Chen v Lym International; Chen v Marcolongo

Conveyancing Act 1919, s 37A LEGISLATION CITED: Duties Act 1997 Legal Profession Act 2004, s 347

Alexander v Cambridge Credit (1985) 2 NSWLR 685 Dadeeton Pty Ltd v Commissioner of State Taxation (2004) 88 SASR 109 CASES CITED: Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 Sportscorp Australia Pty Ltd v Chief State Commissioner of State Revenue [2004] NSWSC 1029; (2004) 213 ALR 795 Vaughan v Dawson [2008] NSWCA 169

CA 40118/09 Yu Po Chen (Appellant) Leonilda Marcolongo (First Respondent) Lym International Pty Limited (Second Respondent) PARTIES: CA 40119/09 Yu Po Chen (Appellant) Lym International Pty Limited (First Respondent) Limin Yang (Second Respondent) Yang Liu (Third Respondent) Westpac Banking Corporation Limited (Fouth Respondent)

CA 40118/09 D Pritchard SC; J Emmett (Appellant) D H Mitchell (First Respondent) COUNSEL: T S Hale SC; S A Wells (Second Respondent) CA 40119/09 D Pritchard SC; J Emmett (Appellant) T S Hale SC; S A Wells (First, Second and Third Respondents) C Hilder (Solicitor) (Fourth Respondent)

CA 40118/09 Middletons (Appellant) Dunstan Legal (First Respondent) SOLICITORS: Unsworth Legal (Second Respondent) CA 40119/09 Middletons (Appellant) Unsworth Legal (First, Second and Third Respondents) Henry Davis York (Fourth Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 5533/06 SC 5049/07

LOWER COURT DATE OF DECISION: 18 March 2009

LOWER COURT MEDIUM NEUTRAL CITATION: Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 182

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40118/09 CA 40119/09

26 May 2009 Yu Po Chen v Leonilda Marcolongo & Anor Yu Po Chen v Lym International Pty Limited & Ors Judgment 1 HER HONOUR: On 2 March 2009, Hamilton J delivered his reasons for judgment in two sets of proceedings heard together, being Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 98. His Honour made orders in the proceedings on 18 March 2009. By notice of motion filed on 15 April 2009, Mr Chen sought a stay of his Honour's orders, pending the determination of Mr Chen's appeal from his Honour's orders. 2 The first set of proceedings (the Lym International proceedings) were brought by Lym International Pty Ltd, Ms Yang, who is one of two directors of Lym International, and Ms Yang's daughter Jasmine against Mr Chen and Westpac Banking Corporation (Westpac). I will refer to Lym International, Ms Yang and Jasmine collectively as the respondents. 3 The factual background of the Lym International proceedings is complex and is set out in his Honour's judgment. In brief, however, the proceedings concerned two townhouse development projects undertaken by Lym International Pty Ltd at Darley Street in Mona Vale (the Darley Street property) and at Golf Avenue in Mona Vale (the Golf Avenue property). By mid-2006, the development of the Darley Street property had been completed and the townhouses had been sold. 4 On 31 July 2006, when the development at the Golf Avenue property was partly completed, Lym International executed a contract to sell the property to Mr Chen for $15 M (the contract for sale). The contract for sale was completed on 15 August 2006. At the time of completion, Kingsway Finance Company Pty Limited (Kingsway) held a mortgage over the Golf Avenue property. This mortgage was discharged by sums advanced to Mr Chen by Westpac which took a mortgage over the Golf Avenue property. That mortgage falls due for repayment in November this year. 5 In the Lym International proceedings, the respondents alleged that Mr Chen breached his fiduciary duty in having the property transferred to him. The respondents further alleged that between 31 July 2006 and 15 August 2006, Mr Chen removed $1.2 M from the bank account of Ms Yang and her husband and $120,000 from Jasmine's bank account. It was contended that these transactions were also undertaken in breach of fiduciary duties owed by Mr Chen, that arose pursuant to powers of attorney that had been granted to him by Ms Yang and Jasmine. 6 The respondents sought orders that the contract for sale be set aside and that Mr Chen be ordered to repay the moneys removed from the bank accounts. 7 Hamilton J found that Mr Chen had not been authorised to take money from the bank accounts. His Honour also held that the transfer of the Golf Avenue property from Lym International to Mr Chen was made in breach of Mr Chen's fiduciary duties to the respondents. His Honour ordered that Mr Chen repay the moneys to Ms Yang and Jasmine that he had misappropriated and ordered that the Golf Avenue property be re-transferred to Lym International. 8 The second set of proceedings were brought by Mrs Marcolongo, the owner of a property adjoining the Darley Street Property, against Lym International (the Marcolongo proceedings). Mrs Marcolongo claimed her property was damaged by the removal of support during the development of the Darley Street Property. In August 2004, Mrs Marcolongo commenced District Court proceedings claiming damages in the sum of $600,000 (the District Court proceedings). By that time, the townhouses on the Darley Street Property had been sold and the Golf Avenue property was Lym International's only asset of substance in Australia. The District Court proceedings had not been determined at the time that Hamilton J delivered judgment in the proceedings before him. 9 In the Marcolongo proceedings, Mrs Marcolongo alleged that her claim in the District Court proceedings made her a potential creditor of Lym International. She contended that the transfer of the Golf Avenue Property from Lym International to Mr Chen was undertaken with the intent to defraud her. She sought an order under the Conveyancing Act 1919, s 37A that the contract for sale be set aside. His Honour found in favour of Mrs Marcolongo and declared the transfer void. 10 His Honour made final orders in both sets of proceedings on 18 March 2009. Those orders included that the Golf Avenue property be retransferred to Lym International and that Mr Chen pay to Ms Yang and Jasmine monies in the sum of approximately $1.55 M reflecting the amounts he withdrew from their bank account (together with interest). In the Lym International proceedings his Honour also ordered that there be an relating, inter alia, to the receipt and payment of moneys and benefits received in respect of the Golf Avenue development. 11 His Honour ordered a stay of the substantive orders for 42 days. Mr Chen's notice of motion for a stay first came before this Court on 27 April 2009 when the stay was extended to 4 May 2009 at 5 pm. On 4 May 2009, I heard the notice of motion and reserved judgment. I stayed orders 1 to 6, 8 and 9 made on 18 March 2009 by Hamilton J, pending delivery of this judgment.

