Supreme Court New South Wales Medium Neutral Citation: Wang v Zhao [2012] NSWSC 706 Hearing dates: 22 May 2012 Decision date: 26 June 2012 Jurisdiction: Equity Division Before: Ward J Decision: Temporary stay of proceedings to be granted on satisfaction of conditions imposed on the stay Catchwords: CONFLICT OF LAWS - stay of proceedings - proceedings concerning application brought under s 66G Conveyancing Act 1919 (NSW) in relation to matrimonial property situated in New South Wales - where both parties resident in People's Republic of China - where proceedings on foot in People's Republic of China regarding disposition of matrimonial property - stay sought pending determination of other proceedings - HELD - appropriate to grant temporary stay of s 66G proceedings pending outcome of Chinese proceedings on certain conditions Legislation Cited: Conveyancing Act 1919 (NSW) Foreign Judgments Act 1991 (Cth) Trade Practices Act 1974 (NSW) Cases Cited: Armacel Pty Ltd v Smurfit Stone Container Corp (2008) 248 ALR 573; [2008] FCA 592 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 Commonwealth v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 Guardian Group Australia Pty Ltd v Alice Lui [2005] NSWSC 1299 Henry v Henry (1996) 185 CLR 571 Mala Pty Ltd v Johnston (1995) 13 ACLC 100 Moore v Inglis (1976) 9 ALR 509 National Australia Bank v Pasupati [2011] NSWSC 540 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 Pascoe v Dyason [2011] NSWC 1217 Ridgeway v The Queen (1995) 184 CLR 19 Rocklea Spinning Mills Pty Ltd v Consolidated Trading Corp [1995] 2 VR 181 Rogers v The Queen (1994) 181 CLR 251 Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311 Slough Estates Ltd v Slough Borough Council [1968] Ch 299 Telesto Investments Ltd v UBS AG [2012] NSWSC 44 United Pacific Finance Pty Ltd v Tarrant [2009] NSWSC 630 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 Williams v Williams [1979] 1 NSWLR 376 Texts Cited: M Davies, A Bell, P L G Brereton, Nygh's Conflict of Laws in Australia (8th ed, 2010) Category: Interlocutory applications Parties: Jianying Wang (Plaintiff) Shangyang Zhao (Defendant) Representation: Counsel: H K Insall SC (Plaintiff) S Golledge (Defendant) Solicitors: Hunt & Hunt (Plaintiff) Auyeung Hencent & Day (Defendant) File Number(s): 12/003879 Judgment 1HER HONOUR: Before me for hearing on 22 May 2012 was an application (by Notice of Motion dated 6 May 2012) by the defendant (Mr Zhao) seeking a temporary stay of proceedings in this Court. Those proceedings have been brought by his former wife, Ms Wang, for orders under s 66G of the Conveyancing Act 1919 (NSW) to appoint trustees for the sale of a property in Vaucluse of which the couple are currently registered proprietors as joint tenants. The stay is sought pending the determination of other proceedings commenced by Ms Wang in China in which she seeks to enforce (and in some respects vary) an agreement as to the division of the matrimonial property of the couple (as well as orders in relation to property not covered by that agreement). Mr Zhao is resisting the relief claimed in the proceedings in China (and in those proceedings Mr Zhao has raised, or is proposing to raise, an allegation that he was tricked or misled into signing the agreement while intoxicated). 2The basis for the temporary stay sought by Mr Zhao is that the dispute in relation to the Vaucluse property is one aspect of the matrimonial property dispute presently being litigated between the parties in China. In essence, Mr Zhao's case is that the s 66G application will inevitably be affected by the outcome of the proceedings in China and thus that the s 66G application ought be stayed pending the determination of those proceedings. Background Facts 3The relevant facts can be briefly stated. The parties are Chinese citizens and each is presently resident in China (though they resided for a time in this country). They were married in 1998 and were divorced in China in December 2010. Mr Zhao's ability to speak English is said to be limited. 4In about April 1999, the couple purchased the Vaucluse property for the sum of $12,900,000. They lived in that property for some period up until late 2009. 5It is not disputed that, in early December 2010, the parties signed a document that made provision for matters such as child custody, child support and the disposition of matrimonial property (referred to in submissions as the Divorce Agreement). Mr Zhao contends that there was an earlier oral agreement made between the parties in China to the effect that he would receive the properties outside China that were owned by the parties. (There is no suggestion that there are any "Overseas assets" in Australia other than the Vaucluse property.) The Divorce Agreement itself refers to a previous agreement, when recording the agreement that "Overseas assets shall be shared equally by both parties in line with the previous agreement" (my emphasis). The only indication in the Divorce Agreement of the content of that "previous agreement" is the statement that the signed document is "in line with" that previous agreement. 