Xu v Wan Ze Property Development

Xu v Wan Ze Property Development - [2015] FCA 1042 - FCA 2015 case summary — Zoe

[19]

The present interlocutory applications 5 At the commencement of the hearing of the competing interlocutory applications I ordered, with the consent of the parties, that the two interlocutory applications be heard together and the evidence in one be evidence in the other. 6 By interlocutory application dated 3 September 2015 Pei Xu and Ke Qin Ren, the applicants, sought an order that the monies paid into Court pursuant to order 10 of 23 May 2013, being the amount of $30,000 plus any interest accrued on those monies, be paid out to the applicants care of their solicitors. The applicants also sought orders that the second and third respondents, Hong Jiang and Yongnan Xie, pay the costs of the interlocutory application. 7 By an interlocutory application dated 16 September 2015 the second and third respondents sought an order that the funds, including any interest earned thereon, be paid out to them, care of their solicitors, and that the applicants pay the costs of the interlocutory application. 8 The interlocutory application of the applicants was supported by an affidavit of Jonathan Lu, solicitor, affirmed on 3 September 2015. 9 That affidavit refers to the orders made in the Supreme Court of New South Wales on 19 July 2012 entering a monetary judgment in favour of the first respondent, Wan Ze Property Development (Aust) Pty Ltd (in liq) (Re Wan Ze Property Development (Aust) Pty Ltd (No 2) [2012] NSWSC 821); the orders of this Court made on 12 May 2014 dismissing the applicants' applications to set aside the bankruptcy notices (Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; (2014) 315 ALR 523) and on 6 June 2014 making costs orders against them, in part on the indemnity basis (Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 610); and to orders of the New South Wales Court of Appeal made on 13 November 2014 (Ke Qin Ren v Hong Jiang; Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] NSWCA 388; (2014) 104 ACSR 149) allowing the appeal from the orders made on 19 July 2012 in the Supreme Court of New South Wales and setting aside the judgment in the amount of $2,364,995.70, and ordering costs against the second and third respondents, in part on an indemnity basis. 10 The proceedings in the Supreme Court have been remitted for trial and have been stood over to allow the liquidator to conduct examinations into the affairs of the first respondent. The proceedings in the Supreme Court as against the present applicants have been settled as between them and the liquidator. 11 The orders made by the Court of Appeal on 13 November 2014 (Ke Qin Ren v Hong Jiang; Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] NSWCA 388; (2014) 104 ACSR 149) were, relevantly, that the costs order made by the trial judge in the Supreme Court be set aside. Order 6 as then made was: 6. Ms Hong Jiang and Mr Yongan Xie to pay the costs of the 1st, 2nd and 4th applicants of the appeal (including the applications for leave and the notice of motion filed on 26 April 2013). 12 Also before me are orders made by the Court of Appeal on 23 February 2015 (Ke Qin Ren v Hong Jiang [2015] NSWCA 22) to the effect that the present second and third respondents pay the costs of the appellants of the appeal, in part on an indemnity basis. The relevant order was: 1. Vary order 6 made on 13 November 2014 such that it provides: "Ms Hong Jiang and Mr Yongan Xie to pay the costs of the 1st, 2nd and 4th appellants of the appeal (including the applications for leave and the notice of motion filed on 26 April 2013 but excluding any costs thrown away by reason of the amendment of the application for leave to appeal): (a) on an indemnity basis in respect of costs of the notice of motion filed on 26 April 2013 incurred after 2 October 2014; and (b) otherwise, on an ordinary basis." 2. Ms Hong Jiang and Mr Yongan Xie to pay the costs of the 1st, 2nd and 4th appellants of the applications concerning costs. 13 As I have said, on 19 December 2014 proceedings in this Court, seeking to sequester the applicants' estates, were dismissed. 14 The interlocutory application of the second and third respondents was supported by an affidavit affirmed on 16 September 2015 by Annette Leung, solicitor. This affidavit refers to the orders made by this Court in each matter that the applicants pay the respondents' costs of the unsuccessful proceedings brought by them to set aside the bankruptcy notices. The affidavit also refers to a Supreme Court Certificate of Determination of Costs Assessment and Reasons dated 24 August 2015. Under those orders the applicants are required to pay $102,790.90 plus the Assessor's costs of $4,496.87. 15 More centrally to the present issue, that affidavit annexes a Certificate of Taxation in the present proceedings dated 8 September 2015 certifying "the Applicant's costs, in accordance with the Order of the Court made on 6 June 2014, are deemed to be $178,204.00." 16 Ms Leung, on 14 September 2015, sent an email to the solicitors for the applicants stating that "our clients have a Certificate of Taxation for $178,204 in these proceedings against your clients" and requesting the sum of $30,000 deposited with the Court be paid to the second and third respondents in partial satisfaction of the costs order. The solicitor for the applicants replied asking that the exact basis on which the second and third respondents had a claim to the funds be identified and pointing out that the orders of the Court made on 23 May 2013 were not by way of security for costs. 17 In response the solicitors, by Ms Leung, for the second and third respondents sent an email dated 15 September 2015 referring to a number of legislative provisions and a number of decided cases. 18 The position is that the applicants have not been shown to be insolvent, there was no order made for security for costs in the proceedings in this Court, and there is a question as to the status of the second and third respondents as at the date of the order made for payment into court on 23 May 2013. 19 On the other hand, the second and third respondents have a costs order in this Court in their favour and a Certificate of Taxation in respect of that costs order.

