Supreme Court New South Wales Medium Neutral Citation: Formerank Ltd v Luo [2020] NSWSC 1641 Hearing dates: 10 November 2020; further written submissions 17 November 2020 Date of orders: 18 November 2020 Decision date: 18 November 2020 Jurisdiction: Equity - Commercial Arbitration List Before: Stevenson J Decision: Application for extension of freezing order refused; existing order to expire at 5.00 pm tomorrow Catchwords: CIVIL PROCEDURE – interim preservation – freezing order in relation to Australian assets of Hong Kong resident – in aid of prospective award and judgment in pending arbitration in Hong Kong – where interim measure made by consent in Hong Kong arbitration in relation to Hong Kong Assets – where preservation order made in PRC Court – whether good arguable case and sufficient prospects of obtaining judgment demonstrated – where respondent pleads detailed defence to applicant's case in the arbitration CIVIL PROCEDURE – interim preservation – freezing order in relation to Australian assets of Hong Kong resident – whether danger of dissipation of Australian assets COMMERCIAL ARBITRATION – international commercial arbitration – interim measures – UNCITRAL Model Law – concurrent jurisdiction of this Court with arbitral tribunal and supervisory court in lex arbitri – comity and deference to arbitral tribunal – whether Court should exercise concurrent jurisdiction to make a freezing order Legislation Cited: Arbitration Act 1996 (NZ) Arbitration Law of the People's Republic of China Arbitration Ordinance (Cap. 609) Civil Procedure Law of the People's Republic of China Foreign Judgments Act 1991 (Cth) Foreign Judgments Regulations 1992 (Cth) International Arbitration Act 1974 (Cth) UNCITRAL Model Law on International Commercial Arbitration 1985 Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: 'Lady Muriel' v Transorient Shipping Ltd [1995] HKCA 615 (HK Ct App) Ansell v New Zealand Insurance Finance Ltd, HC Wellington A434/83 30 November 1983 Bhushan Steel v Severstal Export GmbH [2012] NSWSC 583 Borden Inc v Meiji Milk Products Co., 919 F.2d 822 (2d Cir. 1990) Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASC 136 Green Acres Franchise Group Ltd [2014] NZHC 402 Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA New Zealand Association of Credit Unions v Finszoft Solutions (New Zealand) Ltd [2019] NZHC 3198 Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH & Co KG (The Niedersachsen); [1983] 2 Lloyd's Rep 600 Re Lord Cable (Deceased) [1976] 3 All ER 417 Safe Kids in Daily Supervision Ltd v McNeill [2012] 1 NZLR 714 Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd [2020] VSC 476 Texts Cited: G Born, International Commercial Arbitration (2nd Ed, 2014, Kluwer Law International) Category: Procedural and other rulings Parties: Formerank Ltd (Plaintiff/Respondent) Tie Luo (Defendant/Applicant) Representation: Counsel: D Smallbone (Plaintiff/Respondent) J Redwood SC (Defendant/Applicant) Solicitors: Accuro Maxwell (Plaintiff/Respondent) Clayton Utz (Defendant/Applicant) File Number(s): 2020/296516 Judgment 1. The plaintiff, Formerank Ltd, is a company incorporated in the Hong Kong Special Administrative Region of the People's Republic of China. 2. The defendant, Mr Luo, is a businessman based in Xiamen in the PRC as well as a permanent resident in Hong Kong. [1] 3. Formerank and Mr Luo are parties to two arbitrations currently underway in Hong Kong before a panel of three Hong Kong Senior Counsel. The arbitrations are being administered under the Arbitration Rules of the Hong Kong International Arbitration Centre ("the HKIAC Rules"). 4. Mr Luo is the only active respondent to Formerank's claims in the arbitrations; the other respondents are in liquidation or bankrupt. 5. Formerank's claim against Mr Luo is under guarantees he executed in relation to the alleged indebtedness to Formerank of another Hong Kong company, Takyiu International Company Ltd (now in liquidation). Takyiu International was formerly known as Tak Yun International Company Ltd and is referred to in the arbitrations as "Tak Yun". I will adopt the same shorthand. 6. The arbitrations are currently scheduled to be heard in August 2021. 