Plaintiff v Defendants

1 On 21 June 2021, a number of applications were listed for hearing pursuant to orders made on 30 April 2021. Some of the applications were dealt with on the day, others were adjourned for further hearing until 23 July 2021. These reasons identify the matters determined on 21 June 2021, deal with those matters reserved for decision on 21 June and 23 July 2021 and identify the matters adjourned for further hearing.

2 The first defendant, Ms Zhang (sued in her capacity as administrator of the estate of Mr Jun Chen) ('Zhang'), and the non-party, Good Home and Property Pty Ltd ('Good Home'), applied to vary the freezing order made against them on 15 April 2021 in favour of the plaintiff, Mr Shan ('Shan'). The variation sought by Zhang was to permit payment of legal costs to mediation of $247,065.29, and in the case of Good Home, to permit the payment of costs of a legal proceeding against it in New South Wales. After hearing argument on 21 June 2021 the further hearing of that application was adjourned until 23 July 2021.

3 On 23 July 2021 an application by Zhang and Good Home in relation to legal costs was again adjourned to 6 August 2021.[1] It was adjourned because despite significant efforts on the part of Shan's solicitor, she was not able to engage a costs consultant to consider and respond to the costs consultant's report relied upon on behalf of Zhang and the second defendant, Yuzheng International Trading & Tourism Services Pty Ltd ('Yuzheng') prior to 23 July 2021.[2]

4 On 23 July 2021 orders were made varying undertakings previously given by Shan as security for the costs of Zhang and Yuzheng. Those variations and orders were largely by consent.

5 By summons filed 31 May 2021, amongst other orders sought on her behalf, the third party, Min Ren, applied for leave to file and serve amended defences to each of the third party notices dated 23 December 2020 filed against her by Zhang and Yuzheng (together, 'the Notices'). The Notices are in very similar terms. It is unnecessary to consider them individually. As part of that application, she sought leave to withdraw admissions made in her defences dated 12 March 2021. The Court heard argument on that application on 21 June 2021. In the course of the hearing, I ruled in favour of the application to withdraw admissions. I granted leave for Min Ren to file and serve amended defences to the Notices.

6 Min Ren also applied for security for her costs of the third party proceedings against her. For the reasons given during the course of the hearing on 21 June 2021, I determined it was appropriate to order security for her costs. The making of that order necessitated the variation of the freezing order made against Zhang and Yuzheng in favour of Shan. That is, so as to permit the payment by them of $50,000 as security for Min Ren's costs up to the end of the mediation. If the proceeding does not resolve at mediation, it will be appropriate to order further security for costs in favour of Min Ren.

7 Separately, by her summons dated 31 May 2021, Min Ren applied for an order that the third party proceedings against her be stayed or dismissed pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') on the grounds that Zhang and Yuzheng's claims against her are scandalous, frivolous or vexatious, or an abuse of the process of the Court. Alternatively, she sought to have the claims made against her struck out pursuant to r 23.02 of the Rules (together, 'the Pleading Application'). In the alternative she applied for summary judgment against Zhang and Yuzheng on the third party notices against her pursuant to s 62 of the Civil Procedure Act 2010 (Vic) ('CPA'). The Pleading Application was argued in full on 21 June 2021 and the decision reserved. The summary judgment application was adjourned part heard on 21 June 2021, the hearing of that aspect of the application concluded on 23 July 2021.

8 Min Ren's summary judgment application was supported by her affidavits made 31 May 2021, 18 June 2021 and 21 July 2021. In the course of the hearing on 21 June 2021, Zhang and Yuzheng applied to adjourn the hearing so that they might file answering affidavit material. On 7 July 2021 they filed an affidavit of their solicitor, Yunfei Wu. The affidavit of Mr Wu exhibits a number of documents including translations of various WeChat messages from Mandarin to English.[3]

9 For the purposes of the adjourned summary judgment application the parties were directed to provide submissions addressing the role of a company director under Chinese law ('Chinese Law'). The following expert reports were filed:

(a) two reports from Associate Professor Hawes, the first dated 11 July 2021 ('First Hawes Report') and the second, a reply report dated 19 July 2021, relied upon on behalf of Min Ren ('Second Hawes Report');[4] and

(b) a report by Dr Weng dated 14 July 2021, relied upon on behalf of Zhang and Yuzheng ('Weng Report').

10 By her 31 May 2021 summons in the alternative, Min Ren sought a discharge of the freezing order made against her on 24 March 2021 in favour of Zhang and Yuzheng. During the hearing on 21 June 2021, in the alternative Min Ren sought a variation of the freezing order to enable payment of her reasonable living expenses. It was determined on 21 June 2021 that the application to discharge or vary the freezing order should be dealt with following the disposition of the pleading and summary judgment applications.

11 At the conclusion of the hearing on 23 July 2021, three matters remained for determination, each arising out of Min Ren's 31 May 2021 summons. First, the pleadings application, second, the application for summary judgment and third, the application to discharge or vary the freezing order.

12 Upon a preliminary review of the expert reports concerning the role of a director of a Chinese company and related topics, it became apparent that the expert evidence is relevant both to the summary judgment application and to the determination of the pleadings application.

13 As there is significant overlap between the key issues in dispute on the Pleading Application and those in dispute on the summary judgment application, it is convenient to proceed by reference to the issues.

14 In applying for judgment on the pleadings and pursuant to s 62 of the CPA, Min Ren advanced three arguments:

(a) the plea in the Notices of knowing assistance is not supported by proper particulars and there is no evidence of the required elements of knowledge on the part of Min Ren;

(b) assuming knowing assistance in breach of fiduciary duty is established, Min Ren has a right to be indemnified by Zhang and Yuzheng, which right of indemnity is a complete answer to the claims against her;

(c) assuming the claims by Zhang and Yuzheng against her are otherwise made out, they do not have 'clean hands'. Even if Min Ren were otherwise liable, the absence of clean hands means the claims for indemnity and contribution by Zhang and Yuzheng must fail.[5]

15 On the pleadings application, Min Ren relied on an additional matter. Namely, that the claims against her by Zhang and Yuzheng are not claims capable of being the subject of orders for indemnity or contribution under s 23B of the Wrongs Act 1958 (Vic) ('Wrongs Act') and that the claims for equitable contribution are not sustainable.

16 It is necessary to begin with a brief explanation of the claim by the plaintiff, Shan, against Zhang and Yuzheng. That claim is set out in the amended statement of claim dated 11 August 2020 ('ASOC').

17 The substance of the claim by Shan is that on 17 November 2017 he entered into a written agreement ('the Entrusted Remittance Agreement') with a Chinese company, Tianjin Huaao Jilang Import and Export Co Ltd ('Jilang'). The now deceased Mr Chen (Chen) is alleged to have been a de facto director and the controlling mind of Jilang. The allegations against Zhang, in her capacity as administrator of the estate of Chen, include that Chen knowingly obtained $1,524,550 belonging to Shan in breach of trust, or alternatively in breach of fiduciary duty, that he converted $1,524,550 to his own use and knowingly assisted Jilang in breach of trust, alternatively in breach of fiduciary duty, in relation to that amount. $1,524,550 is alleged to represent part of the sum of $3,015,000 which was transferred to Jilang by Shan on 17 November 2017. The first of two sums of money transferred to Jilang under the Entrusted Remittance Agreement are defined in the ASOC as the First Transfer Amount. On 25 January 2018, Shan transferred the second sum of money to Jilang, $1,381,243.55, defined in the ASOC as the Second Transfer Amount. Shan alleges that $200,000 from the Second Transfer Amount was transferred to Yuzheng and that it has knowledge of the breach of trust, or alternatively of fiduciary duty by Jilang, and/or by reason of the dishonesty of the third defendant, Xiao Chen, that Yuzheng converted that amount to its own use. Shan alleges those amounts should have been transferred from China pursuant to the Entrusted Remittance Agreement into Shan's nominated bank account in Australia (after deduction of $126,000 as Jilang's fee). Instead, the money was diverted to accounts in the name of, controlled by or at the direction of Chen and Yuzheng, and, following the death of Chen, at the direction of Chen's brother, the third defendant, Xiao Chen.[6]

18 Shan alleges that money was paid to Jilang, that money was then transferred to bank accounts in Australia, including accounts in the name of Min Ren, and that specified amounts were then transferred from Min Ren's account into the account of Good Home, a company controlled by Chen. It is not alleged by Shan that Min Ren retained any part of the money for which he claims in the proceeding against the defendants. However, Shan does allege that Min Ren was told to lie to him about the application of funds,[7] and that Min Ren (along with other parties who received the First Transfer Amount) refused and/or failed to remit all of the First Transfer Amount to Shan's nominated bank account in Australia resulting in the shortfall of $1,524,550.[8]

19 The ASOC includes allegations in respect of the First Transfer Amount, that Chen directed Min Ren to transfer money into Good Home's bank account because Good Home 'is lacking money now' and that once Min Ren and other people received money in Australia, all moneys should be transferred into Good Home's account.[9] Separately, that in November 2017, following a conversation said to have taken place during a meeting in China, Chen told Min Ren that Good Home was facing a serious financial issue of lacking cash flow, and for that reason, money received in Australia should be transferred to its bank account.[10]

20 The statement of claim against Min Ren in the Notices recites that Shan alleges that Zhang and Yuzheng are liable to him because, amongst other things:

a) In the case of Zhang, before Chen's death, Chen procured or knowingly assisted a breach of trust by Jilang, knowingly received money belonging to Shan in breach of trust or fiduciary duty, converted money owing to Shan, and obtained money as money had and received for his use.[11]

b) In the case of Yuzheng, it knowingly received money belonging to Shan in breach of trust or fiduciary duty, converted money belonging to him, and obtained money as money had and received for its use.[12]

21 By their defences to Shan's ASOC, both Zhang and Yuzheng deny they are liable to Shan.

22 The Notices recite that if Shan suffered loss and damage as alleged, and if Zhang and Yuzheng are liable to Shan as alleged, then Zhang and Yuzheng are entitled to indemnity and/or contribution from Min Ren in respect of that loss or damage.

