Plaintiffs v Defendants

2 The loan amount from ACT International was $20,027,895.52, and the loan amount from Mr Li was $13,351,930.35 (Shareholder Loans). In 2017, the Property was purchased for approximately $70.7 million, and it was sold in 2018 for about $122 million. After certain expenses were paid, $73,562,961.59 of the proceeds of sale remained (Sale Proceeds).

3 Disputes arose between the parties in connection with the Property and the Sale Proceeds. In September 2018, ACT International and others commenced this proceeding in the Supreme Court of New South Wales[1] and sought urgent interlocutory relief against Mr Li in connection with the preservation of the Sale Proceeds. On 25 September 2018, Mr Li gave undertakings to the Supreme Court of New South Wales that the Sale Proceeds would be paid into an account jointly controlled by the parties' solicitors, as later occurred. The Sale Proceeds, together with interest being earned on them, are being held in a controlled monies interest-bearing account with the Australia and New Zealand Banking Group controlled by the parties' solicitors (ANZ Account).[2]

4 By his summons, amended by leave granted on 29 October 2019, Mr Li seeks to obtain judgment on admissions pursuant to rule 35.04 Supreme Court (General Civil Procedure) Rules 2015 (Vic) in respect of what he contends is part of his counterclaim. Mr Li seeks orders that the Company effect, or ACT International and he do all things reasonably necessary to effect, payment from the ANZ Account of:

(a) the sum of $20,027,869.52[3] to ACT International; and

(b) the sum of $13,351,930.35 to Mr Li.

5 The narrow question for determination on this application is whether, as a result of alleged admissions of ACT International and the Company, judgment should be given pursuant to rule 35.04 that requires repayment of the Shareholder Loans to Mr Li and ACT International out of the Sale Proceeds.

6 The short answer is no. Admissions have not been made that entitle Mr Li to obtain judgment and, for the reasons that follow, Mr Li's application should be dismissed.

7 It is not necessary to address in detail all of the further background to the claims and counterclaims now made in this proceeding. It is sufficient to refer to the following.

8 At the time the proceeding was commenced, the plaintiffs alleged that: they had sought information from Mr Li regarding the whereabouts of, and dealings with, the Sale Proceeds; information had not been provided by Mr Li; and Mr Li had been holding and dealing with the Sale Proceeds as if they were his own. This, so the plaintiffs alleged, is what made it necessary to apply for urgent injunctive relief.

9 Mr Li denied and contested the allegations made against him, although the injunction application was ultimately resolved by consent. In his affidavit sworn on 24 September 2018 that was filed in connection with the injunction application, Mr Li said that he undertook to pay the Sale Proceeds into:

'... Piper Alderman's trust account (on behalf of the Company) pending court order or the agreed directions of the Company's shareholders and directors as to the distribution of the funds.'[4]

10 The undertakings ultimately given by Mr Li to the Supreme Court of New South Wales on 25 September 2018 were in slightly different terms, as follows (Undertakings):

I, QiQi Li, undertake to the Court:

(a) pay [sic] the sums of $15,000,000.00 and $58,562,961.59 into a controlled monies account controlled by Piper Alderman and Fortis Law Group; to be held on behalf of 383 LaTrobe Street Development Pty Limited, as soon as practicable, until further order of the Court or agreement; and

(b) not to deal with or disburse the sums of $15,000,000.00 (currently held in an ANZ bank account in the name of Ralston Street Development Pty Ltd as trustee for Ralston Street Development Unit Trust with BSB 013 606 and account number 2322 78079) and $58,562,961.59 (currently held in a Westpac bank account in the name of Sterling Global Pty Limited with BSB 033 157 and account number 477 553) except to pay the money into the controlled monies account.[5]

11 Mr Li alleges in paragraph 36 of his counterclaim that on or about 10 October 2018 the Sale Proceeds were paid into the ANZ Account pursuant to the Undertakings. This is consistent with an affidavit filed in support of this application on 25 July 2019, by Mr Li's solicitor, Ms Fitzpatrick, and in which she referred to the Undertakings and said that she had been informed by Mr Li and believed that he had complied with them.[6]

12 There is currently more than $74 million in the ANZ Account. The ANZ Account is an interest-bearing account and there was evidence from Ms Fitzpatrick that interest is being earned, but at what Ms Fitzpatrick described as a low rate of 1.5 per cent.[7]

13 When the proceeding was transferred to this Court the claims sought to be made by the plaintiffs were not clear and pleadings were ordered to be filed and served. A statement of claim was filed by the plaintiffs, and Mr Li and the second defendant (Sterling Global) filed a defence and a counterclaim against ACT International and the Company. A reply and defence to counterclaim has been filed by ACT International.