7. Were Formerank to be successful in the arbitrations, an award: 1. would be a foreign award for the purpose of s 3 of the International Arbitration Act 1974 (Cth) ("the IA Act") capable of direct recognition and enforcement in this Court under s 8 of the IA Act as if a judgment of this Court; or 2. could be the subject of an order of the Court of First Instance in Hong Kong which could then be registered in this Court under the Foreign Judgments Act 1991 (Cth) [2] and the Foreign Judgments Regulations 1992 (Cth). 1. On 15 October 2020, as Commercial Arbitration List Duty Judge, I made an ex parte freezing order restraining Mr Luo from dealing with his Australian assets (which include two parcels of land in metropolitan Sydney) in aid of a "prospective judgment" [3] that Formerank hopes to achieve were it to be successful in the Hong Kong arbitrations. 2. On 10 November 2020 I heard argument as to whether the freezing orders should continue. Pending delivery of this judgment, the freezing order has been extended until 5 pm the day following delivery of these reasons. Decision 1. I am not persuaded the freezing orders should continue. The test for a freezing order 1. A freezing order is an exceptional remedy and one that should not be granted lightly. [4] 2. Freezing orders are dealt with in Division 2 of Part 25 of the Uniform Civil Procedure Rules 2005 (NSW). 3. Rule 25.11 provides: 25.11 Freezing order (1) The court may make an order (a freezing order), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied. (2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets. 1. Rule 25.14 provides, relevantly: 25.14 Order against judgment debtor or prospective judgment debtor or third party (1) This rule applies if— … (b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in— (i) the court, or (ii) in the case of a cause of action to which subrule (3) applies—another court. … (3) This subrule applies to a cause of action if— (a) there is a sufficient prospect that the other court will give judgment in favour of the applicant, and (b) there is a sufficient prospect that the judgment will be registered in or enforced by the court. (4) The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur— …. (b) the assets of the judgment debtor, prospective judgment debtor or another person are— … (ii) disposed of, dealt with or diminished in value. (Emphasis added.) 1. The rule speaks of there being a "good arguable case on an accrued or prospective cause of action" in this Court or in "another court". 2. As set out at [7] Formerank relies on both these possibilities: direct enforcement in the Court of an award of the Hong Kong Arbitral Tribunal and registration in this Court of a judgment of the Hong Kong Court of First Instance referable to such an award. 3. It has been held that a "good arguable case" is one "which is more than barely capable of serious argument, and yet not necessarily one the judge considers would have a better than 50% chance of success". [5] 4. The rule also speaks of there being a "sufficient prospect" of there being a judgment in favour of the applicant for a freezing order in the "other court"; that is "that there be sufficient prospect that the other court will give a favourable judgment", [6] and of that judgment being registered in and enforced in this Court. 5. Thus, the expression "good arguable case" is used in the sense of there being "sufficient prospects" of the applicant for a freezing order obtaining a favourable judgment in the "other court" or this Court to warrant the making of a freezing order. [7] 6. Accordingly, here, it is necessary to have regard not only to Formerank's prospects of making out its case in chief in the Hong Kong arbitration, but also to its prospects of winning overall and obtaining a favourable award. 7. Formerank must also show a "danger" that, relevantly, Mr Luo will dispose of his Australian assets. Background 1. Formerank entered into contracts with Tak Yun for the supply of electronic products on 1 January and 8 May 2016 ("the Agreements"). 2. Mr Luo guaranteed Tak Yun's obligations under the Agreements. 3. Each of the Agreements is subject to the law of Hong Kong and each contains a submission to arbitration under the HKIAC Rules and under the laws of the Hong Kong Special Administrative Region. 4. Mr Smallbone, who appeared for Formerank, summarised the effect of the Agreements as follows: "The contract debts 32. The Arbitrations concern the performance of two agreements, both of which were entered into between Formerank on the one part, and [Tak Yun, Mr Luo and two other individuals] on the second part. 33. The genesis of the two agreements was in mid-2012, when Mr Luo on behalf of a corporate entity proposed two types of transactions to Formerank, which are referred to as 'Transaction A' and 'Transaction B' throughout the Arbitrations and in this proceeding. These transactions were effectuated pursuant to written agreements. There have been several iterations of the agreements over time, but the actions are being brought under the latest agreements. 34. Mr Sing Yun Lin represented Formerank. 35. Transaction A was in the nature of a purchase agent agreement wherein Formerank is the purchase agent for [Tak Yun]. Under Transaction A, [Tak Yun] would inform Formerank of what products it wished to buy. Formerank would use its credit facilities with banks to buy and pay for those products. Formerank would then re-sell those products to [Tak Yun] with a mark-up and [Tak Yun] was to pay Formerank within 90 days upon Formerank paying the suppliers. 36. The latest of these agreements, dated 8 May 2016, is the subject of one of the Arbitrations. 37. Transaction B involved Formerank buying unsold inventory of [Tak Yun], which the former would then re-sell to certain downstream distributors. The prices charged by Formerank on the re-sale included a mark-up on the prices it paid to [Tak Yun]. 38. The agreement sued upon was dated 1 January 2016. It is the subject of the other Arbitration." 1. Formerank claims that Tak Yun has defaulted under the Agreements and that Mr Luo is liable under his guarantees to pay to Formerank the amount owing by Tak Yun to Formerank. 2. On 12 March 2019 Formerank made demand on Mr Luo for some US$7 million under one of the guarantees and some US$16.5 million under the other. 3. Formerank commenced the arbitral proceedings on 7 May 2019. 4. As I have said, Mr Luo is now the only active respondent. 5. In the arbitrations: 1. Formerank served a Statement of Claim dated 17 February 2020; 2. Mr Luo served a Statement of Defence and Counter Claim dated 20 April 2020; and 3. Formerank served a Statement of Reply and Defence to Counter Claim dated 15 June 2020. 1. Formerank's case in chief, as articulated in its Statement of Claim, is that: 1. Tak Yun entered the agreements to which I have referred; 2. Mr Luo guaranteed Tak Yun's obligations; 3. Tak Yun has purchased goods for which it has not paid and has acknowledged its indebtedness to Formerank; and 4. Mr Luo is liable under his guarantee for the amount owing. 1. In his Statement of Defence and Counterclaim, Mr Luo alleges that: 1. the director and shareholder of Formerank, Mr Lin, "requested and/or induced" Mr Luo to sign the 1 January and 8 May 2016 Agreements on the basis that Mr Luo "would not actually be asked to meet any payment under the guarantee" contained in those documents; 2. Mr Luo signed the documents based on those representations; 3. the 1 January 2016 Agreement "was a sham which purported to create false or disingenuous transactions involving Formerank to purchase LCD panels and/or related electronic products from Tak Yun and to resell the same to third party buyers"; 4. the 8 May 2016 Agreement "was an illegal contract which interposed Formerank to create disingenuous purchases of the Relevant Products from Tak Yun's designated suppliers to deceive Formerank's banks so that Tak Yun could make use of Formerank's credit facilities and Formerank will be able to profit from such credit facilities"; 5. the 8 May 2016 Agreement "is rescinded and/or not enforceable in law" against Mr Luo; 6. Formerank "clearly knew that it is not entitled to the purported claim" under the two Agreements, but that nonetheless Formerank "had insisted on pressurising [Mr Luo] to accede to its request for payment by directing and/or instructing debt collectors to (a) make unwarranted visits to [Mr Luo]'s home and office premises; (b) make unwarranted telephone calls to [Mr Luo] and (c) circulating and/or posting up posters or notices containing statements defamatory to [Mr Luo]"; 7. the agreements are liable to be rescinded and are not enforceable; 8. the limitation period for Formerank's claim against Mr Luo has expired and is "barred" by a nominated clause in the Agreements; and 9. Formerank has published "Defamatory Posters" in respect of Mr Luo causing Mr Luo to suffer "serious loss and damage to his reputation as well as considerable hurt, distress and embarrassment" and that, accordingly, Mr Luo is entitled to damages, including exemplary or aggravated damages against Formerank. 1. Formerank has made a detailed response to those allegations in its Statement of Reply. 2. Each of Mr Luo's Defence and Formerank's Reply exceeds 40 pages. 3. On 26 May 2020, Formerank through the HKIAC applied to the Intermediate People's Court of Xiamen City, Fujian Province, for an asset preservation order pursuant to the "Arrangement Concerning Mutual Assistance in Court Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the HKSAR". 4. On 1 July 2020, the Xiamen Intermediate People's Court made a Civil Ruling, in the nature of a freezing order in respect of certain of Mr Luo's assets in China including real estate, a cash deposit and shares. 5. Those orders were made under Article 28 of the Arbitration Law of the People's Republic of China and under Articles 102, 103 and 154 of the Civil Procedure Law of the People's Republic of China. 6. On 31 July 2020, Formerank applied to the Hong Kong Arbitral Tribunal for an "interim measure" concerning Mr Luo's Hong Kong assets. 7. That application was made under Article 23.2 of the HKIAC Rules which provides that: "At the request of either party, the Arbitral Tribunal may order any interim measures it deems necessary or appropriate". 1. Such interim measures include: " … any temporary measure, [whether in the form of an order or award or in another form]… ordered by the Arbitral Tribunal at any time before it issues the award by which the dispute is finally decided, that a party, for example and without limitation… (b) …refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself; or (c) provide a means of preserving assets out of which a subsequent award may be satisfied…" [8] 1. The same application could have been made to the Arbitral Tribunal under Article 17 of the UNCITRAL Model Law on International Commercial Arbitration 1985 ("the Model Law") that provides that: "Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures". 1. The Model law was adopted in Hong Kong by s 35 of the Arbitration Ordinance (Cap. 609) ("the Arbitration Ordinance"). 2. The "interim measures" available under the Model Law include: " … any temporary measure … provide a means of preserving assets out of which a subsequent aware maybe satisfied" [9] 1. The interim measures sought by Formerank were in the nature of a freezing order restraining Mr Luo from: "disposing the value of his assets within Hong Kong up to the value of the Claimant's claims [including but not limited to an identified commercial property in Kowloon]." 1. Formerank supported its application with an affirmation by Mr Lin [10] which asserted that it "appeared" that Mr Luo "had been dissipating his assets" including a residential property in Kowloon (referred to as the "Bayview Property") and the pledging and transfer of his shareholding in various companies apparently associated with Tak Yun. 2. In relation to the Bayview Property, Mr Lin deposed that Mr Luo: 1. entered a contract to purchase the property on 5 September 2018 for HK$11.5 million; 2. completed the purchase of the property on 12 March 2019, being the same day upon which Formerank made demand on him [11] ; 3. became the registered owner of the Bayview Property on 25 March 2019; and 4. the following day, 26 March 2019, signed a contract to sell the property for HK$10 million to a woman who appears to be his wife. 1. Mr Lin has affirmed an affidavit in support of the application before me and has deposed to these same matters. 2. On 4 August 2020, Mr Luo's Hong Kong solicitors wrote to the Arbitrators stating, in relation to the sale of the Bayview Property, that Mr Luo was "entitled to put the [Kowloon commercial] property on sale" and that: "It is also well-established that the sale of the property per se is not dissipation of assets as such. In particular, even according to [Formerank], this is not a fire sale as it has been put up for sale since March 2020. [Formerank] also does not suggest this is not intended to be an arm's length transaction, or that [Mr Luo] is otherwise trying to secretly or hastily dispose of the [Kowloon commercial property]." 