty Ltd, importing Australian Type N goods into China.
I have set out in some detail what is known of the conduct of that business. The husband suspects that the wife retained and perhaps retains an interest in the business or at least assets or profit from the business. He cannot make that case. Otherwise there is no evidence other than that the business was unsuccessful and involved a financial loss for the parties and others.
The submission on behalf of the wife was to the effect that there was a four year period, in a long marriage, where the parties lived in different countries and what happened in that short period should not colour the entire history of contributions. In any event it is argued that there is no evidence of a significant loss. In that regard there were the funds contributed to the initial shipment of Type N goods and some administrative costs.
It is submitted on behalf of the wife that she made a financial contribution in that the husband accessed about $30,000 from the wife’s bank account while she was in China. The problem with that argument is that the $30,000 represented joint funds. These were not funds from outside the marriage. The evidence suggests that at least some part of the funds in that account were sourced in income tested benefits paid to the wife. Further, there is no suggestion that the funds were not applied by the husband to the purposes of the family.
On those facts, the financial contributions by and on behalf of the husband exceeded those of the wife.
Section 79(4)(b) Contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.
There is little evidence about non-financial contributions. The husband found the Suburb D land and undertook all of the work on behalf of the parties, associated with the planning and construction of the home. It is his unchallenged evidence[8] that he spent several hundred hours in drafting, investigating, negotiating and supervising the work.
The non financial contributions of the husband exceeded those of the wife.
Section 79(4)(c) Contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.
Each of the parties made parent and homemaker contributions.
In relation to the children, the wife made the sole contribution to H from November 1988 to 1990. The wife was the primary care giver of J until she was 4 years of age, although she returned to work in the clothing industry business when J was six months old. J commenced attending child care at about three or four years of age. The husband was effectively the sole care giver for J from the start of 2007 (when J was eight years of age) to February 2012 and during the periods the wife was out of Australia since then. In any event, I am satisfied that since February 2012, the husband has been J’s primary care giver. That fact is acknowledged in the orders for parental responsibility and living arrangements in the consent orders of 11 March 2013. He was not challenged about the evidence he gave from paragraph 150 to 172 of his affidavit, including his active involvement in J’s school, sporting and extra-curricular activities.
Since she returned to the home in February 2012, the wife has assisted with J, making breakfast and lunches. On occasions the husband or the wife drive J to the railway on school mornings.
The wife had the greater parenting load when the children were young. Although the husband was in effect sole parent for a longer period of time, that was at a time when H was an adult and J was older and more independent.
The evidence of the parties about what they each did around the home cannot be reconciled. The impression I have is that prior to 2007 the husband assisted with the children when he could but that because of his formal work hours, the wife had greater involvement with the children. After 2007 the husband had the sole or main care of J.
The parties give conflicting evidence about sharing the homemaker duties during periods of cohabitation. The wife says she did most of the cooking and other household duties and that the husband assisted her when she was overloaded. The husband deposed that he was responsible for cooking for the whole family, for shopping and gardening. He says the wife was responsible for cleaning the house and washing clothes. “Responsible for” is not the same as “undertook” but again, English is not the parties’ first language and I cannot be certain about the true position.
Each of the parties made valuable contributions to the family. If not equal then those contributions were of similar order.
It was not referred to in submissions, however the fact that the wife’s family cared for H for two years is not relevant to this provision. There is no scope for contributions to the family to be made other than by a party. I will however, refer to that fact under s 75(2)(o).
Conclusion On Contribution
It is agreed that the husband’s contributions exceeded those of the wife. The argument for the wife is that the contributions to all three pools were 52.5 per cent by the husband and 47.5 per cent by the wife. For the husband it is submitted that the contributions to the 3rd pool were 65 per cent by the husband and 35 per cent by the wife.
Contributions were made over 28 years. The husband’s financial contributions were greater than those of the wife. So too were his non-financial contributions but in the scheme of things that disparity is not significant. The parties’ contributions to the family were of a similar order.
