Liu v Xiao

Supreme Court of NSW|2018-09-07|Before: Hulme J, Mr J

Solicitors: Shen's Lawyers Avantro File Number(s): 2018/265627

Judgment

HIS HONOUR: This is an application for a freezing order.
The plaintiff filed a statement of claim on 29 August 2018 by which she seeks judgment in the amount of $1,555,623.77 plus interest. She claims, in short, the amount represents monies given by her to the defendant between January 2017 and 5 October 2017.
The plaintiff and the defendant are both Chinese nationals. They met in Sydney in the context of their sons both attending the same high school.
The plaintiff asserts in an affidavit affirmed by her on 5 September 2018 that there were a number of conversations between her and the defendant in which they agreed that they, with others, would establish a restaurant business or businesses in Sydney. They would be the major shareholders. Pursuant to such agreements, which were never reduced to writing as I understand it, the plaintiff made the various payments to the defendant.
According to Ms Liu's affidavit, the defendant and her son are now shareholders in two companies that operate restaurants in Chinatown. The plaintiff says that she has not received any interest in such businesses or the companies that operate them.
The plaintiff filed a notice of motion yesterday upon which I made the orders sought: short service and an urgent hearing date. Today I have heard the substantive application for the freezing order. Mr McGrath SC with Mr Lee have appeared for the plaintiff and Mr El-Hage has appeared for the defendant. It was apparent that Mr El-Hage was somewhat hamstrung by the fact that his client is presently in China and so I accept that his ability to marshal evidence to meet this application at short notice was an impediment for him.

A good, arguable case?

On the face of the limited evidence before the Court today, there appears to be a good, arguable case. The agreements the plaintiff claims were reached between her and the defendant were all oral; nothing was reduced to writing as I have said. However, she annexes to her affidavit a number of receipts. They are all in Mandarin but there are certified translations of them. They are mostly expressed in terms of the defendant acknowledging receipt of a payment for a sum of money for "Australian investment" from the plaintiff. Some of them do not use that expression "Australian investment" but do not use any other expression; there is no reference to, for example, a "loan".
Mr El-Hage said that the defendant will contend that the payments were loans from the plaintiff to the defendant. There is no evidence of this at the moment for the reasons I indicated earlier. However, there is some indication that tends to support that within the plaintiff's own affidavit. In paragraph 14, the plaintiff deposed that there was a conversation in which the pair discussed the plaintiff lending money for the defendant's business in China. From the account set out in the affidavit as a whole, I take that agreement to be distinct from the other agreement or agreements the plaintiff contends there were in relation to operating a business in Sydney.
But then again in paragraphs 19 and 20 of the affidavit there is reference to lending money and repaying money. For example, in paragraphs 19-20 she said: "On or about 23rd December 2017, Ms Xiao and I met in order to account for how much she owed to me (total I have transferred to her or she received less my part of contribution at amount $715,854.00 which she admitted that it exchanged into Chinese currency ¥ RMB 4,354,080.00), after the checking end, some of receipts has been torn off in front of us, I cannot provide the torn off receipt. I have to explain the Chinese culture in here, which Chinese people lends money to each other, the borrower must write down I Owe you in certain amount money on particularly date and sign his signature; when the borrower repaid the money or fund, he or she will ask the lender to return or tear off the Notice of I owe you before both of parties to show that the lending agreement is terminated."
The amount of money mentioned in paragraph 19, over $700,000, is more consistent with it being referrable to the proposed businesses in Sydney it seems, rather than the lending of money for the defendant's business in China. (These are only preliminary views on the limited evidence.)
Despite these references, the plaintiff's account is otherwise that she contributed money to the proposed business(es) and there is documentary support for her claim. Whether the defendant is able to make good the assertion that they were loans remains to be seen. There is no evidence on her side at this stage. I can only go on the evidence that is before the Court.
On that limited basis I am satisfied that there is a good, arguable case.

A risk of assets being placed out of reach of the plaintiff?

The second aspect is whether there is a risk that any judgment will go unsatisfied by the defendant dealing with her assets to place them out of reach of the plaintiff.
The plaintiff contends that the defendant is in Australia on a bridging visa with a pending application for a 457 visa. She is not a permanent resident and if the 457 application is rejected she will be required to leave Australia within 28 days. That is an issue that is subject to dispute. There is no evidence of the truth of the plaintiff's assertion; it is simply her belief. Mr El-Hage has contended that the defendant is in this country on a spousal visa. However, there is no evidence of that either. So, the evidence is neutral and all I can note is that there is some dispute about what the true state of affairs is.
Mr McGrath SC has argued that there has been a lack of probity on behalf of the defendant, which is relevant to this second limb of the consideration and in that respect he relies upon the plaintiff's substantive claim that there was this agreement between the parties with the defendant failing to live up to her part of the agreement. My finding in favour of the plaintiff is only that there is a good, arguable case; not that I am satisfied on balance that the defendant is responsible for a lack of probity.
The one thing that I have considered to be most significant in relation to the asserted concern about the defendant dealing with her assets in such a way that any potential judgment will not be satisfied is that the last payment made by the plaintiff to the defendant, on the plaintiff's case, was almost a year ago. There is no suggestion that funds available or assets available to the defendant since that time have been dissipated or removed. In fact, it seems to be the case that the plaintiff is asserting that her money has been used to establish companies and businesses in which she is entitled to a share.
There is a suggestion that there is a risk now of dissipation or removal occurring, because a statement of claim has been filed and so now the defendant is being pursued for this debt. But the fact that the plaintiff was prepared to sit back apparently and do nothing about it for such a long period of time, when such a significant amount of money was concerned, raises serious questions about the asserted risk.
The risk of the defendant dealing with her assets in such a way that the judgment would not be satisfied is, as I perceive it, more an assertion than one of real risk. I am not satisfied that that second limb of the test has been made out.

Conclusion and orders

The plaintiff has failed to make out a case to grant her application for a freezing order. Accordingly: 1. The plaintiff's application for a freezing order is refused. 2. The plaintiff is to pay the defendant's costs of the application.

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: 12 September 2018

At a glance

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Judgment (6 paragraphs)

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Cases Cited (6)