Principles governing grant of a stay 12 It is usually said that there are two matters that need to be established for the Court to grant a stay. First, the appeal must have reasonable prospects of success and secondly, the balance of convenience must favour the grant of a stay: see Alexander v Cambridge Credit (1985) 2 NSWLR 685. However, the underlying principle that governs the exercise of the Court's discretion to grant a stay cannot be stated in such definitive terms. Rather, the applicant for a stay must demonstrate a proper case for a stay. As the Court said in Alexander v Cambridge Credit at 694, (rejecting the proposition that special or exceptional circumstances needed to be shown): "It is sufficient that the applicant for a stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in [the applicant's] favour". 13 The Court continued, at 694-695: "There are other principles to be kept in mind. The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties … The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case, nor will it discharge the onus which the applicant bears ... The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it ... Where there is a risk that if a stay is granted, the assets of the applicant will be disposed of, the Court may, in the exercise of its discretion, refuse to grant a stay …

Two further principles can be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay … Secondly, although courts approaching applications for a stay will not generally speculate about the appellant's prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated, this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interest of the parties, from making some preliminary assessment about whether the appellant has an arguable case." (Citations omitted) 14 The Court may impose conditions on the grant of stay to ensure that there is a fair adjustment of the rights of the parties pending the determination of the appeal. 15 It is apparent from the last-mentioned comment by the Court in the above passage in Alexander v Cambridge Credit that there is no necessary requirement that the court determine whether there is an arguable case on the appeal. Rather, that is a matter that may be relevant in determining whether it is appropriate to grant a stay. In the present climate, where legal practitioners have a statutory obligation not to bring proceedings that do not have reasonable prospects of success: the Legal Profession Act 2004, s 347, this particular consideration may be one that the courts can approach with less scrutiny. It will depend upon the circumstances of the particular case. The court will always be concerned to ensure that its processes are not used inappropriately, for example, by permitting a defendant from keeping a successful plaintiff out of the fruits of his/her litigation victory by seeking a stay in respect of a hopeless appeal. That was the position in Vaughan v Dawson [2008] NSWCA 169, discussed below. The primary consideration in the court's determination will be whether the applicant for the stay has discharged the onus of demonstrating that there is a proper basis for the stay.

