Li v Wang (No 5)

I understand from the Affidavit of Mr Feng, the solicitor for the plaintiff who appeared on the application before me today, that on his calculation interest totals $273,377.23. It is likely therefore that when the matter returns to Weinstein J on 18 June that judgment will be entered in favour of the plaintiff against the defendants will be to a tune of around $670,000 plus costs. Mr Feng estimates these costs to be in the vicinity of $350,000. I regret to say that such a sum doesn’t sound implausible or even unlikely given the length of the hearing and the rate of legal costs payable in litigation of this type.

Leaving the question of costs to one side, it is also apparent that previous indications were given on behalf of the plaintiff while the matter was pending that a freezing order would be sought. The dispute about that matter was resolved by the entry of the third defendant into an undertaking in the sum of $800,000. The undertaking was that that sum would remain in the trust account of the solicitor acting for the third defendant on the sale of a property at St Ives of significant value. The undertaking was subject to exceptions, including an exception that the funds could be used “solely for the purpose of paying the purchase price for the acquisition of any real property in Australia under the name of the third defendant”. The evidence indicates that the third defendant entered into a contract for the purchase of real property in Chapel Hill in Queensland, to be purchased for the sum of $1.25 million.

The evidence of Mr Feng does not include any up-to-date real property search, so nothing is known about the current status of that property in terms of its proprietorship and state of encumbrance or otherwise. One would have thought that the exception in relation to the release of the funds for the purpose of acquiring the real property was premised on the assumption that immovable property of that type would of itself provide adequate recourse for the plaintiff in respect of any judgment she ultimately obtained.

There is simply no evidence in relation to the second defendant or her financial affairs in Mr Feng’s Affidavit. Sometimes, of course, the inability of the plaintiff to produce evidence about the financial position of a defendant may of itself be a matter for concern in this context. It is clear from the findings made by Weinstein J about the second defendant that she relied heavily upon the third defendant, her daughter, for the management of her financial affairs, which may be not insignificant.

The first defendant, who is the husband of the second defendant and the father of the third defendant, resides in the People’s Republic of China. He did not take any active part in these proceedings and, on the evidence before me, it is clear that service must have been effected in accordance with orders for substituted service as Weinstein J was prepared, as I have said, to pronounce judgment against him. Judgment is yet to be entered.

The evidence also indicates that the third defendant has, at various points in time of some significance (first, just before the proceedings were commenced in August 2021; and, secondly, when they were part-heard before Weinstein J in August 2024), disposed of real property of significant value. For instance, the St Ives property sold in August 2024 had a sale price of $3.5 million. There is no evidence, as I understand it, as to whether it was mortgaged or not.

There could possibly be an argument that the undertaking was not of itself discharged by the purchase of the Queensland property. Indeed, cl 3 of the undertaking provided that in relation to the use of funds to buy real property, “the third defendant is to provide a copy of the contract for sale entered into with a vendor within two business days after the contract is exchanged”, which of course suggests continuing obligations under the undertaking, notwithstanding the change in status of the moneys subject to it.

What concerns me about the matter is [109] of Weinstein J’s judgment. His Honour’s judgment very comprehensive. When dealing with issues of credibility, which were significant to the resolution of the dispute (as they usually are; at [109]), Weinstein J said that he found the third defendant to be an evasive and generally dishonest witness. He rejected her evidence whenever it was contradicted by any competing evidence. His Honour gave examples of her personal dishonesty beyond what he regarded as her evasiveness in the witness box. He found that she had lied on significant occasions, including to the Department of Home Affairs to obtain a visa for a family member, and further in relation to property transactions. It is also apparent from his Honour’s findings that the third defendant continues to be supported by the first defendant from the People’s Republic of China.

The order sought, as I understand it from what Mr Feng told me and from the form of it, is for a limited time up until the matter returns to Weinstein J on 18 June, and that is another significant factor. I accept, as Mr Kabilafkas of counsel submitted, that normally these orders are made at the commencement, or near it, not at the end, of the proceedings, but there is no reason why orders cannot be made at this mature stage of the proceedings. Indeed, a person who has suffered a significant financial defeat in court may have an even greater motive to protect his or her assets from a judgment creditor when the potential liability at the start of the proceedings has crystallised in a judgment.

I accept unreservedly Mr Kabilafkas’ submission that the plaintiff, soon-to-be judgment creditor, is not entitled to security for the judgment. At the same time, the combination of the third defendant’s frequent dealings in property during the life of the proceedings and the adverse findings as to her credit made by Weinstein J persuade me that an order should be made in the terms sought, bearing in mind its short duration.

During the course of the hearing Mr Kabilafkas made it clear to me that neither defendant was in court. The explanation for that related to the consideration that the application was served at 8.43pm last night, being a Sunday night, and he was not in a position to make any admissions whatsoever on behalf of either defendant. I, of course, do not form an adverse view of that. However, given the absence of any information from the soon-to-be judgment debtors, I can only act on the basis of the evidence of the plaintiff, which I find acceptable.

So far as the amount of the order is concerned, I would work on the basis, frankly, that the original sum of $800,000, rather than $850,000, meets the intent and purpose of the rule.

I am informed that the third defendant is present in New South Wales and, accordingly, there should not be any difficulty in providing a verified statement of her assets with sufficient information to allow their net value to be demonstrated.

Although I was inclined to absolve the second defendant from the order, it seems, as I have said already, quite clear, at least on the findings made by Weinstein J, that the second defendant relies heavily upon her daughter, the third defendant, in respect of the management of her financial affairs. It seems, on the evidence before Weinstein J, that the third defendant had the capacity to operate the second defendant’s bank accounts. It would seem to me that there is a risk that if the second defendant is left out of the orders, significant assets could perhaps be moved between the third defendant’s accounts and the second defendant’s accounts. For that reason, I am prepared, on the undertaking of the plaintiff appearing in Schedule A to the proposed order, to make the order sought.