Huynh v Phan [2004] VSC 151

Supreme Court of Victoria|2004-05-03|Before: Cummins J

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By summons filed on 16 April 2004, the plaintiff, Ms Phan Hoa Huynh, seeks Mareva orders against four defendants: Mrs Thi Mai Phan, Mr Cao Dinh Phan, Mr Van Sau Nguyen, and Mrs Thi Nnh Tran. The first two defendants respectively are wife and husband, and the third and fourth defendants respectively are husband and wife. The first and fourth defendants are sisters.

Proceedings by way of writ were issued in this court by the plaintiff against the four defendants on 17 March 2004. The claim is for the sum of $420,500, together with interest, said by the plaintiff to be owing to her by the four defendants. Essentially the amount claimed is constituted by a series of eleven loans said by the plaintiff to have been made to the defendants between 31 May 2002 and 29 September 2003 and now said to be repayable to her.

The 16 April 2004 summons came on before Redlich J in the Practice Court on 23 April 2004. The plaintiff and the four defendants were represented by counsel before me, Mr Lovell for the plaintiff, and Mr Minahan for the four defendants. In hearing the matter, His Honour raised various questions with both counsel, and in the event the matter was stood over for hearing on 29 April 2004. On that day the matter came before me in the Practice Court, His Honour no longer there sitting.

In support of the application for Mareva orders against the four defendants by way of evidentiary material are the following. For the plaintiff, an affidavit sworn by her of 26 March 2004, which I shall call the primary affidavit of the plaintiff; (after the hearing before Redlich J on 23 April), a further affidavit sworn by the plaintiff on 26 April 2004, which I shall call the supplementary affidavit of the plaintiff, together with exhibits to those affidavits; an affidavit of Mr Doan, sworn 15 April 2004, the solicitor for the plaintiff, and again by him on 22 April 2004; and finally an affidavit of Ms Truong, sworn 27 April 2004, and of Ms Lieu also sworn that day.

For the defendants there is an affidavit sworn by Mr Coelho, the solicitor for the defendants, on 23 April 2004, and (after the hearing before Redlich J on 23 April) a substantive affidavit of Mr Phan, the second defendant, sworn 28 April 2004.

In response to the detailed statement of claim contained in the writ, an appearance on behalf of the four defendants was filed on 26 March 2004 and a defence on their behalf was filed on 15 April 2004. The defence is a bare denial of the allegations.

It is well established that the court should exercise considerable care before granting Mareva relief. The principles guiding the granting of such relief are well known and do not need rehearsal by me. Essentially they are that such relief is a drastic remedy not lightly granted - Cardile v. LED Builders Pty Ltd[1]; that for the grant of such relief there should be a good arguable case made out on the substantive claim; that the plaintiff must establish a real risk of dissipation of assets or of removal from the jurisdiction - Jackson v Sterling Industries Ltd[2] and that the dissipation or removal would be likely to render the prospective judgment nugatory.

I turn to the first question, whether the plaintiff on the material presently before the court has established a good arguable case against the four defendants or any of them.

The plaintiff's affidavit material asserts the following. Of the various loans the foundation of the proceedings, all except one - the eighth loan constituted by payments made from 8 April 2003 to 26 August 2003 totalling $101,000 - were made pursuant to Huis, a form of community syndicated lending and borrowing in accordance with Vietnamese custom. In Huis the members, who may not know each other, lend money to the owner or owners of the Hui, who also are the persons who establish the Hui and promote it. Here each of the defendants is said to be connected to the operation of the Huis. Each of the loans the subject of the proceeding, apart from the eighth, were made in like manner and in like circumstances: in cash, repayable on demand, and with no formal documentation created.

It is inappropriate in this judgment to refer in detail to the respective loans, the details of the making of the loans and the circumstances of the loans. Those matters are deposed to in the plaintiff's primary affidavit, paragraphs 8 to 32. The operation of the Huis is deposed to in paragraphs 33 to 36 of that affidavit and in her supplementary affidavit at paragraphs 4 and 12. The identity and role of the four defendants are deposed to in the plaintiffs primary affidavit in paragraphs 37 to 43, and in her supplementary affidavit at paragraphs 5 to 10 and 13 to 16. The plaintiff in her primary affidavit (paragraph 33) deposed that the four defendants ran the relevant Hui business, which was conducted at the Anh Tu Restaurant in Victoria Street, Abbotsford (also in her supplementary affidavit at paragraphs 3 and 5). She deposed as to individual conduct by each defendant in her supplementary affidavit (paragraph 13). Material called in aid on behalf of the plaintiff as to the identity and role of the defendants, is also contained, it is said by analogy, in Ms Phan's affidavit of 27 April 2004 at paragraph 8.

