Xie v Li

Issue of Transfer

1. By their Defence, the Defendants dispute the assertion that Mr Xie did not know that the property was to be sold; dispute that he did not contest its sale; and say that he gave the unlimited power of attorney to Ms Li because he knew that the property was to be sold (and, implicitly, that he was to receive none of the proceeds). The Defendants deny that, in return for discontinuing the proceedings, they agreed to pay Mr Xie $1.8 million or any amount. Although there is no mention of this in the Defence, Ms Li says in her affidavit of 8 December 2018 (see paragraph 41) that in return for the abandonment of the 2016 proceedings she agreed to withdraw proceedings she had commenced in the Shenzen Futian District Court in China. These proceedings were brought against Mr Xie and a person who Ms Li describes as a mistress of Mr Xie and related to various companies with which Mr Xie and (according to Ms Li) Ms Li was involved. The abandonment of the China proceedings as consideration for Mr Xie's discontinuance of the 2016 proceedings is also mentioned in Ms Li's Cross Claim (see paragraph 21 of Ms Li's affidavit).
2. Mr Xie is 78 years old and Ms Li is 77 years old. It seems that there has been marital disharmony for a number of years. On 5 February 2016, the Plaintiff initiated divorce proceedings in the Federal Circuit Court alleging a separation date of 30 August 2007. As it happens, that application was dismissed (on 7 May 2019) on the basis that it had not been established that separation had occurred at least 12 months before 5 February 2016 (the date that Mr Xie's application for divorce was filed). Mr Xie has recently filed a second divorce application. It is common ground that neither Mr Xie nor Ms Li has filed property proceedings (i.e. proceedings referred to as a matrimonial cause in subsection (ca) of the definition of "matrimonial cause" in section 4(1) of the Family Law Act 1975 (Cth) ("FLA")) in the Federal Circuit Court or the Family Court (I shall in the balance of these reasons refer to the Family Court and the Federal Circuit Court compendiously as "the Family Court"). Ms Li has, however, commenced further property proceedings against Mr Xie in China. Mr Coleman expressed the view, with which Mr Hyde did not disagree, that the Chinese Court would not be likely to deal with Australian assets in those proceedings.
3. There was agreement between Mr Hyde and Mr Coleman that this Court does have jurisdiction to hear the Cross Claim which seeks relief under sections 78 and 79 of the FLA. The critical issue, however, is whether "the proceedings" should be transferred to the Family Court pursuant to section 5(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) ("Cross Vesting Act").
4. Section 5(1) of the Cross Vesting Act is in the following terms: 5 Transfer of proceedings (1) Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court; (ii) having regard to: (A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court; (B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and (C) the interests of justice; it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court; the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be.
5. Also relevant is section 4(1) of the Cross Vesting Act: 4 Additional jurisdiction of certain courts (1) Where: (a) the Federal Court or the Family Court has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and (b) the Supreme Court of a State or Territory would not, apart from this section, have jurisdiction with respect to that matter; then: (c) in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory) - that court is invested with federal jurisdiction with respect to that matter; or (d) in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory) - jurisdiction is conferred on that court with respect to that matter.
6. I set out also the relevant provisions of sections 4(1), 8, 78 and 79 of the FLA: 4 Interpretation (1) In this Act, the standard Rules of Court and the related Federal Circuit Court Rules, unless the contrary intention appears: […] matrimonial cause means: […] (ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings: (i) arising out of the marital relationship; (ii) in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or (iii) in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104; 8 Supersession of existing laws (1) After the commencement of this Act: (a) proceedings by way of a matrimonial cause shall not be instituted except under this Act; and (b) proceedings by way of a matrimonial cause instituted before the commencement of this Act shall not be continued except in accordance with section 9. (2) Proceedings for a decree of restitution of conjugal rights, of jactitation of marriage or of judicial separation shall not be instituted or continued after the commencement of this Act. (3) Proceedings for a separation order shall not be instituted after the commencement of this Act. 78 Declaration of interests in property (1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property. (2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession. 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 (b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage - altering the interests of the bankruptcy trustee in the vested bankruptcy property; 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; or (ii) the relevant bankruptcy trustee (if any); 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. […] (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.