14 As at the commencement of the hearing of this application, no notice of appearance had been filed on behalf of the Company and it had not been represented. The Court was informed that the parties had now agreed that the solicitors and counsel for the plaintiffs would act for the Company in its defence to the counterclaim. Senior counsel for the plaintiffs confirmed that he also appeared on behalf of the Company, and the Court was informed that a notice of appearance for the Company would be filed, which occurred later that day.

15 The plaintiffs' claim is of relatively narrow compass. It is alleged that in January 2017, in connection with the Shareholders' Agreement, ACT International lent Mr Li a sum in excess of $3,500,000.00 as part of Mr Li's proportion of the costs of funding the purchase of the Property and that $2,773,935.36 of this loan remains owing. ACT International seeks a declaration regarding the existence of the debt, repayment orders, interest, and costs. A claim for money had and received is made in the alternative.[8]

16 Mr Li denies that the amount claimed is owing and contends that he owes less to ACT International. As mentioned, Mr Li and Sterling Global also bring counterclaims. Sterling Global alleges that it provided services for the benefit of the Company as an asset manager of the Property and that it is entitled to receive further payment for those services. This is alleged to comprise a management fee of $500,000.00 for each six months from the date of acquisition of the Property until its sale, plus a performance fee in a range of 10 to 30 per cent of the amount by which the Company's profit on the sale of the Property exceeded an internal rate of return of 18 to 20 per cent. These amounts are collectively defined in the counterclaim as the 'Asset Management Fee'.

17 Allegations are also made regarding the Shareholder Loans, including that Mr Li loaned the Company $13, 351,930.35 and that ACT International loaned the Company $20,027,895.52.

18 Sterling Global and Mr Li seek declarations and orders regarding the distribution of the Sale Proceeds, including declarations and orders to the following effect:

(a) A declaration that Sterling Global is entitled to the Asset Management Fee.

(b) A declaration that the Sale Proceeds ought to be distributed to Sterling Global, Mr Li and ACT International as follows:

(i) first, the payment to Sterling Global of its Asset Management Fee;

(ii) secondly, repayment of the Shareholder Loans;

(iii) thirdly, payment of any contingent revenue liabilities of the Company which exceed the amount held in the controlled monies account as 'Revenue Monies';[9] and

(iv) fourthly, as to the net amount after the preceding payments: 40% to Mr Li and 60% to ACT International.[10]

(c) An order that the Sale Proceeds in the ANZ Account be distributed to Sterling Global, Mr Li and ACT International in the manner set out in subparagraph (b) above.

19 By its reply and defence to counterclaim, ACT International denies that Mr Li and Sterling Global are entitled to any of the relief claimed. The particular paragraphs of the counterclaim and the alleged admissions in ACT International's reply and defence to counterclaim that are relevant to this application are addressed in more detail later in these reasons.

20 The proceeding is continuing and orders were made for the filing of expert reports regarding Sterling Global's quantum meruit claim in advance of a court ordered mediation. This was to have occurred recently but both parties have had timing challenges compiling their expert evidence. Extensions of time were sought by agreement and appropriate time extension orders will be made.

Judgment on admissions

(1) Where a party makes admissions of fact in a proceeding, whether by that party's pleading or otherwise, the Court may, on the application of any other party, give the judgment or make the order to which the applicant is entitled on those admissions.

(2) The Court may exercise its powers under paragraph (1) without waiting for the determination of any other question in the proceeding.

22 There was no issue between the parties regarding the terms and operation of rule 35.04. Observations regarding the operation of this and similar rules have been made in numerous cases.[11] It is convenient to mention the following.

23 In Re Registered Trade Mark "Certina" (1970) 44 ALJR 191 (Re Certina), Barwick CJ observed, in relation to a relevantly similar rule, that the power which the rule gives '... must be exercised with great caution',[12] noting that '... in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense'.[13] His Honour also observed that the admissions that can be relied upon are not limited to admissions formally made in the pleadings or given in response to a notice to admit - as is also apparent from the express terms of rule 35.04(1). The necessary admissions 'may be found in a writing proved to be the defendant's or it may be proved to have been made by the defendant orally'.[14] In the case of Re Certina the admissions were found to be 'adequate and unambiguous'[15] for the purposes of the rule, resulting in his Honour being prepared to act upon them.

