Link Investments Ltd v DC Rd DC Pty Ltd

1. The application for leave to appeal filed on 15 March 2024 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from the transcript)

A INTRODUCTION AND BACKGROUND 1 This is an application for leave to appeal from orders (Orders) made for the reasons explained in DC Rd DC Pty Ltd v Zhang (No 2) [2024] FCA 157 (primary judgment). 2 It is unnecessary for me to set out the detailed factual background which gives rise to the dispute between the parties for the purposes of this application for leave to appeal. In any event, they have been helpfully set out in the primary judgment (at [1]-[22]), in terms which are not in contest before me. 3 By way of broad summary, DC RD DC Pty Ltd, Stanley Xue and Sit Family Pty Ltd (together, the applicants) moved on an interlocutory application following the provision of discovery by Link Investments Ltd (Link). 4 Link had discovered bank statements of a bank account held by Link with Bank of China (Hong Kong) Ltd (BOC), but those documents were not available for inspection. They had been discovered by Link because the documents were accepted to be directly relevant to the issues in the case and were documents once in the possession and control of Link. At the time of the swearing of the affidavit verifying the list of documents (List), however, it was said that they were no longer in Link's possession, custody, or control and hence they were discovered in Part 3 of the List. 5 Prayer 1 in the interlocutory application sought orders that Link produce the bank statements for any bank account in the name of, or held by, Link with BOC for the period 1 January 2019 to 31 March 2023 (Link Account Statements). Contrary to the assertion made in the affidavit verifying the List, the applicants asserted that the documents were relevantly within the control of Link, as it was possible for Link to take steps to recover bank statements which were said to be Link's property. 6 In the alternative, prayer 2 in the interlocutory application sought an order that Link make such requests and do such things as may be reasonably necessary to obtain the Link Account Statements from BOC, including but not limited to: (i) arranging for the first respondent (Mr Zhang) or another director of Link to attend a BOC branch in Hong Kong in person; (ii) completing an application form required by BOC; (iii) providing such identity verification documents as may be required by BOC; and (iv) paying any fees charged by BOC. 7 As the primary judge records (at [26]), the order sought by prayer 2 was in the nature of a "Sabre order", referring to the decision of Lockhart J in Sabre Corporation Pty Ltd v Russ Kalvin's Hair Company [1993] FCA 557; (1993) 46 FCR 428 (at 431-2). As is well known, this case is authority for the proposition that the Court has power to direct a party to take steps to obtain access to and discover documents which are in the possession, power or control of a third party where there is a real likelihood that the party to the proceeding would be given access to the documents upon request. 8 When the matter came before the primary judge, the task that his Honour was discharging was to make a practice and procedure decision at an interlocutory stage of a proceeding that he was managing as the Docket Judge. As such, his Honour was required to adopt an approach of applying the civil practice and procedure provisions and exercising any power conferred by them in a way which "best promotes the overarching purpose", being the just determination of the dispute according to law as quickly, inexpensively and as efficiently as possible: see s 37M(1) and (3) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 9 The transcript reveals that his Honour immediately directed himself to resolving the interlocutory dispute in accordance with the overarching purpose. Further, the primary judgment (at [25]) reveals his Honour, with respect, sensibly eschewing getting into a complicated debate concerning the definition of "control" of the Link Account Statements because the proposed Sabre order appeared to his Honour, in the light of the evidence before him, to provide a solution to the dispute which was "… quick relatively inexpensive and efficient" (at [25]). It was on that basis that his Honour dismissed the application for an order in the terms of Order 1. 10 His Honour then turned to the consideration of the proposed Sabre order, and, in summary, reached the following conclusions (at [27]-[30]): (1) the production of the Link Account Statements would allow the applicants to confirm what they had already pieced together to date from the materials in their possession on subpoena as to the complex series of fund transfers referred to earlier in the primary judgment; (2) although Link is an overseas company, it had submitted to the jurisdiction of the Court and was actively defending the claims made against it and its director, Mr Zhang; (3) even if it were regarded as unreasonable to require Mr Zhang to travel to Hong Kong, there was no evidence that Mr Zhang could not appoint an additional director of Link solely for that purpose; (4) in any event, it would not be unreasonable to require Mr Zhang to travel to Hong Kong (which already had done for the purpose of opening and later closing the BOC Account); (5) it was alleged Link was the primary vehicle through which the proceeds of the disputed transactions were transferred; (6) the allegations and the scale of the alleged misappropriation of funds were serious; (7) at the final hearing, it is likely the Court will need to apply tracing principles, and hence need to access the Link Account Statements in order for this to be able to be performed properly; (8) there is a real question as to the source and co-mingling of funds in the BOC Account; and (9) the Link Account Statements would assist the applicants in seeking a proprietary claim in respect of certain real property and would be "critical in establishing that proprietary claim" (at [27]). 11 Save for (4) above, none of these facts are proposed to be challenged by any appeal. The challenge to his Honour's Orders is that, having made those findings and the additional finding that there was a real likelihood that Link would be given access to the Link Account Statements by BOC upon request, provided that the process for making that request in person in Hong Kong is carried out, his Honour then regarded the steps that were identified in Order 2 to be reasonably necessary in all the circumstances. 12 During oral submissions this morning, this issue turning on objective reasonableness emerged as the core contention made by Link, even though the three grounds of the appeal contained within the notice are as follows: 1. The primary judge erred and mistook the facts by finding: a. at Judgment, [26], that each of the steps to be undertaken by the Fifth Respondent (Link) to obtain the bank statements for any bank account in the name of, or held by, Link with Bank of China (Hong Kong) Ltd (BOC) for the period 1 January 2019 to 31 March 2023 (Link Account Statements) is reasonable; and b. should have held that arranging for the First Respondent (Mr Zhang) or another director of Link to attend a BOC branch in Hong Kong in person to obtain the Link Account Statements is not reasonably necessary. 2. The primary judge erred and mistook the facts by finding: a. at Judgement, [30], that the interference with the liberty of Mr Zhang, in requiring him to attend a BOC branch in Hong Kong in person to obtain the Link Account Statements, is not unreasonably onerous in the circumstances; and b. should have held that requiring Mr Zhang to attend a BOC branch in Hong Kong in person to obtain the Link Account Statements is not reasonably necessary. 3. The primary judge erred and acted on a wrong principle in that: a. his Honour acted, at Judgment, [27] and [28], on the basis that Mr Zhang bore the onus of adducing evidence to prove that he could not appoint an additional director of Link solely for the purpose of travelling to Hong Kong to obtain the Link Account Statements; b. whereas, the principle upon which his Honour should have acted is that, as the applicants on the Interlocutory Application seeking an order that Link arrange for a director of Link to attend a BOC branch in Hong Kong in person to obtain the Link Account Statements, the Applicants bore the onus of proving that Mr Zhang could appoint an additional director of Link solely for the purpose of travelling to Hong Kong to obtain the Link Account Statements. 13 I will come back to the core contention, which is reflected in Ground 1 of the proposed appeal, and the interrelated Grounds 2 and 3 briefly below.