The unusual aspect of the case is the period during which the wife lived and worked in China and the husband had a full time job as well as being effectively, sole parent and homemaker. That period was five years. The disparity of contributions in favour of the husband over that time must be seen in the context that it represents less than 20 per cent of the time over which contributions have been made. However, the husband continued with both roles after the wife returned to Australia subject to the wife’s assistance at home except when she travelled back to China.
I agree that the contributions by and on behalf of the husband exceeded those by and on behalf of the wife. In my view the balance of contributions was 55 per cent by the husband and 45 per cent by the wife.
THE OTHER MATTERS IN SECTION 79
Once contributions have been assessed, the applicable factors in s 79(4)(d) – (g) need to be considered. In the context of this case, they are:
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in s 75(2) would seem to be paragraphs (a), b), (c), and (o).
(a) the age and state of health of each of the husband and wife;
The wife is 54 years of age.
The wife underwent surgery and chemotherapy for cancer in China in 2009.
The wife deposed that she was treated for depression by a psychologist in 2007 and in 2009. More recently she saw a psychiatrist once a month. As at September 2012 the wife was taking Diazepam 5 mg daily; Mirtazapine 15 mg daily and Mormison 10 mg before bed.[9] Although the evidence was incorrectly set out in her trial affidavit, the wife’s oral evidence was to the effect that she last saw her psychiatrist in May 2013. She is feeling better and no longer takes sleeping pills. There is no evidence about whether she continues to take antidepressants. In the past the wife consulted her GP about “back pain sciatica”. The wife has been told that she remains free of the cancer for which she was treated in 2009.
The husband is 58 years of age. He works for a government agency and hurt his back at work in 2004 and 2009. He was treated with physiotherapy after each injury and was placed on restricted duties. He had suffered a prolapsed disc in his back. His thyroid was removed in 2010 and he had been treated for hypertension from 2010, high cholesterol from 2011 and a Vitamin D deficiency from 2012. He reported tiredness and lack of energy despite thyroid replacement.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s income is $245.69 per week in the form of the Newstart Allowance. She spends $251.84 a week including $16.29 in the form of child support for J. She estimated that she spends $50.00 per week on clothing, personal items and pocket money for J.
The wife owes $79,000 to friends and family and $68,396.00 in legal costs as at 1 March 2014. Otherwise her financial position is reflected in the balance sheet above.
There is the question of the wife’s earning capacity. This issue was not directly addressed in her evidence. She has been out of the workforce for two years or so. She expresses a lack of confidence in relation to business ventures and a lack of trust in potential partners. She is 54 years of age, English is not her first language and these are not times of full employment. The wife has had experience in the clothing industry, sales and the export of Type N goods. The wife deposed to a hope that she will be able to re-enter the workforce “at earliest time”.[10]
In my view the wife has some earning capacity.
The husband’s income is $1,127 per week made up of wages from a government agency of about $977 per week and Parent Tax Benefits A & B at about $150 per week. There is no evidence as to why he does not receive the child support payments made by the wife.
The husband’s Financial Statement was sworn before H moved out of home. It is not clear what difference, if any, that caused to his expenditure. The husband spends $976 per week which includes $177 in tax, $140 in rates, $75 on a Coles Mastercard and $100 on a Woolworths Mastercard. The husband estimates that of his expenses $200 per week goes to H as a living fee and $400 per week is spent on J’s living expenses and tuition.
The husband said he owes over $100,000 to friends and family. Some of those moneys were apparently applied to his legal costs. Otherwise his financial position is reflected in the balance sheet above.
The evidence about his assets and liabilities is addressed above.
There is no evidence about the husband’s earning capacity. I note that he is 58 years of age and in an occupation that is physically demanding. He has suffered injuries that have impacted on his work. As at 2013 his General Practitioner of six years reported that he remained on restricted duties which limit his hours of work and what he can lift. The husband is exercising his earning capacity. There is a question as to how long he will be able to continue in that role.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
J will continue to live with the husband. He has sole parental responsibility for her. She is 14 years of age. Although the father has been heavily involved in various aspects of her life, J will be increasingly independent.