Arguable case on the appeal 16 Mr Chen submitted that he had reasonable prospects of success on the appeal. The respondents contended however that the trial judge had made adverse credit findings against Mr Chen and those findings would be determinative of the appeal. They referred to the decision of Campbell JA in Vaughan v Dawson as an example of a case where the Court had refused a stay in circumstances where the first instance decision had been based essentially on credit findings. As the applicant had not been able to explain to the Court how the tests in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 were to be met on the appeal, his Honour considered that the applicant had not shown there was an arguable ground of appeal. Accordingly his Honour refused to grant a stay. 17 In this case, the credit of the witnesses in the Lym International proceedings underpinned the trial judge's conclusions in respect of a number of important issues of fact. In this regard, his Honour found Mr Chen to be "a most unimpressive witness" (at [70]) and concluded that, except where his evidence was against interest, or not contested, he was not prepared to accept Mr Chen's evidence unless it was corroborated by the evidence of a credible witness, or by documentary evidence or extrinsic circumstances (at [78]). Hamilton J also made an adverse credit finding against Mr Chen's wife (at [83]). By contrast, although finding some unsatisfactory aspects in the evidence of all witnesses, his Honour, overall, found that Ms Yang and Jasmine tried to give the Court the best possible account of the events with which their evidence was concerned. 18 Mr Chen contended that the adverse credit finding against him was not determinative of the question whether there were reasonable prospects of success on the appeal, as there are substantial grounds of his appeal in respect of which the credit findings are irrelevant. In particular, he contended that the scope of his fiduciary duty did not extend to the sale of the Golf Avenue property as he was not appointed an attorney in connection with the sale of the property, nor did he use his power of attorney to effect the sale. 19 Mr Chen next challenged Hamilton J's finding of breach of duty in failing to make full and frank disclosure, in particular of: "(i) Mr Chen's intention to purchase the Property on or before 24 July 2006;

(ii) the terms of Special Condition 33 of the Sale Contract (CB1069 in Vol 3);

(iii) the revised quantity surveyor's report estimating the cost to complete the development project and received by the Appellant on 3 August 2006; and

(iv) the absence of a settlement statement or details about debts satisfied at the time of completion of the sale." (Outline of submissions, appellant, 2) 20 Mr Chen made a particular complaint that the second, third and fourth of these matters of non-disclosure were not pleaded. Mr Chen contended that he had protested at having to meet any case based on these non-disclosures at trial and that it was therefore an error for the trial judge to find breach of fiduciary duty on the basis of these matters. It was submitted Mr Chen's credit was irrelevant to this aspect of his appeal. 21 Mr Chen also challenged his Honour's finding in respect of each of the four non-disclosures upon which his Honour had found that he had breached his fiduciary duty. 22 As to the first non-disclosure, it was submitted that the trial judge considered the matter at the wrong date and that the relevant date upon which the question of disclosure should have been assessed was the date of the contract of sale and the transfers, being 31 July 2006. 23 As to the second non-disclosure, it was alleged that Lym International had legal representation on the sale and, accordingly in the circumstances, it was not open to conclude that any inadequate explanation of the sale contract was relevant to a breach of fiduciary duty. 24 As to the third non-disclosure, Mr Chen contended that not only was this issue not a matter that had been pleaded and, accordingly, had taken Mr Chen by surprise, the trial judge failed to consider evidence demonstrating that the quantity surveyor's revised report was not material that needed to be disclosed. 25 As to the fourth non-disclosure, it was submitted that any such non-disclosure could not warrant a conclusion that Mr Chen held the Golf Avenue property on trust for Lym International, as by the time of settlement, Lym International was already bound by the sale contract. 26 Mr Chen contended that given the basis upon which he challenged the trial judge's findings in respect of each non disclosure, the adverse credit finding against him would not be relevant to the appellate determination of these issues. 27 Next, in respect of the money judgment in favour of Ms Yang and Jasmine, Mr Chen contended that Hamilton J failed to expressly deal with the submissions he had made in respect of this claim. Mr Chen also contended that it was inherently improbable that Ms Yang had not authorised him to use the funds. Further, Mr Chen submitted that his Honour erred in ordering him to transfer the Golf Avenue property to Lym International before he had been paid his just allowance for expenses he had incurred in the development. Finally, he submitted that his Honour erred in failing to order that Mr Chen have a just allowance for his time, skill and effort in respect of the development project. Again, he asserted that any adverse findings as to his credit were irrelevant to the determination of these issues on appeal. 28 Finally, in respect of the Marcolongo proceedings, Mr Chen submitted that there was a series of entirely legitimate factors motivating the transfer of the Golf Avenue property, so that his Honour's finding that the property had been transferred with the intention of defrauding creditors was contrary to the evidence. Mr Chen also complained that his submissions at trial on this issue were not dealt with by his Honour. Again, it was contended that any adverse credit finding is irrelevant to the determination of these matters on the appeal. 29 The respondents contended that the outcome of the proceedings in their favour was so enmeshed in the credit findings that Mr Chen would not be able to successfully establish on the appeal that the credit findings ought to be set aside. It must be said immediately in this regard that Mr Chen fully recognised the burden he has in overturning the adverse credit findings made against him. However, as is apparent from the manner in which he has focussed his submissions on this application, Mr Chen proposes to seek to persuade the Court that there were errors in the trial judge's determination which stand separate from and are not dependant upon any credit findings. The respondents did not directly engage with this aspect of the way in which Mr Chen contended that that he had an arguable case on the appeal. 30 The proceedings at first instance were lengthy and his Honour's judgment was likewise lengthy. The complexity of the matter is reflected in the fact that the settling of the final orders in the matter took a further two days argument after judgment was delivered. Given that the Court need only make a preliminary assessment of whether there is an arguable case on the appeal (assuming that question is a prerequisite) the matters relied upon above are sufficient to establish that Mr Chen's appeal is arguable.