6As noted above, Mr Zhao contends that he signed the Divorce Agreement as a result of the fraud or trickery of his ex-wife, in circumstances where he was affected by alcohol, had not previously seen the document (which she had prepared) and had not read the agreement when he signed it. It is alleged that Ms Wang presented him with the document and told him that it was the final version of the divorce agreement "with everything in it". The December Agreement was signed in a Civil Marriage Office in China. Mr Zhao contends that he did not review the document until some six months later, when Ms Wang called him to enquire as to her share of the proceeds of the foreign assets. 7In October 2011, Ms Wang commenced proceedings in China seeking orders for the enforcement of the Divorce Agreement (but, relevantly for present purposes, seeking no relief in respect of the Vaucluse property) and some variation to the Divorce Agreement (in relation to the management of some property in China). Mr Zhao (who maintains that he did not receive notice of the proceedings in China until March 2012) filed a Defence in the proceedings in April 2012. He now intends to file an Amended Defence. (There was some confusion as to whether the copy of the defence in the overseas proceeding that was in evidence before me was the original or the proposed amended defence (since the document that was identified as the proposed Amended Defence is dated 13 April 2012, the date when the original Defence was said to have been filed). Nevertheless, Senior Counsel for Mr Zhao (Mr Insall SC) confirmed that his instructions were that the pleading in evidence before me was the Amended Defence proposed to be filed in the proceedings in China.) 8The bases on which Mr Zhao intends to defend the claims made in the proceedings in China include not only that the Divorce Agreement should be set aside because it was signed by Mr Zhao when he was intoxicated and had been misled by Ms Wang but also that it is null and void as infringing the interests of third parties and that the earlier alleged oral agreement (under which Mr Zhao contends he was to be entitled to the overseas properties) should be enforced. In the alternative, Mr Zhao contends that the Court should vary the terms of the Divorce Agreement. (As I understand it, if the Court in China were to set aside the Divorce Agreement but were not to find that there was a binding earlier oral agreement in the terms alleged by Mr Zhao (or at all), then the Court in China would be asked to exercise its jurisdiction to make orders for the disposition of the matrimonial property under the applicable Chinese law.) 9There is some evidence (from Mr Zhao's solicitors in China) as to the procedure for determination of disputes in the relevant Court in China, to which Mr Insall points as suggesting that there may be only a relatively short period, of say six months, for the determination of the proceedings in China. However, the evidence in this regard is little more than a general outline of procedure and (without intending any criticism of the foreign court or its processes) that procedure seems open to delays occurring at various points (for example, if there were to be a review of decisions made at various points in the litigious process). It is not clear precisely what are the further steps to be taken in the proceedings in China. 10In 2011, the Vaucluse property was advertised for sale. (Mr Zhao does not dispute that the Vaucluse property has been on the market, a fact that suggests that it is not the prospect of a sale of the property per se with which he has difficulty, but, as I understand it, he wishes to retain control of any sale process.) 11Ms Wang lodged a caveat on the title of the Vaucluse property in October 2011, fearing an "improper dealing" with the land. She has deposed to the discovery in November 2011 of a document purporting to be a power of attorney in her name and appointing an attorney (Bin Liang) with authority to deal with her interest in the Vaucluse property. Ms Wang has deposed that she does not know anyone by that name. She denies having signed that power of attorney. I note in this regard that by affidavit was affirmed on 21 May 2012, Mr Sunny Auyeung (Mr Zhao's solicitor) has deposed to the instructions received in telephone conversation with Mr Zhao in which the latter asserted that he did not sign or witness the withdrawal of caveat or power of attorney and had no knowledge of the alleged forgery. The tenor of those responses, as reported by Mr Auyeung, seems somewhat dismissive and it is by no means apparent that Mr Zhao was concerned at the prospect that there might have been an attempted fraudulent dealing with Ms Wang's interest in the property. 