23 The prayer for relief in the Notices claims contribution pursuant to s 23B of the Wrongs Act amounting to a complete indemnity in respect of any amount ordered to be paid by Zhang and Yuzheng to Shan. Alternatively, contribution pursuant to s 23B in respect of any amount ordered to be paid by them to Shan to such extent the Court considers to be just and equitable having regard to Min Ren's responsibility for loss and damage. In the alternative Zhang and Yuzheng seek contribution in equity from Min Ren.[13]

24 Zhang alleges in her Notice that Min Ren is liable to Shan because she knowingly assisted in the breaches of trust, knowingly received $1,338,034.50 from the First Transfer Amount, and knowingly received $1,381,243.55 from the Second Transfer Amount.[14] Yuzheng alleges in its Notice that Min Ren directly participated in and caused the transfer of $200,000 to its bank account in Australia as identified in the ASOC.[15]. The Notices refer to and rely upon various paragraphs of Shan's ASOC and the particulars there set out in support of the allegations against Min Ren, including that she possessed the requisite degree of knowledge required to make out a claim for knowing assistance in breach of fiduciary duty.[16]

(1) Where a proceeding generally or any claim in a proceeding -

(a) is scandalous, frivolous or vexatious; or

(b) is an abuse of the process of the Court -

the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.

(2) ...

(3) In this Rule -

(a) a claim in a proceeding includes a claim by counterclaim and a claim by third party notice.[17]

26 In Annesley v Westpac Banking Corp,[18] Derham AsJ discussed the approach to be adopted on an application under r 23.01:

68. The ground of application is that the claim is bad in law or is scandalous, frivolous or vexatious or is an abuse of process. In an application by a defendant, the contention will be that by no proper amendment of the pleading can the plaintiff raise a good cause of action because the claim so completely lacks foundation in fact or law that no legitimate pleading amendment could save it. On an application under r 23.01 of the Rules, any party may rely upon evidence given on affidavit or, by leave, orally.

69. The court will not make an order under this rule unless it is clear on the pleadings or from extrinsic evidence that the claim is unsustainable in fact or in law. The burden on this question lies on the party impeaching.[19]

27 In BFJ Capital Pty Ltd v Financial Ombudsman Service Ltd (in liq),[20] Elliott J compared the approach to be adopted to applications under rules 23.01 and 23.02:

[32] The legal principles that apply to strike out applications are ... without controversy.[21]

[33] The court may order that the whole or part of a pleading be struck out if, relevantly, a statement of claim: does not disclose a cause of action; is scandalous, frivolous or vexatious; may prejudice, embarrass or delay the fair trial of the proceeding; or is otherwise an abuse of the process of the court.[22] Unlike an application under r 23.01, an application under r 23.02 seeks no more than a striking out or an amendment, rather than judgment ordered summarily.

[34] The elements of an adequate pleading are straightforward. A pleading must comprise a coherent narrative of material facts which set out and frame the elements of a cause of action. It must be pleaded with sufficient clarity, must not be unintelligible, ambiguous or vague and must not raise allegations that are offensive.[23] Where particulars are relied upon, they ought not be used to "fill material gaps" or "cure a bad statement of claim".[24] Ultimately, the purpose of a proper pleading is to allow, in the interests of fairness, the opposite party to know what is alleged.[25] Where a pleading is deficient in any of these respects, an application striking out the pleading may be warranted.

[35] A strike out application, therefore, is distinct from an application for summary judgment in that it is an objection to the manner of expression of the pleading, as opposed to the prospects of the cause of action or defence itself.[26] Again, care must be exercised when ordering that a pleading be struck out.[27]

...[28]

28 The pleadings application by Min Ren relied in the alternative upon rules 23.01 and rule 23.02. Rule 23.01 entitles a successful applicant to judgment in that person's favour. That rule formed the basis of argument on the pleadings application.

29 As stated by Elliott J in BFJ Capital,[29] what falls for consideration on an application under Rule 23.01 is the prospects of success of the causes of action relied upon and not the manner of expression of the pleaded case.[30] Adopting the language of Derham AsJ in Annesley,[31] Min Ren will be entitled to summary judgment if the Court is persuaded that 'by no proper amendment of the [Notices] can [Zhang and Yuzheng] raise a good cause of action because the claim so completely lacks foundation in fact or law that no legitimate pleading amendment could save it'.[32]

30 To decide whether or not that is the case requires the Court to determine whether the claim as pleaded contains sufficient particularisation of the knowledge required for a knowing assistance plea. If not, whether the right to be indemnified and the clean hands arguments earlier identified are a complete answer to the claims. On the Pleading Application additional questions arise; whether the claims made by Shan against Zhang and Yuzheng in the ASOC are claims for the 'same damage' as claimed in the third party notice against Min Ren such that s 23B of the Wrongs Act is engaged, and if not, whether the claim in the alternative for equitable contribution is available.

The summary judgment application: the principles

31 The Court may order summary judgment if a claim has no real prospect of success. The test is well established.[33] In submissions filed on behalf of Min Ren the principles were summarised as follows:

1. the test is whether the respondent to an application has a 'real' as opposed to a 'fanciful' chance of success;[34]
2. the test is to be applied by reference to its own language and without comparison to the 'hopeless' or 'bound to fail' test enunciated in Dey and General Steel;[35]

1. 'the "no real prospects of success" test is to some degree more liberal than Dey and General Steel. It permits of the possibility of cases in which, although the plaintiff's case is not "hopeless" or "bound to fail", it does have a real prospect of succeeding';[36]

1. the court's power under section 63 is not to be exercised lightly;[37]
2. the power under section 63 'should not be exercise unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process where the application is supported by evidence';[38]
3. the court is to have regard to the overarching purpose of the CPA, as set out in section 7(1) of the CPA, being 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.'[39]

Section 23B of the Wrongs Act and the equitable contribution claim

32 The Wrongs Act and equitable contribution issues concern the Pleading Application only. Section 23B(1) of the Wrongs Act provides:

23B Entitlement to contribution

(1) Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).

33 What is critical for the operation of the section is that the person against whom the contribution is sought (Min Ren) is liable for the 'same damage' as that person (Zhang and Yuzheng) are liable for to the plaintiff (Shan).

34 Section 23A(1) of the Wrongs Act provides:

(1) For the purposes of this Part a person is liable in respect of any damage if the person who suffered that damage, or anyone representing the estate or dependents of that person, is entitled to recover compensation from the first-mentioned person in respect of that damage whatever the legal basis of liability, whether tort, breach of contract, breach of trust or otherwise.

35 Section 24(2) of the Wrongs Act is concerned with the amount of contribution that may be recovered from a person liable in respect of the same damage. It relevantly provides:

(2) ... in any proceedings for contribution under section 23B the amount of the contribution recoverable from any person shall be such as may be found by the jury or by the court if the trial is without a jury to be just and equitable having regard to the extent of that person's responsibility for the damage; ...

36 The relief sought by Shan against Zhang and Yuzheng is for the payment of money, consisting of $1,724,550 against Zhang, and $200,000 against Yuzheng, and includes in the alternative an account for profits and equitable compensation and damages.[40] The legal basis of liability relied on against those defendants includes knowing assistance in breach of fiduciary duty by Jilang. The Notices allege that Min Ren knowingly assisted Jilang in breach of fiduciary duty.[41] The relief claimed against Min Ren by Zhang and Yuzheng relying upon s 23B of the Wrongs Act is for indemnity or, in the alternative, picking up the language of s 24(2) of the Act, for such contribution as is just or equitable.

37 In her submissions Min Ren contended that contribution is not available against her in equity because there is no co-ordinate liability or common obligation between her and Zhang and Yuzheng.[42] In support of that submission Min Ren relies upon HIH Claims Support Limited v Insurance Australia Limited,[43] where Gummow CJ, Hayne, Crennan and Kiefel JJ) said:

47. The authorities show that no court has departed from the requirement that the equity to contribute depends on obligors bearing a common burden, the basis for co-ordinate liabilities in respect of the one loss. A proposition upon which the appellant wishes to rely - namely, that equity looks to substance rather than form - has never been invoked successfully to achieve a departure from, or modification of, that requirement.[44]

38 Min Ren submits that contribution may be made in equity as a form of 'natural justice', to share the burden of a liability that is common to a number of parties but where a plaintiff does not sue them all. A common obligation is one where the liability is 'of the same nature and to the same extent'.[45] She submits that the case against her alleges she knowingly assisted Zhang and Yuzheng in breach of fiduciary duty. She submits that the claim by Shan is a different claim. Shan alleges that Zhang and Yuzheng received money and converted it to their own use and he seeks, among other things, an account of profits from those parties. No such claim is made against Min Ren. On this basis she submits her liabilities and those of Zhang and Yuzheng are not of the same nature or of the same extent.[46]

39 The correctness of the statement relied upon in HIH Claims[47] concerning equitable contribution, set out in paragraph 37 above, cannot be doubted. If that were the only matter relied on to found the contribution claim against her, Min Ren may be on solid ground. However in this case the Notices rely in the first instance on statutory rights of contribution pursuant to the Wrongs Act and the claim for equitable contribution is in the alternative only.