24 In Moon v Mun [2013] NSWCA 217 (Moon), Barrett JA emphasised '... [t]wo key points ...'.[16] First, that the admissions must be 'clear and unambiguous', and second, that the power is discretionary. His Honour continued:

1. As to the first matter, it was said in Ellis v Allen [1914] 1 Ch 904 at 909 that judgment on admissions is permissible where "there is a clear admission of facts in the face of which it is impossible for the party making it to succeed". The matter was put thus in Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 at 503:

"A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted; he is not entitled to ask the Court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission."

1. The discretionary nature of the power was referred to by this Court in Termijtelen v Van Arkel [1974] 1 NSWLR 525 and is consistent with the purpose of the power as explained by Barwick CJ in Re the Trade Marks Act 1955-1958 and the Registered Trade Marks "Certina" and "Certina DS" (1970) 44 ALJR 191 at 192:

"The power which the rule gives to a Justice in chambers must be exercised with great caution....But in a clear case a proper exercise of the power will obviate the delay involved in a hearing and will save unnecessary expense."

1. The power to award judgment on admissions on the pleadings is properly exercisable only where the court can see that a clear and unanswerable case is advanced on the pleadings, with the position so decisively depicted and the correct outcome so unambiguously obvious that there is simply no need for any issue to go to trial. The evaluative question relevant to exercise of the discretion is whether it is just to award judgment without regard to the merits of the parties' contentions.
2. In this case, the position emerging from the pleadings was as described at [36] above. That being so, there was no sound basis for a conclusion, on the strength of the pleadings alone, that the respondent had a clear and unanswerable case against the appellants. The pleadings, taken in isolation, did not show such a case in relation to the terms of the contract, the subject matter of the contract or the indebtedness of the appellants to the respondent. Far from indicating a firm foundation for a judgment without a trial on the merits, the pleadings demonstrated that important issues were in dispute.

25 An admission of an alleged right that does not or cannot exist at law will not support a judgment on admissions; the Court is bound to give judgment according to law.[17] Further, and as was held in Greig & Murray Ltd v Hutchinson [1889] VicLawRp 139; (1889) 15 VLR 706, judgment ought not to be given on admissions when a '... difficult point of law is involved ...'.[18]

26 In SFJ Pty Ltd v Brady Constructions Company Pty Ltd [2001] VSC 487, Beach J concluded that the words 'in a proceeding' in rule 35.04 should be construed as meaning 'in reference to a proceeding, in relation to a proceeding or with regard to a proceeding'.[19]

27 Mr Li relied upon admissions of ACT International said to be drawn from paragraphs 37, 38, 39 and 40 of ACT International's defence to counterclaim, and particularly the admission in paragraph 38, which was described as 'most central'.[20] These paragraphs responded to paragraphs 37, 38, 39 and 40 of the counterclaim. Given the limited and specific nature of the application it is desirable to set out the relevant paragraphs of each of the pleadings.

1. Pursuant to clauses 2.2, 10.4 and 17.1 of the SHA, the purchase of the Property was funded by shareholder loans and equity from Li and ACT International in proportion to their respective shareholding percentages, as well as a facility from CBA which was repaid at settlement of the sale of the Property by 383 to Mirvac.
2. Further to the above paragraph, ACT International and Li provided shareholder loans to 383 to fund the purchase of the Property as follows:

(a) $13,351,930.35 by Li; and

(b) $20,027,895.52 by ACT International,

(collectively the Shareholder Loans).

1. By reason of the clauses of the SHA set out in paragraphs 20(a), (b), (j) and (k) above, and the matters set out in paragraphs 21, 26 to 28 and 37 to 38 above, the Net Sale Proceeds (and accrued interest thereon) ought to be distributed as follows:

(a) first, the payment to Sterling Global of its Asset Management Fee;

(b) secondly, repayment of the Shareholder Loans;

(c) thirdly, payment of any contingent revenue liabilities of 383 which exceed the amount held in the controlled monies account as Revenue Monies; and

(d) fourthly, as to the net amount after the preceding payments: 40% to Li and 60% to ACT International.

1. Further, in the event that any portion of the Revenue Monies is not required for the discharge of 383's revenue liabilities, those monies (and accrued interest) ought be distributed as to 40% to Li and 60% to ACT International.

Paragraphs from ACT International's Defence to Counterclaim

(a) admits that the purchase of the Property was funded by shareholder loans from Li and ACT International in proportion to their respective shareholdings as well as a facility from CBA which was repaid at settlement of the sale of the Property by 383 to Mirvac; and

(b) otherwise denies the paragraph.

