was unlikely to protect any re-transfer of the property from Mr Chen to Lym International from being dutiable, because on the original transfer to Mr Chen, the property had actually been transferred and registered in his name.
36 The next potentially relevant provision was s 54, which provided that only nominal duty of $50 was chargeable in respect of a transfer of dutiable property on the part of a trustee. However, in Sportscorp Australia Pty Ltd v Chief State Commissioner of State Revenue [2004] NSWSC 1029; (2004) 213 ALR 795, Gzell J held that s 54 only applied in the case of a continuing trust. In this case, the trust was brought to an end by Hamilton J's orders. Mr Chen drew the Court's attention to Dadeeton Pty Ltd v Commissioner of State Taxation (2004) 88 SASR 109 as providing support for the proposition that duty would not be payable. However, Gzell J, in Sportscorp, distinguished Dadeeton. For the limited purposes of the stay application, the decision of Gzell J should be accepted as correct.
37 Mr Chen next submitted that it was likely s 55 and s 56 would not protect the transfer from substantial duty. Those sections relate to property vested in an apparent purchaser and transfers back from a nominee. On their face at least, these sections do not appear to protect any transfer under the Court's order from the imposition of duty. Likewise, it was submitted that s 57, relating to property passing to beneficiaries, was unlikely to arise, because the present case does not involve an express trust.
38 Reference was also made to s 65(14), which provides for an exemption from duty where there is a transfer of dutiable property made to correct an error in a previous transfer of the same dutiable property. Again, it was unlikely that s 65(14) exempted any transfer of the property pursuant to his Honour's orders from duty.
39 Finally, reference was made to s 293, which provides that an instrument that fails in its intended operation and becomes useless is not chargeable with duty under the Act. The respondents relied in particular on this section, contending that by the combined operation of this section and s 50A, duty was not payable. However, that is far from certain.
40 In my opinion, it is not appropriate to resolve the question as to whether or not duty is payable. I have referred briefly to the provisions of the Act for two reasons. First, to demonstrate their complexity and, secondly, to demonstrate that there is at least a real possibility that duty may be payable, both on a transfer from Mr Chen to Lym International and, should Mr Chen succeed on the appeal, on a re-transfer to him. In my opinion, it would be inappropriate to cause one or other of the parties to incur such a significant financial burden at a time when there is an appeal on foot which has at least arguable prospects of success. I would propose, therefore, to continue the stay in respect of the transfer of the property.
41 Mr Chen also sought a stay of order 7, being the order for an enquiry. Mr Chen submitted that if the enquiry proceeds now, then, should he succeed on the appeal, the process would be wasted, as there would be no basis to order an enquiry. The same submission was made should the appeal succeed only in part.
42 I am of the opinion that the balance of convenience lies in order 7 being stayed. Such proceedings are expensive and time-consuming, both for the parties and the Court. Any enquiry should await the outcome of the appeal.
43 Finally, a stay was sought in respect of the payment of the money judgments to Ms Yang and Jasmine in a sum totalling about $1.55 M. Mr Chen offered to provide a form of security for the stay. He contended that he is entitled, upon a full enquiry, including enquiry as to the amount he should receive by way of a just allowance for the work he has performed on the development project, to a sum of $4.5 M. He submitted that this, in effect, would provide sufficient security to pay to Ms Yang and Jasmine the money funds ordered in their favour, should he not be successful on the appeal, as any amount he owed them could be set off when his just allowance claim was determined.
44 Mr Chen submitted there was evidence that there was a significant risk that if any moneys were paid over to Ms Yang and Jasmine, it was unlikely that those moneys would be repaid. In support of this contention, he relied upon the following matters: that Ms Yang and Jasmine are ordinarily resident out of the jurisdiction, their residence being in New Zealand (presumably making enforcement more difficult); a change of name by Jasmine on two occasions, without any reference to that being made in her affidavits; the transfer of property by Ms Yang to Jasmine's boyfriend, shortly before commencing the Lym International proceedings against Mr Chen; and that Ms Yang had agreed to the transfer of the Golf Avenue property out of the name of Lym International and into Mr Chen's name, so as to avoid having to pay moneys to Mrs Marcolongo, should she succeed in the District Court proceedings.
45 In a further attempt to place before the Court evidence of Ms Yang and Jasmine's financial circumstances, Mr Chen served a notice to produce upon them. No documents were produced. Mr Hale, senior counsel for the respondents, explained to the Court that there had been relatively late service of the notice to produce, given the location of his clients in New Zealand. More importantly, however, he stated that his clients did not wish Mr Chen to know their assets, he being someone who had effectively defrauded and cheated them.
46 As there was no response to the notices to produce, the Court is not in a position to know whether Ms Yang and Jasmine have assets that would be sufficient for the repayment of such sums if Mr Chen's appeal is successful. In the usual case, the party seeking the stay bears the onus of establishing that the successful party in the litigation is unlikely to be able to repay the judgment sum if an appeal is successful.