12These proceedings were commenced in January 2012. In February 2012, the Land Titles Office notified Ms Wang's solicitors that it had received for registration a withdrawal of caveat and a mortgage document in respect of a $4.75 million advance purportedly made jointly to Ms Wang and Mr Zhao by the National Australia Bank, both documents having been signed in her name by the alleged attorney. The Land Titles Office has presently refused to register either the withdrawal of caveat or the mortgage. Legal Principles 13There is power in the Court to stay proceedings which amount to an abuse of process so as to safeguard the administration of justice, to protect the integrity of the Court's process or to prevent serious and unjustified prejudice or harassment (Rogers v The Queen (1994) 181 CLR 251 at 286; Ridgeway v The Queen (1995) 184 CLR 19 at 74-75; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at [9]-[16]). 14Mr Insall places weight on the decision of Rath J in Williams v Williams [1979] 1 NSWLR 376 for the submission that, in circumstances where the parties' matrimonial property rights are presently the subject of litigation in China, the present s 66G proceedings should be stayed. 15In Williams, it was the inherent jurisdiction of the Court to stay its own proceedings in order to prevent an abuse of process that was exercised by Rath J. His Honour did so in the context of an application for the appointment of trustees for sale at a time when there were on foot proceedings in the Family Court to determine the property rights of the couple who were the registered proprietors of the property. Rath J said: For these reasons, I am of the opinion that the Court has jurisdiction to appoint trustees for sale under s. 66G. However, in the circumstances, I consider that there should be a stay of proceedings. The Court has inherent jurisdiction to stay its proceedings to prevent an abuse of its process. Though the jurisdiction should be exercised sparingly, the Court has a wide discretion, and will stay proceedings in its own jurisdiction for the purpose of the prosecution of proceedings in another jurisdiction if serious injustice would otherwise be occasioned: Maritime Insurance Co. Ltd. v. Geelong Harbor Trust Commissioners; Rockware Glass Ltd. v. MacShannon; Tansell v. Tansell. If the wife's proceedings for divorce have been instituted in good faith, and if there is a genuine case for the alteration of property rights, it would be unjust not to permit the wife to pursue her remedies in the Family Court. In the absence of satisfactory evidence on this aspect of the case, the stay to be granted at this stage should be for a comparatively short period only, and be subject to the plaintiff's right to apply on short notice for the lifting of the stay. ... (footnotes omitted) (my emphasis) 16Mr Insall also referred to the decision of Buddin J in National Australia Bank v Pasupati [2011] NSWSC 540 as a recent example of acceptance of the approach in Williams (though accepting that the facts in that case were very different). In Pasupati, his Honour noted at [24] that the application before him was on the basis that the s 66G application was an abuse of process (since property proceedings between the applicant and the respondent had been on foot since 2006 in the Family Court) and referred to Counsel's submissions based on Williams but did so without comment, ultimately determining the application on a different basis. 17Counsel for Ms Wang (Mr Golledge) submits that the relevant principles on the present applicable on the present application (to the extent that they differ from those in Williams) are those stated by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 (and endorsed by the High Court in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538) on an application for a stay of proceedings in this jurisdiction in favour of proceedings on foot in another jurisdiction based on this being a forum non conveniens. The test on such an application is for the applicant for the stay (in this case Mr Zhao) to satisfy the Court that the local jurisdiction is a "clearly inappropriate" forum (it not being sufficient to show that another jurisdiction might be more appropriate). 18In this regard, Mr Insall's response is that whether the jurisdiction applied in Williams is the relevant jurisdiction on this application or the applicable principles are those relating to forum non conveniens (of which it is suggested Williams may be a subset), this is an appropriate case for a temporary stay on the basis that the proceedings in China are likely to affect the outcome of the present proceedings. 19In CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345, it was noted that the power to stay proceedings on the ground of forum non conveniens is an aspect of the inherent or implied power which every court has to prevent its own processes being used to bring about injustice. Hence, Williams can be seen as a particular application of that power. 