40 Whether the claim in the Notices lacks foundation in law must be determined at least in the first instance by reference to the Wrongs Act. The reference in the Notices to contribution 'to such extent that this Court considers to be just and equitable' is not a reference to contribution in equity but is a reference to s 24(2) of the Wrongs Act as set out above at paragraph 35.

41 Responding to the arguments advanced on behalf of Min Ren, Zhang and Yuzheng submit the assertion they are precluded from claiming contribution is an impermissible gloss on the third party claim. They submit that Zhang and Yuzheng do not claim from Min Ren as an employee, nor do they suggest she was acting as an employee. They also do not claim from the position of 'chief fiduciary'. They say that if Shan's claim that Zhang and Yuzheng are liable for assisting in Jilang's breach of trust is successful, Min Ren should be liable under either limb of Barnes v Addy.[48] As Min Ren would be a person liable to Shan had he brought the claim against her on this basis, she is a person liable within the meaning of Part IV of the Wrongs Act. They submit that Zhang and Yuzheng are therefore entitled to statutory contribution as well as contribution in equity. They further contend that as what is sought is an apportionment/contribution, in order to demonstrate no real prospect of success Min Ren must show that any apportionment must be 100% against them.[49]

42 I do not accept that the relief sought in the Notices relying upon s 23B of the Wrongs Act is bad in law, is an abuse of process or is a claim that so completely lacks foundation in fact or law that no legitimate amendment could save it. On the contrary, whilst ultimately a matter for trial, it appears to me that the claim by Zhang and Yuzheng against Min Ren relying upon s 23B is a claim for the 'same damage' as is claimed against those parties by Shan.

43 In Alexander v Perpetual Trustees WA Ltd,[50] when construing s 23B of the Wrongs Act, the High Court said:

32. Two relevant propositions are, therefore, central to the proper application of s 23B as it is to be understood in the light of s 23A. First, the party claiming contribution ("the claimant") must show that it is liable in respect of damage suffered by another person ("the injured plaintiff"). Secondly, the claimant may recover contribution from any other person ("the potential contributor") who is also liable to the injured plaintiff in respect of the same damage. The relevant inquiry is not confined to whether the damage for which each is liable can be said to be the same; both claimant and potential contributor must be liable to the injured plaintiff.

...

37. The second question which is of critical importance is presented by the requirement in s 23B(1) that the respondents, the parties against whom Minters asserts an entitlement to contribution, be liable "in respect of the same damage". ...

38. ... what is the "damage" which must have this identity? The legislation offers no definitions. In Royal Brompton Hospital,[51] the House of Lords held that "damage" does not mean the "damages" awarded as compensation by a court, usually as a single sum. That is consistent with decisions in this Court construing similar legislation,[52] but does not take the matter very far.

39. The definition in s 23A(1), which has been set out, suggests that there may be the necessary sameness in the "damage" for which the two parties to the contribution claim are liable to a third, even without an identical legal basis for that liability. So it may be in a given case that the liability of one party is founded in contract and the other is in tort. But that does not resolve the present problem, which concerns liabilities founded in breaches of trusts at the two levels. The legal basis of liability may in each case be located in trust law, but what is meant by the requirement of "the same damage" where a plurality of trusts is involved?

40. Minters' submission is to the effect that "any damage" identifies interference with any legal or equitable right or interest. The "interference" would include the infliction of injury to proprietary interests and the infliction of personal injury as an interference with the interest in bodily integrity.[53] Understood in this fairly broad sense, the submission by Minters may be accepted for present purposes, without finally ruling on the question.[54] That is because, even on the basis that the relevant interests damaged were those conferred by law upon the beneficiaries of trusts, the appeal must fail.[55]

44 As is made clear in Alexander,[56] an identical legal basis for liability is not required for the purposes of s 23B(1), particularly when the definition in s 23A(1) is borne in mind. While that is expressly made plain by s 23A(1) of the Wrongs Act, the claims made by Shan against Zhang and Yuzheng include claims that Chen knowingly assisted a breach of trust by Jilang and that he knowingly received money belonging to Shan in breach of fiduciary duty. Similar claims are made against Yuzheng. The claim against Min Ren in the Notices is a claim of knowingly assisting Jilang to act in breach of fiduciary duty. The relief sought against Zhang is not limited to an account of profits. Damages and equitable compensation are sought against Zhang and Yuzheng for breach of fiduciary duty. Although the legal basis upon which liability is asserted against Min Ren is not identical to that which forms the basis of Shan's claim against Zhang and Yuzheng, due to s 23A(1), that is not required. Applying Alexander,[57] it cannot be said that the claims made in the Notices are not claims in respect of the 'same damage' which the plaintiff, Shan, could have brought against Min Ren, had he chosen to do so. Both claims include claims for knowing assistance or knowing involvement in breach of fiduciary duty by Jilang relying on the principles in Barnes v Addy.[58] The relief sought against Zhang and Yuzheng includes claims for equitable compensation and damages. That is the same relief for which Min Ren would have been liable to Shan if a claim for knowing assistance in breach of fiduciary duty had successfully been brought against her by Shan.

45 There is no proper basis to grant judgement in favour of Min Ren pursuant to rule 23.01 of the Rules based on the nature of the relief claimed in the Notices. The reliance by Zhang and Yuzheng upon s 23B of the Wrongs Act is appropriate_._ In light of my finding concerning s 23B it is unnecessary to determine whether the claim for equitable contribution made in the alternative lacks foundation.

46 There can be no complaint about the form of the Notices pursuant to rule 23.02 by reason of their reliance on s 23B of the Wrongs Act and no such complaint was made. It was not suggested in argument that the claim for equitable contribution should be struck out.

a) actual knowledge;

b) knowledge of circumstances that would indicate the facts to an honest and reasonable person; or

c) knowledge of the circumstances that would have put an honest and reasonable person on inquiry,

that the money Shan had paid to Jilang under the Entrusted Remittance Agreement was being utilised in breach of trust or in breach of fiduciary duty or was being misapplied.[59]

48 The Notices refer back to and rely upon particulars of knowledge in the ASOC.[60] Those paragraphs allege:

(a) Chen instructed Min Ren how to apply monies paid into her bank account as part of the First Transfer Amount, including payments to Good Home and that he instructed her to slow the remittance of funds to Shan.

(b) Min Ren and others who received the First Transfer Amount, acting at the direction and on behalf of Chen, refused and or failed to remit all of the money to Shan's nominated bank account in Australia leaving a shortfall of $1,524,550.

(c) Acting on instructions from Chen, Min Ren encouraged Shan to make the Second Transfer and lied to him regarding why remittance of the First Transfer Amount had been delayed.

(d) Min Ren received part of the Second Transfer Amount into her Chinese bank account, and on instruction from Xiao Chen, the brother to Jun Chen, transferred $200,000 into Yuzheng's bank account.

(e) Min Ren received a part of the Second Transfer Amount into bank accounts held with the Commonwealth Bank of Australia and Westpac and failed to remit all of the funds received to Shan's nominated bank account in Australia.[61]

49 The ASOC includes allegations that Jun Chen made all of the significant decisions regarding Jilang's affairs.[62] It alleges that Chen was officially listed as the 'supervisor' in Jilang's enterprise credit information publicity report, had actual control of Jilang, and was responsible for its day to day activities. Further, that Min Ren was Jilang's manager and executive director, but at all times until Chen's death, reported to Chen.[63] It alleges that after Chen's death, Xiao Chen, the brother of Chen, became a de facto director and the controlling mind of Jilang and gave instructions to Min Ren.[64]

50 During the hearing of the application on 21 June 2021, Zhang and Yuzheng placed significant reliance on the fact that Min Ren is the sole director of Jilang, the holder of 31% of the shares in that company and was the manager and executive director of the company,[65] as providing a proper basis for the knowledge allegations in the Notices.

51 Min Ren does not dispute the allegations concerning her role as director and shareholder in Jilang. However, she says that at all relevant times she acted pursuant to the instructions and subject to the direction of Chen and, after his death, pursuant to the instructions and directions of his brother. In response to the Notices, she pleads that to the extent that she is found liable to pay compensation to Zhang, the recovery of any such compensation should be reduced to a nominal amount pursuant to s 24 of the Wrongs Act on the basis that she was acting as an employee or agent of Jun Chen, Xiao Chen, Jilang and/or Good Home, she acted pursuant to the instructions of Chen and, after his death, his brother. Further, that her involvement in any misapplication of the money paid by Shan to Jilang was to transfer that money to Good Home and/or Yuzheng, which both had the same controlling mind as Jilang; and did not receive a benefit from her involvement in the transactions.[66]

52 In addition to Min Ren's involvement in the transfer of funds and as the sole director of Jilang, Zhang and Yuzheng rely in support of the knowing assistance plea on the particulars to the ASOC which allege that at Chen's request Min Ren gave a false explanation to Shan for money having been sent from China not having been received in Shan's son's bank account in Australia. It is alleged that on 19 and 20 January 2018, WeChat voice messages were exchanged in which Chen told Min Ren to tell Shan the Australian bank account was frozen because of anti-money laundering in Australia. Shan alleges that on 24 January 2018 Min Ren gave a false explanation to him that the Australian bank accounts had been frozen due to money laundering in accordance with Chen's instructions.[67]

The evidence going to the knowledge allegations against Min Ren

53 It is necessary to consider the evidence relied upon by Zhang and Yuzheng on the summary judgment application concerning Min Ren's knowledge and what Min Ren says about those matters.

54 In support of her application for summary judgment pursuant to the CPA, Min Ren gave evidence that in December 2015, Chen told her he would apply for a visa allowing her to work in Australia. In return, she took 31% of the shares of Jilang, without dividend rights, and was employed by Jilang and Tianjin Aushida Asset Management Co Ltd and that she carried out work for another company incorporated in China controlled by Chen. Clause III of Min Ren's employment agreement with Jilang ('Personnel Agreement') required that she 'obey the management and coordination of the branch in Tianjin' and 'obey the arrangements of the company leaders', that she shall not be entitled to an actual distribution of shares for dividends, except for agreed commission of 2% of turnover and, 'when dealing with financial problems about the company's accounts or taxes' shall communicate with the finance department of head office in Beijing.[68]

55 Min Ren gave evidence that during her employment she worked under the direction and supervision of Chen and that she made numerous transfers of money for many different clients. She said she did not know whose money she was transferring, that she made the transfers at the direction and supervision of Chen or of his brother and received no benefit from any transfer of money made by her under their direction. She gave evidence that Chen instructed and directed her to transfer the payments referred to in paragraph 20 of the ASOC and after his death, his brother instructed and directed her to transfer the payments referred to in paragraph 28 of the ASOC.

56 In her affidavit dated 21 July 2021 Min Ren gave evidence that Chen was the supervisor of Jilang under Chinese Law and that she is the executive director and legal representative of Jilang under that law. At the time she was appointed the director and legal representative of Jilang she was 25 years old. She gives evidence that Jilang entered into an agreement with Mr Wang, one of its clients, on 25 September 2016 for migration purposes ('Wang Shares Agreement'). The Wang Shares Agreement states that Mr Wang does not enjoy distribution of shares or the right to dividends in Jilang.[69] His 31% shareholding in Jilang is 'to meet the requirement of 31% shares of the Immigration Bureau'.[70] Based on those matters Min Ren asserts that neither she nor Mr Wang are real shareholders of Jilang and that Chen is the sole shareholder of Jilang.

57 In opposition to the application, as to factual matters, Zhang and Yuzheng rely upon the Affidavit of Mr Wu affirmed on 7 Jul 2021. That affidavit exhibits translated copies of WeChat conversations between Min Ren and Chen. It also exhibits a copy of the transcript of the hearing before Robson J on the return of Zhang and Yuzheng's application for a freezing order against Min Ren, that has been amended to incorporate translations of Min Ren's comments made in Chinese at that hearing.

58 Having reviewed the translated statements made by Min Ren in the course of the hearing before Robson J on 24 March 2021, although those matters are relied upon by Zhang and Yuzheng, they show a consistent message on the part of Min Ren that she was, as she told Robson J:

'... merely a tool transferring money. I did not retain one cent of the company's money'.[71]

...

'All the monies in my account were transferred to the places I was instructed. Not one cent was left in my account.'[72]

59 Min Ren told his Honour the reason she considered she was being targeted by Zhang and Yuzheng in the third party proceedings is that she was helping Shan to get money back that had been wrongfully taken by Chen.

60 Some of the other translated documents from WeChat are not as helpful to Min Ren on the issue of knowledge relevant to the application under s 62 of the CPA. In essence what has been exhibited and translated confirms as evidence a number of the allegations in the pleadings relied upon to by Zhang and Yuzheng to particularise Min Ren's knowledge.

61 On 17 January 2017 a draft copy of the Entrusted Remittance Agreement between Jilang and Shan, but incomplete as to the details, which provided for the transfer of money from China into an overseas account at the Commonwealth Bank in Australia, the details of the account being part of the document remaining incomplete, was forwarded to Min Ren.[73]

62 On 22 November 2017 Chen instructed Min Ren (referred to in the translation as 'Ruby') to transfer a small sum to Shan's son's account, 'then take his money ... This way he will be more relieved'. On 22 November 2017 Chen instructed Min Ren to 'now ask for it again'. She responded by saying 'I feel it's hard to say it'. Later, on 27 November 2017, there was an instruction from Chen to 'let Shan see AUD $400,000 this week' after deduction of commission. Subsequently, Chen told Min Ren, 'too slow, it will be too slow this way. He has $2 million to transfer later and will be over to buy a farm in December. So we got to get it done by mid-December. I think we will then slow up a bit later. He will feel relieved after seeing $1 million'.[74]

63 After an earlier instruction from Chen not to transfer money to Good Home, on 19 January 2018 Chen told Min Ren 'before you go to China to see director Shan, about his money, he will definitely ask you about it, I will teach you how to say. He will definitely ask you'. Min Ren responded 'we will owe him $1.5 million'.[75]

64 On 20 January 2018, Min Ren asked Chen, 'how should I talk about money when I see director Shan?' Chen instructed that she should tell Shan that:

... this issue was caused by a stupid colleague ... Then the old Shan will ask you what's going on with my money and why I haven't received it? You just say, director Shan, our account has got a little issue because of the stupid colleague ... The colleague is also an overconfident person always like to show off. But she has a good relationship with our boss and she has all the networks in relation to our boss.... So our account in Australia just added over $20 million. Over 100 million yuan, what do you think? But Australia is also fighting money laundering so our account was frozen because of the over $20 million. Director Chen got very worried so he flew to Australia last week to solve this problem because we have over $10 million of our own in there too. He was very worried because it's your money and others. But director Chen has a broad network and surely he can unfreeze the account, maybe needs to pay some fine or write an explanation letter. Our boss has a broad network in the political and business areas, as you know. He just needs to use some connections, makes some explanations, treats some people to dinners, which are pretty much the same as in China ... They might not take a red packet at this time. Promise them some benefits in the future. So director Chen is back in Australia to deal with this and it shouldn't be a big issue.[76]

65 On 26 January 2018 a discussion took place between Mr Wu and Min Ren. It appears the subject matter of the discussion concerned Mr Chen's will and what should occur to assets forming part of Mr Chen's estate. As part of the conversation Min Ren said 'we cannot let Xiao Chen handle all of this matter. If it's in his hands, we cannot be sure that he would return the money and fill the whole of AUD $1.5 million ... We are just worried people cannot uphold their moral standards... AUD $1.5 million was embezzled by us and which was not informed to the client as a borrowing'.[77]

66 In written submissions on behalf of Zhang and Yuzheng concerning this discussion, they submit that while the admission of embezzlement was made after the fact, it demonstrates that at that time Min Ren was aware of the misappropriation of the first transfer amount. It might also be said in Min Ren's favour, that having become aware of embezzlement, the conversation relied on shows that she was wishing to take steps to ensure that what had occurred was put right.[78]

The 'knowledge' requirement in the second limb of Barnes v Addy[79]

67 In Farah Constructions Pty Ltd v Say-Dee Pty Ltd,[80] the High Court said:

111. ... In Barnes v Addy[81] Lord Selborne LC said:

"Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees."

The form of liability referred to in the first part of the last sentence is often called the "first limb" of Barnes v Addy, and the form of liability referred to in the second part of the last sentence is often called the "second limb".[82]

68 The case against Min Ren the subject of the Notices falls squarely within the second limb of Barnes v Addy.[83] In that part of the court's reasons in Farah Constructions[84] discussing the 'second limb' the High Court said:

171. What is required by the requirement of "knowledge" expressed in the second limb [of Barnes v Addy [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244]?

172. In the passage in which Lord Selborne formulated the second limb in terms of assisting with knowledge in a dishonest and fraudulent design on the part of the trustees, he contrasted those "actually participating in any fraudulent conduct of the trustee" and those "dealing honestly as agents".[85]

...

174. Against this background, it has been customary to analyse the requirement of knowledge in the second limb of Barnes v Addy by reference to the five categories agreed between counsel in Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA[86]:

"(i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man; (v) knowledge of circumstances which would put an honest and reasonable man on inquiry."

In Bank of Credit and Commerce International (Overseas) Ltd v Akindele (BCCI),[87] Nourse LJ observed that the first three categories have generally been taken to involve "actual knowledge", as understood both at common law and in equity, and the last two as instances of "constructive knowledge" as developed in equity, particularly in disputes respecting old system conveyancing. After noting that in Royal Brunei[88] the Privy Council had discounted the utility of the Baden categorisation, Nourse LJ in BCCI[89] went on to express his own view that the categorisation was often helpful in identifying the different states of knowledge for the purposes of a knowing assistance case.

175. Although Baden post-dated the decision in Consul, the five categories found in Baden assist in an analysis of that for which Consul provides authoritative guidance on the question of knowledge for the second limb of Barnes v Addy.

176. Thus, support in Consul can be found for categories (i), (ii) and (iii).[90] Further, Consul also indicates that category (iv) suffices.[91] However, in Consul, Stephen J held that knowledge of circumstances which would put an honest and reasonable man on inquiry, later identified as the fifth category in Baden, would not suffice. Gibbs J left open the possibility that constructive notice of this description would suffice.[92] Barwick CJ agreed with Stephen J.

177. The result is that Consul supports the proposition that circumstances falling within any of the first four categories of Baden are sufficient to answer the requirement of knowledge in the second limb of Barnes v Addy, but does not travel fully into the field of constructive notice by accepting the fifth category. In this way, there is accommodated through acceptance of the fourth category, the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons.[93]

69 Senior counsel for Zhang and Yuzheng submitted the pleaded case as to Min Ren's knowing involvement is sufficient to satisfy the first three categories of knowledge set out in Baden v Société Générale pour Favoriser le Dévelopment du Commerce et de l'Industrie en France SA,[94] as adopted in Farah Construction.[95] Namely, actual knowledge; wilfully shutting one's eyes to the obvious; and wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make.[96]

70 Counsel for Min Ren submitted that it was necessary that Zhang and Yuzheng prove that Min Ren had knowledge of each of the four elements identified in Baden[97] that an alleged constructive trustee must know. In Baden,[98] Gibson J said as follows:

I start, first, by considering what it is that the alleged constructive trustee must know.... He must know that there was a trust though I do not think it necessary that he should know all the details of the trust... He must know of the dishonest and fraudulent design of the trustee. Again, however, I do not think it need be knowledge of the whole design: that would be an impossibly high requirement in most cases. What is crucial is that the alleged constructive trustee should know that a design having the character of being fraudulent and dishonest was being perpetrated. Further he must know that his act assisted in the implementation of such design.[99]

71 Min Ren submitted that if there is no allegation or evidence going to any one of those four elements, Min Ren is entitled to summary judgment in her favour.

72 At the hearing on 21 June 2021, Zhang and Yuzheng relied on the fact that Min Ren was a director of Jilang as providing a sufficient basis of Min Ren's knowledge in opposition to both the pleadings and summary judgment applications. On the adjourned hearing on 23 July 2021, they also relied on the translated documents exhibited to Mr Wu's affidavit in opposition to Min Ren's s 62 CPA application.

Min Ren as a director of Jilang: a company incorporated under Chinese Law

73 In the course of the hearing on 21 June 2021 Zhang and Yuzheng submitted that because Min Ren is the sole director of Jilang, she is taken to have knowledge and to have participated in its actions, relying upon the decision in Morgan v Flers Avenue Pty Ltd.[100] In that case, Young J said, in substance, that a person cannot be a director for some purposes but not for others.[101] It was submitted that when it suited Min Ren to say she was a director for the purposes of obtaining a visa to come to Australia, she was content to accept that description, but not for other purposes. In particular, not when responding to a claim for knowing assistance in breach of fiduciary duty.

74 During the 21 June 2021 hearing, reference was also made to Morley v Statewide Tobacco Services Ltd (No 2),[102] where, discussing the role of a passive director, Ormiston J said:

A director should not in those circumstances be entitled to hide behind ignorance of the company's affairs which is of his own making or, if not entirely of his own making, has been contributed to by his own failure to make further necessary enquiries. On the other hand directors are not required to have omniscience. It is not yet assumed that directors shall apply themselves full-time to the company's business. There is still a place for part-time and advisory directors. Directors are entitled to delegate to others the preparation of books and accounts and the carrying on of the day to day affairs of the company. What each director is expected to do is to take a diligent and intelligent interest in the information either available to him or which he might with fairness demand from the executives or other employees and agents of the company.[103]

75 On appeal, the Court of Appeal agreed with Ormiston J, noting that:

These considerations lead us respectfully to agree with Ormiston J when he said "a director cannot now assert from a state of total ignorance that he ... had no reasonable cause to expect (commercial insolvency)." See also the observation of Rogers A-JA in Naffai v Haines (unreported, New South Wales Court of Appeal, 26 November 1991), "as the judgment of Ormiston J in (the present case) has vividly reminded us, the days of the sleeping, or passive, director are well and truly over".[104]

76 There is no doubt that what Young J said in Flers Avenue[105] and what Ormiston J said in Morley,[106] with whom the Court of Appeal agreed, is correct so far as Australian corporations are concerned. If Jilang were an Australian company, Min Ren's position as director, ignoring the other matters alleged against her concerning her involvement in payments and the false explanation to Shan about money laundering would likely be sufficient particularisation and proof for Zhang and Yuzheng to successfully resist judgment against them based on the knowledge issue. That is so even though Min Ren says she only ever acted as directed by Chen and his brother. But Jilang is not an Australian company. Jilang is a company incorporated under Chinese Law.

77 Dr Weng gave expert evidence that under Chinese company law there is no direct comparable counterpart of constructive knowledge or assumed knowledge in common law jurisdictions. Legal liabilities are usually imposed only based on whether an issue in dispute is within the director or officer's power.[107]

78 Dr Weng reported that the shareholders general meeting of the company is the only and ultimate source from which the board of directors and officers derive power. Therefore, in his opinion it is possible to require a board of directors to consult with a specific person before making a business decision or stipulating the director's decision to subjugate to an individual's opinion. In addition, the constitution of a company may adjust the board of directors power. If the constitution has a power arrangement of that type or a resolution is passed by shareholders in a general meeting the board, or in this case the executive director, may take orders from the specific person to breach a contract.[108] Relying on this evidence against Min Ren it was contended that there is no evidence of a resolution in this case.

79 Dr Weng was asked whether a director could be required to act according to the directions of another, particularly if such a direction would lead to a breach of contract, or be unlawful or illegal. It was Dr Weng's evidence that while a director must exercise independent judgment, if a company's constitution alters the powers of an executive director, the effect may be that the executive director is required to take orders from the specific person. While orders to breach a contract may be permitted, Dr Weng's evidence is that any order to engage in unlawful or illegal activities is invalid and should not be complied with.[109]

80 Associate Professor Hawes upon whose evidence Min Ren relied, reported in relation to the role of supervisors as set out in the Company Law of the People's Republic of China ('PRC Company Law'). Article 53 of the PRC Company Law provides that the board of supervisors have powers of supervising the performance of duties by directors and senior management personnel and have power to require the directors or senior management to correct any conduct that prejudices the interests of the company. Supervisors also have power to put forward proposals to the shareholders meeting.[110]

81 Associate Professor Hawes gave evidence that in his opinion Chen was the controlling shareholder and the 'company leader' of Jilang and, that Min Ren is an employee of Jilang who must obey all orders of the 'company leaders' relating to dealings management. He concluded that as a result Min Ren never had the independent powers of an executive director, company manager, legal representative or shareholder.[111] He expressed his opinion that the effect of the Personnel Agreement was to take away Min's capacity to independently exercise the legal powers allotted to her under the PRC Company Law and the company constitution of Jilang, and instead to require her to follow the direction of 'the branch in Tianjin' and the 'company leaders'.[112]

82 It was his evidence that the reference to the branch in Tianjin in the Personnel Agreement is a reference to Jilang, which by implication he considered evidences that Min Ren was not in control of that company; and that the reference to 'company leaders' was a reference to Chen. Associate Professor Hawes opined that the effect of the Personnel Agreement was to make Min into a nominal shareholder, subject to the control of the 'company leader(s)', without the capacity to exercise her 31 percent voting rights.[113]

83 In replying to Dr Weng's report, Associate Professor Hawes agreed that the legal powers of an executive director, manager and legal representative under the PRC Company Law are potentially quite broad. In the case of Jilang, he considered those powers to have been effectively curtailed by the Personnel Agreement and by Min Ren's appointment to those positions being only nominal so as to fulfil Australian Visa requirements.[114]

84 The questions asked of the experts concerning Chinese Law were not identical. There are matters upon which they disagreed. The matters upon which they reported extended well beyond the topics mentioned above. Nonetheless it is clear that the role of a company director under Chinese Law, particularly in the factual circumstances of the present case, given Chen's role as a supervisor, and the Personnel Agreement, cannot be equated with the position of a director of an Australian company under the Corporations Act 2001 (Cth). The submission on behalf of Zhang and Yuzheng that Chinese Law places a director in a substantially similar position to that of the Australian director takes too simplistic a view of the position of a director. It is a submission that fails to engage with the factual circumstances of this case and the likely consequences under Chinese Law of those circumstances.

85 At the pleadings level, the fact that Min Ren was a director of Jilang but subject, as is pleaded by Shan and is her unchallenged evidence, to the direction and control of Chen, is not sufficient of itself for Zhang and Yuzheng to resist Min Ren's application for summary judgment. I consider that to be so based on the pleadings and also on the evidence, noting that on the evidence there are areas upon which the two experts disagree. There is no concept of constructive or assumed knowledge in Chinese Law. Although there is no evidence of a resolution of the company directing Min Ren to act in a certain manner as would be necessary according to the evidence of Dr Wang, the evidence establishes that Chen controlled all the shares in the company and that Min Ren was little more than, as she told Robson J, 'a tool transferring money'.[115]

86 Based on my reading of the expert reports and without the benefit of a joint report and in circumstances where the experts have not been asked the same questions I consider the fact Min Ren is the sole director of Jilang, a Chinese corporation, is insufficient of itself to establish knowledge on her part of each of the matters identified by Gibson J in Baden.[116] In particular, I consider the fact she is a director does not provide evidence from which it might be inferred that she had knowledge of the trust or of the dishonest and fraudulent design of the trustee, even though she participated in her role in Jilang in making payments.