It is not clear how much time J will spend living with her mother. The orders leave that matter to J and to date, there has been no issue as, except when travelling, the wife has lived with the rest of the family at the Suburb D property.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out above, what there is of the evidence in relation to the parties’ expenses.
(f) Subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia, and the rate of any such pension, allowance or benefit being paid to either party;
Each of the parties receives an income tested benefit. Each of them has a superannuation interest, although the husband’s interest is greater than that of the wife by about $100,000. That means that relatively more of the husband’s assets are tied up in superannuation than those of the wife. That said each of the parties may well be able to access their superannuation soon.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is no reliable evidence about the standard of living of the parties.
(na) 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; and
The wife says she pays $16.29 per week in child support but the husband does not disclose receiving any such payment. Neither of the parents identifies the date of a child support assessment. The only document I could find in evidence in respect of child support was a letter from the Child Support Agency dated 18 January 2012[11] rejecting the husband’s application. Suffice it to say, unless the wife obtains paid employment she is unlikely to pay and therefore, the husband is unlikely to receive, any significant financial support for J.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
WASTE
No submissions were made on behalf of the wife in respect of an issue raised earlier in the proceedings to do with gambling losses incurred by the husband.
The submissions on behalf of the husband include an argument that the wife is responsible for wasting family assets. It is clear from the line of arguments and issues maintained in the husband’s case that he retains a belief that whether in the form of an interest in the Chinese Type N goods importing business or otherwise, the wife has undisclosed resources. That aspect of his case has not translated into a claim for assets to be added back to the balance sheet but the corollary of that argument is that the wife has recklessly or deliberately lost matrimonial assets.
Much of the wife’s evidence makes little or no sense. The facts and allegations are as follows:
The wife travelled to China on 29 November 2006 with J and returned on 25 January 2007. While she was there the parties discussed by telephone, opening a business importing Australian Type N goods to China. The parties decided to proceed with that business.
A company called O Company Pty Ltd was established in China. The company was controlled by the wife but was registered in the name of the wife’s sister, Ms T. The wife says she was told that it was necessary that a Chinese citizen be the registered owner. The parties agreed that the husband would remain in Australia, caring for the children and would source an Australian Type N goods supplier for the business. The wife was to run the operation in China.
It is agreed that funds were invested in the new enterprise. The husband deposes that the wife told him that they needed a total of ¥500,000 RMB to register the business in China. The parties agree that ¥300,000 RMB was provided by the husband’s family (his sister and his father). It is the evidence of the wife that her family provided a similar sum. The husband disputes that, saying that the wife told him that her sister lent them ¥100,000 RMB and that a further ¥100,000 RMB came from the parties’ funds. Although no evidence was called from the wife’s sister and no explanation was given for that, I cannot make a finding about that issue.
The husband found a supplier in the form of Mr U of V Pty Ltd and Type N goods were ordered from that company.
There were significant costs including administrative costs such as the wife’s airfares and the costs associated with shipments of Type N goods. In the latter regard a total of $43,700 was paid by the parties to V Pty Ltd for the first shipment. Neither party asserts that those funds came out of the ¥500,000 RMB or ¥600,000 RMB with which the operation in China was first resourced. The husband understands, however, that a second shipment of Type N goods was paid for from those initial funds.
It is the wife’s evidence that the business lost ¥22,471 RMB in 2007, ¥118,084 RMB in 2008 and ¥330,437 RMB in 2009.
It is the husband’s evidence that until early 2009, the wife assured him that all was well with the business.
In the beginning of 2009 the husband visited Shanghai with the children. He was shown through the company offices and saw the Type N goods stored there. It is the husband’s evidence that the wife’s mother pointed to the stores of Type N goods at the company premises and assured him that he didn’t have to worry about his money (presumably, his family’s money). The husband says that a few days later the wife telephoned him and told him that she could not repay his father; that she did not have any money; that the Type N goods were sold but that the company could not collect the purchase price for those goods. She told him that the daily running of the company had exhausted the company’s funds.
