[2001] HCA 63
Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57
[2006] HCA 46
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Source
Original judgment source is linked above.
Catchwords
[2001] HCA 63
Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57[2006] HCA 46
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Judgment (4 paragraphs)
[1]
EX TEMPORE JUDGMENT
Yesterday, the plaintiff came before the Court seeking urgent relief in relation to extant proceedings in this Court and indeed this Division. The relief included what I will call the "short service" of the motion itself and an urgent hearing of the interlocutory proceedings, as well as leave to issue some subpoenas which may bear upon whether such relief should be granted in the medium to longer term. Those somewhat prosaic orders were made hurriedly in the midst of the duty list and without the provision of reasons, while the main part of the interlocutory motion was stood over until 12pm today to allow the first defendant and his lawyers to be made aware of the motion and to prepare for a disputed interlocutory hearing if such was necessary. It was.
The significant part of the motion concerns the plaintiff's application for freezing orders or, perhaps more correctly, property preservation orders. Both parties appeared today at noon. The broad position that each take was discussed and what I will call the "duelling forms of order" were placed before me. The first defendant's preferred form of order was somewhat refined, and the documents are currently before the Court as MFI 1 and MFI 3 respectively. I should observe at once that the first defendant has had, obviously enough, a limited amount of time to prepare for today's hearing. The substantive controversy between the parties concerns a debt which started out at $3.3 million and is said to arise from a loan and a sum advanced by the plaintiff in October 2016.
The agreement as alleged was that the defendants were to repay the sum of $6.6 million on 31 October 2018. As I understand it, and putting it very generally based on the submissions made by counsel for each side, the defendants will assert that this was a sham arrangement and that any "agreement" was not meant genuinely to reflect the legal relations between the parties. Secondly, they will assert that the second defendant, who is a natural person, was misled into signing the agreement and may have a defence or something similar under the Contracts Review Act 1980 (NSW). That was described to me yesterday, in the absence of the first defendant, as an argument around the asserted unconscionability of the contract.
The interlocutory controversy and the one with which I am presently concerned, on an urgent and interim basis, relates to the plaintiff's concern that the defendants may dissipate their assets to avoid satisfying any judgment that may ultimately be entered against them based on the loan agreement or on the simple payment or transfer of funds by the plaintiff to the defendants. For that reason, the plaintiff seeks orders of the kind contemplated in Pt 25 of the Uniform Civil Procedure Rules 2005 (NSW). The first defendant did not, at least on an urgent interim basis, contest the making of orders to preserve the property. However, the parties provided different forms of the orders and in one respect, took distinctly opposed positions.
The plaintiff indicated he did not require reasons. That is not unduly surprising because it is not his assets that would be subject to the terms of the order, albeit that he has a real and serious interest in the terms of the order. Counsel for the first defendant, again quite understandably, said that he did require reasons because he will need to explain the nature of the orders to his client and the reasons that they were made. Because of the time of day - and I note it is just approaching 5pm on Friday - and the exigencies of the duty list including matters that are not heard in court but involve certain law enforcement bodies seeking warrants and similar urgent processes, I am going to provide very brief reasons.
It is also to be understood that the resolution of the notice of motion to finality can be heard by the Court constituted by a Judge with more time to digest the relevant material and hear the submissions of the parties in greater detail. That will happen in just two weeks' time and I will, in due course, make an order or direction that the matter be listed for hearing on Friday, 29 November 2024 with an estimate of half a day but an expectation that it will take up to one day. The scope of the dispute between the parties, at least at this juncture, was relatively narrow, although its importance is not to be underestimated, at least from the perspective of both the plaintiff and the defendants.
Before I move to the issues in dispute, I will make two factual findings and identify in the broadest terms the basis of those findings. It is upon findings of this nature that, in accordance with well-established authority, the Court has a discretion to make the kinds of orders that the plaintiff seeks: see, for example, Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622; [1968] HCA 1, Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213, Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23, Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 320 and 325, Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 and Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46.
The findings are these. First, the plaintiff has a prima facie case that he is owed a substantial sum of money by the defendants. The basis of that finding is the contents of paragraph [7] of the plaintiff's affidavit of 17 May 2023:
"7. On 17 October 2016, I agreed to loan $3,300,000 to the first defendant, Cao & Du Management Pty Ltd ('Cao & Du'). The terms of the loan were out in a written loan agreement that I signed on 17 October 2016 (Loan Agreement). It was a term of the Loan Agreement that Cao & Du was to repay me $6.6 million on 31 October 2018. Behind Tab 1 are the copies of the counter-signed Loan Agreement."
The second finding is that there is some evidence to suggest that steps may be taken by the defendants, in particular by the second defendant, to dissipate or remove assets. That finding is based on transfers of real estate to his wife, or his estranged wife or his ex‑wife (it is unclear which) that are evidenced in the annexures to an affidavit of Zheng Chu affirmed 13 November 2024 and, in particular, the items exhibited at pages 20 and 41. Those pages comprise of a caveat over, and a transfer of, real estate apparently owned by the second defendant. There is a temporal coincidence with those transactions or entries or notes on the register and unrelated litigation in the equity division which subsequently found its way to the Court of Appeal: see ISPT Pty Ltd and AWPF Management No. 2 Pty Ltd v Cao and Zhao [2023] NSWSC 1115 and Cao v ISPT Pty Ltd [2024] NSWCA 188.
