New South Wales Supreme Court CITATION : Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 182 HEARING DATE(S) : 18 March 2009 JUDGMENT DATE : 18 March 2009 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Orders finally settled. CATCHWORDS : PROCEDURE [482] – Judgments and orders – In general – Other matters – Whether inclusion in declaration of a statement that moneys were misappropriated was justified. CATEGORY : Procedural and other rulings CASES CITED : Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 98 Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 167 5533/06 Lym International Pty Limited (P1) Limin Yang (P2) Yang Liu (P3) PARTIES : Yu Po Chen (D1) Westpac Banking Corporation (D2) 5049/07 Leonilda Marcolongo (P) Lym International Pty Limited (D1) Yu Po Chen (D2) FILE NUMBER(S) : SC 5533/06; 5049/07 T S Hale SC & S A Wells (Lym International, Yang & Liu) COUNSEL : J S Emmett (Chen) D H Mitchell (Marcolongo) M R J Thomas, Solicitor (WBC) Unsworth Legal Pty Ltd (Lym International, Yang & Liu) SOLICITORS : Middletons (Chen) Dunstan Legal (Marcolongo) Henry Davis York (WBC) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J WEDNESDAY, 18 MARCH 2009 5533/06 LYM INTERNATIONAL PTY LIMITED & ORS v YU PO CHEN & ANOR 5049/07 LEONILDA MARCOLONGO v LYM INTERNATIONAL PTY LIMITED & ANOR JUDGMENT 1 HIS HONOUR: In these complicated matters I have delivered two judgments: Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 98 ("my substantive judgment") and Lym International Pty Ltd v Chen; Marcolongo v Lym International Pty Ltd [2009] NSWSC 167 ("my 16 March judgment"). 2 At the tail end, there have been further submissions about the form of the orders including some new points that have been raised only this morning. Whilst on the one hand it creates considerable difficulty to have the matters run on, on the other hand I acknowledge that the orders are extremely complex and difficult to deal with. 3 Contrary to what I have earlier indicated, it is contended on behalf of the plaintiffs in 5533/06 that the stay I grant should be for 28 days only, not for 42 days: see my 16 March judgment [17]. However, I adhere to my previous fixing of the time of stay at 42 days. This allows 28 days for notification of an appeal, if there is to be one, and then 14 days to approach a Judge of Appeal concerning any continuation of stay or other orders about an interlocutory regime while the appeal is pending. 4 Also, relating to the stay, it is pressed on me on behalf of Mr Chen that I should give at least a 72 hour stay of order 16 concerning the payment out of security. However, for the reasons given in my 16 March judgment at [20], I do not propose to grant any stay in relation to order 16. 5 The most difficult of the matters that have been debated this morning is in relation to the form of order 6(a)(ii). The plaintiffs in 5533/06 contend for the inclusion of the words as an exception to order 6(a)(ii) "except for the $360,000 paid to Kingsway on 15 August 2006". Mr Emmett, on behalf of Mr Chen, is certainly in agreement that that amount ought to be excepted because, although taken from the bank account, it was paid to discharge the Kingsway mortgage and therefore for the benefit of Lym International as the mortgagor and of Ms Yang as a guarantor of that mortgage. 6 However, he contends that in addition or in substitution for that exception there should be an exception to the extent that the money has been repaid in accordance with orders 12 and 13. It is contended on behalf of the Lym International parties that that gives Mr Chen a double credit when read with order 9(a)(iii). Mr Emmett contends that the $360,000 is caught by his wording. I am inclined to agree with the submission on behalf of Lym International that the wording creates a double up in favour of Mr Chen. However, whether it does or not, I cannot see that an exception in those terms has the effect contended for by Mr Emmett or in reality makes any sense at all. 7 In the circumstances I do not propose to include Mr Emmett's exception in order 6(a)(ii) but I shall include the exception in relation to the $360,000 contended for on behalf of Lym International and which Mr Chen welcomes in the absence of his exception being included in the order. If I am wrong and the orders as made prove to have some unintended effect, application may be made under the liberty to apply. 8 Updated interest figures have been given to me and will be included in the final orders. 9 The other contention on Mr Chen's behalf is that he repeats his submission that the words characterising the abstraction of the money from the bank accounts as misappropriations ought to be omitted from the relevant declarations. I decided in my 16 March judgment at [15] that they ought to be included. Quite apart from the fact that I came to that conclusion in [181] of my substantive judgment, I do not accept that the fact that Mr Chen had a general power of attorney in any way alters the situation in relation to this matter. It was submitted that there is no finding that Mr Chen knew that the power of attorney did not permit him to use the funds in the manner in which he used them and that he therefore lacked the mental element necessary to found a declaration that the funds were misappropriated. It is true there was no finding in those terms. But, whether he realised it or not, Mr Chen was not authorised by a general power of attorney to take and use money for his own purposes. It might be observed, in addition, that he did not have, as I understand it, a general power of attorney from Jasmine at all. But, even in relation to the money taken from Ms Yang's account, there could have been no authorisation by that power for him as a fiduciary to use those moneys for his own purposes. His deliberately taking and using the moneys in that way is sufficient to support a finding that the taking of the money was a misappropriation, whatever he knew or did not know about the effect of any power of attorney. ********** 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.