7. The Defendants rely on the affidavits of Ms Li of 8 December 2018, Michael Xie and Peter Xie of this same date. Mr Xie relies on his affidavit of 29 January 2019, although very little reference was made to the content of the affidavits in submissions.
8. There was no dispute that this Court has jurisdiction to hear Mr Xie's Settlement Agreement claim as well as Ms Li's Cross Claim. There is no dispute that the Family Court has jurisdiction to deal with the Cross Claim and with the Plaintiff's claim had he raised it as a cross claim in that Court, although there is a possibility that the Family Court might have declined to hear Mr Xie's Settlement Agreement claim and leave it for determination by this Court. The question for determination is whether it is more appropriate that the proceedings (i.e. both Mr Xie's Settlement Agreement claim and Ms Li's Cross Claim) be determined by the Family Court.
9. In an application for transfer there are three matters which the Cross Vesting Act requires to be considered: 1. Whether a substantial part of the proceeding would have been incapable of being instituted in the Supreme Court but for the Cross Vesting Act; 2. The extent to which the matters for determination arise under or involve questions of interpretation or validity of a Commonwealth law; and 3. The interests of justice.
10. Mr Coleman submitted that: 1. The Supreme Court only has jurisdiction by reason of a determination under the cross vesting laws: see Young v Lalic [2006] NSWSC 18; 197 FLR 27 at [39]-[50] (see paragraph 4 of Mr Coleman's submissions). 2. The issue of ownership of the property is a matrimonial cause because either the house or the proceeds of sale were or are owned by Mr Xie and Ms Li or either of them. 3. There will be considerable overlap between the issue of the Settlement Agreement and the matters raised by the Cross Claim. 4. An appeal from the decision of the Supreme Court that is related to matters arising out of the FLA will have to go to the Full Court of the Family Court: Eberstaller v Poulos [2014] NSWCA 211; 87 NSWLR 394. 5. Mr Coleman relied on Stanford v Stanford [2012] HCA 52; 247 CLR 108 for the proposition that, in approaching the task of determining what is just and equitable, the matters to be considered are not restricted or constrained by s 79(4) of the FLA.
11. Mr Hyde in opposing the transfer made these points: 1. The Settlement Agreement claim is a claim clearly within the jurisdiction of the Supreme Court, and one appropriately brought here. Mr Hyde relied on Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706 per Ward CJ in Eq, as an example of a case in which, although one party to the marriage had commenced proceedings in the Family Court and the husband had sought in this Court the appointment of a new trustee of their discretionary family trust, this Court declined to transfer those proceedings to the Family Court. 2. It is a claim based on an agreement said to have been reached in July 2016 and will be a case based on affidavit evidence and likely to take at most one day, having a very narrow focus: namely, what were the terms of what was agreed between the parties? 3. Ms Li has filed a cross claim enlivening the jurisdiction of this Court - and done so after having filed the Notice of Motion for transfer. She has not sought to commence property proceedings in the Family Court, either as the initiating party or by way of cross application. 4. It cannot be said to be not in the interests of justice for her Cross Claim to be heard in this Court since she herself has propounded her Cross Claim here and not sought to commence property proceedings in the Family Court. 5. There has been no explanation offered by Ms Li (or her solicitor) on why she has initiated the property proceedings in the Supreme Court and yet now says that it is not in the interests of justice for it to be heard here. 6. The application to transfer the proceedings came before the Cross Claim (and the Defence), and the Cross Claim, he submitted, seems designed to enhance the prospect of transfer.