[20]

Consideration 20 The parties accepted that the Court has a discretion. One consideration is the purpose for which the money was paid into Court. More particularly, I adopt what was said by the Full Court of the Supreme Court of South Australia, in Duncan (as Trustee for Bankrupt Estate of Garrett) v National Australia Bank Ltd [2006] SASC 239; (2006) 95 SASR 208; (2006) 235 ALR 385 at [30] as follows: Given this variety of circumstances, it is to be expected that the decision by the court as to payment out in a particular case is to be determined by a consideration of the relevant statutory or rule regime governing the payment in, the rule regime concerning the holding of the moneys in court, the purpose for which the moneys have been paid in, any relevant decision of the court concerning the legal or beneficial ownership of the moneys or the entitlement to them, and any relevant event in the litigation in relation to which the moneys have been paid, rather than by reference to any rule of general application. See also Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd [2014] VSCA 326; (2014) 292 FLR 114 at [81] and [85]; JKB Holdings Pty Ltd v de la Vega [2013] NSWSC 501 especially at [1]-[2] and [107]. 21 The second and third respondents relied on Re Farrow [2004] FCA 1569 to the same effect, where Mansfield J at [7] cited with approval the following: In Bou-Simon v Attorney-General of the Commonwealth of Australia (2003) 133 FCR 230; [2003] FCA 1303, at 235, [22] Tamberlin J said of O 63 r 4 the following: 'There are no specific factors which are mandated to be taken into account. Nor are any matters expressly excluded from consideration in the terms of O 63 r 4. The Court's discretion is a wide one and it is entitled to take into account any circumstances relevant to the exercise of its discretion in a proper and judicial manner. There is no specification as to the basis on which the Court is to exercise the discretion, apart from a requirement that the Order must state particulars of payment out, the manner in which the money is to be dealt with, and any action to be taken by the Registry.' 22 In the present case, I required the $30,000 to be paid into Court as a condition of extending time for compliance with the requirements of the bankruptcy notices under s 41(6A) of the Bankruptcy Act 1966 (Cth). The payment was not directly for the benefit of the company in liquidation. It was not for the benefit of the present second and third respondents, who at that stage, by orders made on 14 May 2013, had been granted leave to intervene limited to prosecuting their interlocutory application filed on 17 April 2013 to vary the interlocutory regime in bankruptcy proceedings "to bring under control of the Court funds which have been placed offshore". The purpose of the order was to give some assurance to the Court that the applicants were acting in good faith in bringing their application. Neither in form nor in substance was the payment into court by way of security for costs. 23 In my opinion, therefore, the specific purpose of the payment into court having now been superseded by later orders dismissing the proceedings in this Court seeking to sequester the applicants' estates, the applicants would be entitled to payment out to them. But there remains to be considered the claim of the second and third respondents in respect of their costs. 24 The second and third respondents submitted that they were entitled to enforce the certificate of taxation dated 8 September 2015 as a judgment of the Court: see r 40.32(2) of the Federal Court Rules 2011 (Cth). They then relied on s 53 of the Federal Court of Australia Act 1976 (Cth) which provides that, subject to the Rules of Court, a person in whose favour a judgment of the Court is given is entitled to the same remedies for enforcement of the judgment in a State as are allowed in like cases by the laws of that State to persons in whose favour a judgment of the Supreme Court of that State is given. The applicants also drew attention to r 2.43 of the Federal Court Rules that money paid into Court under r 2.42 "may be paid out or applied only in accordance with an order of the Court". They also referred to r 41.10 to the effect that a party who wants to enforce a judgment or order of the Court may apply to the Court to make an order or to take any other step that can be taken in the Supreme Court of the State in which the judgment or order has been made as if the judgment or order was a judgment or order of that Supreme Court. 25 The second and third respondents submitted that where the court has under administration a fund, it looks to the purpose for which the fund was established in the first instance to determine who is the party ordinarily entitled, but that process of administration must also take into account the various statutory provisions and any other rights or remedies that come in as an overlay. And in this case, they submitted that as a judgment creditor entitled to proceed to execution, that gave them a superior claim, because they would be entitled to act under the rules of court to proceed by way of execution against any asset of the applicants, and for the applicants to demonstrate this was or otherwise would be one of their assets was merely to show that it was something that could be available to be taken in execution. That, as a matter of principle, it was submitted, should inform the exercise of discretion in relation to the administration of the fund. 26 I am not persuaded to accede to the second and third respondents' submissions. I take into account first the limited purpose of the order. Secondly, that purpose has now been superseded by later orders dismissing the proceedings in this Court seeking to sequester the applicants' estates. Thirdly, this litigation has in effect been conducted both in the Federal Court and in the Supreme Court of New South Wales. I take into account the costs orders made not only in this Court but also in the Supreme Court. No net result has yet been achieved and in those circumstances I see no reason to give the second and third respondents a cash advantage. Fourthly, I take into account that the liquidator of the company which was the first respondent in the proceedings and the party seeking the sequestration orders in this Court has consented to an order that the amount paid in by the applicants be returned to them. 27 I do not see any need to consider in detail the other authorities cited to me by way of analogy, those authorities being primarily Westpac Banking Corporation v Morris [1998] NSWSC 666; Westpac Banking Corporation v Morris [2014] NSWSC 332; and Patterson v Cohen [2006] NSWSC 424.

At a glance

Court

Decision date

Before

Source

Judgment (21 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (19)

Cited By (2)