The material relied upon by the defendants, not before Redlich J. but now before me, is contained in the substantive affidavit of the second defendant sworn 28 April 2004. The operation of the Huis according to the second defendant is set forth in general terms in paragraphs 4 to 11 of his affidavit and the particular Huis the subject of these proceedings in paragraphs 12 to 16. Importantly, the second defendant in paragraphs 10 and 11 deposed that the host or organiser of the Hui is not the borrower, assumes no personal responsibility in relation to the borrowing or repayment thereof, and is not obliged to repay if default occurs by borrowers in the syndicate.

Mr Minahan who appeared on behalf of the defendants in submissions which were very clearly and helpfully made, put to me that the plaintiff's claims are flawed in numerous respects. He put that particulars in the statement of claim and the material in the affidavits of the plaintiff are conspicuously lacking: no particulars of the agreements are given and no terms other than the loans were payable on demand are set forth, no particulars of how the monies were advanced beyond a list of dates and amounts are given and no particulars of the oral demands for payment, said to be inconsistent with the disappearance allegedly of the defendants from September 2003, equally are given. Further, Mr Minahan submitted that the plaintiff has inadequately identified the individual liability of each of the four defendants and has cast her claim globally with insufficient particularity to fix upon any individual defendant, perhaps other than the second defendant. Finally and fundamentally, Mr Minahan submitted that the proved nature of the syndicated lending and borrowing went no further than to establish, at its highest, that the first and second defendants were operators of the Huis but themselves not liable for the repayment of the loans, such liability resting in the syndicated group rather than in the operator or operators.

I have considered these submissions on behalf of the defendants and there is some force in them. However, in the end I am not persuaded that the plaintiff has fallen short of making out her case to the standard that is appropriate on the first leg of Mareva relief - that is to say, a good arguable case.

Mr Lovell responsibly and frankly has submitted to me that there may be further work needed to be done on the proper formulation and presentation of the plaintiff's case. That is for the future. I must judge whether a good arguable case has been made on the present material. Sometimes, of course, Mareva relief short-term is sought even before proceedings are issued. In this case there is an articulated and full statement of claim which the court can have recourse to, together with the substantial affidavits of the plaintiff, in particular. There is clearly some imprecision and imperfection in the material which is relied upon by the plaintiff, including as to the identity of each defendant and the conduct or connection of that defendant to the Huis in question, and the liability of the operator or owner. However, the material which I have referred to does specify that each defendant was present and can be argued to have played a part in relation to each of the Huis being operated. Further, the plaintiff has deposed that the defendants were the owners of the Huis in question and themselves liable for repayment of the loans. True it is, as Mr Minahan has said, that there is some imperfection in the proof of demand. On the other hand, there is a significant body of material to show that the plaintiff has had very real difficulty in contacting the defendants directly, since September 2003 and in the circumstances, I consider the imperfections in relation to demand ought not be viewed in a narrow legalistic or pedantic way and I proceed upon that basis.

Doubtless there are matters yet to be fully articulated. That is a matter for the future. But I am satisfied, given the standard applicable in Mareva relief, that sufficient has been made out to fairly say that an arguable case has been established as to the liability of the defendants, given the nature of these arrangements which were inherently verbal and behavioural rather than formal and documentary.

Turning to the second question, that is to say the dissipation of assets, there is an amplitude of evidence to justify the making of Mareva relief contained in the material. It is contained in the plaintiff's primary affidavit paragraphs 44 and 56 and in her supplementary affidavit paragraphs 17 and 22; and also in particular in both affidavits of her solicitor. The plaintiff and her solicitor have made substantial efforts to ascertain the whereabouts of the defendants but to no avail. That material establishes, in my view, entirely clearly that there is sufficient risk of dissipation as contemplated by the authorities for the granting of relief if a good arguable case has first been made out. Of course, a defence has been filed and a substantial affidavit by the second defendant has now been filed and the defendants have the benefit of the appearance of Mr Minahan. But that does not derogate from the circumstances deposed to by the plaintiff and her solicitor as to the uncertainty of the whereabouts of the defendants and the state of their assets. There is a real risk, in my view, established on the material, of dissipation of assets.

In the circumstances, I am satisfied that the second aspect of the Mareva criteria is established, given the disappearance since September 2003 of the defendants.

Having reviewed the material in the various affidavits, together with that contained in the exhibits thereto, I am satisfied to the requisite standard for Mareva relief that the plaintiff has made out a good arguable case against the defendants and that there is a real risk of dissipation or removal of assets such as to defeat a legitimate judgment.

Accordingly I am satisfied that Mareva relief ought be granted if an appropriate undertaking as to damages is made by the plaintiff.

[1] (1999) 198 C.L.R. 380 at 409 per Gaudron, McHugh, Gummow and Callinan JJ.

[2] [1987] HCA 23; (1987) 162 C.L.R. 612 at 619 per Wilson and Dawson, JJ.

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Judgment (23 paragraphs)

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