12. I raised with Mr Coleman the possibility that the Settlement Agreement issue be heard in this Court and the Cross Claim be transferred to the Family Court. Mr Coleman informed me, however, that his client did not want a separation of the hearing of Mr Xie's claim and Ms Li's claim and that all matters should be heard in the one court. He submitted that if the Court was not minded to transfer the proceedings in their entirety it should not transfer the Cross Claim aspect of the proceedings. Mr Hyde did not promote the transfer of the Cross Claim alone. I accept that it is preferable for both the Plaintiff's claim and Ms Li's claim to be heard in the one Court (see Valceski v Valceski [2007] NSWSC 440; 70 NSWLR 36 at [59]), and without agreement for transfer of part only I do not think it would be appropriate to make such an order.
13. In Lalic, Brereton J (as his Honour then was) held that the Supreme Court does have jurisdiction conferred upon it by virtue of section 4(1) of the Cross Vesting Act to hear a matrimonial cause. His Honour explained that: 42 It is a misconception that before cross-vested jurisdiction can be exercised, the proceedings must first be "cross-vested" pursuant to some application or order of either Court. The Supreme Courts are simply invested, by the Commonwealth Cross-vesting Act, with the jurisdiction of the Family Court, notwithstanding the previous exclusivity of the jurisdiction of that Court. The invocation of the cross-vested jurisdiction in inappropriate matters is controlled by the power to transfer, contained in s 5 of the Commonwealth Cross-vesting Act, so that if a party commences family law proceedings in the Supreme Court when the Family Court is clearly the appropriate forum, the Supreme Court - although it has jurisdiction to entertain and determine the proceedings - may transfer them to the Family Court.
14. His Honour drew attention to one limit on the conferral of jurisdiction (section 60G of the FLA, which deals with adoption) but that is of no present relevance. It will be observed that there is no requirement for a 'determination' under the Cross Vesting Act. The Act confers jurisdiction on this Court both in respect of Ms Li's claim, and on Ms Li's contention, in respect of Mr Xie's claim as well.
15. In Valceski, an estranged wife instituted proceedings for a settlement of property under section 79 of the FLA. The husband had become the sole owner of the former matrimonial home following transfer of his father's share in the property under a deed. The husband's father brought proceedings in this Court to set aside the deed and transfer, and to have his claimed equitable interests in the property declared. The wife then sought a declaration in the Family Court that her husband's family had no interest in the property and she sought transfer of the equity suit to the Family Court. His Honour ordered the transfer. His Honour expressed the view that: 1. The Family Court did have power under its accrued jurisdiction to hear the equity suit - and that includes issues that involved the application of State law. 2. Whilst there may be a discretion to decline to exercise accrued jurisdiction it will be an exceptional case where that would not be exercised with the result that the whole of the justiciable controversy was not resolved [at 59]. 3. One court hearing the whole justiciable controversy would avoid duplication and inconsistency - which was best avoided. The Family Court was the more appropriate court because the larger controversy was primarily in its jurisdiction. 4. There is no onus of proof or burden on an applicant for transfer, and the fact that one party has commenced in the proposed transferor court before the proceedings in the proposed transferee court does not create a presumption in that party's favour.
16. In Valceski, Brereton J did say that the relevant proceeding (i.e. the father's proceeding) was clearly capable of being instituted in the Supreme Court without recourse to the Cross Vesting Act and, as the matrimonial proceedings were already pending when the equity suit was instituted, the proceedings could also have been instituted in the Family Court "but only in reliance on accrued jurisdiction". His Honour also held that there was no question involving the application or validity of a Commonwealth law which was a factor which suggested that the Supreme Court was more appropriate. His Honour decided that the equity proceedings should be transferred to the Family Court on the basis of the interests of justice (see [69]-[85]). His Honour looked at a number of factors and placed emphasis on the need to avoid duplication and inconsistency and he held that the larger controversy between the parties of which claim in respect of the property the subject of the equity proceedings was a matter properly and primarily in the jurisdiction of the Family Court (see [85]).
