HER HONOUR: This is an application by notice of motion filed on 10 December 2020 by Dr Kurosh Parsi in his capacity as administrator of the estate of the late Zhili Wu, also known as Match Wu. Dr Parsi has sought an order pursuant to s 98 of the Trustee Act 1925 (NSW), that certain funds in Court which represent the residue of the proceeds of sale of a property in Dundas, plus all interest earned on those funds, be paid to him in his capacity as administrator for the deceased's estate.
There has been no appearance on this application by the first respondent to the notice of motion, Ms Xuemin Li, the widow of the deceased. I will come back to that in due course. Suffice it to note at this stage that there is evidence that has been relied upon on the present application to establish the attempts made to notify Ms Li of the present application.
On the present application, Dr Parsi relies on: two affidavits sworn or affirmed by him (the terms are interchangeably used) on 7 December 2020 and 8 March 2021 respectively; an affidavit sworn by his solicitor, Mr Wayne Annis-Brown on 26 February 2021; and an affidavit of service of Mr Michael Guest sworn 29 January 2021.
By way of background to the matter, I will briefly note by reference to the affidavit material and the chronology, helpfully prepared by the applicant, the following. From March 2008 to 15 September 2015, the deceased was employed as a bookkeeper by Dr Parsi at Dr Parsi's medical practices at Bondi and then at Chatswood. On 20 June 2015, the deceased purchased the Dundas property in his sole name and granted a mortgage over it to the Bank of Queensland. On 15 September 2015, the deceased resigned from his employment with Dr Parsi. In November 2015, Dr Parsi discovered discrepancies in the order of some two million dollars in his practice accounts. On 25 November 2015 there was a meeting between Dr Parsi, the deceased, and their respective solicitors to discuss the accounts, in which Dr Parsi deposes that the deceased admitted to having misappropriated funds of the practice (Dr Parsi's affidavit sworn 7 December 2020 at [8]). That same day, the deceased committed suicide.
At the time of his death Zhili Wu was married to Xuemin Li, who was also known as Angela Li, and they had one child. On 10 December 2015, Dr Parsi and others commenced these proceedings against Ms Li, the estate of the deceased and a Mr David Du, an alleged accomplice of the deceased.
On the same day, ex parte orders were made by the Court freezing all of the defendants' assets. Ms Li was appointed as representative of the deceased's estate until 4pm on 15 December 2015 (Dr Parsi's affidavit sworn 7 December 2020 at [10], Annexure D). Orders were made on 15 December 2015 for the defendants to serve on Dr Parsi's solicitor by 12pm on 18 December 2015 an affidavit setting out, amongst other things, details of all of their assets worldwide, and the extent of their interests in those assets, including details of any trusts in which they had any interest. Ms Li was also ordered in her affidavit to provide full details of the deceased's assets.
On 16 December 2015, Ms Li represented at that stage by her solicitor, Kelvin Lo, filed and served an affidavit pursuant to the 15 December 2015 orders. Paragraph 1A of Ms Li's affidavit (exhibited to Dr Parsi's 7 December 2020 affidavit but not formally tendered) deposes to her interest in a mortgage loan in joint names with the deceased with the Bank of Queensland for the Dundas property which had, she deposed, a remaining balance of $560,000 as at 16 December 2015. Ms Li stated in that affidavit that "I do not, however, have any legal interest in the Dundas property".
At [2] of that affidavit, Ms Li deposed that she was aware that the assets of the deceased included a 100% interest in the Dundas property which, as at 16 December 2015, had a market value of approximately $700,000 subject to the mortgage loan of $560,000.
On 5 August 2016, consent orders were made by McDougall J excluding the Dundas property from the freezing orders so that it could be sold by the Bank of Queensland as mortgagee. His Honour ordered any surplus sale proceeds to be paid into Court within 7 days of receipt. On 18 October 2016, the sum of $33,614.52 was paid to Court by the Bank of Queensland pursuant to those orders.