Balance of Convenience 31 The principal reason advanced as to why the stay should be granted was that if the orders of Hamilton J are implemented, it was likely that not only would stamp duty be payable on the transfer from Mr Chen to Lym International, but that stamp duty would again be payable should Mr Chen succeed in his appeal. He submitted that the amount of stamp duty involved could, therefore, possibly be $2 M (that is, $1 M on each transfer). Mr Chen also relied upon the impecuniosity of Lym International (which was not in dispute) and further sought to establish a case that there was a real question as to whether Ms Yang and Jasmine would be able to repay the moneys Mr Chen is presently under an order to pay to them. 32 The question as to whether the transfer from Mr Chen to Lym International pursuant to his Honour's orders would attract stamp duty is both contentious and problematic. It is contentious because the respondents dispute that stamp duty is payable. It is problematic, because the position is far from clear and raises difficult questions, both of the construction of the Duties Act 1997 and in respect of factual issues relating to the identity of the property upon which duty may be chargeable. This is so, because since the property was transferred from Lym International to Mr Chen, it has changed from a partially-built property on a single title to a property containing 15 separate units, in respect of which a strata plan has been registered. Three of the 15 units have been sold. 33 Mr Chen did not ask the Court to decide whether duty is payable on the proposed transfers of property. He said that it is sufficient for the purposes of satisfying the Court that the balance of convenience lies in the orders of Hamilton J being stayed, that there is a real risk of duty being payable. 34 The primary section imposing liability to pay stamp duty is the Duties Act, s 8. It provides: " 8 Imposition of duty on certain transactions concerning dutiable property

(b) the following transactions: … (v) a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia …" 35 The Act provides for a number of exceptions. Section 50 provides that if an agreement is cancelled, it is not liable to duty and any duty that has been paid may be refunded. However, pursuant to s 50(3), "cancelled" is defined as "rescinded, annulled or otherwise terminated without completion". In this case, the transfer from Lym International to Mr Chen was completed. Mr Chen submitted that s 50A, which provides: " 50A Cancelled transfers of dutiable property

(1) A transfer of dutiable property that is effected by a written instrument is not liable to duty under this Chapter if the Chief Commissioner is satisfied that: (a) the transfer instrument has been cancelled and the dutiable property has not been transferred to the transferee, and (b) the transfer was not cancelled to give effect to a subsale"

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:

1. Continue the stay ordered in this matter until further order;

2. Direct the parties to file any submissions as to the appointment of a receiver of the property or as to the ongoing marketing of the property pending the determination of the appeal by 4 pm, Tuesday 2 June. Any submission is to be delivered to my associate by that time. **********

16/06/2009 - Typographical error - Paragraph(s) Heading 19/06/2009 - Typographical error - Paragraph(s) coversheet

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.