Zhou v Jing

Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) r 41.3

Cases Cited: Zhou v Jing [2023] NSWSC 214
Frigger v Trenfield (No 3) [2023] FCAFC 49

Category: Procedural rulings

Parties: Anna Zhou (Plaintiff)
Xiaoli Jing

Representation: Counsel:
No appearance (Plaintiff)
A Macauley (First defendant/applicant)
Solicitors:
Du & Associates Lawyers (First defendant/applicant)

File Number(s): 2021/00060620

Publication restriction: Nil

EX TEMPORE JUDGMENT (REVISED)

1. By motion filed on 3 October 2024, the successful first defendant in these proceedings seeks an order under r 41.3 Uniform Civil Procedure Rules 2005 (NSW) for the payment out of funds deposited by the Registrar in the Court’s bank account which had been paid into court by the plaintiff pursuant to an order for security for costs. It is unnecessary to detail the whole chronology of the proceedings. As Mr A Macauley of counsel, who appears for the applicant on the motion, has pointed out, the proceedings were initially commenced in the District Court of New South Wales on 3 March 2021. The plaintiff was seeking to enforce, under common law principles, a judgment recovered in the People’s Court of Jinshui (the Chinese Court) in the People’s Republic of China in an amount which was the equivalent of about AUD150,000.

2. While the matter remained in the District Court, on 22 November 2021, the plaintiff was ordered to pay the sum of $30,000 into court as security for costs. That order was duly complied with on 13 December 2021. At that time, there were two defendants sued. Because of doubt about the jurisdiction, or perhaps the power, of the District Court to make an order enforcing the Chinese judgment, the proceedings were transferred to this Court. On 20 May 2022, an order was made for further security in the sum of $70,000, with which the plaintiff also duly complied.

3. The proceedings against the second defendant were discontinued, but the plaintiff pressed on against the first defendant. The proceedings were heard by Elkaim AJ in early March 2023. On 14 March 2023, his Honour delivered judgment dismissing the plaintiff’s claim, entering judgment for the first defendant with costs: Zhou v Jing [2023] NSWSC 214. His Honour was not satisfied that the first defendant had been afforded natural justice in the proceedings in the Chinese Court, which had resulted in default judgment for the monetary sum to which I have referred. His Honour was not satisfied either that the proceedings had been duly served on the first defendant or as must necessarily follow, that she had had the opportunity to present her case before the Chinese Court.

4. Following the entry of judgment in her favour, the defendant took steps to have her costs assessed. Certificates of determination were issued in the sum of $4,816.16 for the Manager, Costs Assessments’ costs, and of the defendant’s costs on the ordinary basis in the sum of $109,866.63 together with interest in the sum of $10,374.90. Those certificates were duly registered in the District Court, resulting in a judgment totalling $126,198.89. I should say that in the meantime, the second defendant had assessed costs and had recovered, by way of payment out from the funds held in court, the amount of those costs, leaving the sum of $85,661.27 remaining. It is that sum that the first defendant seeks to be paid out in her favour.

5. A difficulty has arisen in relation to service of the motion for payment out. The plaintiff has not appeared today, notwithstanding her name being called outside the court three times in accordance with the usual practice. Despite the best endeavours of the first defendant’s solicitors to serve her with the motion, no response has been elicited from her. The solicitors who had acted for the plaintiff in the principal proceedings have responded to enquiries about whether they were authorised to accept service by stating that their retainer had been discharged by performance, and that they had no instructions to accept any process on behalf of the plaintiff. On 30 October 2024, those solicitors emailed the defendant’s solicitors stating, “We are unable to assist you in the… matter.”

6. Several attempts have been made to serve the plaintiff, and they are fully set out, principally, in the second affidavit of the first defendant’s solicitor, Ziguang Yao affirmed on 2 December 2024. From Mr Macauley’s helpful submissions, I am satisfied, relying upon the affidavit and oral evidence given by the plaintiff before Elkaim AJ, that the following steps have been taken to inform the first plaintiff of the first defendant’s claim for payment out.

7. First, the cost certificates were sent to each of the parties in respect of the first defendant’s costs on 23 July 2024. This was done, in the usual course, by the Manager, Costs Assessment in the administration of the assessment scheme. At that time, it is likely that the solicitors, who no longer act, were still acting for the plaintiff and were in communication with her, and I am of the view that it is more likely than not, that the amount of the assessed costs, by that means, came to the plaintiff’s attention. As I have said, the certificates were duly registered as a judgment of the District Court on 28 August 2024.

