Huang v Liao

Facts

1. The Court finds the following facts to have been proven by the affidavit of Mr Junn sworn on 14 December 2021 in support of the application.
2. On 1 June 2020, Ward CJ in Eq made ex parte orders restraining Ms Liao from dealing with her assets (the Restraining Orders). The orders were in the usual form of asset preservation orders and were returnable on 4 June 2020. They restrained Ms Liao from diminishing her Australian assets up to the unencumbered value of $4,212,783.45 and were particularly directed to restraining any dealing with a property known as X XXXXX Court, Mudgeeraba, Queensland (the Queensland Property). They also required the provision of information about Ms Liao's assets by an affidavit to be sworn within two working days after she was served with the Restraining Orders.
3. The Court issued a penal notice which included the Restraining Orders and set out the customary warning that disobedience of the Restraining Orders could lead, among other things, to imprisonment (the Penal Notice).
4. On 2 June 2020 a process server personally served Ms Liao at the Queensland Property with the Penal Notice and related court documents.
5. On 4 June 2020, Ms Liao was represented in Court by her solicitor, Mr David Robbins, of KHQ Lawyers, a firm based in Melbourne. On that occasion, Ward CJ in Eq extended the Restraining Orders to 22 June 2020 and extended the time for compliance with the requirement for Ms Liao to provide an affidavit to 5 June 2020.
6. On 5 June 2020, Mr Robbins wrote to Mr Junn setting out Mr Robbins' instructions as to Ms Liao's assets. In addition to some cash at bank, furniture and household effects, her only two substantial assets were: 1. The Queensland Property, said to be valued at $685,000 but encumbered to $470,000, including a debt of approximately $429,873 to the Shavell Trust (as to which see further Ms Liao's affidavit set out in [23] below); and 2. A half share in approximately $100,000 of Chinese currency deposited with the China Construction Bank in China.
7. On 9 June 2020, Ms Liao swore an affidavit giving her address as the Queensland Property, her occupation as "Primary Carer" and deposing to the truth and correctness of what was set out in Mr Robbins' letter of 5 June 2020 (which was exhibited to the affidavit).
8. On 22 June 2020, the proceedings were again before the Court and Ms Liao was again represented by Mr Robbins. Ward CJ in Eq extended the Restraining Orders until further order. Since then, the substantive proceedings have continued to be case managed but no variation has been made to the Restraining Orders.
9. A copy of a transfer obtained from the Queensland Titles Registry shows that on 13 September 2021, Ms Liao - using the name Jingwen Kurz - transferred the Property for $1,000,000 (the Transfer). Her solicitor on the Transfer was not Mr Robbins or his firm, but a Mr Ing Lee of Ebenezer Legal.
10. The Transfer came to the attention of the plaintiffs. In November 2021, two sets of additional orders were made by the Court (the November 2021 Orders).
11. First, on 16 November 2021, when Ms Liao was represented in Court by her then solicitor, Mr Lukas Lim of Adams Wilson Lawyers, Ward CJ in Eq ordered Ms Liao: "to file and serve by close of business on 18 November 2021 an updating affidavit as to assets and liabilities including as to the ownership of the Queensland property in which the first defendant is said to reside and the disposal of any proceeds of sale of that property."
12. Second, on 30 November 2021, when Ms Liao was again represented in Court by Mr Lim, Ward CJ in Eq extended the time for compliance by Ms Liao with the order made on 16 November 2021. No updating affidavit has been filed by Ms Liao.
13. Her Honour also directed that Ms Liao to: "notify the plaintiff of the account details on [sic] which the first defendant says that the sale proceeds of the Queensland property referred to in the orders of 16 November 2021 are presently located."
14. On 2 December 2021, Mr Lim emailed Mr Junn, including: "Sincere apologies for the non-compliance with orders. My client has provided the following details of the account where the sales proceeds have been deposited: Institution: China Construction Bank Guanzhou BSB and Account: XXXX …"
15. On 3 December 2021, when Ms Liao was again represented in Court by Mr Lim, Ward CJ in Eq directed Ms Liao (the 3 December Order): "by no later than 1pm today, to provide full details of the account in which the sale proceeds of the Queensland property have been deposited, including without limitation the name of the account holder, the address of the bank and any other details necessary for the plaintiff to make enquiries in relation to the deposit of the funds."
16. No such details have ever been provided by Ms Liao.
17. On 6 December 2021, Ms Liao's husband, Graham Liao, affirmed an affidavit witnessed by Mr Lim which disclosed no occupation and gave his address as X XXX Avenue, Auchenflower, Queensland (the New Address). The affidavit included: "2. I had Jingwen sell the [Queensland Property] on or around July 2021. 3. I was advised by the solicitors that the property would be sold subject to consent granted by the Plaintiff in this matter. I was advised by my then solicitors and the real estate agent that the sale could proceed and the caveat was withdrawn and that the sale could proceed. 4. The sale proceeds were paid to the following accounts: a. XXXX b. Bank code as provided: XXXX c. Country code as provided: CN d. Location code: BJ e. Brank [sic] code: XXX"
18. Mr Junn informed me, and I accepted, that his clients had never been asked to consent to the Transfer and that no caveat had ever been lodged by them over the Queensland Property.
19. On 7 December 2021, Ms Liao served an affidavit affirmed on 6 December 2021 and witnessed by Mr Lim which disclosed no occupation, gave her address as the New Address, and included: "2. My husband told me to sell the [Queensland Property] on or around July 2021. 3. I did not know that there was a freezing order on the property. My husband managed the financial and legal matters in our relationship. 4. I have no other assets or liabilities to my knowledge except as a beneficiary in the Shavell Trust as advised by my husband."
20. ASIC searches reveal that Ms Liao has been a director, shareholder, or both in six companies, five of which are deregistered or in the process of being struck off. ASIC searches reveal that Mr Liao - so described on his driver's licence but whose passport is in the name of Graham Douglas Favell - has been a director of 52 companies, the majority of which have either been deregistered or are in external administration.
21. On 8 December 2021, Mr Lim filed and served a Notice of Ceasing to Act for Ms Liao and giving the New Address as her last address known to him.
22. On 10 December 2021, the proceedings came before Ward CJ in Eq for directions. Mr Junn appeared for the plaintiffs. There was no appearance for Ms Liao or the second to fourth defendants.
23. Mr Junn then undertook an internet search of the New Address which disclosed that it was listed on the accommodation website Booking.com as being available for rent from 4 January 2022.
24. Ms Liao has a China identity card and a residential address in Guangzhou. So much appears from a copy of a company search of the Hong Kong Companies Registry of the third defendant, Vustar Pty Ltd, in which Ms Liao is a shareholder and director.

