Solicitors:
King & Wood Mallesons (Plaintiff)
Maddocks (Fourth and Fifth Defendants)
File Number(s): 2018/309560
[2]
Judgment
By a notice of motion filed on 21 February 2020, the plaintiff, Hui (Annie) Guo, seeks verified discovery from the fourth defendant, Keynes Capital Global Limited (KCG), and the fifth defendant, General Energy International Holdings Limited (GEI), of certain categories of documents described below.
In this proceeding, the plaintiff seeks a freezing order in aid of a proceeding she has commenced in Hong Kong. A freezing order has been granted on an interlocutory basis. The question whether the freezing order should continue has been set down for hearing on 13 May 2020, with an estimate of three days. The discovery is sought in connection with that hearing.
In the proceeding in Hong Kong the plaintiff sues on what is described as a Strategic Cooperation Agreement expressed to be made between Party A and Party B. Party B consists of the plaintiff and Jianguo Zhang, who has been named as the third defendant in this proceeding and who has filed a submitting appearance. Party A consists of the first defendant, Yuedong Xu, and the second defendant, Ji Chen. The plaintiff contends that under the terms of the Strategic Cooperation Agreement, Party A and Party B agreed to invest or cooperate in the investment in certain ASX listed companies on the basis that they would share all of the financial rewards in the proportion 51 percent to Party A and 49 percent to Party B. The plaintiff also alleges that pursuant to the agreement the parties invested in two ASX listed companies, Rand Mining Limited and Tribune Resources Limited; that those investments occurred through KCG and GEI; that Rand Mining and Tribune Resources paid dividends and special dividends during the term of the agreement to KCG and GEI, at least some of which continue to be held in a stockbroking account held by the sixth defendant, Gleneagle Securities Nominees Pty Limited; and that in breach of the agreement none of the amounts paid by Rand Mining and Tribune Resources have been paid to Party B.
It appears that one of the issues in the proceeding is whether the investments made by KCG and GEI in Rand Mining and Tribune Resources were made by them on behalf of Party A and Party B in accordance with the agreement. One ground on which KCG and GEI propose to resist a continuation of the freezing orders, which prevent Gleneagle Securities from distributing any money it currently holds on behalf of KCG and GEI, is that the plaintiff is unable to establish that she has a good arguable case on that issue. Their contention is that the case as pleaded in Hong Kong against them discloses no reasonable cause of action.
The discovery sought by the plaintiff is in the following terms:
Within 28 days of the making of this order, the Fourth and Fifth Defendants provide verified discovery of all documents created between 1 October 2014 and the date of commencement of these proceedings between officers, employees, representatives or agents of Keynes Capital Global Limited or General Energy International Limited and any of:
(a) Mr Yuedong Xu; and/or
(b) Mr Ji Chen; and/or
(c) Mr Jianguo Zhang; and/or
(d) Ms Hui Guo; and/or
(e) Officers, employees, related entities or agents of Gleneagle Securities Nominees Pty Limited,
concerning or relating to:
(f) the acquisition of shares in Rand Mining Limited and/or Tribune Resources Limited (Target Companies); or
(g) the receipt, distribution or transfer of, or dealings with any dividends received from the Target Companies; or
(h) the Strategic Cooperation Agreement dated 11 November 2014 (as that term is defined in paragraph 11 of the Commercial List Statement filed on 10 October 2018).
This category is poorly expressed. It seeks "documents … between" officers etc of KCG or GEI. Presumably, the category is to be understood as seeking "documents recording or evidencing communications between" the identified persons and entities.
The plaintiff contends that the documents she seeks are relevant to the question whether she has a good arguable case against KCG and GEI. She also points out that originally KCG and GEI agreed to give discovery of the documents in question, but that agreement was overtaken by events when KCG and GEI agreed to an extension of the freezing order.
KCG and GEI submit that they should not be required to give discovery for a number of reasons. First, there is no substantive proceeding in this Court. The only question in this Court is whether the plaintiff has a good arguable case. The discovery sought is too broad and unnecessary for that purpose. Second, and related to the first point, the plaintiff should not be entitled to obtain discovery of the type she seeks in order to prove matters on which she bears the onus and discovery has not been sought in the proceeding in Hong Kong. Third, the plaintiff must already have copies of correspondence between her and KCG and GEI. Consequently, discovery of those documents is unnecessary. Fourth, circumstances have changed since KCG and GEI agreed to give discovery. In particular, the plaintiff has delayed in prosecuting the proceeding in Hong Kong.
In my opinion, it is appropriate to order KCG and GEI to give discovery of the documents sought.
In order for the plaintiff to establish that the freezing order should continue, it will be necessary for her to establish, among other things, that she has a good arguable case. That raises factual questions about the relationship between KCG and GEI on the one hand and Party A and Party B on the other as well as questions about the adequacy of the pleading of the claim against KCG and GEI in Hong Kong. Although the plaintiff is not required to prove her case in this proceeding, she must still prove that she has a good arguable case. That requires her, among other things, to produce sufficient evidence to establish that the factual basis of her case satisfies that requirement. The communications between KCG and GEI on the one hand and the persons referred to in the discovery category (other than the plaintiff) are not within the plaintiff's knowledge. But they are relevant to the factual basis of her case and therefore relevant to the question whether she has a good arguable case. It is not suggested that discovery of communications between KCG and GEI would add substantially to the scope of discovery.
KCG and GEI do not suggest that they would face any particular difficulties in giving discovery of the documents sought; and the fact that they previously agreed to do so suggests that an order for discovery will not place any particular burden on them. The delay in the plaintiff prosecuting the proceeding in Hong Kong and the explanation for that delay may be very relevant to the question whether the freezing order should continue. It is difficult, however, to see why it is relevant to the question whether KCG and GEI should be required to give discovery of documents going to the question whether the plaintiff has a good arguable case.
The plaintiff has been successful in her motion. She should certainly obtain her costs of the motion if she succeeds in her application to continue the freezing order. However, if she fails, it seems to me she should not get her costs, since the costs of the motion will have been wasted.
It follows that the orders of the Court are:
1. Within 28 days of the making of this order, the Fourth and Fifth Defendants provide verified discovery of all documents created between 1 October 2014 and the date of commencement of these proceedings which record or evidence communications between officers, employees, representatives or agents of Keynes Capital Global Limited or General Energy International Limited and any of:
1. Mr Yuedong Xu; and/or
2. Mr Ji Chen; and/or
3. Mr Jianguo Zhang; and/or
4. Ms Hui Guo; and/or
5. Officers, employees, related entities or agents of Gleneagle Securities Nominees Pty Limited,
concerning or relating to:
1. the acquisition of shares in Rand Mining Limited and/or Tribune Resources Limited (Target Companies); or
2. the receipt, distribution or transfer of, or dealings with any dividends received from the Target Companies; or
3. the Strategic Cooperation Agreement dated 11 November 2014 (as that term is defined in paragraph 11 of the Commercial List Statement filed on 10 October 2018).
1. The costs of the plaintiff's motion filed on 21 February 2020 be the plaintiff's costs in the claim against the fourth and fifth defendants.
[3]
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.
Decision last updated: 02 April 2020