The wife says she tried to sell the company in December 2008, without success. It is the wife’s evidence that she met a Mr P in February 2009 and recruited him as a salesman. It is the wife’s evidence that at the time she felt that the parties’ marriage was failing; she felt unwell; had received advice that she may have cancer; and felt that she could not continue to manage the company while she was being treated. The wife says she decided to sell the company to Mr P.
The wife deposed that Mr P told her that if she registered a company in Sydney it would help him (and presumably aid in his capacity to pay the parties for the company).
On 16 March 2009 the wife travelled to Sydney.
On 18 March 2009 the wife was told by her sister, presumably by telephone that she (the wife) had been diagnosed with endometrial carcinoma.
On 19 March 2009, the wife and Mr P registered W (Aust) Pty Ltd in Sydney. The wife was listed as a director of the company. She held 20 per cent of the shares and Mr P held 80 per cent. In or about May 2010 Mr X (an accountant) subsequently became the director of W (Aust) Pty Ltd but the shareholding was unchanged. W (Aust) Pty Ltd ceased trading in or about November 2011.
It is an agreed fact that even though she travelled to Australia in March 2009, apparently with Mr P, the wife neither told the husband of her plans, nor sought or obtained his approval to those plans.
It is the wife’s evidence that her sister suggested that she return to China for an operation and treatment and said that she (the wife’s sister) would cover the medical costs. The husband suggested that the wife remain in Australia and receive treatment here. The wife chose to return to China for treatment and travelled there on 21 March 2009.
On 22 March 2009 an agreement was signed between the wife’s sister (in whose name the company was registered) and Mr P, pursuant to which Mr P was to pay ¥500,000 for the assets of the company. It is the wife’s case that no payment was made at that time and indeed, the payment was never made. The wife was asked in cross-examination, why the payment was not required when the agreement was signed. The wife responded in what seemed an exasperated fashion, to the effect that naturally the payment was expected to come later and from the sale of Type N goods.
On 28 March 2009 the wife underwent lymphadenectomy and hysterectomy in Shanghai. Thereafter the wife received chemotherapy.
It is the wife’s evidence that while recovering she was unable to supervise the company and so became an employee. She was paid a wage by the company although she signed no employment contract. It is her evidence that until October 2009 she received an average income of ¥1,500 RMB per month and from January 2010 until October 2011 an average income of ¥2,000 RMB per month. The wife rejected the proposition that she continued to manage the company, saying that after her operation she remained in hospital and could only work by telephone or computer. An email was sent under the wife’s name to Mr U, a Type N goods supplier in Australia on 29 March 2009, the day after the wife’s operation. The effect of the wife’s evidence is that she wrote the email but asked someone else to send it. The wife agreed that she referred in the email to Mr P as her partner but asserted that she only did that so as to introduce Mr P to the supplier.
Presumably to counter the suggestion that her conduct was imprudent, it was the wife’s evidence that although the assets of the company were transferred to Mr P, at least initially he did not have the key to the business premises which was kept by the accountant and he had no access to the company bank accounts.
The husband says that in early 2009 he rang the Shanghai company premises from Australia and was told that he could not talk to “Manager [DXXn]” (the wife) but that he could talk to “Manager [P]”. He says that he rang the wife to find out who Mr P was and she told him that Mr P was “our manager” and that he is good at marketing in China.
The parties separated in June 2010.
On 16 August 2010 O Company Pty Ltd borrowed ¥1,000,000 RMB. The wife said that the company needed funds and Mr P asked her for money. After talking about it with someone the wife agreed to personally guarantee a loan. The loan agreement[12] was for two years at 8 per cent per annum. The wife said that she took some advice and was told that the guarantee would lapse because she had transferred the company. The evidence suggests that the business subsequently failed and yet it is not asserted that the wife has been called on to satisfy her guarantee.
As I understand the wife’s evidence, after she transferred the assets of the business to Mr P she raised money, including borrowing $12,579 from her mother, to pay for Type N goods ordered by the business. The wife was asked in cross-examination why she would advance money for Mr P’s business and said she did not want the Australian supplier to be out of pocket.