47 However, I would not regard this as a usual case. The evidence establishes that Mr Chen, Ms Yang and Jasmine have all been prepared to deal with assets so as to thwart the claim of possible and potential creditors and/or, on the trial judge's findings in respect of Mr Chen, to deal with assets in breach of fiduciary duty. In those circumstances, I am not satisfied that if moneys were paid to them, that Ms Yang and Jasmine would retain assets of equivalent value (if in fact they have such assets), so as to be in a position to repay those moneys, should Mr Chen be successful on his appeal.
48 Whilst it is understandable that Ms Yang and Jasmine may not wish to reveal their assets to the Court and thus to Mr Chen given the relationship between the parties, and whilst Mr Chen has not strictly proved that they have insufficient assets, so as to be unable to repay such moneys, the factors to which I have referred are sufficient to persuade me that a stay ought to be granted in respect of this aspect of his Honour's orders.
49 That leaves the decision in respect of Mrs Marcolongo.
50 Mrs Marcolongo also opposed Mr Chen's application for a stay of the orders made by Hamilton J in the Marcolongo proceedings. She contended that a stay should not be granted for the following factors: first, Mr Chen is in a precarious financial position; secondly, Mr Chen has disobeyed court orders in the past; thirdly, he was found by Hamilton J to be a man of little credit; fourthly, he had transferred assets to the sole ownership of his wife; and fifthly, he is a resident of New Zealand. It was submitted that these factors indicated that it was not "safe" for the property to remain in Mr Chen's hands, even for a relatively short period. Mrs Marcolongo also made submissions in respect of the stamp duty position.
51 In my opinion, a stay should be ordered for the reasons I have already given in respect of the Lym International proceedings, particularly in respect of the possible liability to stamp duty. I am fortified in this conclusion by the fact that an expedited hearing date for the appeal has been allocated for 8 and 9 July 2009.
52 Notwithstanding that I am of the opinion that a stay should be granted, the circumstances require that steps be put in place to ensure that the property is not dealt with in a way that will put it out of the reach of the respondents and Mrs Marcolongo should the appeal be unsuccessful.
53 There is a also a real question as to how the property should be managed in the interim. Both parties wish there to be an ongoing sale programme. Mr Chen seeks an order or direction that the respondent have the ongoing marketing of the property.
54 The respondents are concerned at the manner in Mr Chen is presently managing the property. Their concern arises not only from Mr Chen's non-compliance with court orders that were directed to ensuring that the respondents would at all times be fully informed, relevantly as to any leasing arrangements entered into but also as to the manner in which some of the lessees are treating the property. They claimed, however, that they cannot adequately market the property unless they are the registered proprietors and for that reason also seek that there be an immediate transfer of the property to them.
55 Whilst the Court, as a condition of a stay, may be able to fashion an order relating to the marketing of the property of the type suggested by Mr Chen, such an order would be inappropriate in the circumstances of this case. In the first place, other than Lym International, whose financial position is precarious, the other respondents reside out of the jurisdiction. Presumably if they were to be responsible for the marketing of the property, they would need to engage an agent. That agent may not be acceptable to Mr Chen. Further (and the last matter feeds into this), the parties are highly distrustful of each other.
56 It seems to me, therefore, that there are three alternative approaches to the ongoing marketing of the property pending the determination of the appeal.
57 First, the property is to remain in the registered ownership of Mr Chen and he be permitted to market the property for sale and otherwise to manage it, but be subject to certain conditions, should he proceed to do so. Such an approach has already been tried and Mr Chen has been found wanting, in that he failed to comply court orders relation to the leasing of the property. There is also complaint as to the standard of his management. The Court is not in a position to adjudicate on that, but the fact of complaint again underscores the lack of trust between Mr Chen and the respondents.
58 Alternatively, I could order that there be no further marketing of the property, either for sale or lease, but that Mr Chen otherwise remain responsible for all other aspects of the management of the property. Given the level of distrust between the parties and Mr Chen's present financial position, that also would seem to have problems. There may also be adverse financial implications to the parties relating to the Westpac mortgage if ongoing sales and leasing were suspended.
59 Finally, I could appoint a receiver of the property. As I see the matter at present, that is the appropriate step to take pending the determination of the appeal. Since such an appointment was not canvassed during the hearing, I propose to give the parties seven days to make submissions (not exceeding three pages) as to the appointment of a receiver, including, if an appointment is sought, who the receiver should be and the terms of the receiver's appointment. If either of the parties does not to wish to have a receiver appointed, short submissions (of no more than three pages) should be addressed as to the terms and conditions of the ongoing marketing of the property pending the determination of the appeal.
60 The orders of the Court are: