Ye v Zeng

ON THE APPLICANT, BY HIS COUNSEL, GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT, UNTIL FURTHER ORDER:

Subject to compliance with these orders, in particular the provision of any mortgage or mortgages referred to in Order 2 below, each of the first to sixth respondents not sell, encumber, or otherwise deal with, in any way whatsoever, including by the obtaining of additional funding under any relevant facility, other than by the accrual of interest in the ordinary course of business, any of the following properties: (a) 3/507 Pacific Highway, Killara (Folio #3/SP86801); (b) 36/507 Pacific Highway, Killara (Folio #36/SP86801); (c) 39 Stanhope Road, Killara (Folio #1/551876); (d) 39A Stanhope Road, Killara (Folio #2/551876); (e) 109 Pitt St, Sydney (Folio #99/SP72095 & #100/SP72095); (f) 73 and 74 Belssel St, Belconnen, ACT; (g) such interest of any kind as each may have in the Xiang Rong Management Trust or any other trust or legal structure or entity over 7 Help St, Chatswood; and (h) such interest of any kind as each may have in the property at 7 Help St, Chatswood.
Stand over proceedings for recognition and enforcement to Friday 11 December 2015 at 9:30am on condition that the respondents on or before Friday 20 November 2015 execute, in registrable form, a mortgage or mortgages over the properties in 1(a)-(f) above and deliver same to the applicant. The applicant, as mortgagee, be at liberty to lodge a caveat or caveats in support of said mortgage or mortgages, but not, without leave of the court, to lodge said mortgage or mortgages for registration, up to Friday 11 December 2015.
Should the respondents fail to execute and deliver said mortgage or mortgages in registrable form by Friday 20 November 2015, the applicant have leave to move the Court on Monday 23 November 2015 at 9:30am for the entry of judgment for the full sum of the arbitration award, subject to conditions as to enforcement to be made by the Court.

REASONS FOR JUDGMENT 1 The history of this matter is set out in my extempore reasons for judgment given on 13 November 2015: Ye v Zeng (No 2) [2015] FCA 1243, and in the brief extempore reasons given on 2 November 2015: Ye v Zeng [2015] FCA 1192. 2 The question is whether there should be an adjournment of the recognition and enforcement application in the light of the existence of the hearing of the appeal in the Chinese court on 4 December 2015. The respondents have proffered by letter yesterday to the applicant an offer of an equitable mortgage over all the properties listed in Order 1(a)-(f) made on 13 November 2015. The letter of offer required that no caveat be lodged, nor the mortgage be registered or lodged for registration. 3 As I understand the submission from Mr Lynch today, his clients are willing to provide a mortgage in registrable form, presumably with the consent of any first mortgagee of the properties listed in Order 1(a)-(f), and that his clients have no objection to a caveat being lodged to reflect the interest in the mortgage. Ultimately, there is a balancing exercise as to what is a suitable security for the purposes of s 8(8) of the International Arbitration Act 1974 (Cth). I have significant sympathy for the position of Mr King's client, however, one must also look at things pragmatically and recognise the brief but un-cross-examined evidence of the first respondent (which to a degree only reflects common sense) that his business may be brought to a halt in a catastrophic way if the full sum has to be paid in short order. 4 For a period up to 11 December 2015 I consider that suitable security for the adjournment will be provided by the freezing orders that are in place, varied by an order which I will make as to the delivery of mortgages in registrable form to the applicant. It should be clear that they are security for the full sum, being AUD $11,189,363.60, plus any amounts accruing since 13 November 2015. It is appropriate that, at least until 11 December 2015, the mortgages not be lodged for registration, given that we do not know of the outcome of the hearing on 4 December 2015. That said, depending upon the outcome of that hearing, any restriction on lodgement for registration may be lifted at that point. 5 It is also appropriate to say this: first, I do not presume to express a view, for the purposes of transmission to the Chinese court, as to my perception as to the likelihood of the appeal. Looking at the matter for my own purposes, and the instruction of the authorities to which Mr King has made reference, I do not perceive a strong appeal. However, that is not a matter that I would wish communicated to the Chinese court. Apart from anything else, I do not presume to pass advice to the Court in the exercise of its duties. However, it will be of considerable importance to this court on 11 December 2015 to know what the timing of any judgment from the Chinese court will be, if it be the case that the matter is not decided on 4 December 2015. And it is a matter for the parties as to how they communicate that to the court in China. I do not presume to demand or require any such information from a court in the Peoples' Republic of China. However, it will be a matter of some importance for me on 11 December 2015. 6 Therefore, what I propose to do is to adjourn the application for recognition and enforcement to Friday 11 December 2015, and vary the orders made on 13 November 2015 as follows: ON THE APPLICANT, BY HIS COUNSEL, GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT, UNTIL FURTHER ORDER:

Subject to compliance with these orders, in particular the provision of any mortgage or mortgages referred to in Order 2 below, each of the first to sixth respondents not sell, encumber, or otherwise deal with, in any way whatsoever, including by the obtaining of additional funding under any relevant facility, other than by the accrual of interest in the ordinary course of business, any of the following properties: (a) 3/507 Pacific Highway, Killara (Folio #3/SP86801); (b) 36/507 Pacific Highway, Killara (Folio #36/SP86801); (c) 39 Stanhope Road, Killara (Folio #1/551876); (d) 39A Stanhope Road, Killara (Folio #2/551876); (e) 109 Pitt St, Sydney (Folio #99/SP72095 & #100/SP72095); (f) 73 and 74 Belssel St, Belconnen, ACT; (g) such interest of any kind as each may have in the Xiang Rong Management Trust or any other trust or legal structure or entity over 7 Help St, Chatswood; and (h) such interest of any kind as each may have in the property at 7 Help St, Chatswood.
Stand over proceedings for recognition and enforcement to Friday 11 December 2015 at 9:30am on condition that the respondents on or before Friday 20 November 2015 execute, in registrable form, a mortgage or mortgages over the properties in 1(a)-(f) above and deliver same to the applicant. The applicant, as mortgagee, be at liberty to lodge a caveat or caveats in support of said mortgage or mortgages, but not, without leave of the court, to lodge said mortgage or mortgages for registration, up to Friday 11 December 2015.
Should the respondents fail to execute and deliver said mortgage or mortgages in registrable form by Friday 20 November 2015, the applicant have leave to move the Court on Monday 23 November 2015 at 9:30am for the entry of judgment for the full sum of the arbitration award, subject to conditions as to enforcement to be made by the Court.
Liberty to apply on 24 hours' notice.
The Court notes that there is no dispute that the award sum, at an appropriate exchange rate, is AUD $11,189,363.60, as at 13 November 2015, with daily accrual of post-award interest of AUD$1992.67.
The respondents to pay the costs of the application for recognition and enforcement to date, on a party-party basis.
Reserve to the applicant the right to argue that the question of the costs in Order 6 should be on an indemnity basis. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.

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