On 8 September 2010 O Company Pty Ltd was formally transferred to Mr P and thereafter he held 100 per cent of the shares in that company.
As I understand the wife’s evidence, apart from her wages as an employee and some unspecified part of the ¥300,000 RMB used to repay the husband’s sister, the wife was never paid for the company by Mr P.
On 4 May 2011 the wife registered an Australian company called Y Pty Ltd. The wife was the director and sole shareholder. It is the wife’s evidence that she established that company in case “her first business” failed. It transpired that the wife was referring to O Company Pty Ltd. The wife was asked why she would care about Mr P’s company failing and she said that she still had feelings for the company.
The husband continued to press the wife to repay his family. In 2011 the wife repaid the husband’s sister $160,000 for the husband’s family’s original ¥300,000 RMB investment in O Company Pty Ltd. The wife said that some of the money came from her family and some from Mr P, from the sale of Type N goods. The wife’s solicitor confirmed that there is no evidence as to whether the wife’s sister was repaid for the initial stake the wife’s family provided for O Company Pty Ltd.
In an often quoted passage from his judgment in In the Marriage of Kowaliw (1981) FLC 91-092, Baker J discussed the issue of waste in the following terms:
....
Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec. 79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.
Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?
As a statement of general principle. I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
I have no doubt that the husband's involvement in the company was an attempt by him not only to produce income for the family, but also to acquire assets of a business nature with the whole object of improving the parties' overall financial position. It is clear that for a period of some six years the husband derived income from this source and although the company failed, it did not fail, in my opinion, as a result of the type of conduct set out in the exceptions to the statement of general principle referred to above.
The decision of the Full Court of the Family Court in Antmann and Antmann (1980) FLC 90-908 was cited to me as authority for the proposition that the Court cannot take into account a negative contribution in either para. (a) or (b) of sec. 79(4) of the Act in determining applications for settlement of property under sec. 79. It seems to me that that portion of the headnote which appears under the heading ''A potential liability arising from the unilateral act of one party'' puts as a general proposition a statement which appears to relate solely to the particular facts which the Court was considering.
The relevant passage from the judgment as appears on p. 75,744 is as follows:
Counsel for the wife further claimed that the wife should receive compensation out of other assets for the waste of the assets committed by the husband. He described this as a 'negative contribution'. In our view, there is no room for such a consideration in para. (a) or (b) of sec. 79(4). It would be relevant in this context for the Court to take into account that the burden of contribution of one party was increased because the other party failed to make such contribution as was reasonably expected of him or her. If the husband had walked out of Anchards and left the wife to shoulder the burden of carrying on the business by herself that obviously would have been relevant. But in this case the wife did not take up any gap left by the husband.
The fact that a party has committed 'waste' of the matrimonial assets may be a relevant fact or circumstance under para. (o) of sec. 75(2) in an appropriate case. But in this case there is no evidence that the wife lost anything in consequence of her husband's action.
What the Full Court is saying in effect is that it was not appropriate, having regard to the facts before it, for a consideration of a negative contribution pursuant to para. (a) or (b) of sec. 79(4) to be taken into account. That is not to say, however, that conduct which amounts either to a deliberate diminution of the value of assets or to economic recklessness can never be taken into account in altering property interests. The reason for the Court concluding as it did in Antmann and Antmann (supra) as stated at the top of the second column on p. 75,744 was that there was no evidence in that case that the wife had lost anything in consequence of her husband's action.
It does seem to me, however, that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by sec. 79(4).
If, on the other hand, the decision of the Full Court in Antmann and Antmann (supra) is to be interpreted both literally and restrictively as precluding the Court from a consideration of a negative contribution in relation to para. (a) or (b) of sec. 79(4) then I am nevertheless of the opinion that evidence of wantonness or recklessness having economic consequences is clearly a matter which the Court may take into account pursuant to the provisions of sec. 75(2)(o).