1. It admits the allegations in paragraph 38 of the counterclaim.
2. It denies the allegations in paragraph 39.
3. It admits the allegations in paragraph 40 of the counterclaim.

28 Mr Li also relied upon what were said to be admissions of the Company set out in a letter dated 25 October 2019 from the plaintiffs' solicitors,[21] being the solicitors who it had been agreed between the parties would also act on behalf of the Company. Briefly, by that letter Mr Li's solicitors were informed, among other things, that:

(a) A notice of appearance would be filed on behalf of the Company.

(b) In the Company's defence it will:

(i) admit the allegations in paragraph 38 of the counterclaim; and

(ii) deny the allegations in paragraph 39 of the counterclaim and may include allegations beyond the denial set out in paragraph 39 of ACT International's reply and defence to counterclaim.

29 Senior counsel for the plaintiffs and the Company confirmed that the position regarding the defence of the Company will be as reflected in the 25 October 2019 letter and expressly stated that the Company admitted the allegations in paragraph 38 of the counterclaim. He also informed the Court that the additional allegations that would be made in relation to paragraph 39 of the counterclaim would relate to the terms of the Shareholders' Agreement, including a term that, absent unanimous agreement to the contrary, Mr Li and ACT International must not require repayment of the Shareholder Loans except in the event of a liquidation.[22]

30 Mr Li relied on the affidavit of Ms Fitzpatrick, sworn on 25 July 2019, the letter of 25 October 2019, and the admission made in open court on behalf of the Company that paragraph 38 of the counterclaim was admitted. He also relied on his written submission,[23] which was supplemented by oral submissions from senior counsel.

31 ACT International and the Company relied on an affidavit of ACT International's former solicitor, Mr Nehme, sworn on 21 September 2018 and that of Mr Li, sworn on 24 September 2018.[24] They also relied upon written submissions,[25] supplemented by oral submissions from senior counsel.

32 Although Mr Li's submissions covered some wide ranging territory and the basis of Mr Li's application was not always easy to discern, Mr Li's position evolved further through the helpful exchanges with senior counsel during oral submissions. Without descending into the detail of all that was addressed, Mr Li made submissions to the following substantive effect:[26]

(a) The Sale Proceeds substantially exceed the sums that might be payable in connection with the claims and counterclaims in the proceeding and other possible liabilities of the Company, which should be no more than about $27.7 million.[27]

(b) The enterprise that the Company was undertaking had effectively concluded with the sale of the Property and it has no ongoing business or activities '... other than to hold the proceeds of sale for distribution as appropriate'.[28] In '... accordance with the Shareholder Agreement the Company's net assets need to be distributed to Mr Li and ACT [International] in their respective 40% and 60% entitlements. But the Company must first discharge its liabilities ...',[29] which include the Shareholder Loans.

(c) The Company was factually and practically in a complete deadlock[30] and commercial and practical considerations favour the giving of judgment. It was confirmed that, at least at this stage, Mr Li's counterclaim does not embody a claim that the Company be wound up on the just and equitable ground.[31]

(d) The shareholders and directors are not in any dispute as to the Shareholder Loans and have, '... admitted the provision of the Shareholder Loans and their quantum. As is clear from the Shareholders Agreement, there is no basis for the Company to continue to hold all of the monies in the ANZ Account. It holds those moneys in a capacity analogous to a stakeholder, and no more.'[32] In this regard reference was made to, among others, clauses 2.2, 3, 10.4 and 17.1 of the Shareholders' Agreement.

(e) The admissions made in paragraphs 37 to 40 of ACT International's defence to counterclaim, and the admission by the Company of the allegations in paragraph 38 of the counterclaim, are such that the amounts sought to be paid to Mr Li and ACT International are '... admitted entitlements of Mr Li and ACT [International] ...',[33] and if the orders are not made, the relevant amounts will '... remain frozen in a low interest account without any reason for that occurring.'[34]

(f) By his counterclaim Mr Li specifically seeks orders that the Shareholder Loans be repaid to him and ACT International and the relief sought is precisely the type of relief to which rule 35.04 is directed.[35]

(g) The Undertakings do not operate as any constraint upon the orders sought. They have been complied with, are spent, and have no more work to do. 'The funds are now simply held in the ANZ Account pending the orders of the Court in this proceeding (or agreement of the parties).'[36]

(h) The Sale Proceeds have been committed to the control of the Court and the Court has jurisdiction to control their disbursement, which it should do by making the orders because the parties cannot agree and the admissions make it '... crystal clear ...' that Mr Li and ACT international are entitled to have the Shareholder Loans repaid now rather than later.[37] The course proposed is simple, practical, and commercially sensible.