Consideration

1. There is no doubt that the Court can issue a warrant for an alleged contemnor's arrest under SCR Part 55 r 10 (set out in [2] above): see, for example, the detailed consideration of the procedures involved in ASIC v Michalik (No 2) (2004) 52 ACSR 115; [2004] NSWSC 1260 per Palmer J (Michalik). Three steps are involved.
2. First, when the matter came before me in the Duty List, I granted leave to the plaintiffs to file in Court a notice of motion seeking declarations that Ms Liao is in contempt, accompanied by a statement of charge setting out the allegations (in large part reflected in the Court's findings of fact set out in [6] to [20] above) in support of the conclusion that Ms Liao is in contempt of the Restraining Orders, the November 2021 Orders and the 3 December Order. That filing satisfies SCR Pt 55 r 10(a).
3. Second, SCR Pt 55 r 10(b) requires that "it appears to the Court that the contemnor is likely to abscond or otherwise withdraw himself from the jurisdiction of the Court". I found that it did appear to the Court, on the balance of probabilities and taking into account the Briginshaw standard to the extent necessary having regard to the seriousness of the allegation, that Ms Liao is likely to abscond from the jurisdiction of the Court, most probably to China. That finding was based on the Court's acceptance of these submissions made by Mr Junn: 1. By reason of personal service and because she was legally represented in Court at all relevant times, Ms Liao had personal knowledge of the Restraining Orders. Her legal representation and conduct set out in [18] and [23] also demonstrated that she had personal knowledge of the November 2021 Orders and the 3 December Order. 2. The Transfer, in the absence of further evidence or explanation, was a flagrant breach of the Restraining Orders, with the proceeds being transferred to a bank account out of the jurisdiction in China. 3. Mr and Ms Liao's attempted explanations for the Transfer in their affidavits set out in [21] and [23] were false on their face and bespoke a deliberate intention to deceive the Court. In particular, given the personal service on her of the Restraining Orders and the fact that she was at all material times legally represented, Ms Liao's suggestion that she did not know the Queensland Property was subject to the Restraining Orders was a brazen lie. 4. Without further evidence or explanation, Ms Liao is in breach of the November 2021 Orders and the 3 December Order. 5. Ms Liao is a Chinese national with a residential address and funds in China. 6. There was no appearance for Ms Liao after her latest solicitor ceased to act and her current address (the New Address) - a holiday rental property - appeared to be available for rent from 4 January 2022, suggesting that Mr and Ms Liao would be vacating that property before then. 7. Both she and her husband use more than one name and have a corporate history that does not suggest reputable commercial conduct on their part.
4. The third aspect of an application such as this is that even if SCR Pt 55 r 10(a) and (b) are satisfied (as was the case here), the Court retains a discretion whether or not to act: "the Court may issue a warrant". Even when the charge of contempt is brought by a party rather than the Court, there is always a public element that must be considered. In some cases, the degree of seriousness or nature of the contempt, or some other feature of the case generally, may persuade the Court to stay its hand. This was not such a case.
5. The evidence demonstrated a pattern of flagrant breaches of the Court's orders leading to a very strong case of contempt, lying to the Court, a motive to escape the reach of the Court (being to avoid both the consequences of those alleged breaches and the result of the proceedings), and personal and commercial connections to China. The administration of justice, including the public interest in deterring others from breaching orders of the Court, would be undermined if enforcement of the Court's orders was rendered nugatory by Ms Liao fleeing the jurisdiction and avoiding answering serious allegations of contempt. The equally serious step of ordering her arrest to answer those allegations was plainly required in the interests of the proper administration of justice.
6. Finally, I record that having regard to the balance of SCR Pt 55 r 10, I did give consideration to whether the Court's order should include the possibility of Ms Liao giving security. I respectfully agree with and adopt the reasons of Palmer J in Michalik at [26] to [29] to the effect that the Court is not required to deal with the question of release upon security at the time of issuing a warrant. Because of the matters set out in the preceding paragraph, I came to the view that it would not be appropriate for the Court to prescribe at this time what security Ms Liao might offer to avoid arrest and incarceration. Those are matters that can be considered on any application she may make when she is brought before the Court.

Conclusion

1. In addition to the orders for the issue of the arrest warrant which I made on 14 December 2021, the Court orders: 1. The Plaintiffs' contempt motion filed in Court on 14 December 2021 is returnable before Ward CJ in Eq for directions with the balance of the proceedings on 2 February 2022.

Amendments 14 February 2022 - No 14 February 2022 - No publication restriction 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: 14 February 2022