Wang v Farkas

Judgment 1BASTEN JA: In this matter the Court handed down its judgment, though without making orders, on 26 February 2014. 2The present application is in effect a post-judgment Mareva injunction application seeking that the security provided by the appellants, Mr Wang and Ms Gu, prior to the hearing of the appeal be continued pending an application for special leave to appeal by Mr Farkas, the respondent to the appeal in this Court. 3The application comes before the Court at a stage when final orders have not been made. However, submissions have been received in respect of the final orders and of the six proposed orders (of which the sixth was a direction) put forward on 26 February 2014, there is a large measure of agreement that, at least in general terms, orders 1, 2 and 3 will in due course be made. The effect of those orders is to set aside the judgment in the District Court and to set aside the magistrate's order as to the costs of the proceedings in the Local Court. 4Pending determination of the appeal in this Court, the appellants had provided a bank guarantee in an amount of a little over $400,000. The bank guarantee was expressed to operate, in accordance with interlocutory orders of this Court, until 4pm on Monday 31 March 2014. There was a question as to whether, given the orders that will shortly be made in this Court, that guarantee would then be discharged. In the ordinary course of events it would, and the Court would normally act by instructing the registrar to write a letter to the bank indicating that the guarantee is to be discharged. 5The application by Mr Farkas is based upon the assertion that Mr Wang has been disposing of assets, including by way of proposed sale of three properties. Those three properties were, until the bank guarantee was put into effect, subject to writs of execution taken out by Mr Farkas to protect his entitlement. Indeed, steps had been taken under those writs prior to the proceedings in this Court. 6Having given up what security he had as a result of the filing of writs over the title to the three properties, he now has a bank guarantee which is due to expire. He said in his affidavit that the properties are all for sale. He further said that there is reason to believe that Mr Wang may be subject to an order for repayment to the Commonwealth of an amount on account of social security of $100,000. He also said that there is reason to believe that the Commonwealth may take proceedings under the Proceeds of Crime Act 2002 (Cth) which would result in any beneficial interest in the properties or in any bank accounts held by Mr Wang and Ms Gu not being available to him, in the event he is ultimately successful in overturning the judgment of this Court. 7In these circumstances he sought either payment into court of an amount of money which would be sufficient to provide a fund from which he could recover his original judgment debt (which will be set aside by this Court) or the maintenance of the bank guarantee, either in the existing amount or in a somewhat greater amount to account for accrued interest. 8The facts upon which Mr Farkas relied were not fully accepted by Mr Wang. Mr Wang denied that he has a debt to the Commonwealth on account of social security, although he provided no evidence as to what has happened to the AAT decision to which reference was made by Mr Farkas. He also denied that all of the properties are for sale and noted that one is presently the subject of a leasing arrangement. He disputed that there is any risk of him being subject to an order under the Proceeds of Crime Act. 9These are not disputes which can be resolved today. Indeed in these proceedings, without full-cross examination which is not appropriate, it is simply not possible to resolve those issues. The circumstances require determination of whether there is a substantial issue to be determined in the proceedings in the High Court and where the balance of convenience lies in so far as maintenance of the "status quo" with respect to security is concerned in the meantime. 10So far as the case before the High Court is concerned, Mr Farkas submitted that there are a number of arguments which can be put in favour of the position that the term "expenses" in the legislation which was the subject of the judgment may cover the kind of "expenses" which were referred to in the case of London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872. I accept that that is so, although, ultimately, the question is one of construction of the statute. 11He also noted that the case involves a matter of some general public importance (for the purposes of satisfying s 35A of the Judiciary Act 1903 (Cth)) relating to the entitlement of lawyers to recover amounts on account of fees when acting in their own interest. I accept that that is also so, although only by reference to the specific statutory regime. 12There is, therefore, an arguable case for obtaining special leave to appeal to the High Court. Whether such leave will be granted or not is not for this Court to predict; it suffices to note that the proposed application is arguable and it is therefore necessary to take account of what is at least a possibility, namely that Mr Farkas will obtain special leave to appeal and that his appeal will be upheld. 13As to whether it is appropriate that security for payment of the debt which he seeks to reinstate through an appeal to the High Court should be provided, Mr Farkas submitted that, on the evidence, there is at least a likelihood that the appeal would be nugatory and he would be unable to recover what by then is likely to be an amount approaching $420,000 or more, depending on how long the proceedings take, and the rate of interest on the outstanding amount. 14Mr Wang submitted that he will have a judgment in his favour when the orders are made, in the sense that the debt will not be over $400,000 but he says will be nil or even a balance in his favour. It is possible that the debt will be in the order of $23,000, which was the amount of expenses in general terms incurred by Mr Farkas and which, under the judgment of this Court, Mr Farkas is entitled to recover. 15Even if an amount in the order of $23,000 is payable by Mr Wang, that would not justify maintaining the security. For Mr Farkas to succeed he must rely on the proposition that he will be without security for the much larger sum. The argument in favour of Mr Wang is that he will be kept out of money which is properly his until such time as the matters are resolved in the High Court. If special leave to appeal is not granted, then it may be expected that that result will be known within perhaps four or five months; obviously a longer period will elapse before the determination of the proceedings if special leave is granted. 16The expense to Mr Wang if the bank guarantee remains in force depends on various costs which will be incurred. As Mr Wang is not the moving party in these proceedings, the Court is not able to order him to maintain the bank guarantee, because there is nothing to be stayed in the meantime. Once the orders (which must be made in order for a special leave application to go ahead) have been made, then the judgments on which Mr Farkas relies will be gone. 17Balancing these considerations, the appropriate course is to direct the registrar to call up the amount of the bank guarantee so that it will be paid into court, but on the condition that, in the event the guarantee is not required because Mr Farkas is not successful in the application to the High Court and any possible appeal, he (Mr Farkas) will bear the costs of Mr Wang of maintaining the security. (This approach reflects the usual undertaking accompanying an interlocutory injunction.) 18Mr Wang has put on evidence that the costs include fees charged by the bank and a differential between the amounts he is paying by way of interest on his home loan mortgages and the amount of interest which is payable to him on a term deposit, which he has apparently made to obtain the bank guarantee. The actual cost will depend upon the time period over which the calculations are to be carried out. 19The Court will make the following orders:

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