(i) By the Court accepting Mr Li's undertakings and the Sale Proceeds being deposited in the ANZ Account, the situation is analogous or akin to the moneys being paid into court.[38] Therefore it is not a matter of enforcing the Shareholders' Agreement, but the Court exercising its jurisdiction to deal with and distribute the Sale Proceeds as sought on the basis of the admissions relied upon[39] to those who have an entitlement to them. In this context, submissions were made that the Company does not have a beneficial or legal interest in the Sale Proceeds but that it is in a position akin to that of a beneficiary of a discretionary trust, therefore being entitled to what was described as '... due administration ...'. Alternatively, it was submitted that the Company was holding the Sale Proceeds on trust 'in a typical fashion',[40] or as a fiduciary or trustee because they comprise the proceeds of a joint venture.

(j) An additional submission was made late during oral submissions that, by reason of the agreement reached as embodied by the giving of, and acting upon, the Undertakings, for the purposes of clause 10.4 of the Shareholders' Agreement the parties had unanimously agreed that the clause would not apply and that, instead, the Sale Proceeds had been agreed to be committed to the control of the Court. It was further submitted that this agreement 'moved past'[41] clause 10.4 and therefore the Shareholder Loans must be seen as being repayable on demand, and Mr Li's counterclaim constituted a demand for payment.[42]

(k) Making the orders sought '... on the admissions in the pleadings ...' is consistent with the overarching purpose of the Civil Procedure Act 2010 (Vic) (CPA) as reflected in ss 7, 8 and 9, being to facilitate the just, efficient and timely resolution of disputes.[43]

ACT International and the Company's Submissions

33 ACT International and the Company acknowledged the admissions made by ACT International in its defence to counterclaim and the Company's admission of the allegations in paragraph 38 of the counterclaim regarding the existence and amounts of the Shareholder Loans, and they submitted that:[44]

(a) The application was based on rule 35.04 only and must be considered from that confined perspective.[45]

(b) Such admissions as have been made do not constitute admissions that, taken together, make good a cause of action that entitles Mr Li to judgment of the kind sought. Whilst admissions regarding the existence and quantum of the Shareholder Loans have been made, there were no admissions that the Shareholder Loans are due and payable and, further, most of the matters sought to be relied upon are not pleaded in the counterclaim and therefore not responded to by ACT International[46] - and the Company has not yet pleaded. Further, the terms of the Shareholders' Agreement, and particularly clause 10.4, expressly provide to the contrary, including that the Shareholders '... must not require repayment of such loans except in the event of the liquidation of the [Company].'[47]

(c) The giving of the Undertakings by Mr Li and the payment of the Sale Proceeds into the ANZ Account cannot be characterised as an agreement of a kind that steps around the operation of clause 10.4 of the Shareholders' Agreement. In addition, the terms of the Shareholders' Agreement are inconsistent with the business of the Company having come to an end.[48]

(d) The circumstances are not the same as or akin to those that would pertain if a payment into court had been made by a stakeholder, and the cases relied upon involve materially different facts and circumstances that do not assist Mr Li's position. Even if the circumstances had been akin to a payment into court, there was no admission that the Shareholder Loans should be repaid as sought by Mr Li.[49]

(e) In any event, disputed and complex issues of fact and law remain to be decided and this, of itself, is sufficient reason for declining to exercise the Court's discretion in favour of Mr Li.[50]

(f) Practical and commercial considerations are not germane given the absence of admissions that would entitle Mr Li to judgment or orders of the kind sought. They cannot fill material 'gaps' in the admissions required.[51]

(g) The allegations in the counterclaim are inconsistent with the position taken and relief sought by Mr Li on this application because in the counterclaim it is alleged that other amounts should be paid out of the Sale Proceeds before the Shareholder Loans, and declaratory and other relief to that effect is sought.

34 It is clear that Mr Li's application must be refused. Cognisant of the confined nature of this application and because many contested factual and legal issues of varying complexity remain to be heard and determined at trial, it is desirable that the matters leading to this conclusion be briefly stated.

35 First, although it is correct that admissions have been made regarding the existence and amounts of the Shareholder Loans, that does not take the position far enough for Mr Li. There are no admissions regarding the Shareholder Loans being due for repayment at this time. It is plain that, whether considered alone or together with the evidence regarding the surrounding circumstances, the admissions in ACT International's reply and defence to counterclaim, and those made by the Company in the letter of 25 October 2019 and during the hearing, do not provide a basis for concluding that either ACT International or the Company have admitted that the Shareholder Loans are due to be paid to Mr Li and ACT International at this time. As will be seen, this matter is relevant to many of Mr Li's submissions.