Based on the acceptance by the defendants that some form of freezing order might be made, the first defendant might be seen as accepting the second of those factual findings which I broadly stated a moment ago.
Counsel for the first defendant contends it is a question that will be subject to dispute at the final hearing of the motion in two weeks' time. Material was tendered upon which it was put that there is at least some doubt about that issue. That is, the issue of whether the defendants have in other cases - or might in this one - attempt to remove assets or dissipate assets or transfer assets to someone like the second defendant's wife or ex‑wife who is not a party to the litigation. That included exhibit C, being an email suggesting legitimate family law proceedings were on foot and proving perhaps instructions around those proceedings, as well as an affidavit earlier filed in the substantive proceedings.
Even so, taking those matters into account, I find that the timing of the transfers or the entry of the caveat relative to the other unrelated litigation gives rise to real and serious concerns as to the second defendant's motivations and intentions when he is confronted with litigation concerning large sums of money. As I have said, the transfer was to the second defendant's wife, Ni Du. While I am inclined to accept, based on the very limited material before me, that there may have been family law property proceedings on foot or in contemplation, the evidence at this stage does give rise to significant concerns. The defendants and Ni Du will have the opportunity to flesh out their case on that issue in two weeks' time.
In terms of the dispute agitated today, and largely on the basis of my finding that some of the transfers and activities concerning the defendants' real estate holdings create concern and suspicion, I am satisfied that the form of orders contended for by the plaintiff are - for the most part - more appropriate and provide greater clarity and certainty.
This includes the form of order in MFI 1 which was the plaintiff's proposed order at paragraphs 6(b) and 7(b) of annexures A and B. The terms of those orders provide far greater clarity and certainty than the conditions proffered by the first defendant in MFI 3, order 1. As emerged in argument, I am unable to accept at this point of time that a carve out or exception for some non‑specified transfer of sums up to $20,000 is appropriate given the purpose of the orders and their relatively short duration. I found the explanation for that proposed carve out unconvincing. [1]
In any event, while it was ultimately accepted under pressure of argument that this carve out could be deleted, I still find the condition proposed by the plaintiff to be the more clear and certain condition. Similarly, I accept the plaintiff's exception clause, if I can call it that, in item 10(c) in annexures A and B of MFI 1, is preferrable to the condition proffered by the first defendant in MFI 3, order 2(d).
Subject to what I am about to say, the orders will be in accordance with those proposed by the plaintiff.
I do accept the first defendant's submission that, at this point, it is not appropriate to make the orders in the plaintiff's proposed orders 8 and 9 of annexures A and B, being orders for provision of information. I have considered the plaintiff's submissions in that regard and I accept that it may be that such orders are appropriate once the defendants have had a greater opportunity to present their case on the issue and subpoenas have been answered. It may also be that the latter process renders such orders unnecessary. I cannot predict that at this point, but I would not exercise my discretion to force the second defendant to provide such information until he has had a longer and better opportunity to prepare to resist such orders. The same may also apply to the second defendant's wife, who the plaintiff proposes to be subject to similar orders.
Accordingly, I will make orders in the terms of annexures A and B to MFI 1 with the exception that the words in conditions 8 and 9 under the heading, "Provision of Information" will be deleted.
I would direct the parties, or invite them at least, to provide an electronic form of orders that accord with those reasons or to liaise with my Associate to ensure that the orders are in the correct form. I believe she may have already done that with your assistance over the last hour and a half.
Subject to that, the orders are to be entered forthwith.
[2]
Interim orders on motion
The orders are as follows:
1. Grant the orders sought in the plaintiff's amended notice of motion except for orders 8 and 9 of annexures A and B.
2. List the matter for hearing on Friday, 29 November 2024 with an estimate of half a day.
3. Orders to be taken out forthwith.
[3]
Case management orders
After those orders were made, there was discussion about the service of evidence and statements for the purpose of ensuring the efficient disposal of the motion on 29 November 2024. The following case management orders were made:
1. The subpoena directed to the second defendant is to be served on his solicitor by 6pm on 15 November 2024 and is returnable on Thursday 21 November 2024.
2. The subpoena directed to Ni Du is to be served by Tuesday 19 November 2024 and is returnable on Monday 25 November 2024.
3. Any additional evidence in chief to be relied upon by the plaintiff is to be filed and served on or before Friday 22 November 2024.
4. The defendants' affidavits and other evidence is to be filed and served by 5pm on Monday 25 November 2024.
5. The parties are to provide an agreed court book on or before 12pm on Thursday 28 November 2024.
6. The plaintiff is to file written submissions of no more than 10 pages and any evidence in reply by 5pm on Wednesday 27 November 2024.
7. The defendants are to file written submissions of no more than 10 pages by 5pm on Thursday 28 November 2024.
8. The plaintiff's material may be supplemented by material produced on subpoena by Ni Du.
9. No order as to costs.
10. The plaintiff is granted leave to file the amended notice of motion filed in court today.
11. Liberty to apply to the Duty Judge if necessary next week.
[4]
Endnote
See, for example, Tcpt (15/11/24) at p 18 where it was submitted, "Something may not be ordinary living expenses because he may have something that might be a trip with a child in a week, or wants to buy his child something that might be a little bit different to ordinary. It is not that we are trying to get the money out. We can put $10,000 per week, for example."
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Decision last updated: 20 November 2024