Dr Parsi had deposed that, on 22 November 2016, the 2015 proceedings were settled as between Dr Parsi and Ms Li (his affidavit sworn 7 December 2020 at [11]). On 5 February 2020, Dr Parsi caused Ms Li personally to be served at her then place of employment with notice of his intention to apply for letters of administration of the deceased's intestate estate. On 18 November 2020, letters of administration were granted to Dr Parsi in his capacity as creditor of the deceased and in proceedings 2019/94683.
On 10 December 2020, the present notice of motion was filed in the Court. Michael Guest deposes in his affidavit of service sworn 29 January 2021 to unsuccessful attempts made in the period from 21 to 24 December 2020 to locate and serve Ms Li with a notice of motion and the supporting affidavits at an Epping address and at her former place of employment.
Mr Annis-Brown deposed that, on 12 January 2021, the notice of motion and affidavits were forwarded to two email addresses of Ms Li provided by her former employer. Mr Annis-Brown also disposed that these documents were sent to Ms Li by express post to the Epping address on 8 February 2021 (his affidavit sworn 26 February 2021). As noted earlier, there has been no appearance on this application by Ms Li.
The requirements pursuant to r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for the payment out of funds held in Court were considered in In the matter of C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 at [120].
Relevantly, in Chong v Super Equity Invests Pty Ltd [2012] NSWSC 27 at [14] (considering the procedure for dealing with surplus funds that had similarly been paid into Court by a mortgagee), Slattery J restated the requirements of proof in the ordinary case under r 55.11, where a party seeks payment out of court, that his Honour had earlier identified in Commonwealth Bank v Estate of late Slieman [2010] NSWSC 661 at [8]-[11]:
[8] An applicant under UCPR r 55.11 must establish three matters to justify an order for the payment of money out of court. The first is to identify the person who is primarily entitled to any funds paid into court and the basis of that entitlement. It is fundamental that the person be identified from the best evidence available, so that the court can be sure that the person has been given appropriate notice of the application and can if necessary contest it.
[9] The second matter that needs to be proved by a claimant is that he or she is not merely an unsecured creditor against the person primarily entitled to the fund but is a person who has an beneficial interest in the very fund that has been paid into court. The same evidence that demonstrates a person's primary entitlement to the funds in court often establishes this second matter.
[10] Thirdly, it is necessary for an applicant to identify the other potential claimants to the fund in court and to prove that those persons were notified of its claim. Those persons may consent to the claim. Alternatively, the applicant may prove that those persons either do not have valid claims against the fund or that their claims do not have priority over the applicant's claims.
[11] The court requires strict proof as to who has the entitlement to the funds in court. There is a heavy burden placed on a party seeking payment of money out of court under Trustee Act s 98 and UCPR r 55.11. It is necessary for that party not only to prove his or her entitlement to the funds but also to prove that all other potential claimants to the funds in court have been properly notified. Otherwise there is a risk of incorrect payments being made.
Where another potential claimant (once notified), does not consent to the payment out (which is not the case here), Slattery J accepted that it was for the applicant then to prove that the claimant did not have a valid claim against the fund, and his Honour emphasised that strict proof would be required, having regard to the Court's concern as to the risk of incorrect payments being made (see also ANZ v Maunder [2009] NSWSC 1356 at [8], where Slattery J referred to the situation where there were established to be "no competing claimants to the funds which would prevent payment out to the applicant").
I am satisfied that the applicant has satisfied those tests. I note, in particular, that Ms Li has not raised any competing claim and Dr Parsi has deposed in his affidavit of 7 December 2020 at [14] that he is not aware of any other person who has, or may have, a valid claim to the moneys held in Court.
Accordingly, for the above reasons, I make the following orders:
1. Pursuant to s 98 of the Trustee Act 1925 (NSW), order that the funds in Court, being the residue of the proceeds of sale of the land known as 13/4-5 St Andrews Place, Dundas, together with all interest earned on those funds be paid to the applicant in his capacity as administrator of the estate of Zhili Wu, also known at Match Wu.
2. Order that the applicant's costs of this motion be costs in the administration of the estate of Zhili Wu, also known as Match Wu.
[2]
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Decision last updated: 14 April 2021