Australian Securities and Investments Commission v Xiao

Should Ms Hu be released from the undertaking? 10The giving of an undertaking to the Court as a condition of obtaining relief from the Court is a matter of great seriousness. It needs to be borne in mind, when dealing with an application for relief from the consequences of such an undertaking, that the Court would not have granted the relief in question but for the undertaking that was given. Most commonly, for example, this can be seen in the undertaking as to damages given in connection with applications for interim or interlocutory relief, but there are many other examples. The Court will, therefore, not lightly relieve a party from an undertaking it has given in that way. However, ultimately, as with any interlocutory order, the essential question will always be whether it is unjust to hold the party to the undertaking in all the circumstances. 11On an application to be relieved from an undertaking, the applicant - that is the party that has given the undertaking - bears the onus of proof. In this case, therefore, it is for the applicant to satisfy the Court that it would be unjust to hold the applicant to the undertaking in all the circumstances. The starting point for that is that this application is made after the benefit of the order made upon the undertaking has been gained by the parties who sought it - namely, the first defendant primarily, in connection with whose application it was made, and the fifth defendant, who gave it in support of her husband's application - but at a time when the burden of the order -namely, to return to Australia - has been repudiated by the fifth defendant. At the outset, that arouses a sense of injustice in enabling the adverse consequences of an undertaking to be evaded when the benefit it procured has been exploited. 12Secondly, it is manifest that the undertaking was offered effectively as security for the husband's return to Australia. It is true that Ms Hu did not undertake to procure the husband's return to Australia, nor could she sensibly have done so; but she could offer some form of security for his return, and in this case it is plain that on the previous application, Barrett J was moved by the force of the idea that circumstances which effectively kept Mr Xiao's wife and two young children in Australia could operate as a powerful influence to give confidence of his return. There has been evidence given by Ms Hu, in the course of the s 19 examinations, to the effect that she thought that her relationship with her husband was a good one, and there was, of course, the husband's personal undertaking that he would return. In those circumstances, it seems to me that this undertaking was of enormous practical significance: first, to the decision of Barrett J to make the first order, to which I have referred; and then, on the minds of the parties, in particular ASIC, to consent to the order permitting the husband to go overseas on 17 November 2011. 13What has happened since then, is not only that Mr Xiao has not returned, but that as recently as 20 July 2012 - that is to say, well after the present interlocutory application was filed - the one-year-old son of the first and fifth defendants returned to China, according to the fifth defendant's solicitors, "in the company of his paternal grandparents", and assertedly because Ms Hu was unable to care for him herself without assistance from other family members. This means that, despite the position contemplated by Barrett J in September last year, not only the first defendant, but also his youngest son, is now in China. If the order which I am now asked to make is made, there is no obstacle to the fifth defendant, nor their remaining six-year-old child, also returning to China, both of them being citizens of the People's Republic. Thus, by acceding to the present application, the purpose of the regime established by Barrett J, and then later agreed to by the parties, would be totally defeated, and in many ways the Court would be seen as a laughing stock. 14It must be noted that there is not before the Court any satisfactory explanation or evidence of why Mr Xiao has not returned to Australia. There is no suggestion on the part of Ms Hu that she did not understand the undertaking she was asked to give. There is no evidence on her part that she gave it under any pressure, undue or otherwise, or other than willingly. There is no evidence of any attempts on her part to secure or influence his return to Australia. That is not to say that she gave an undertaking to do so - I accept that she did not - but, in connection with an application of the present kind, one might expect to see at least some evidence from Ms Hu that she had made an effort to do something to see that the Court's intent in making the orders had been achieved. 15There is no evidence of any pressing need for Ms Hu to travel in any event. The highest the evidence in that respect comes is a desire to seek out her husband in China, and to see her one-year-old child there; however, with respect to her child, that is a circumstance that has entirely been brought about by her own concurrence, since this present application was commenced. As to the assertion on the part Ms Hu of an intention to seek out her husband in China, the professed difficulty in doing so, or in communicating with him from Australia - referred to by her in her s 19 examinations - is difficult to accept in the absence of any direct evidence from her in these proceedings, and, more so, when it appears that, despite these supposed difficulties, it was possible to procure his signature to the contract for a sale of property. 16It was submitted on her behalf that there was no utility in holding her to the undertaking at this stage, and that it would be sheer speculation to think that the continuation of the undertaking would serve as any influence on the first defendant's mind. I am far from convinced of this proposition. The continued presence in Australia, and inability to leave Australia, of at least his wife and, to some extent, their first child, must operate as some ongoing influence on his mind. Whether or not it is of immediate impact is another matter, but it has not been shown by any means that it will be of no utility. I do not need to resort to speculation, as was suggested, in this respect. The onus is on the applicant to show that there is no ongoing utility in the undertaking, and I am simply not satisfied that that onus has begun to be discharged. As I put in argument, were there evidence to show that, for example - and I offer these only as illustrations - the first defendant was dead, or was incarcerated for a long period in China, or that for some other powerful practical reason it was impossible for him to return to Australia, that might well show that maintaining the undertaking on foot was no longer of any utility, but nothing like that has begun to be shown on the present application. 17I also stress that I do not see this in any way as a question of punishment of the fifth defendant for the decamping of her husband, the first defendant. No question of punishment arises. It is no more than holding the fifth defendant to an undertaking that I must assume she knowingly, willingly and freely gave to procure a particular benefit, namely, the ability of her husband to travel. It would operate markedly to the disadvantage of others in a similar position if it were thought that such undertakings could be given and then, when they did not turn out for the better, be dispensed with. If I were to accede to this application, it would be a powerful message that the Court should not even entertain such undertakings in similar circumstances in the future. 18In my view, this application must be dismissed.

Order 19My order is that the interlocutory process filed 15 June 2012 be dismissed with costs.

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