36 Second, although Mr Li's submissions regarding reliance on causes of action in support of the application were not always as clear as perhaps they might have been, if and to the extent it remained a contention that the admissions relied upon provided a basis for giving the judgment sought on the grounds that a claim in debt or a claim in contract has been made out on admissions,[52] I do not accept those submissions. Even putting to one side the absence of clearly pleaded claims of this kind, and the terms of clause 10.4(c) of the Shareholders' Agreement, there is no admission by ACT International or the Company in the context of any such claims that the Shareholder Loans are currently due and payable. Further, there is no sound basis for concluding that the admissions currently made and relied upon 'move past'[53] the operation of clause 10.4 of the Shareholders' Agreement, again noting the confined nature of this application and of the pleaded claims.

37 Third, to the extent that it was submitted that an order is justified under rule 35.04 because of the terms of the Undertakings and, in particular, the undertaking to pay the Sale Proceeds into the ANZ Account 'to be held on behalf of [the Company], as soon as practicable, until further order of the Court or agreement',[54] I do not accept that submission. Even if it were to be assumed for the purpose of argument that rule 35.04 is conceptually capable of being engaged in such circumstances where no identified cause of action is relied upon, Mr Li's submission faces the following additional challenges:

(a) Again, there is no admission by ACT International or the Company in this context that the Shareholder Loans should be repaid at this time, whether pursuant to an order of the kind said to be contemplated by the Undertakings, or otherwise.

(b) Mr Li[55] expressly alleges in paragraph 39 of the counterclaim that other payments are to be made out of the Sale Proceeds before any payment is to be made in respect of the Shareholder Loans, and seeks declaratory relief and payment orders to this effect.[56]

(c) ACT International and the Company dispute that the Shareholder Loans should be repaid and point to provisions of the Shareholders' Agreement that they contend are inconsistent with such a position, and particularly clause 10.4.

(d) It is apparent from the pleadings, evidence and submissions that a number of factual and legal questions will arise at trial for determination in connection with the parties' competing contentions regarding how the Sale Proceeds are to be dealt with.

(e) To date there has been no hearing or adjudication by the Court in relation to any substantive factual or legal issue so as to provide a basis upon which repayment orders could be made by the Court, noting again that the admissions relied upon do not provide a basis for making final orders in respect of the Shareholder Loans at this point.

38 Fourth, I do not accept that the giving of the Undertakings and the payment of the Sale Proceeds into the ANZ Account is the same as, or akin to, the position of money being paid into court by a stakeholder. As is evident from the background section above, the money was not paid into court, and it was not paid into court by a stakeholder. Further, the terms of the Undertaking, and Mr Li's affidavit, expressly recorded that the Sale Proceeds were to be paid into the ANZ Account 'to be held on behalf of [the Company]' which is what aspects of Mr Li's affidavit evidence and the pleaded allegations suggest occurred. That said, it is not necessary, possible, or desirable to seek finally to determine on this application whether the Sale Proceeds were paid into the ANZ Account to be 'held on behalf of [the Company]', which may remain as an issue between the parties for consideration and determination at trial.

39 The decisions of Harmer[57] and Pilmer[58] relied upon by Mr Li in connection with the submission that the circumstances are akin to money being paid into court by a stakeholder, do not change the position. Each case involved a payment into court (which this case does not), and very different circumstances to those under consideration. The facts in both cases are clearly distinguishable from the facts in this case and they do not advance the position of Mr Li on this application.

40 In any event, even if the circumstances were such that payment of the Sale Proceeds into the ANZ Account could properly be regarded as being akin to a payment into court, and the interests were to be characterised in the manner discussed in Harmer[59] and Pilmer,[60] the result of this confined application would not change. This is because no admission has been made by ACT International or the Company that the Shareholder Loans can or should be paid out now, whether by court order or otherwise. In this regard I refer also to the matters raised in paragraphs 35 and 37 above.

41 Fifth, and as I have earlier indicated, it is apparent that many relevant contested factual and legal issues remain to be determined in connection with the entitlements to the Sale Proceeds and the terms of the Shareholder Loans, which is also apparent from the counterclaim and its prayer for relief. This is another factor, of itself, that in the present circumstances weighs against the giving of judgment of the kind sought.

42 Sixth, although aspects of the commercial context and dispute between the parties are capable of providing context to the claimed practical or commercial result sought to be achieved by Mr Li, they do not, whether considered alone or in the context of other matters, provide a basis for giving judgment on admissions under rule 35.04. Given the limited admissions made, and the issues remaining for determination, these claimed commercial and practical considerations do not weigh materially in the balance on this application.