87 However the fact Min Ren is a director of Jilang is not the only matter relied on by Zhang and Yuzheng in opposition to Min Ren's application for summary judgment on the Notices.

Other matters relied upon to support the knowledge allegations

88 In opposition to both applications, in addition to Min Ren's role as sole director of Jilang, senior counsel for Zhang and Yuzheng relied upon the allegations, supported by the translated documents in evidence, that Min Ren knew of the Entrusted Remittance Agreement and that at Chen's request Min Ren gave a false explanation to Shan for the money having been sent from China not having been received in Shan's son's bank account in Australia.

89 The evidence of the translated WeChat messages shows that on 19 and 20 January 2018, there were WeChat voice messages in which Chen told Min Ren to tell Shan that the Australian account was frozen because of anti-money laundering in Australia. Shan alleges, and the WeChat messages show, that on 24 January 2018 Min Ren gave a false explanation that the Australian bank accounts had been frozen in accordance with Chen's instructions.[117]

90 On behalf of Min Ren it was submitted that she did not know about the trust. While that position may be established at trial, the WeChat messages show that at the time, Min Ren knew at least about the contents of the draft but incomplete Entrusted Remittance Agreement. They establish that the purpose of the Entrusted Remittance Agreement, to transfer money from China to Australia to Shan's son on behalf of Shan, was known to Min Ren. Returning to the words of Gibson J in Baden,[118] '[she] must know that there was a trust though I do not think it necessary that [she] is should know all the details of the trust ...'.[119]

91 I accept there is a real question about whether Min Ren knew of the dishonest and fraudulent design of Chen. However, as stated in Baden,[120] what is crucial is that the alleged constructive trustee should know that a design having the character of being fraudulent and dishonest was being perpetrated. It is not necessary that the person in question have knowledge of the whole design.

92 I consider there is some evidence from which it can be inferred that Min Ren had actual knowledge or if not, that the circumstances were such that they should have indicated to her circumstances that would put an honest and reasonable person on enquiry. Specifically I have in mind the WeChat messages which referred to $1.5 million being owed to Shan and the direction by Chen to Min Ren that she lie to Shan about money laundering in Australia and the fact that she did so. The evidence shows that Min Ren was aware that Good Home, to which various payments were being made, was in financial difficulty. It may be inferred from her involvement in the transfer of funds, including to Good Home, that her actions assisted in the implementation of a fraudulent and dishonest design by Chen as controller of Jilang.

93 While these matters may or may not be inferred at trial, taking the requirement for knowledge on the part of a constructive trustee as set out in Baden,[121] based on the currently available evidence it cannot be said that the claim on the Notices against Min Ren has no real prospects of success.

94 The knowledge argument advanced on behalf of Min Ren does not provide a basis the grant of summary judgment in her favour. The claim asserting knowledge on the part of Min Ren as pleaded in the Notices is not a claim that is bad in law, scandalous, frivolous or vexatious, or an abuse of process or one which has no real prospect of success such that it should be summarily dismissed.

The indemnity argument as a complete answer to the claim

95 As a separate and standalone argument Min Ren submitted that any principal who uses his or her agent, with or without the agent's knowledge, to deceive another is responsible for any damages that flow from the agent's conduct.[122] It was said to follow from this proposition that Zhang and Yuzheng are not entitled to contribution or indemnity under s 23B of the Wrongs Act or otherwise. A number of authorities were relied on in support of this submission.

96 Min Ren asserted an implied right to an indemnity against liabilities incurred as either an employee or agent, relying on R v Henrickson & Knutson,[123] where Griffith CJ observed:

It is a general principle of law when an act is done by one person at the request of another which act is not in itself manifestly tortious to the knowledge of the person doing it, and such act turns out to be injurious to the rights of a third party, the person doing it is entitled to an indemnity from him who requested that it should be done.[124]

97 In her 18 June 2021 written submissions Min Ren relied on Burke v LFOT Pty Limited,[125] and the decision of the Victorian Court of Appeal in Willis v Teparyl Pty Ltd.[126]

98 In Clancy,[127] in a passage referred to in oral submissions, the following principle was said by Santow J to be applicable in relation to an agent:

a principal is responsible in an action for damages for the fraud of his or her agent, acting within the scope of the agent's apparent authority and it makes no difference that the agent committed the fraud for the agent's own private advantage and not for the benefit of the principal, so long as the agent was acting within the scope of the agent's apparent authority; Lloyd v Grace, Smith & Co [1912] AC 716 particularly at 725, 731, 733-4 and 736.[128]

99 In Hazanee Pty Ltd v Elders,[129] Olsson AJ said:

21. It is accepted that, as a matter of general, common-law principle, an agent appointed pursuant to a contract of agency has a right to be reimbursed by the principal in respect of all expenses and to be indemnified against all losses and liabilities incurred by the agent in the execution of its authority (see Dal Pont, Law of Agency (2001), pages 455-456 and the authorities there referred to). Such right is said to derive from a term of the contract that will be implied if not clearly excluded (Re Clune (1988) 14 ACLR 261 at 266, Richardson v Martin (1882) 16 SALR 44).[130]

100 Responding to this submission, senior counsel for Zhang and Yuzheng contended that the indemnity point could shortly be disposed of because it was misconceived. That was said to be so because neither Zhang nor Yuzheng were Min Ren's principal. It was the company, Jilang, who was the party to the Personnel Agreement who was her employer. It was submitted that Hazanee[131] was not on all fours with the present case and that Clancy[132] involved fraudulent misrepresentation which was said to involve a different basis of liability from a claim for knowing involvement in breach of fiduciary duty and was not therefore directly applicable.[133]

101 Whether the cases relied upon by Zhang and Yuzheng, including those mentioned, are distinguishable is clearly a matter for trial. It is unnecessary to deal with those arguments here. That is so because, for the purposes of the summary determination of the claim against her, it cannot be said that Min Ren's employer was any person other than Jilang, the company with whom she had the Personnel Agreement and of which she was the sole director. Even though Chen may have been the controlling mind and will of that Chinese company, the fact the Personnel Agreement was with the company rather than with him suggests that it is more likely that Min Ren was an agent of the company and not of Chen. If that is found to be the case, then the cases relied on in argument establishing the agents' right to be indemnified, do not apply as between Zhang and Yuzheng. In the circumstances, the indemnity argument does not provide a sound basis to grant summary judgment in favour of Min Ren.

102 It was submitted on behalf of Min Ren that the claims against her by Zhang and Yuzheng are bound to fail because those defendants came to court with unclean hands, Shan alleges those parties acted dishonestly in their dealings with him and those dealings are central to the claims by those parties against Min Ren.

103 Ms Ren relied on the following statement by Windeyer J in Karl Suleman Enterprizes v George:[134]

When one considers the pleaded claim which is being made, it might appear to the casual observer to be one which would only be made in cuckoo land. That is because in the real world a court does not give much time to an action brought by a thief against an accessory to the theft who has got his hands on some of the stolen funds. Leaving aside the question of liquidation that is really what is happening here. KSE having obtained moneys from members of the public by fraud and having sought the assistance of agents in the obtaining of such moneys is seeking to recover from the agents either moneys which KSE actually paid to those agents for their services or moneys which those agents themselves have retained out of moneys collected from the investors. The persons whom one would expect to be bringing such a claim for the moneys obtained by fraud would be the people deceived by the fraud ... In particular, claims which appear to be brought under Barnes v Addy [1874] UKLawRpCh 20; (1874) 9 ChApp 244 relating to knowing receipt of trust funds or knowing assistance in breach of fiduciary duty are by the person who was assisted or the person who was in breach of the duty. Without going into the matter in any detail it is difficult to understand why any equitable claim of the plaintiff would not be defeated by a defence of lack of clean hands and illegality and why any claim for breach of contract would not be defeated by a defence of illegality. Insofar as the claim which appears to be based on unjust enrichment might be thought to fall within the two, it is clearly unsustainable.[135]

104 In response to the unclean hands submission, senior counsel for Zhang and Yuzheng submitted that the court looks to the absence of clean hands in relative terms and that being party to a common endeavour to act in breach of fiduciary duty does not mean that necessarily the claim against Min Ren must fail.

105 In their defences to Shan's statement of claim, Zhang and Yuzheng plead that the Entrusted Remittance Agreement was entered into by Shan and Jilang in the People's Republic of China, and under Chinese Law is void ab initio and unenforceable.[136] In the alternative, because Australia and China are member states to the International Monetary Fund ('IMF') and the Entrusted Remittance Agreement is an 'exchange contract' within the meaning and operation of Article VIII(2)(b) of the Articles of Agreement of the IMF, and is contrary to the exchange control regulations of China which, in substance, limit the amount of money persons can send out of China to Australia without approval, the Entrusted Remittance Agreement upon which Shan relies is unenforceable under Australian law.[137] The defences allege in the alternative that Shan does not come to court with clean hands and is not entitled to the remedies sought.[138]

106 In his reply Shan denies that the IMF Articles of Agreement are justiciable in an Australian court. He alleges that any illegality under Chinese Law does not apply to transactions involving the money in question in Australia as any illegality had passed.[139]

107 Expert evidence has been filed in relation to these questions concerning Chinese Law. That evidence was not relevant to and was not canvassed on the application for summary judgment.

