These reasons deal with an application by Austin Ta De Investment Pty Ltd (Austin Ta De) and Eastern Eminent Ltd (Eastern Eminent), made by notice of motion filed on 4 October 2023, for orders that the amount of $67,994,748.63 be paid out of Court together with any accrued interest to Austin Ta De forthwith.
The circumstances in which the moneys were paid into Court can be summarised as follows.
Earlier this year, Ta De Investment Pty Ltd (Ta De Investment) was involved in negotiations for the purchase of a property in North Sydney which involved the acquisition of units in a property trust. In July 2023, Ta De Investment retained Bartier Perry Lawyers (Bartier Perry) to provide advice in relation to the acquisition, but not in relation to the conveyancing or taxation issues arising from the transaction.
In August 2023, Austin Ta De was incorporated to purchase the units in the property trust.
On 18 August 2023, a written property trust unit sale agreement was entered into by Austin Ta De as purchaser and another company incorporated as the incoming trustee, Ruby Miller Pty Ltd. The purchase price was $70 million (plus GST, if any) subject to adjustments. A 10% deposit of $7 million was paid to the vendor's agent on about 18 August 2023 by Eastern Eminent on behalf of Austin Ta De.
Eastern Eminent is a company incorporated in the British Virgin Islands, and Dongxiao Yu is its sole director and shareholder. Mr Yu is also a director and sole shareholder of Ta De Investment and a director of Austin Ta De. Ta De Investment is the holding company of Austin Ta De. Mr Yu authorised the transfer of the 10% deposit from Eastern Eminent's bank account with JP Morgan in Singapore and treated it as a loan from Eastern Eminent to Austin Ta De.
On about 6 September 2023, Mr Yu arranged for the balance of the purchase price, being the funds the subject of this application, to be transferred to Bartier Perry's trust account. The funds were transferred on behalf of Austin Ta De from Eastern Eminent's same bank account with JP Morgan in Singapore. Mr Yu arranged for the funds to be transferred to Bartier Perry's trust account as he understood that Bartier Perry had been retained to assist with and attend on the settlement of the unit sale agreement which, at that time, was scheduled to complete on 22 September 2023.
The transfer of funds occurred following approaches to Bartier Perry on the afternoon of 6 September by two people assisting Ta De Investment and Austin Ta De with the sale transaction, namely, Leslie Abboud and Zhensong Gao. Mr Abboud and Mr Gao had asked Bartier Perry to receive the funds into its trust account and attend on settlement of the transaction.
On the morning of 7 September 2023, Bartier Perry requested that the funds not be remitted to the firm's trust account pending approval by the firm's risk committee as certain information had not been provided by Mr Abboud or Mr Gao. As events transpired, Mr Yu's direction to transfer the funds from Eastern Eminent's bank account to Bartier Perry's trust account had already been acted on and the funds were received into Bartier Perry's trust account at about 9.30am that day.
On 21 September 2023, Bartier Perry commenced these proceedings by summons seeking an order for the payment into Court of the funds held in its trust account that were received on 7 September 2023. The application was made on the basis that the funds had been received in circumstances where Bartier Perry's retainer at that time was unclear, the amount of the funds was sizeable and Bartier Perry was not satisfied as to who and on whose authority it would be justified in disbursing the funds. Bartier Perry's client at the time it received the funds was Ta De Investment and it had only received instructions from Mr Abboud on behalf of that company whereas the information from Mr Gao suggested that the funds were for the benefit of Austin Ta De. The source of the funds was traced to Eastern Eminent and the correspondence from Mr Gao indicated that he worked for a company, Capital Holdings (International) Ltd. These matters also led Bartier Perry to report the matter as a suspected trust account irregularity to the Law Society of New South Wales pursuant to s 154 of the Legal Profession Uniform Law 2014 (NSW).
The funds were paid into Court by Bartier Perry, with the money taken to have been paid on the filing of Bartier Perry's summons without the need for further directions: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 55.9(3).
The application by Austin Ta De and Eastern Eminent for payment of the funds and accrued interest to Austin Ta De is made pursuant to r 55.11 of the UCPR, which provides that funds that have been paid into Court may only be paid out of Court pursuant to directions of this Court.
In support of the orders sought, the applicants rely on affidavits from:
1. Mr Yu, dated 3 October 2023;
2. Zihao Wang, dated 3 October 2023. Mr Wang is the other director of Austin Ta De and Ta De Investment;
3. Susanna Ford, dated 3 and 5 October 2023. Ms Ford is a partner of Arnold Bloch Leibler, the solicitors for the applicants in these proceedings;
4. Mr Gao, dated 4 and 5 October 2023; and
5. Elson Jiang-Wei Pow, dated 4 October 2023.
Mr Pow is a solicitor and principal of Elson Pow & Associates, and was retained by Austin Ta De to provide legal services in connection with the acquisition of the property trust. He gives evidence that he has instructions to receive the funds into his firm's trust account should an order for payment out of Court be made and that completion of the unit sale agreement is now scheduled for 11 October 2023. It is on this basis that the application is being heard urgently in the Duty List as the funds are required to settle on that transaction.
The applicants also rely on written submissions which have assisted the Court.