20In Voth, it was recognised that the rationale for the exercise of the power is the avoidance of injustice between the parties in the particular case. The test to be applied on such an application is whether, having regard to the controversy as a whole, the proceedings are vexatious or oppressive in the sense in which that expression was used in Voth namely, that they are "productive of serious and unjustified trouble and harassment" or "seriously and unfairly burdensome, prejudicial or damaging"; (CSR v Cigna at 401; as applied in Armacel Pty Ltd v Smurfit Stone Container Corp (2008) 248 ALR 573; [2008] FCA 592 at 96). In Voth, the majority noted (at 558) that the "clearly inappropriate forum" test: ...focuses on the advantages and disadvantages arising from a continuation of the proceedings in the selected forum rather than the need to make a comparative judgment between the two forums. That is not to deny that considerations relating to the suitability of the alternative forum are relevant to the examination of the appropriateness or inappropriateness of the selected forum. The important point is that, in those cases in which the ascertainment of the natural forum is a complex and finely balanced question, the court may more readily conclude that it is not a clearly inappropriate forum. 21 "Vexatious" and "oppressive" are terms not used as directly descriptive of the conduct of the plaintiff but as "descriptive of the objective effect which continuance of the action would have on the defendant" (Oceanic, at 247). In Oceanic, Deane J cautioned (as 248) that: The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him. 22In Henry v Henry (1996) 185 CLR 571 the majority (at 591) said: It is prima facie vexatious and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with respect to the matter in issue [their Honours there referring to Moore v Inglis (1976) 50 ALJR 589]. And although there are cases in which it has been held that it is not prima facie vexatious, in the strict sense of the word, to bring proceedings in different countries, the problems which arise if the identical issue or the same controversy is to be litigated in different countries which have jurisdiction with respect to the matter are such, in our view, that, prima facie, the continuation of one or the other should be seen as vexatious or oppressive within the Voth sense of those words. (my emphasis) 23Their Honours went on to say that it did not necessarily follow that because one or other of the proceedings is prima facie vexatious or oppressive that the proceedings to be stayed should be the local proceedings but that: ... it does follow that the fact that there are or, even, that there may be simultaneous proceedings in different countries with respect to the same controversy is highly relevant to the question whether the local proceedings are oppressive in the sense of "seriously and unfairly burdensome, prejudicial or damaging", or, vexatious, in the sense of "productive of serious and unjustified trouble and harassment". And it also follows that courts should strive, to the extent that Voth permits, to avoid that situation.) 24Insofar as it is Ms Wang who has commenced both sets of proceedings, I note that in United Pacific Finance Pty Ltd v Tarrant [2009] NSWSC 630, Austin J at [33] commented that "the commencement of proceedings which create duplicity of proceedings is an abuse of process" (citing Moore v Inglis (1976) 9 ALR 509, at 514 and 516 per Mason J; Commonwealth v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192, at [56]-[63] per McColl JA; and referring also to Slough Estates Ltd v Slough Borough Council [1968] Ch 299, at 314-5 per Ungoed-Thomas J). 25Nevertheless, there may be circumstances in which the prima facie position (that it is an abuse of process for any party to institute two proceedings for the one claim) may be the subject of an explanation satisfactory to the Court (see Mala Pty Ltd v Johnston (1995) 13 ACLC 100 at 102; Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311 at 317; Guardian Group Australia Pty Ltd v Alice Lui [2005] NSWSC 1299 at [58]). Similarly, there may be a sufficient explanation as to why two proceedings raising the same or similar issues should be continued at the same time. 26Tadgell J in Rocklea Spinning Mills Pty Ltd v Consolidated Trading Corp [1995] 2 VR 181 (at 183) said: The pendency of the New Jersey proceeding could not alone render the Victorian court a clearly inappropriate forum for determination of the dispute ... the mere pendency of a proceeding upon a dispute in another jurisdiction does not render litigation upon the dispute inappropriate here ... If the dispute were litigated in New Jersey there might be good reason to restrain its re-litigation in Victoria, assuming a re-litigation of the issues to be otherwise competent. The prospect of litigation of the dispute in New Jersey is alone, however, no reason to deny a prospect of its litigation here. 27The relevant factors to be taken into account when