43 Seventh, the regime regarding the giving of the Undertakings and the Sale Proceeds being placed into the ANZ Account was, as the Court was informed, arrived at by consent between the parties following the making of the urgent injunction application in the Supreme Court of New South Wales. As is apparent from Mr Nehme's affidavit, from at least ACT International's perspective, it was said to be aimed at preserving the Sale Proceeds, and at a time when concerns had been raised regarding how the Sale Proceeds were being dealt with. I add that these concerns and allegations were contested by Mr Li, although as events transpired they were not matters that were necessary for the Supreme Court of New South Wales to determine.

44 Eighth, the Sale Proceeds remain protected whilst they are in the ANZ Account which, as has been said, is an interest-bearing account with interest accruing at 1.5 per cent. If the parties consider that they are able to obtain a better rate of return elsewhere, the Undertakings contemplate the Sale Proceeds remaining in the ANZ Account 'until further order or agreement'[61] and therefore it appears that there may be scope for the parties to reach agreement regarding such a course. In any event, having regard to the limited admissions and the other matters raised, the fact that the interest rate is at 1.5 per cent and it is submitted that a greater rate of return could be achieved is not a factor of material weight on this application. It may also be noted that the evidence suggests that the ANZ Account was an account nominated or settled upon by the parties or their legal representatives anyway.

45 Ninth, approaching and determining the application in the way indicated is not inconsistent with the Court's or the parties' obligations under the CPA. In any event, given that there are insufficient admissions to justify giving the judgment sought pursuant to rule 35.04, the obligations that exist on the parties and the Court under the CPA are not such that they could or should lead to a different result on the application.

46 Tenth, other amounts will be required to be paid out of the Sale Proceeds, including amounts with respect to taxation. Although it was common ground that there is likely to be a substantial amount of the Sale Proceeds remaining after all other amounts contemplated are paid out, having regard to the limited admissions made and other matters raised above, this is not a significant factor and does not materially advance the position of Mr Li on this application.

47 Finally, it is apparent that there are issues between the parties regarding the status of the business of the Company, whether its purpose has been exhausted, and what might or should now follow. For present purposes these matters need not be further explored because, even if it were to be assumed that the Company is practically or commercially deadlocked and that its business has substantially concluded, when such matters are considered against the limited admissions and other matters referred to above they do not aid Mr Li's position.

48 For completeness, I add that I accept Mr Li's submission that there was little force in ACT International's submission that the admissions in the reply and defence to counterclaim were made by only ACT International. Although the point was well made by ACT International at the time the written submissions were filed, that position changed by the time of the hearing because the Company was represented and it was confirmed that the Company admitted the allegations in paragraph 38 of the counterclaim.

50 I will hear from the parties regarding costs and timetabling orders.

ACT INTERNATIONAL INVESTMENT PTY LTD First Plaintiff

383 LATROBE STREET DEVELOPMENT PTY LTD Fifth Defendant

ACT INTERNATIONAL INVESTMENT PTY LTD First Defendant by

383 LATROBE STREET DEVELOPMENT PTY LTD Second Defendant by

[1] The proceeding in the Supreme Court of New South Wales was transferred to this Court earlier this year.

[2] There has since been a change of solicitors for the plaintiffs, but this is not relevant for present purposes.

[3] There was a minor difference between this figure and the amount of the loan from ACT International which is not important for present purposes.

[5] As recorded in the order comprising exhibit 'LEF-1' to Ms Fitzpatrick's affidavit sworn on 25 July 2019.

[8] The second and third plaintiffs are alleged to be directors of the Company and the second plaintiff is alleged to be the sole director and secretary of ACT International. On the current pleadings these plaintiffs do not appear to bring any separate claims, except perhaps to the extent that they seek to join in seeking a declaration in respect of the existence of the debt said to be owed to ACT International.

[9] A term defined in paragraph 35 of the counterclaim and said to comprise $15,000,000.00 of the Sale Proceeds held in the ANZ Account.

[10] A declaration is also sought that, in the event that any portion of the Revenue Monies is not required for the discharge of the Company's revenue liabilities, those monies (and accrued interest) ought to be distributed as to 40% to Mr Li and 60% to ACT International. See prayer for relief and paragraph 40 of the counterclaim.