108 The unclean hands argument on behalf of Min Ren is directed to a different issue. It is contended that because the breach of fiduciary duty claims against Zhang and Yuzheng is based on their alleged participation in breach of fiduciary duty then they have unclean hands and equity will prevent them claiming contribution or indemnity against Min Ren on the basis that she too knowingly assisted in such breach.

109 In Meagher, Gummow and Lehane's Equity Doctrines and Remedies,[140] referring to the maximum that 'those who come into equity must come with clean hands' the authors state that the maxim means that when the plaintiff whose conduct has been improper in a transaction seeks relief in equity that relief will usually be refused.[141] Two matters may be noted. First, the maximum applies to those who come into equity and second, that the application of the maximum 'usually' means that relief will be refused.

110 The claim for indemnity and contribution in the Notices is a claim for equitable contribution in the alternative. The primary basis for the relief claimed rests upon s 23B of the Wrongs Act. While no doubt equitable principles and maxims will inform what is 'just and equitable' pursuant to s 24(2) of the Wrongs Act it cannot assumed that the maxim, if otherwise applicable on the facts, is slavishly to be given effect under the section.

111 Zhang and Yuzheng submit that Alexander[142] is authority for the proposition that equitable principle has no application to statutory claims.[143] Alexander[144] was concerned with s 23B of the Wrongs Act. However, having considered the passages relied on in support of the submission I do not consider those passages to support the broad proposition for which Zhang and Yuzheng contend. However, what is clear from Alexander[145] is that the words of the statute are what matters. Whether on a proper analysis of s 23B and the application of s 24(2) of the Wrongs Act which requires the court to determine such contribution as is just and equitable the equitable maximum has direct application is a matter for trial rather than for determination on a summary judgment application.

112 There is a further matter, it concerns the fact that the claim is a third party claim. For the defence of unclean hands to operate at all, if it is applicable in the statutory context, the impropriety complained of 'must have an immediate and necessary relation to the equity sued for'.[146] If the relationship to the cause of action relied on by the party seeking relief is indirect, then it is irrelevant.

113 In Karl Suleman,[147] the plaintiff sued the defendants, who were their agents in a fraudulent scheme. Here claims are by the defendants for contribution or indemnity in respect of Shan's claims against them, which they deny. The notices seek contribution against a third party, not because that party is bound to indemnify the defendant's under a contractual provision for any amount they might be found liable to the plaintiff. Rather, the claim for indemnity arises because the third-party is said to be liable to the plaintiff for the same damage. It appears to me that it is at least arguable in the circumstances that the cause of action relied on is indirect rather than direct.

114 For those reasons it cannot be said that it is clear on the pleadings or from extrinsic evidence that due to unclean hands the claim is unsustainable in fact or in law or that it has no real prospects of success such that summary judgment should be granted in favour of Min Ren.

Disposition of the pleadings and s 62 CPA applications

115 For the reasons discussed above, the application by Min Ren for summary judgment pursuant to r 23.01 of the Rules is dismissed. The same is the case in relation to her application for summary judgment relying upon s 62 of the CPA.

Min Ren's application to discharge or vary the freezing order

116 Min Ren has given evidence that none of the funds to purchase either the land or to construct a house on the property at Werribee came from funds associated with Shan. Her evidence in that regard is unchallenged.

117 If the freezing order is discharged in its entirety, Min Ren proposes to apply funds made available to her following discharge to pay debts owed to her brother, who lent her the money to purchase the land at Werribee and to her aunt, who lent her the money to construct a house on that land.[148]

118 It was accepted during the hearing on 21 June 2021 that if the application to discharge was not successful but if Min Ren could establish a need for payment out of the funds frozen following the sale of the property at Werribee, that it would be appropriate for the Court to order a variation. There was some evidence dealing with the question of reasonable living expenses in Min Ren's first affidavit dated 31 May 2021.[149] That evidence was supplemented by her 21 July 2021 affidavit.

119 Although I have refused Min Ren's application for summary judgment against Zhang and Yuzheng, based on the material presently available, it seems likely that if those parties succeed in obtaining contribution from Min Ren pursuant to s 23B of the Wrongs Act that because Min Ren received no benefit from any role that she performed in knowingly assisting Jilang in breach of the judiciary duty, it seems likely that the amount of contribution, if any, that she will be ordered to pay at trial on the basis that it is just and equitable that she do so, will be limited. However, against that, the amount of the claim by the plaintiff to which she may be required to contribute is substantial. The claim is for in excess of $1.5 million plus interest. The proceeds of sale of the Werribee property that have been frozen are $535,788. Those proceeds represent approximately one third of the plaintiff's claim. In the circumstances it is not appropriate that the freezing order be discharged.

120 It is agreed that it is appropriate to vary the freezing order to make provision for the payment of Min Ren's reasonable living expenses. The order will be varied to permit payment immediately to Min Ren of $25,000, a sum approximating the combined total of the items referred to in 11(a), (b), (d)and (g) of her affidavit of 21 July 2021. In addition, the order will be varied to permit her to apply $600 per week on an ongoing basis towards her living expenses. The legal representatives of Min Ren should provide a draft form of order to my Chambers that gives effect to these variations.

121 Irrespective of whether it is agreed or not, it is appropriate that the order also be varied to permit the payment of Min Ren's legal costs. If there is agreement in relation to the quantum of those costs then the draft order should make provision for payment. If there is no agreement that would be convenient to deal with and resolve cost issues on 6 August 2021, unless that date poses difficulty for counsel involved.

122 I do not agree on the basis of the evidence presently before the Court to vary the order to permit the payment of amounts referable to loans previously obtained by Min Ren and referred to in her affidavit. The affidavit refers to total interest of $183,292 being the interest to date on those loans. However, I am concerned that interest is continuing to accrue on those loans in circumstances where the ability of the parties in whose favour the freezing order has been obtained to make good any damage that may be found to have been sustained by Min Ren by reason of that freezing order may be questionable. I will expressly reserve liberty to Min Ren to make further application to vary the freezing order to enable payment of either the whole or part of the outstanding interest on those loans should she be advised to do so.

ZHONGNING ZHANG (AS THE ADMINISTRATOR OF THE ESTATE OF JUN CHEN)

YUZHENG INTERNATIONAL TRADING & TOURISM SERVICES PTY LTD (ACN 605 339 777)

[1] Transcript of hearing on 23 July 2021 ('23 July Transcript'), 14.

[2] Plaintiffs, Affidavit of Jiayao Peng dated 22 July 2021, [36]-[41].

[3] First and Second Defendants, Affidavit of Yunfei Wu dated 7 July 2021 ('Wu Affidavit'), [3].

[4] The reply report is exhibited to the affidavit of Wei Jian Lee dated 21 July 21, WL-7.

[5] Third Party, Outline of Submissions dated 18 June 2021 ('Third Party's Submissions'), [14]-[23].

[6] Plaintiff, Amended Statement of Claim dated 11 August 2020 ('ASOC'), [2.2], [11], [12], [17], [25], [33], [34].

[7] Ibid, [18]-19], [20.1], [20.2], [20A], [22]-[23] (and the particulars referred to therein).

[8] Ibid, [21] (and the particulars referred to therein).

[10] Ibid, [20.2(a), (d), (e)] and the particulars referred to therein.

[11] See Third Party Notice filed by the First Defendant dated 23 December 2020, Statement of Claim ('First Defendant's Notice'), [2].

[12] See Third Party Notice filed by the Second Defendant dated 23 December 2020, Statement of Claim ('Second Defendant's Notice'), [2].

[13] See First Defendant's Notice, Second Defendant's Notice, [A]-[C].

[14] First Defendant's Notice, [6]-[9].

[16] First Defendant's Notice, [5], [8]; Second Defendant's Notice, [5], [7].

[17] Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 23.01.

[18] [2016] VSC 323 ('Annesley').

[20] [2019] VSC 71 ('BFJ Capital').

[21] Wheelahan v City of Casey (No 12) [2013] VSC 316, [25] (Dixon J), and the cases there cited. See also Annesley v Westpac Banking Corporation [2016] VSC 323, [70]-[71] (Derham AsJ); Hoh v Frosthollow Pty Ltd [2014] VSC 77, [11]-[20] (Derham AsJ); Vo v Nguyen [2013] VSC 304, [30]-[41] (Derham AsJ), and the cases there cited.

[22] Pursuant to r 23.02 of the Supreme Court Rules.

[24] Bruce v Odhams Press Ltd [1936] 1 KB 697, 712.7-713.2 (Scott LJ); referred to with approval in numerous cases including Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591, 44,152.9 (col 1) (Goldberg J); McKellar v Container Terminal Management Services Ltd [1999] FCA 1101; (1999) 165 ALR 409, 417-418 [22] (Weinberg J); Environinvest Ltd v Pescott [2011] VSC 325, [23] (Judd J).

[25] Dare v Pulham (1982) 148 CLR 658, 664.3 (Murphy, Wilson, Brennan, Deane and Dawson JJ); Meckiff v Simpson [1968] VicRp 7; [1968] VR 62, 70.9 (Winneke CJ, Adam and Gowans JJ).