considering whether the local forum is a clearly inappropriate forum are summarised in Nygh's Conflict of Laws in Australia (8th ed) as being: (a) Any significant connection between the forum selected and the subject matter of the action and/or the parties, such as the domiciles of the parties, their places of business and the place where the relevant transaction occurred or the subject matter of the suit is situated, and other factors affecting convenience or expense, such as the availability of witnesses. (b) Any legitimate and substantial juridical advantage to the plaintiff, such as greater recovery, more favourable limitation period, better ancillary procedures, or assets within the jurisdiction against which any judgment can be enforced. (c) Whether the law of the forum will supply the substantive law to be applied in the resolution of the subject case or whether the matter is governed by foreign law. Reasons 28At the outset I note that Mr Insall emphasises that what is sought in the present case is not a permanent stay and that Mr Zhao will undertake to the Court to do all things necessary on his part to prosecute diligently the proceedings in China. 29As to the potential impact that the outcome of the proceedings in China may have on the exercise of the discretion whether any order should be made under s 66G, the Court has a discretion to refuse a s 66G application where, for example, the claim would be inconsistent with some enforceable agreement or on the basis of an estoppel (referring to Pascoe v Dyason [2011] NSWC 1217 at [6] to [8]). Therefore, it is submitted (and I accept) that if the outcome of the proceedings in China were to be that the alleged oral agreement with respect to the foreign properties is upheld (or the Divorce Agreement is set aside or varied) with the result that Mr Zhao were to be found entitled to call for the whole of the Vaucluse property, then this would be a basis for the Court in the present proceedings to refuse the application by Ms Wang for orders under s 66G. 30As to the decision in Williams, Mr Golledge submits that what there rendered a stay appropriate was that the Family Court was a jurisdiction in which the Court could alter the couple's property rights and that, if it did so (say, by extinguishing the wife's interest as a joint tenant), this could render the s 66G proceedings otiose (by depriving the wife of standing to make the application). Thus, it is submitted that it was the complete overlap in the two jurisdictions that rendered it an appropriate exercise of judicial discretion in Williams for the s 66G proceedings to be stayed pending the outcome of the proceedings in the more appropriate forum. 31Mr Golledge submits that Williams is distinguishable from the present case because here the s 66G proceedings will not be rendered otiose by a decision in the proceedings in China. That submission is put on the following bases: first, that there is no evidence of any claim by Mr Zhao in the proceedings in China for the conveyance of the title to the Vaucluse property into his name and, second, that such a judgment would not be enforceable under the Foreign Judgments Act 1991 (Cth) (and would at most be a judgment in personam between the parties, which would not be immediately enforceable at common law). 32It is submitted that even if Mr Zhao were to be successful in having the Divorce Agreement set aside in China, that would not render the s 66G proceedings unnecessary because the property would remain registered in the names of the couple (though it is conceded that there might be a finding inter partes as to the parties' rights in relation thereto). Alternatively, it is said that if Mr Zhao succeeded in obtaining a finding that there was an enforceable oral agreement as to the disposition of the couple's interests in the Vaucluse property, that might give rise to an order by the Court in China that Ms Wang take certain steps in relation to the property but would not foreclose argument under s 66G in this Court (as opposed to being a factor to be taken into account in the exercise of the discretion under s 66G). 33As to the first of those arguments, Mr Insall contends that Mr Zhao is seeking in the overseas proceedings to enforce the alleged oral agreement under which he would be entitled to the whole of the Vaucluse property (and hence the suggestion that Mr Zhao is not seeking relief in China that would require a conveyance of Ms Wang's interest in the Vaucluse property to him is disputed). (In that regard, insofar as there is uncertainty to the status of the pleadings or the relief sought, I have proceeded on the basis that, by invoking the earlier oral agreement in the overseas proceedings, the relief Mr Zhao will seek if that agreement is upheld is or includes relief in relation to the Vaucluse property.) As to the second of those arguments, Mr Insall submits that the basis on which Williams is sought to be distinguished is without substance, since