Fine China Capital Investment Limited v Qi

Fine China Capital Investment Limited v Qi - [2023] FCA 1405 - FCA 2023 case summary — Zoe

Background 2 On 24 July 2023, Fine China obtained a freezing order from Moshinsky J. See Fine China Capital Investment Limited v Qi [2023] FCA 861. 3 It was extended on 29 August 2023. The order was granted on the basis that his Honour was satisfied that Fine China had demonstrated an arguable case, as follows: Having regard to the evidence summarised above, I consider that Fine China has established a good arguable case that Mr Qi acted as trustee for Fine China in relation to CSJH, and therefore that CSJH has a claim for the sum of $19,510,000 withdrawn from CSJH's bank account before the account was closed… There does not seem to be any issue that Mr Qi did in fact withdraw approximately $19.5 million from CSJH's bank account - that is accepted in the Richards affidavit dated 24 August 2023, at [44(f)]. See Fine China Capital Investment Limited v Qi (No 2) [2023] FCA 1059. 4 The freezing order included a requirement that Mr Qi provide an affidavit disclosing "all of [the respondent's] assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they [were] subject) and the extent of [the respondent's] interest in the assets". It also included a provision that the order would cease to have effect if the amount to be frozen was paid into court. 5 On 11 August 2023, at Fine China's request, the court issued subpoenas to the Commonwealth Bank and the ANZ Bank. Each sought statements and other information for bank accounts in the names of Mr Qi, CSJH (Australia) Pty Ltd (deregistered) (CSJH), Sunshine Glory Australia Pty Ltd (Sunshine Glory), and MAWF Australia Pty Ltd (MAWF) from 1 March 2017 to 11 August 2023. 6 Justice Moshinsky subsequently set aside parts of those subpoenas. In substance, his Honour ruled that documents sought in respect of Mr Qi and CSJH were directly relevant to the question of whether the freezing order was permitted to continue, and so were able to be produced by subpoena; and documents sought in respect of Sunshine Glory and MAWF were not, because "they [were] not relevant to the issues raised in the statement of claim and [were] not relevant to the issue whether the freezing order should continue". 7 By an amended statement of claim dated 22 August 2023, Fine China pleaded, in substance, that there was $19.5 million in an account held by CSJH at the ANZ Bank immediately before CSJH was deregistered; $19.747 million was transferred out of that account to an unknown recipient on 5 August 2022; and that was in breach of duties owed by Mr Qi to Fine China and to CSJH. It is then pleaded that by reason of Mr Qi's alleged breaches of duties variously owed to Fine China and to CSJH, Mr Qi improperly obtained a benefit for himself. 8 On 20 October 2023, I made orders that the respondent pay the sum of $19.510m into court, by 10 November 2023. 9 The respondent complied with that order. 10 On 1 November 2023, Fine China caused five subpoenas to be issued, addressed to five different banks, requiring that they produce bank account statements for any bank accounts in respect of some or all of CSJH; Sunshine Scenery (Australia) Pty Ltd (Sunshine Scenery); MAWF; Sunshine Glory; and Mr Qi, since 5 August 2022, and documents "evidencing the account Administrator(s), Authoriser(s) and Operator(s) of any bank accounts in the name of" the same parties, for the same period.

[5]

The subpoenas must be set aside 13 In so far as the subpoenas seek the production of documents from MAWF and Sunshine Glory, they must be set aside as an abuse of process because they seek production of the same documents that Moshinsky J has already ruled, in respect of a relevantly indistinguishable statement of claim, were not relevant to the issues raised by it or anywhere else - that is, they had no legitimate forensic purpose. Compare Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485 at 492-93 (Buckley LJ, with whom Shaw LJ and Oliver LJ agreed) ("[e]ven in interlocutory matters a party cannot fight over again a battle which has been fought unless there has been some significant change of circumstances, or the party has become aware of facts which it could not reasonably have known or found out in time for the first encounter"). 14 In so far as the subpoenas are addressed to Sunshine Scenery and Mr Qi, they must be set aside because counsel who appeared to resist the application was unable to proffer any conceivable forensic purpose for them. Indeed, to the contrary, her submission was in effect a concession that the subpoenas had been issued as part of an impermissible fishing expedition, as this passage from the transcript illustrates: MS DE FERRARI: Your Honour, the only - your Honour, the forensic purpose at the moment [for the subpoenas] is to plead properly and fully in a way that we will eventually be able to do once we get discovery. I mean, [the respondent] [doesn't] dispute that any of this material is relevant. They say it might be confidential, and then last time it was said it might be that he needs to consider privilege, which I inferred to be about incriminating himself. But so the only question is will we move [the] pleadings speedily forward? (Emphasis added). 15 In my view, those submissions demonstrate, without more, that the subpoenas were an impermissible attempt "not to obtain evidence to support [a] case, but to discover whether [there is] a case at all": see Commissioner for Railways v Small (1938) 38 SR (NSW) 564 at 575 (Jordan CJ, with whom Davidson and Owen JJ agreed). 16 In my view, this was as clear a case for the making of a costs order on an indemnity basis as one is likely to encounter. I thus acceded to Mr Ferrett KC's request that I make such an order. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.

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