[26] The aim of which is to secure compliance with the rules of pleading: Meckiff v Simpson [1968] VicRp 7; [1968] VR 62, 70.9. See also Rowson v Alpass (2017) 53 VR 196, 204 [30] (Derham AsJ).

[27] Rowson v Alpass (2017) 53 VR 196, 204 [31].

[28] [2019] VSC 71, [32]-[35].

[29] [2019] VSC 71.

[31] [2016] VSC 323.

[33] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27; Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 2) (2011) 34 VR 584. Civil Procedure Act 2010 (Vic), ss 62 and 63.

[34] Silver Chef Rentals Pty Ltd v Malong Australia Pty Ltd [2019] VSC 703 ('Silver Chef Rentals'), [53]; Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd [2021] VSC 310 ('Business Service Brokers'), [33].

[35] Trkulja v Google LLC [2018] HCA 25; (2018) 263 CLR 149 ('Trkulja') ('Trkulja'), [22] (per Kiefel CJ and Bell, Keane, Nettle and Gordon JJ); Silver Chef Rentals [2019] VSC 703, [53]; Business Service Brokers [2021] VSC 310, [33]-[34].

[36] Trkulja [2018] HCA 25; (2018) 263 CLR 149, [22]; Silver Chef Rentals [2019] VSC 703, [53]; Business Service Brokers [2021] VSC 310, [33].

[37] Trkulja [2018] HCA 25; (2018) 263 CLR 149, [22]; Silver Chef Rentals [2019] VSC 703, [53]; Business Service Brokers [2021] VSC 310, [33]-[34].

[38] Silver Chef Rentals [2019] VSC 703, [53]; Business Service Brokers [2021] VSC 310, [33].

[39] Silver Chef Rentals [2019] VSC 703, [54]; Business Service Brokers [2021] VSC 310, [33]. See Third Party's Submissions, [27].

[41] Second Defendant's Notice, [8]; First Defendant's Notice, [9].

[42] Third Party's Submissions, [19] with reference to Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129 ('Friend'), 148 [39] (per French CJ, Gummow, Hayne and Bell JJ); HIH Claims Support Limited v Insurance Australia Limited [2011] HCA 31; (2011) 244 CLR 72 ('HIH Claims'), 90, [47] (per Gummow CJ, Hayne, Crennan and Kiefel JJ).

[43] [2011] HCA 31; (2011) 244 CLR 72.

[45] Friend [2009] HCA 21; (2009) 239 CLR 129, 148 [39].

[46] Third party, Submissions dated 18 June 2021, [19]-[22].

[47] [2011] HCA 31; (2011) 244 CLR 72.

[48] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244. See First and Second Defendants, Outline of Submissions dated 18 June 2021 ('Defendants' Submissions'), [7].

[50] [2004] HCA 7; (2004) 216 CLR 109 ('Alexander').

[51] [2002] UKHL 27; [2002] 1 WLR 1397 at 1401 , 1410; [2002] 2 All ER 801 at 806 , 813-814.

[52] See Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522 at 527.

[53] See Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522 at 527.

[54] cf Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317 at 373-375 [168]-[172].

[55] Alexander [2004] HCA 7; (2004) 216 CLR 109, 123-125 [32], [37]-[40] (per Gleeson CJ, Gummow and Hayne JJ).

[56] [2004] HCA 7; (2004) 216 CLR 109.

[58] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244.

[59] First defendant's Notice, [8]; Second Defendant's Notice, [7].

[60] The Notices particularise the claim that Min Ren had actual or circumstantial knowledge that the money paid to Jilang under the Entrusted Remittance Agreement was being utilised in breach of trust, or breach of duty or was being misapplied, by reference to the ASOC, [20.1], [20.2], [20.3] (and the particulars subjoined thereto), [20A], [21], [22], [23], [27], [28] (and the particulars subjoined thereto), [30], and [31]. See First defendant's Notice, [8]; Second Defendant's Notice, [7].

[61] ASOC, [20.1]-[20.3] (and the particulars subjoined thereto), [20A], [21]-[23], [27]-[28] (and the particulars subjoined thereto), 30, and 31 of the ASOC.

[62] As pleaded in the plaintiff's Amended Statement of Claim dated 3 August 2020 ('ASOC'), [2.4], [8], [16], and the particulars to paragraphs [2.4] and [8].

[63] These matters are not referred to directly in support of the knowing assistance claim but are referred to and adopted in the Notices. See First defendant's Notice and Second Defendant's Notice, [5], which adopt paragraphs 2.4, 4.2, 8 and 16 of the ASOC.

[64] Ibid, [4] (and the particulars referred to therein).

[65] Transcript of the hearing on 21 June 2021 ('21 June Transcript'), 34-35.

[66] Third Party, Defence to the First Defendant's Third Party Notice dated 21 June 2021, [5(c)], [11]; Defence to the Second Defendant's Third Party Notice dated 21 June 2021, [5(c)] [10].

[67] ASOC, [22] (and the particulars referred to therein), [23.2].

[68] Third Party, Affidavit of Min Ren dated 31 May 2021 ('Ren May Affidavit'), Exhibit MR-2.

[69] Third Party, Affidavit of Min Ren dated 21 July 2021, [6].

[79] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244.

[80] [2007] HCA 22; (2007) 230 CLR 89 ('Farah Construction').

[81] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244 at 251-252.

[82] Farah Construction [2007] HCA 22; (2007) 230 CLR 89, 140.

[83] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244.

[84] [2007] HCA 22; (2007) 230 CLR 89.

[85] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244 at 251-252.

[86] [1992] 4 All ER 161 ('Baden').

[87] [2001] Ch 437 at 454.

[88] [1995] UKPC 4; [1995] 2 AC 378 at 392.

[89] [2001] Ch 437 at 455.

[90] [1975] HCA 8; (1975) 132 CLR 373 at 398 per Gibbs J; at 412 per Stephen J; Barwick CJ concurring at 376-377.

[91] [1975] HCA 8; (1975) 132 CLR 373 at 398 per Gibbs J; at 412 per Stephen J; Barwick CJ concurring at 376-377.

[92] [1975] HCA 8; (1975) 132 CLR 373 at 398.

[93] (2007) 230 CLR 89, 162-164 [171]-[177].

[94] [1992] 4 All ER 161 ('Baden').

[96] Farah Construction [2007] HCA 22; (2007) 230 CLR 89, 162-164 [171]-[177].

[97] [1992] 4 All ER 161.

[100] (1986) 10 ACLR 692 ('Flers Avenue').

[102] [1993] VicRp 32; [1993] 1 VR 423 ('Morley').

[104] Ibid, 465 (Crockett, Southwell and Hedigan JJ).

[106] [1993] VicRp 32; [1993] 1 VR 423.

[116] [1992] 4 All ER 161.

[117] ASOC, [22] (and the particulars referred to therein), [23.2]; Wu Affidavit, Exhibit PW-1, 35-36.

[118] [1992] 4 All ER 161.

[120] [1992] 4 All ER 161.

[122] Clancy v Prince &Anor [2001] NSWSC 85, [61] ('Clancy').

[123] [1911] HCA 56; (1911) 13 CLR 473.

[125] [2002] HCA 17; (2002) 209 CLR 282.

[126] [2010] VSCA 318.

[127] [2001] NSWSC 85.

[129] [2006] NTSC 26 ('Hazanee').

[131] [2006] NTSC 26.

[132] [2001] NSWSC 85.

[134] [2003] NSWSC 544 ('Karl Suleman').

[135] Ibid, [15]. See Third Party, Response to the Defendants' note of authorities on Third Party's defence of unclean hands dated 29 July 2021, [4].

[136] First Defendant's Amended Defence dated 23 December 2020, [37]-[41] ('First Defendant's Defence'); Second Defendant's Amended Defence dated 23 December 2020 ('Second Defendant's Defence') [37]-[41].

[137] First Defendant's Defence, [42]-[45]; Second Defendant's Defence [42]-[45].

[138] First Defendant's Defence, [49]; Second Defendant's Defence [49].

[139] Plaintiff, Reply to the First and Second Defendants' Amended Defences dated 31 March 2021, [11].

[140] John D Heydon, Mark J Leeming and Peter G Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (Lexis Butterworths Australia, 5th ed, 2015) ('Meagher, Gummow and Lehane's Equity Doctrines and Remedies'), [3-090].

[141] Ibid, [3-090] 80, Citing cases including Karl Suleman Enterprises Pty Ltd (in Liq) v Babanour [2004] NSWCA 214; (2004) 49 ACSR 612, [54].

[142] [2004] HCA 7; (2014) 216 CLR 109.

[143] Ibid, 120 [27] (per Gleeson CJ, Gummow and Hayne JJ); 159 [166] (per Callinan J).

[144] [2004] HCA 7; (2014) 216 CLR 109.

[146] Dewhurst v Edwards [1983] 1 NSWLR 34, 51; Meagher, Gummow and Lehane's Equity Doctrines and Remedies [3-115]; Black Uhlans Inc v New South Wales Crime Commission (2002) 12 BPR 22, 241; [2002] NSWSC 1060; Carantinos v Magafas [2008] NSWCA 304; Kation Pty Ltd v Lamru [2009] NSWCA 145; (2009) 257 ALR 336; Royal Bank of Scotland plc v Highland Finance Partners LP [2013] 1 CLC 596; [2013] EWCA Civ 328 at [149]- [172].

[147] [2003] NSWSC 544.

[148] Ren May Affidavit, [54]-[55].