[11] See, for example: Gilbert v Smith (1876) 2 Ch D 686 (James LJ and Mellish LJ); Chilton v London Corp (1878) 7 Ch D 735, 740 (Jessel M.R.); Greig & Murray Ltd v Hutchinson [1889] VicLawRp 139; (1889) 15 VLR 706 (A' Beckett J); Ash v Hutchinson & Co (Publishers) Ltd (1936) Ch 489 (Slesser, Romer and Greene LJJ); Re Certina; Sung Li Holdings Ltd v Medicom Finance Pty Ltd (1995) 13 ACLC 955 at [9] and [10] (Young J); SFJ Pty Ltd v Brady Constructions Company Pty Ltd [2001] VSC 487 at [12], [15]-[21] (Beach J); Scott MacRae Investments Pty Ltd & Anor v Baylily Pty Ltd & Anor [2011] NSWCA 82 at [91] (Giles JA, Beazley and Hodgson JJA agreeing); Moon v Mun [2013] NSWCA 217 (Barrett JA, Basten and Ward JJA agreeing); Tanwar Enterprises Pty Ltd v Bradshaw [2013] NSWSC 1276 at [59]- [62] (Bellew J); Juliex Pty Ltd v Shoalhaven City Council [2015] NSWSC 618 at [8]- [12], [37] and [47] (Harrison AsJ); and Halford v Halford [No.2] [2018] WASC 303 at [22]- [23], [30], [36]-[37] (Allanson J).

[16] At [40] (Basten and Ward JJA agreeing), in relation to the relevantly similar rule 17.7 of the Uniform Civil Procedure Rules 2005 (NSW).

[17] Chilton v London Corp (1878) 7 Ch D 735 at 740 (Jessel M.R.), noting also that a party relying on an admission must have a clear case.

[19] At [21] (and after referring to and considering Re Certina).

[21] Corrs Chambers Westgarth. That letter became exhibit 'D1'.

[22] Relying on clause 10.4 of the Shareholders' Agreement. The Company is also a party to the Shareholders' Agreement.

[24] Each of which were filed in the Supreme Court of New South Wales prior to the proceeding being transferred to this Court earlier this year.

[26] Noting that some matters fell away, including, for example, the issue with respect to the Company not making admissions and not being represented, and Mr Li clarifying that he was not seeking an injunction, whether permanent or otherwise. See Transcript 32-33.

[27] Mr Li's written submissions at [13]-[15]. Transcript 16-17.

[28] Mr Li's written submissions at [11]. Transcript 13-15.

[29] Mr Li's written submissions at [18]. Transcript 16-17.

[30] See, for example, Transcript 5, 14-15, 17 and 87.

[32] Mr Li's written submissions at [4] and [18]. See also Transcript 15, 24-26 and 32-33.

[33] Mr Li's written submissions at [17].

[34] Ibid (footnote citation omitted). See also Transcript 24-26 and 32-36.

[35] Mr Li's written submissions at [20]-[21].

[36] Mr Li's written submissions at [23].

[37] Transcript 12, 23-4, 36 and 40-46.

[38] In this context, and in the context of related submissions, reference was made to Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 (Harmer) and Pilmer and Ors v HIH Casualty & General Insurance Ltd (No.2) [2004] SASC 389 (Pilmer). However, senior counsel for Mr Li properly acknowledged that the research carried out had not revealed any authority that had applied a rule such as rule 35.04 to circumstances like those before the Court and where it was suggested that the arrangements between the parties were akin to a payment into court by a stakeholder.

[40] Transcript 44. See also Transcript 40-46.

[43] Mr Li's written submissions [22].

[44] As earlier observed, certain matters fell away, including any issue that Mr Li's application was for a permanent injunction.

[45] Plaintiffs' and the Company's written submissions at [20]-[22]. Transcript 77 and 83.

[46] Plaintiffs' and the Company's written submissions at [7]-[14], [20]-[22] and [25] and Transcript 67-68, 73-77, and 83.

[47] Clause 10.4(d) of the Shareholders' Agreement.

[48] Plaintiffs' and the Company's written submissions at [9]-[14], [20]-[22] and Transcript 68-69, 74, and 79.

[49] See Transcript 67, 70-73, 74, 77 and 83.

[52] During oral submissions it was indicated that such a submission was not being made or pressed, however late in oral submissions reference was again made to a claim in contract as referred to in paragraph 32(j) above.

[56] See paragraphs 19 and 27 above and the allegation that Sterling Global's claimed Asset Management Fee is to be paid first.

[57] (1991) 173 CLR 264.

[58] [2004] SASC 389.

[59] (1991) 173 CLR 264.

[60] [2004] SASC 389.