Supreme Court New South Wales Medium Neutral Citation: Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2020] NSWSC 1613 Hearing dates: 29 October 2020 Date of orders: 29 October 2020 Decision date: 29 October 2020 Jurisdiction: Equity Before: Rees J Decision: Mareva order extended; asset disclosure order varied. Catchwords: MAREVA INJUNCTION – $10 million paid for personal protective equipment to export to USA during COVID-19 pandemic – alleged fraudster departs for Mexico – $8.5 million on-paid to third party company – alleged fraudster is brother of third party's sole director and shareholder – whether asset disclosure order gave plaintiff forensic advantage – whether order should excise family communications where main actors are brothers – asset disclosure order made as sought by plaintiff. Cases Cited: Moustapha v Nelson (No 3) [2020] NSWSC 1263 Category: Procedural and other rulings Parties: Blue Mirror Pty Limited (Plaintiff) Pegasus Australia Developments Pty Limited (Defendant) Tan & Tan Australia Pty Limited (Interested Party) Representation: Counsel: Mr S Ipp (Plaintiff) No appearance (Defendant) Mr P Barham (Affected Party) Solicitors: Lander & Rogers Lawyers (Plaintiff) Law Australia (Affected Party) File Number(s): 2020/222425 EX TEMPORE Judgment 1. HER HONOUR: This matter comes before the Court today after an asset preservation order was made by Lindsay J on 21 October 2020 in respect of Tan & Tan Australia Pty Limited. 2. Today, the plaintiff, Blue Mirror Pty Ltd, seeks to extend the asset preservation order and to ensure that the asset disclosure order made by his Honour is complied with, although accepts that the asset disclosure affidavit is not due until tomorrow given some delay in serving his Honour's orders. Tan & Tan has filed a motion seeking to vary the asset preservation order. The parties have reached an agreed position, save for two issues to which I will shortly come. 3. Tan & Tan is a company of which Anthony Tan is the sole director and shareholder. The law firm which represents the company is Law Australia Pty Limited, at which Anthony Tan's wife practices. The registered office of Tan & Tan is Law Australia. Tan & Tan operates a car dealership, buying and selling motor vehicles under the business name "Cartrade Australia". In February 2020, Anthony Tan expanded the company's business to include personal protective equipment, given the outbreak of the COVID-19 pandemic. Tan & Tan acquired the business name "Aus Hygiene". 4. The circumstances in which the asset preservation order was made are these. The plaintiff says that it entered into a contract with the first defendant, Pegasus Australia Developments Pty Ltd, to acquire one million boxes of nitrile examination gloves to be on-sold in the United States. For this purpose, the plaintiff transferred some $10 million to Pegasus. Anthony Tan's brother, Ken Tan, is associated with Pegasus. The transaction appears to have 'fallen over'. Ken Tan appears to have departed to Mexico. The plaintiff wants its money back. 5. Of the $10 million paid by the plaintiff to Pegasus, $8.5 million was paid onto Tan & Tan. On 1 July 2020, Pegasus transferred $2.5 million into a Tan & Tan's bank account ending in 8401. Anthony Tan says that this is Tan & Tan's trading account for the purchase and sale of motor vehicles and the business operating account. It is an overdraft facility with an available limit of $75,000. On 14 July 2020, Ken Tan transferred $3 million to the same Tan & Tan bank account. On 21 July 2020, Ken Tan transferred a further $3 million to a second Tan & Tan bank account. The current balance of Tan & Tan's trading account ending in 8401 is that it is overdrawn by some $65,000, that is, there is only $10,000 credit available on its overdraft facility. 6. Anthony Tan says these were part-payments for personal protective equipment. Tan & Tan has not borrowed any money from Pegasus or Ken Tan, nor do Pegasus or Ken Tan have any interest in the business activities or assets of Tan & Tan. Tan & Tan does not hold any money or property as trustee on behalf of Pegasus or Ken Tan. 7. On 30 July 2020, Ward CJ in Eq made asset preservation orders in respect of Pegasus. Initially, Anthony Tan's wife appeared for Pegasus. Problems emerged with Pegasus' compliance with the asset preservation orders, particularly with the asset disclosure orders. This has been the subject of further orders made by this Court by Williams J on 12 August 2020; Parker J on 18 August 2020; and Ward CJ in Eq on 15 September 2020; 22 September 2020; 29 September 2020 and 8 October 2020. Ken Tan has apparently been afflicted by COVID-19 such that he is unable to participate in a video-link hearing from Mexico to be cross examined on his asset disclosure affidavit. 