If a party has acted in the manner to which I have referred earlier either by:
(a) embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) acting recklessly, negligently or wantonly with matrimonial assets the overall effect of which has reduced or minimised their value,
then such conduct in my view and the economic consequences which flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
If, on the other hand, losses of a financial kind have been suffered by the parties to a marriage in the course of the pursuit of matrimonial objectives, such as the gaining of income or the acquisition of assets whether the liability for such losses be joint or several then, in my view, such losses should be shared by the parties (although not necessarily equally) and taken into account when altering property interests.
In my view, the words ''financial resources'' as they appear in sec. 75(2)(b) must be taken to include liabilities as well as assets.
I respectfully agree with what Nygh J. said in Aroney and Aroney (1979) FLC 90-709 in relation to the distinction to be drawn between marital assets on the one hand and business assets on the other. At p. 78,785, his Honour said:
``In my opinion no distinction can usefully be drawn between so-called marital assets on the one hand and business assets on the other hand.''
Such an approach in my view is the proper approach for the Court to take and I am of the opinion that it is the logical extension of his Honour's argument that no useful purpose is served in attempting to draw a distinction between marital debts and business debts. ....
It is the husband’s case that the wife’s conduct of the Type N goods importing business in China was reckless, negligent and/or was intended to defraud him.
There was a lack of disclosure by the wife to the husband, both at the time of relevant events and in the course of the proceedings. Beyond the bare circumstances cited by the wife – her health, her belief that her marriage was breaking down and the need for the company to be run while she was treated, no reason is advanced for that lack of disclosure. Quite properly, I was not asked to infer any reason that is not advanced by the wife. The events or circumstances in question had a detrimental effect on the parties’ assets. Some of them are bizarre and not explained adequately or at all. In the case of others, the wife’s testimony is inconsistent with other evidence.
Nevertheless, in my view the circumstances do not justify any treatment other than as part of the exigencies of a marriage. In that regard:
Some aspects of the circumstances that seem foreign to Australian commerce may well be explained in terms of another culture and the commercial realities of business in China.
The parties’ arrangement left the wife with carriage of the operation in China. Apart from asking the wife for the return of his family’s initial investment, the husband does not contend that he intervened in respect of the business. There is no evidence that he pressed for active involvement in the running of the China arm of the business.
It is not unusual for businesses to fail. There is no evidence to suggest that the failure of the business can be attributed to the wife in a way that would attract the approach advocated in Kowaliw.
The wife was operated on and underwent chemotherapy. There is no evidence to suggest that she could have continued to run the business while in hospital; that a suitable person was available to run the business in her stead; that there was another buyer available for the business etc.
Care is needed to avoid taking a gendered view of the circumstances. If a husband had been solely in charge of such an operation in China, would there be a similar claim if he was hospitalised with cancer treatment and the business had failed? Perhaps not.
The only evidence is that the business was failing long before the events of February – March 2009.
In my view, I would need to be confident that the circumstances fell within the categories identified by Baker J before finding that the wife committed waste in these circumstances. The facts are curious and suggestive but on balance, are not circumstances outside the normal range of experience. I do not find that the wife behaved in a negligent, reckless or wanton way. Even if I found that the circumstances did warrant that approach, the extent of the loss is not known and so the resultant impact on a property settlement would be highly contentious.
MINDING OF H BY THE WIFE’S FAMILY
The wife’s family cared for H for two years in China after the wife came to Australia in 1990. That must have assisted the parties to settle in Australia.
THE CHINESE PROPERTIES
Each of the parties has an interest in a residential property in China. On the face of the evidence, the wife will have access to the property jointly owned by H and her and could use the property, rent it out or sell it. The husband’s property however is rented out and on the evidence, he is not able to sell it, live in it or receive the rent paid for it.
Section 79(4)(f)
I have referred to the parenting orders made in 2013. Beyond those referred to above, there are no relevant orders made under the Family Law Act 1975.
Section 79(4)(g)
I have referred to what I know of the child support position.