The applicable principles are well-known: see National Australia Bank Ltd; Application of Avant Garde Investments Pty Ltd (rec apptd) (in liq) [2023] NSWSC 1153 at [70], referring to Council of the City of Sydney v Baboon Pty Limited [2020] NSWSC 1480 at [9]. An applicant seeking payment out of Court must satisfy the following requirements:
1. identify the person who has the primary beneficial interest in the funds and the nature of their entitlement;
2. identify any other persons beneficially interested in the funds and the nature of their respective entitlements;
3. notify all potential fund claimants of the application; and
4. have either a beneficial entitlement prior to the other interested parties or the consent of the other interested parties to the payment.
Based on the evidence before the Court, I am satisfied that each of these requirements have been met.
Mr Yu's evidence of the arrangements between Eastern Eminent and Austin Ta De satisfies me that Austin Ta De has the primary beneficial interest in the funds, and that the funds are the property of Austin Ta De by virtue of its intercompany loan arrangements with Eastern Eminent.
The evidence establishes that the other entities who were identified by Bartier Perry as possibly having an interest in the funds, namely, Ta De Investment, Eastern Eminent and Capital Holdings, have been notified of the application. Ta De Investment and Eastern Eminent support the application and the payment of the funds to Austin Ta De. Capital Holdings has confirmed in writing that it has no interest in and makes no claim over the funds, and does not otherwise wish to participate or be heard on the application.
Notice of the application has also been given to Bartier Perry, the Law Society of New South Wales and Mr Abboud, the latter two being the parties to whom notice of Bartier Perry's summons had also been given. Bartier Perry submits to the making of the orders sought on the motion and does not wish to be heard further in relation to the proceedings. The Law Society of New South Wales and Mr Abboud do not wish to be heard or participate in the proceedings and there is also nothing in the material to suggest that those parties have any possible interest in the funds.
For these reasons, on 6 October 2023, I was satisfied that the orders sought in the applicants' notice of motion should be made and I made the following orders:
1. Pursuant to r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW), direct that the amount of $67,994,748.63 paid into Court by the plaintiff in these proceedings, together with any accrued interest, be paid to the first applicant, Austin Ta De Investment Pty Ltd (ACN 670 205 697), forthwith.
2. These orders be entered forthwith.
3. Note that the exhibits to the affidavits have been returned to the applicants.
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ADDENDUM
On 9 October 2023, my Chambers received an email from the applicants' solicitors making an application for a variation of the orders made by this Court on 6 October 2023 in respect of the provision of payment of the funds to the first applicant so as to expressly provide that the payment out would be to the trust account of the first applicant's solicitor, namely, Elson Pow of Elson Pow & Associates. This application was made in circumstances where r 41.11 of the UCPR refers to payment to "the party's solicitor", which the Registry interprets as referring to the party's solicitor on record in the proceedings which, in this case, is Arnold Bloch Leibler, not Elson Pow & Associates.
In support of the variation application, the applicants rely upon a third affidavit from Susanna Ford dated 9 October 2023 which I have granted leave to file in Chambers and have read.
Ms Ford's affidavit confirms that Austin Ta De does not have a bank account in Australia and outlines the background to the application as set out above. The evidence already filed confirms that Austin Ta De had retained and authorised Mr Pow of Elson Pow & Associates to receive the funds into its trust account for the purposes of the settlement of the transaction.
This Court has power to vary the orders made on 6 October 2023 pursuant to UCPR rr 36.16(3B) and (4) and s 23 of the Supreme Court Act 1970 (NSW). I consider that it is appropriate to grant the application to direct the funds to be paid out to Austin Ta De's authorised solicitor, who is acting on the conveyancing related to the sale transaction. In making its decision about the release of the funds, the Court is engaging in "an exercise of prudential management of the funds in order to ensure their due administration": Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [81].
For these reasons, on 9 October 2023, I made the following orders:
1. An order, pursuant to rules 36.16(3B) and (4) of the Uniform Civil Procedure Rules 2005 (NSW), s 23 of the Supreme Court Act 1970 (NSW) and/or the inherent jurisdiction of the Court, that the direction made by Justice Henry in these proceedings on 6 October 2023 be varied as follows:
1. Pursuant to r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW), direct that the amount of $67,994,748.63 paid into Court by the plaintiff in these proceedings, together with any accrued interest, be paid to the first applicant, Austin Ta De Investment Pty Ltd (ACN 670 205 697), forthwith, with such payment to be made to the trust account of Austin Ta De Pty Ltd's authorised solicitor, Elson Pow of Elson Pow & Associates.
1A. To the extent necessary to give effect to the direction contained in paragraph 1, order pursuant to section 14 of the Civil Procedure Act 2005 (NSW) and/or rule 2.1 of the Uniform Civil Procedure Rules 2005 (NSW), that compliance with rule 41.11 of the Uniform Civil Procedure Rules 2005 (NSW) be dispensed with.
1. Grant leave to the applicants to file in Chambers the affidavit of Susanna Ford affirmed 9 October 2023 and read the affidavit on this application.
2. These orders be entered forthwith.
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Decision last updated: 09 October 2023