8. On 21 October 2020, Lindsay J made asset preservation orders in respect of Tan & Tan. This brings us to the matter before the Court today. The plaintiff seeks an order that, each week, Tan & Tan notify the plaintiff of any assets acquired and sold, accrued, and expenses referred and paid, by a report provided by 4.00 pm on Friday each week. The reason why the plaintiff says such an order should be made is that the circumstances of this case are indicative of fraud, that Ken Tan and Anthony Tan are brothers, that Anthony Tan's wife is the solicitor for Tan & Tan, and more oversight should be applied in this case given that the plaintiff has agreed that Tan & Tan can use its assets in the ordinary course of business. It is submitted that the order is not onerous given that the report is only to be provided "post" expenditure rather than necessarily to limit expenditure. Tan & Tan submitted that this was not the usual order, that it was an onerous obligation on a trading entity which was already the subject to an injunction, and that the matter could be easily addressed by a weekly production of bank statements. 9. Tan & Tan seeks a variation from the usual form of asset disclosure order by limiting its obligation to disclose assets to those acquired since 1 July 2020, being the date on which the first payment of $2.5 million was made from Pegasus to Tan & Tan's bank account. A similar limitation was sought to be applied in respect of transfers of money from payments made by Ken Tan to Tan & Tan. A modification was also sought to exclude communications on family matters, rather than business matters. Tan & Tan submitted that the order sought conferred a forensic advantage on the plaintiff which was not necessary: Moustapha v Nelson (No 3) [2020] NSWSC 1263 at [84]. 10. Moustapha v Nelson (No 3) concerned the development of a property in Lindfield by two people who were then in a relationship. An application for an asset preservation order was dismissed. The plaintiffs sought an order that the defendant file an affidavit setting out how the proceeds of sale of the property had been used. The proceedings had then been on foot for some three years. The plaintiffs' counsel suggested that the defendant's refusal to provide the information betrayed a concern that disclosure of the information would not assist her in defending the proceedings. Parker J considered that this was too simplistic. At [84]: In circumstances such as the present, Ms Nelson's reluctance to answer the plaintiffs' questions may be understandable for other reasons. Information about Ms Nelson's asset and liability position is not something which the plaintiffs would normally have. The information may reveal financial pressures or opportunities which could affect Ms Nelson's ability or willingness to continue the litigation. I did not think the Court should regard Ms Nelson's refusal to give the plaintiffs that advantage as necessarily being suspicious. 1. The facts at hand are somewhat different. Asset preservation orders have been made and are in place. The plaintiff is endeavouring, at an early stage of these proceedings, to ascertain where the $10 million has gone, presumably so that it can take whatever further steps are available to it to preserve the money until final determination of its claim to be entitled to be repaid. The information sought may well give the plaintiff some kind of forensic advantage, but it does not appear to me that the purpose of seeking the information is to that end but, rather, to ascertain the location of the funds to assist in preservation of the funds, being classically within the province of asset preservation orders. 2. I am minded to make the orders in the form sought by the plaintiff. There is a familial relationship between Ken Tan and Anthony Tan, who is the sole director and shareholder of Tan & Tan. A large amount of funds has been transferred by Pegasus to Tan & Tan's bank accounts. There may be for an entirety legitimate purpose for these payments, as described by Anthony Tan; time will tell. Either way, the amount is substantial. It is appropriate in the circumstances to make the additional disclosure order sought by the plaintiff and to decline to limit the asset disclosure order in the manner sought by Tan & Tan. I decline to exclude communications which may relate to family matters in circumstances where the alleged fraudster is the brother of Anthony Tan and the brother-in-law of his former solicitor. 3. Tan & Tan further seeks to extend the time to provide the asset disclosure affidavit beyond the extension now granted or agreed to by the plaintiff. I am not prepared to make orders for any further period of time. The company has been on notice of these orders since 23 October 2020. ********** Amendments 25 November 2020 - Judgment amended on 25 November 2020 on application for non-publication order by wife of Anthony Tan. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 November 2020