1. Mr Luo's solicitors nonetheless proposed that, upon Formerank giving an undertaking as to damages: 1. there be an interim measure restraining Mr Luo from disposing or diminishing the value of the Kowloon commercial property up to the determination of the arbitration proceedings; 2. that Mr Luo have leave to apply to the Arbitral Tribunal at any time to vary that order; and 3. that if the Arbitral Tribunal later determined that the orders should not have been made, Formerank pay damages to Mr Luo. 1. On 6 August 2020 the Arbitrators made an Interim Measure Order to that effect. 2. Formerank commenced these proceedings on 15 October 2020 on which occasion I made the freezing order referred to at [8]. 3. That order has been extended with Mr Luo's consent (given without admissions) pending delivery of these reasons. Concurrent jurisdiction 1. There is no dispute that I have jurisdiction to make the freezing order by reason of Article 17J of the Model Law which, by reason of s 16 of the IA Act, has the force of law in Australia. 2. Article 17J provides for "court-ordered interim measures" and provides that: "A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in court. The Court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration." 1. Nor is there any dispute that the Hong Kong Arbitral Tribunal itself has jurisdiction to make an "interim measure" restraining Mr Luo from dealing with his Australian assets. As I have set out, the Arbitral Tribunal has recently made interim measure concerning Mr Luo's Hong Kong assets, albeit by consent. 2. Amongst the matters relevant to obtaining an interim measure under Article 17A is that: "There is a reasonable possibility that the requesting party will succeed on the merits of the claim." [12] 1. This is reflected HKIAC Rule 23.4(b) which uses the same language. 2. There is New Zealand authority suggesting this test requires something akin to a "serious question to be tried" for an interlocutory injunction and, arguably a higher threshold. [13] Australian authority, albeit in dicta, suggests the test reflects [14] or is substantively similar to [15] that required for interlocutory relief. 3. It is not necessary for me to express any final view about this matter, save to observe that the test is differently worded to that under the UCPR although, just as UCPR provisions have been construed, it appears to be directed to the overall result of the arbitration. 4. The Court of First Instance of the Hong Kong High Court also has jurisdiction to grant an interim measure in arbitration. [16] Good arguable case/sufficient prospects of success 1. Formerank's case in chief is likely to be documentary and formal. 2. As Mr Smallbone submitted: "There appears to be no substantial issue in the Arbitrations that the contracts on their face contain the obligations that are sued upon, or that the amounts claimed are mathematically correct." 1. Mr Smallbone continued: "Mr Luo's defences are of their nature claims that he will have to make out and do not impeach the proposition that, for present purposes [Formerank] has a good arguable claim. His defences will be a matter for trial. They do not answer the point that [Formerank] has a good arguable claim." 1. In my opinion, the situation is a little more nuanced than this. 2. As I have set out above, [17] the question here is whether Formerank has a "good arguable case" in the sense of one where there are "sufficient prospects" of obtaining a favourable judgment to warrant the making of a freezing order. 3. That involves consideration of the prospects of, first, Formerank making out its case in chief. I am satisfied that this is likely. 4. But it also involves consideration of the matters raised by Mr Luo in his Defence and Counter Claim. 5. It is true that Mr Luo has not yet given evidence in the Hong Kong arbitration about these matters and has not put evidence on before me. 6. But I cannot, as Mr Smallbone invites me to do, simply ignore the very serious allegations that he, in the solemn context of an arbitration, has made in his Defence and Cross Claim; and in very great detail. 7. There is no evidence before me as to the provision made in the law of Hong Kong concerning the defences and causes of action Mr Luo seeks to agitate. Formerank had adduced no evidence from a Hong Kong lawyer to the effect that, assuming the truth of the factual matters for which Mr Luo contends, they could not lead to the legal consequences he alleges. 8. Although Mr Smallbone submitted that Mr Luo's defences "do not appear prepossessing" I cannot see what conclusion I could come to about them, save that if they are made out they will be a complete defence to Formerank's claim. [18] 9. It appears that there will be a stark contest of fact before the arbitrators. 10. I cannot predict what the outcome of that contest will be, and thus what prospects Formerank has of achieving a favourable award in the arbitration. 11. For this reason, I am not prepared to extend the freezing order that I made on 15 October 2020. 12. In any event, this raises allied questions. 13. The first is whether the Arbitral Tribunal is in any event in a better and more appropriate position to form any view about Formerank's prospects than I am. 14. The second is whether "comity and deference", to adopt the words of Mr Redwood, who appeared for Mr Luo, compel the conclusion that, as a matter if discretion, I should not entertain Formerank's application because: 1. the Arbitral Tribunal is seized of the underlying dispute between Formerank and Mr Luo; 2. that dispute has no connection with New South Wales; 3. the dispute is to be determined in accordance with Hong Kong law and under HKIAC Rules; 4. the seat of the arbitration is in Hong Kong; and 5. the lex arbitri or supervisory law is the Arbitration Ordinance and not the IA Act 1. In Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [19] the Western Australian Court of Appeal said: "A court may properly be reluctant to make a freezing order except for a limited time in circumstances where there is a serious contest as to whether the applicant for a freezing order has established a good arguable case for final relief. In such circumstances, the court may be seen to trespass on the role of the arbitral tribunal if it resolves a contest between the parties as to the merits of a claim which the arbitral tribunal will ultimately be required to determine." [20] 1. The circumstances in Duro were different from those before me and the Court earlier emphasised that Article 9 of the Model Law expressly provides that it is not incompatible with an arbitration agreement for a court to grant an interim measure, including a freezing order and that: "…where an applicant satisfies the onerous requirements for obtaining a freezing order, there is no reason for a court to adopt a default position that the order should only be made until the arbitral tribunal can consider the question" [21] 1. And in Duro, the court upheld the trial judge's decision to grant a freezing order in aid of a pending arbitration. 2. There is another consideration. 3. Were the Arbitral Tribunal to review an application by Formerank for an Interim Measure restraining Mr Luo from dealing with his Australian Assets, it would have regard to a differently worded test to that under UCPR 25.14, namely, that I have set out at [55] above. No doubt the Arbitral Tribunal would be familiar with those words, and the manner in which they have been construed, including in the authorities to which I have referred and perhaps also in Hong Kong. 4. Mr Redwood also drew attention to Mr Gary Born's International Commercial Arbitration [22] in which he stated: "Even if a national court has the power to issue provisional measures in connection with a foreign arbitration, there are strong reasons for exercising such authority with circumspection. When a court in State A issues provisional measures in connection with an arbitration seated in State B, it runs a double risk, of interfering in (a) the arbitral proceedings, and (b) the (limited) supervisory jurisdiction of the courts in the arbitral seat. In these circumstances, courts have rightly demonstrated caution in granting provisional measures." [23] 1. In these circumstances, I am persuaded that Mr Redwood was correct to submit that in circumstances where the order sought by Formerank concern an international arbitration seated in Hong Kong: "The Hong Kong arbitral tribunal is the body most familiar with the dispute on foot between the parties and, accordingly, is best placed to form a view about the merits of those proceedings. And that is especially so when the arbitration is at such an early stage. … This is important because the Plaintiff's Orders involve not only trespassing on the role of the arbitral tribunal in resolving a contest between the parties as to the merits of a claim which the arbitral tribunal will ultimately be required to determine, but also involves displacing the powers of the arbitral tribunal as the natural forum empowered under Article 17 of the Model Law (as adopted by Part 6 of the Hong Kong Arbitration Ordinance) to grant interim measures or, in appropriate cases, the courts at the juridical seat (i.e., Hong Kong courts)." 1. I find this a further reason to not make the freezing order. Risk of dissipation 1. Because of the conclusions I have reached above, it is not necessary for me to consider whether there is a "danger" that any award obtained by Formerank in the Hong Kong arbitration, or any judgment it obtains as a result of such an award will not be satisfied because of Mr Luo's disposition with his assets. 2. Mr Smallbone pointed to what he described as being the "troubling" evidence concerning Mr Luo's dealings with the Hong Kong Bayview Property. [24] 3. However, this application directed to Mr Luo's Australian property which, relevantly, comprises real estate, and there is no evidence that Mr Luo might deal with those assets adversely to Formerank's interest. 4. Mr Luo purchased one of the properties, at Gordon, in October 2014 and the other, at Catherine Field, in 30 May 2018. 5. There is evidence suggesting that no one is in occupation of the Gordon property. 6. Mr Smallbone submitted that: "The concern is that now that [Mr Luo] knows [Formerank] is aware of Australian assets, [Mr Luo] may undertake prejudicial actions in respect of those assets unless restrained." 1. However, as Mr Smallbone candidly said to me on the hearing of the ex parte application on 15 October 2020: "I can't point to any known step taken in Australia to engage in any imminent disposition of property…" 1. And, as Mr Redwood submitted, many months have elapsed since Formerank obtained the Chinese Freezing Order and the Hong Kong Interim Order. Mr Luo, despite having the opportunity to do so, has made no attempt to dispose of his Sydney properties. 2. In these circumstances, were it necessary to me to come to a conclusion on this matter, I would not be satisfied that there is a "danger" of dissipation of Mr Luo's Australian assets sufficient to make a freezing order Conclusion 1. The parties should confer and agree on the orders needed to give effect to these reasons. ********** Endnotes 1. According to allegations he makes in his defence in the arbitrations pending in Hong Kong to which I refer below. 2. Sections 4 and 5. 3. UCPR r 25.11. 4. For example Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 at [57] (Bathurst CJ; Beazley P and Barrett JA agreeing). 5. Ninemia Maritime Corp v Trave GmbH & Co KG (The Niedersachsen) [1983] 2 Lloyd's Rep 600 at 605 (Mustill J). 6. Severstal Export v Bhushan Steel Ltd (supra) at [51]. 7. Per Sackar J in Bhushan Steel v Severstal Export [2012] NSWSC 583 at [144]; not disturbed on appeal. 8. Article 23.3. 9. Article 17(2)(c). 10. To whom I have referred above at [25] and [32(a)] and who is the sole director of and a shareholder in Formerank. 11. See [27] above 12. Article 17A(1)(b) of the Model Law which, by reason of s 36 of the Arbitration Ordinance has effect in Hong Kong. 13. Safe Kids in Daily Supervision Ltd v McNeill [2012] 1 NZLR 714 at [30] (Asher J); followed in New Zealand Association of Credit Unions v Finszoft Solutions (New Zealand) Ltd [2019] NZHC 3198 at [30] (Wylie J) and Green Acres Franchise Group Ltd [2014] NZHC 402 at [6] (Lang J). 14. Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA 77 at [448] (Quinlan CJ, Beech and Vaughan JJA). 15. Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd [2020] VSC 476 at [75] (Lyons J). 16. Section 45 of the Arbitration Ordinance which states that Article 17J of the Model Law does not have effect in Hong Kong but which makes separate provision for that court's power to grant an interim measure. 17. At [18] and [19]. 18. As Mr Smallbone's reply submissions appeared to accept: at [52]. 19. [2018] WASC 136 ("Duro"). 20. At [150]. 21. At 153. 22. G Born, International Commercial Arbitration (2nd Ed, 2014, Kluwer Law International) at 2558.. 23. Citing Borden Inc v Meiji Milk Products Co., 919 F.2d 822 (2d Cir. 1990); Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334; 'Lady Muriel' v Transorient Shipping Ltd [1995] HKCA 615 (HK Ct App). 24. See [46] above. 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: 18 November 2020