8. Secondly, from the evidence before Elkaim AJ, to which I have referred, the defendant’s solicitors emailed the plaintiff on 18 September 2024, directed to the email address she disclosed in her affidavit read in the principal proceedings. It is obvious, from her affidavit, that she had received correspondence by email from the Chinese Court while those proceedings were pending, successfully, to that email address. An email of 18 September 2024 seeking the plaintiff’s consent to the release of the funds paid into court, to the extent they satisfy the outstanding cost liability, was sent to that address but there was no response.

9. Thirdly, on 8 October 2024, the defendant’s solicitors attempted to serve the motion, which had been filed on 3 October 2024 by email to the same address, and by prepaid post to the address where the plaintiff resided while in Australia for the proceedings, at Strathfield, and by prepaid international express post to the address which had been disclosed as her home in Shanghai to the Chinese Court, as disclosed in her affidavit read in the proceedings before Elkaim AJ. Each of those attempts were unsuccessful, in the sense that no response was elicited, except that the prepaid post to the Strathfield address was recorded as having been successfully delivered, and the international letter was returned marked (I assume there is some ambiguity about the translation of the Chinese word) either “refused” or “returned”.

10. Fourthly, on 31 October 2024, the defendant’s solicitors attempted to send details of the motion by text message to a Chinese mobile phone number that had also been disclosed in the evidence in the proceedings before Elkaim AJ, but that text was apparently “undelivered”.

11. Fifthly, further attempts to call and text the Chinese mobile number were made on 13 November 2024, again unsuccessfully.

12. Finally, on 7 February 2025, the first defendant’s solicitors again sought to serve the process on the plaintiff’s former solicitors, who responded by stating that they did not have instructions to accept service. It seems to me that while it is possible that the plaintiff has changed her email address or her Chinese mobile number since judgment was handed down or the costs were assessed, given the breadth of attempts made by the solicitors to bring this application to the notice of the plaintiff, they were probably successful in at least one or more of their attempts.

13. There was no non-delivery message received when the solicitors emailed the plaintiff seeking her consent to the release of the funds informally on 18 September 2024. But apparently the attempted service resulted in a non-delivery message being received. Even so, as I have said, it seems to me very likely that the defendant’s intention to seek recovery against the amount paid into Court would have come to the plaintiff’s attention, even if there may be a question about whether the actual motion was received by her. There is certainly an available inference that if it was not, it was because of attempts made by the plaintiff to evade service of the motion.

14. In any event, as Mr Macauley has pointed out in his written submissions, it is clearly established that funds paid into court as security for costs are subject to a charge in favour of the party for whose benefit the order was made, which crystallises upon the making of a costs order in favour of that party and the quantification of those costs by assessment: Frigger v Trenfield (No 3) [2023] FCAFC 49 at [606]-[611]. Quite apart from this consideration, orders for security are made in respect of proceedings brought by foreign residents in part because of the inherent difficulty that may be experienced in enforcing a costs order overseas if the foreign resident who brought the proceedings is unsuccessful.

15. That difficulty of enforcement extends not only to what may be the vagaries of an unfamiliar legal system in a foreign land, but also to the practical difficulty of locating and adequately serving a foreign resident who may have no wish to be served with, or to respond to, the process. Even if I am wrong in my finding about the likelihood of these proceedings having come to the attention of the plaintiff, and in good time for her to respond to the application had she wished to do so, it does seem to me that given the purpose of an order for security, even had she not been served, it remains appropriate for an order for payment out to be made in realisation of the security, which the orders of the Court afforded to the first defendant.

16. I should also say it is impossible to conceive of any argument that could have been advanced by an unsuccessful plaintiff, who is subject to an order for costs which have been duly assessed, in opposition to an order for payment out. In the circumstances, I will accede to the application brought by the first defendant.

17. My orders are:

18. Under r 41.3 Uniform Civil Procedure Rules 2005 (NSW), the sum of $85,661.27 presently held on deposit by the Court pursuant to orders previously made for the security of the first defendant’s costs are to be paid out to Du & Associates Lawyers, the solicitors for the applicant whose receipt whereof will operate in full discharge of any further liability in respect of the deposited funds.

19. The first defendant’s motion of the 3 December 2024 is dismissed with no order as to costs.

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