Lu v Man

STEWARD J: 1 By an interlocutory application filed on 6 August 2019, the applicants applied to the Court for orders giving default judgment against the first and third respondents on the basis that they were in default of orders made by Middleton J in this proceeding on 18 June 2019 (the "June Orders"). This application was heard on 12 September 2019. Before me, Mr Shaw of Counsel appeared on behalf of the applicants; none of the respondents appeared. I made the orders sought by the applicants, which effectively finalised the matter. Mr Shaw indicated that reasons were not required by the applicants. However, upon reflection, I consider it necessary to provide short reasons for why I granted the application for default judgment.

Background 2 The history of the matter may be set out in brief compass. The applicants are shareholders of a company in Hong Kong called Eastern Union Limited ("Eastern Union"). Until early 2019, Eastern Union was the beneficial owner of 100% of the issued capital of a company called Sunshine Energy Australia Pty Ltd ("Sunshine Energy"). In June 2019, the applicants commenced proceedings against Mr Li (the first respondent), Sunshine Energy (the third respondent) and others alleging, amongst other things, that Mr Li wrongfully caused Eastern Union to transfer from itself to him beneficial ownership of all the issued capital of Sunshine Energy. 3 So far as is relevant, the June Orders provide as follows: THE COURT ORDERS THAT: 5. Until the hearing and determination of this proceeding, or further order: a. the First Respondent (Mr Li) forthwith transfer all of the shares held by him in the Third Respondent (Sunshine Energy) to the Fourth Respondent (Eastern Union), such shares to be held by Eastern Union; b. Sunshine Energy forthwith register a transfer of all of the shares in Sunshine Energy from Mr Li to Eastern Union and notify the Australian Securities and Investments Commission (ASIC) that it has corrected its register to record Eastern Union as the holder of all of its shares; c. ASIC forthwith correct its register so as to record Eastern Union as the holder of all of the 100 ordinary shares in Sunshine Energy in lieu of Mr Li; d. ASIC not act upon any Form 484 lodged in relation to any change in any shareholding in Sunshine Energy; and e. Sunshine Energy is restrained from registering a transfer of any of its shares save for the purpose of complying with order 1(b). 4 The Court received sworn, uncontradicted evidence that Mr Li and Sunshine Energy had not complied with the June Orders. It also received several affidavits in which it was deposed that the pleadings, the interlocutory application, the affidavit in support of the interlocutory application, and the June Orders were either formally served (they were in the case of Mr Li and Sunshine Energy) or otherwise brought to the attention of the respondents. I note that the second and fourth respondents had been named parties on the basis that they may have an interest in the proceeding. No relief, however, was sought against them. Additionally, it was accepted before me that the fifth respondent did not really need to be a party to the proceeding. 5 In early August 2019, the Court listed the interlocutory application for hearing. No material or communications were received by the Court from the respondents about the listing until two days prior to the hearing. In that respect, on 10 September 2019, my Chambers received an email from Mr Li stating that he could not attend the hearing due to a health condition. In support of that assertion, he attached a medical certificate from a doctor dated 9 September 2019. The certificate listed Mr Li's current medications and recorded: Patient has very severe back pain after his back surgery. He will be unfit for any legal decision making and unfit for any interstate or international travel for the next two months. 6 Mr Li requested an adjournment of at least two months. I declined to accede to that request. In my view, a delay was not warranted in the light of such a spartan certificate: see MZABV v Minister for Immigration and Border Protection [2017] FCA 105 at [5] per Pagone J. Mr Li did not otherwise contend that he had complied with the June Orders. The parties were thus informed that the matter would proceed on 12 September 2019.

Interlocutory Application for Default Judgment 7 In seeking default judgment, the applicants relied upon r 5.23(2)(c) of the Federal Court Rules 2011 (Cth) which is in these terms: (2) If a respondent is in default, an applicant may apply to the Court for: … (c) if the proceeding was started by an originating application supported by a statement of claim … , or if the Court has ordered that the proceeding continue on pleadings - an order giving judgment against the respondent for the relief claimed in the statement of claim … to which the Court is satisfied that the applicant is entitled; or … 8 After examining the pleadings, the June Orders and the affidavit evidence filed on behalf of the applicants, I was satisfied that Mr Li and Sunshine Energy had failed to comply with orders 5(a) and 5(b) respectively. I was also satisfied that the applicants were entitled to the relief they sought given the absence of any explanation for non-compliance and the time that had elapsed since the June Orders were made. I thus made the following orders: 1. Pursuant to Rule 5.23(2)(c) of the Federal Court Rules 2011 (Cth), the Court orders that the First Respondent (Mr Li), forthwith, take all necessary steps to transfer all of the shares in the Third Respondent (Sunshine Energy) that he holds to the Fourth Respondent (Eastern Union). 2. Upon compliance with order 1, pursuant to s 175(1) of the Corporations Act 2001 (Cth), the Court orders that Sunshine Energy is, forthwith, to correct the register of members maintained by it pursuant to s 168(1) of the Corporations Act 2001 (Cth) to record Eastern Union as the holder of 100% of the shares in Sunshine Energy. 3. Upon compliance with order 1, pursuant to s 175(3) of the Corporations Act 2001 (Cth), the Court orders that Sunshine Energy is, forthwith, to lodge with the Australian Securities and Investments Commission a notice of the correction of the register of members maintained by it pursuant to s 168(1) of the Corporations Act 2001 (Cth) to record Eastern Union as the holder of 100% of the shares in Sunshine Energy. 4. Mr Li pay the Applicants' costs of the proceeding, including reserved costs, to be taxed in the absence of agreement. 9 Judgment was therefore entered in favour of the applicants. A sealed copy of the orders (in the terms set out above) was subsequently sent to the parties by email. Within 10 minutes, the Court received an email from Mr Li stating that "the share transfer back to Eastern Union Limited already done in June" (errors in original). For that purpose, he attached an extract of a document ostensibly obtained from the Australian Securities and Investments Commission in respect of Sunshine Energy (the "Extract"). The Court drew this email and the Extract to the attention of the parties. The applicants' legal representative responded to the Court, copying in all parties, by stating that "[t]he extract does not evidence a share transfer to Eastern Union Limited in June, but rather compliance by ASIC with the order 5(c) made by Justice Middleton on 18 June 2019". 10 Having given default judgment, I do not consider that it would be appropriate to express any views about the Extract. The orders I made on 12 September 2019 will stand unless and until they are set aside or varied. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Steward.

SCHEDULE OF PARTIES VID 598 of 2019 Respondents Fourth Respondent: EASTERN UNION LIMITED (HONG KONG COMPANY NUMBER 2066164) Fifth Respondent: TAY LIANG KHENG