17. The present case is different to Valceski because this is not a case in which one party to the marriage has commenced proceedings in the Family Court in connection with the matrimonial property and the other party has commenced proceedings in another court. Here, Mr Xie has commenced proceedings on a claim that is, on its face, of a type normally brought in this Court and the wife has brought a cross claim invoking the jurisdiction of this Court to hear her case in respect of the distribution of matrimonial assets. In her affidavit of 8 December 2018, Ms Li said that she intended to bring property proceedings in the Family Court but, not only has she not done so, she filed her Cross Claim in this Court on 22 December 2018. Mr Coleman submitted that because Mr Xie's Settlement Agreement claim relates to property that he claims is his (i.e. his right to the monies promised under the Settlement Agreement) that, by virtue of subsection (ca) of the definition of "matrimonial cause" in section 4(1), the claim is a matrimonial cause falling within the FLA. The definition does, however, require that the proceedings must be proceedings falling within (i), (ii) or (iii) of that subsection. The only possibly relevant subsection is (i), and I have some doubt as to whether the claim here "arises out of the marital relationship". Mr Hyde did not, however, challenge this view of the claim (and no authorities were cited by either Mr Coleman or Mr Hyde on this point), but Mr Hyde says that a claim based on the Settlement Agreement is very much one that would normally be heard in this Court. I think it certainly is a case of a type that would normally be heard in this Court.
18. Whilst I accept Mr Coleman's point that the issues in the Cross Claim are of a type heard daily in the Family Court, the present case is one in which both courts have jurisdiction to hear all maters raised; the Plaintiff's claim is of a type suitable for determination in this Court and the wife has already invoked the jurisdiction of this Court and has not commenced proceedings in the Family Court. I do not accept that there would be any overlap between the Settlement Agreement claim and Ms Li's matrimonial cause, although if this Court finds in favour of Mr Xie it will need to decide the effect of Mr Xie's recovery in relation to Ms Li's claims, given that the original source of the funds the subject of the 2016 proceedings was the matrimonial home. If Ms Li is successful in defending Mr Xie's claim, that will potentially affect her recovery from Mr Xie too. All matters can be heard in the one Court, there is no reason to think that the proceedings will not be heard in a timely fashion in this Court and there is no disadvantage relating to locality or representation. Nor do the issues raised by sections 78 and 79(4) and, a fortiori, Mr Xie's claim, involve questions as to the application of complex or specialist statutory or other legal principles developed in the Family Court. The phrase "just and equitable" is a standard with which this Court is not unfamiliar. The fact that any appeal from the decision at first instance would have to be heard by the Full Court of the Family Court, whilst to be taken into account, does not, it appears to me, present a significant obstacle or difficulty, since that is what, on the basis of Eberstaller, is required by the legislature and it seems to be designed to ensure that there is consistency in approach of the various Courts (Federal and State) with jurisdiction at first instance. I do not think in these circumstances it is more appropriate or in the interests of justice that the proceedings be transferred to the Family Court. I therefore decline to make an order transferring the proceedings to the Family Court.

The Issue of Security for Costs

1. The second issue in the Motion is the issue of security. The Plaintiff's position is that: a) he is a resident of Australia; and b) he has a property worth $2 million in his name (see paragraphs 5, 6, 34, 35 and 36 of his affidavit of 29 January 2019). Point b) is only relevant if he is not resident. His evidence is that he is resident and he was not cross examined on that assertion. Mr Coleman frankly indicated that he had nothing more to say beyond his written submissions and he accepted that the Plaintiff does have an asset in the jurisdiction worth $2 million.
2. It was accepted that if Mr Xie is resident in Australia that he cannot be compelled to provide security. Mr Xie's evidence is that he is resident and Mr Coleman did not seek to persuade me that I should reject Mr Xie's sworn testimony. There therefore will be no order for security for costs.

Costs of the Motion

1. The Plaintiff having been successful in resisting the Motion, it should be dismissed and the Defendants should pay the Plaintiff's costs on the ordinary basis, as agreed or assessed.

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