CONCLUSION
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
The husband is in paid employment but his health restricts his work and because of his health and his age, he is probably nearing the end of his working life;
The wife is four years younger than the husband but she does not have a job. There is no evidence that she has applied for a position of employment or that her health would be an impediment to securing employment. The wife has some, unexercised capacity for paid employment;
J is 14 years of age and the main responsibility for her housing, financial support and day to day care will fall to the father;
The wife’s parents cared for H in China from 1990 to 1992; and
The wife is more likely to obtain practical benefit from her property in China than the husband is from his.
Albeit in relation to a single pool of assets, the submission on behalf of the wife is that there should be a net adjustment to her of 7.5 per cent - in effect discounting what would be a 10 per cent adjustment for the disparity in the parties earning capacities because the husband will support J. It was submitted for the husband that there should be an adjustment to the husband of 17 per cent and in any event, not less than 10 per cent.
The most influential factors are the cost of housing and supporting J for four years or so; and the difference in the parties’ financial circumstances, particularly their employment status. Those are countervailing factors, one favouring an adjustment to the husband and one favouring the wife. The impact of those factors cannot be accurately predicted. If the wife secures a job next week, then the costs associated with J would take greater precedence. If the wife is unable to return to paid employment and the husband works for another five plus years, the disparity in earning capacity will be more important. Given the range of uncertainty, I will make no adjustment to the outcome warranted by contributions alone.
Just and Equitable
There are three pools of assets:
Pool 1 – The Husband’s Shanghai Property
The pool has a value of $250,945.45. I have found that the only contributions to that property were made by the husband. No orders are sought in relation to the property and therefore no adjustment in the overall settlement will need to be made for this asset.
Pool 2 – The Wife’s Shanghai Property
The property has a value of $246,886.93. I have found that the contributions to that property were equal. No orders are sought in relation to the wife’s property and therefore any adjustment in the overall settlement will need to be made out of other assets.
Pool 3 – The Remaining Net Pool Of Assets
Pool 3 is as follows:
Owner
Description
Value
1
H
C Street, Suburb D
$850,000
4
H
Toyota Tarago
$3,100
5
H
Toyota Echo
$4,050
6
H
HSBC and Westpac Bank savings
$200
7
W
HSBC and Westpac Bank savings
$246
8
H
Credit cards
-$3,000.00
9
W
Wife’s superannuation interests
(F Super Fund)
$9,322.42
10
H
Husband’s superannuation interests
(F Super Fund @ $14,958.72 and E Super Fund @ $93,440.06)
$108,398.78
Total
$972,317.20
I have found that the contributions to the main pool were made in the proportion 55 per cent by the husband and 45 per cent by the wife.
Therefore the husband will retain his property in China and receive about $658,217.46, representing 55 per cent of the third pool ($534,774.46) together with one half of the value of the wife’s property in China - pool 2 ($123,443).
That would leave the wife with her property in China together with about $314,099.74, representing 45 per cent of the third pool ($437,542.74) minus half the value of the second pool ($123,443).
Of pool 3, the wife has the benefit of and will retain:
Description
Value
Toyota Echo
$4,050
HSBC and Westpac Bank savings
$246
Wife’s superannuation interests
(F Super Fund)
$9,322.42
Total
$13,618.42
In order to bring her to $314,099.74 she would need to receive an additional $300,481.32.
That would leave the husband with the following from the third pool:
Description
Value
C Street, Suburb D
$850,000
Toyota Tarago
$3,100
HSBC and Westpac Bank savings
$200
Credit cards
-$3,000.00
Husband’s superannuation interests
(F Super Fund @ $14,958.72 and E Super Fund @ $93,440.06)
$108,398.78
Payment to the wife
-$300,481.32
Total
$658,217.46
If there is to be a payment from the husband to the wife, the parties each want part of the settlement to be reflected in a splitting order in relation to the husband’s superannuation. Because of the impact of the wife’s property in China, pool 3 is being divided in the approximate proportions 67.7 per cent to the husband and 32.3 per cent to the wife. So that the parties share the advantages and disadvantages of funds held in the form of a superannuation interest, I will provide for a payment to the wife which will leave her with 32.3 per cent of the non-superannuation assets and a splitting order which, together with her own superannuation interests, will leave her with 32.3 per cent of the superannuation. All other things being equal that would provide a result within $40 of the outcome described at paragraphs 190 & 191 of these reasons.
The non-superannuation assets are:
Owner
Description
Value
1
H
C Street, Suburb D
$850,000
4
H
Toyota Tarago
$3,100
5
H
Toyota Echo
$4,050
6
H
HSBC and Westpac Bank savings
$200
7
W
HSBC and Westpac Bank savings
$246
8
H
Credit cards
-$3,000.00
Total
$854,596.00
If the wife is to receive 32.3 per cent of that amount she would receive $276,035. Of those assets she will have $4,296 (her savings and the Toyota Echo motor vehicle). Therefore she should receive a payment of $271,739.
The superannuation interests are:
Description
Value
Wife’s superannuation interests
(F Super Fund)
$9,322.42
Husband’s superannuation interests
(F Super Fund @ $14,958.72 and E Super Fund @ $93,440.06)
$108,398.78
Total
$117,721.20
32.3 per cent of the superannuation is about $38,024. The wife has $9,322.42 in superannuation. In order to bring her to 32.3 per cent of the superannuation, there should be a splitting order in respect of the husband’s superannuation based on $28,701.58 which I will round down to $28,700.
As to the mechanics of the settlement, the superannuation orders will be expressed in the form of a splitting order. The husband has interests in two superannuation funds. Of those funds only the E Super Fund interest could accommodate the relevant splitting order. I will express the splitting order in relation to that fund. I have amended the wording of the order sought on behalf of the wife to the effect that the payment is calculated on the base amount rather than being the base amount.
The non-superannuation adjustment is complicated by the fact that the husband is unlikely to be able to pay the wife out and therefore the Suburb D property will have to be sold. The husband will have two months to pay the wife and in default the Suburb D property will be sold. In order that the parties share in the consequences of any difference between the net sale proceeds and the agreed value I will express the amount to be paid to the wife as a proportion of the net sale proceeds. The payment due to the wife is $271,739. In the event that the payment is to be made on the sale of the home, I will express that amount as 271,739/850,000ths which I will round down to 31.9 per cent of the net sale proceeds. That calculation relies on the fact that the home is unencumbered.
During the hearing the parties agreed that the contents of the Suburb D property would be divided in terms of a handwritten document dated 26 February 2014.
The orders are complicated and I will provide for the parties to bring the matter back on short notice in relation to the wording of the orders.
CONCLUSION UNDER SECTION 79
This was a marriage that spanned 26 years and very significant contributions were made by each of the parties. They acquired substantial assets and provided a sound foundation for their children. The parties shared in some contributions and divided others. Section 79(4) has been applied to the assets in three pools. Overall the contributions by and on behalf of the husband were greater than those by and on behalf of the wife. There are factors that would support adjustments in favour of one party or the other but their impact is uncertain and they have countervailing effects. Therefore there will be no adjustment by reference to paragraphs s 79(4)(d) to (g) inclusive. The parties will retain their interests in properties in China and there will be a settlement of the other assets as set out above. In my view, that will reflect a just and equitable division of their property.
I certify that the preceding two hundred and three (203) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 25 March 2014.
Associate:
Date: 24 March 2014
[1] The husband’s counsel asked that an affidavit of the wife filed 16 April 2013 be included in the reading. No affidavit was filed on that date.
[2] See paragraphs 127 – 143 of the wife’s affidavit.
[3] Norman & Norman [2010] FamCAFC 66 at [60]; Bevan & Bevan [2013] FamCAFC 116.
[4] Exhibit 10 the “Husband’s Schedule” was agreed to on behalf of the wife although there are issues about the treatment of some items on the schedule. For my own purposes I have included reference to the ownership of the items in accordance with previous draft balance sheets and the name of the superannuation fund. Importantly, however, those references were not part of the agreed document.