a court of equity determining a s 66G application would take into account (if that were to be the case) a foreign judgment binding the same parties that appear before it in relation to a question of entitlement to property. (I note in this regard that Mr Golledge accepts that an issue estoppel might well arise in relation to the parties' rights inter se in respect of the matrimonial property and, if so, that would be highly relevant to the outcome of the s 66G proceedings). It is submitted by Mr Insall that it is just as much an injustice for Mr Zhao to be prevented from litigating his rights in China (in proceedings there commenced by his former wife) as it was for the wife in Williams to be prevented from litigating that issue in the Family Court. 34The approach in Williams is predicated on the jurisdiction of the court to prevent an abuse of its process. The jurisdiction to stay proceedings on the ground of forum non conveniens is noted in CSR v Cigna as being an aspect of that jurisdiction, based (as recognised in Voth) on the rationale of the avoidance of injustice between the parties in the particular case. On the present application, I consider first whether in all the circumstances the local forum is a clearly inappropriate forum for the resolution of the s 66G dispute (namely, the dispute as to how the parties' joint interest in the Vaucluse property is to be terminated) and then whether, if it is not, there would nevertheless be an abuse of process or injustice in permitting the local proceedings to continue in advance of a determination in the foreign proceedings. 35The issues involved in the proceedings in China go (at least in part) to whether (as between the two parties) the interest that each has in the property (as recorded on the title to the Vaucluse property) should be dealt with pursuant to an earlier oral agreement or pursuant to the Divorce Agreement or otherwise as part of the disposition of matrimonial assets according to the applicable law on the dissolution of a marriage in China. 36Whatever happens in the proceedings in China, absent co-operation between the parties (whether by agreement or following compulsion by the court processes in China), the termination of the joint tenancy interests recorded on the title to the land in this jurisdiction can only practically be dealt with under the statutory jurisdiction conferred by the Conveyancing Act 1919 (NSW). In that sense, it is axiomatic that the present jurisdiction is not a clearly inappropriate forum. Ms Wang is seeking the exercise of a discretionary power conferred by statute on this Court in relation to land situated in the forum. Even though those proceedings may require evidence to be obtained from persons resident outside the jurisdiction or expert evidence as to the law of another jurisdiction, as Mr Insall contends, this cannot be a clearly inappropriate jurisdiction to exercise that statutory power. However, that section does confer a discretionary power on the judge hearing the application and, in the exercise of that discretion, considerations as to the operation of any earlier relevant agreement between the parties would need to be taken into account. Moreover, the standing to bring such an application rests on proof of at least equal ownership in the property. Therefore, it is clear that the outcome of the issues sought to be raised by Mr Zhao in the proceedings in China has the potential to affect the Court's decision in the local proceedings. 37I accept that the mere fact that there are proceedings in different countries touching upon the disposition of interests in the matrimonial property does not mean that the s 66G proceedings are necessarily vexatious or oppressive. However, the fact that Ms Wang did not herself seek relief in the overseas proceedings in relation to the Vaucluse property has been overtaken by the fact that Mr Zhao's defence will now inevitably put the parties' entitlements in relation to that property in issue. 38Although it was further submitted that Ms Wang, having invoked the jurisdiction in China before the commencement of these proceedings, should not be entitled "to circumvent that jurisdiction simply because a prospect of a negative outcome arises", I accept Mr Golledge's submission that there is nothing to support any conclusion that Ms Wang's commencement of the present proceedings was due to an apprehension that the proceedings in China will or may be determined against her. As pointed out by Mr Golledge, the local proceedings were commenced in January this year some time before the proposed amendment to Mr Zhao's defence, to raise the allegations of drunkenness, was first raised. 39The question seems to me to be whether (the local forum not being a clearly inappropriate forum for a s 66G application), it can nevertheless be said that the continuation of the s 66G proceedings at this stage would potentially create such an injustice that a temporary stay should nevertheless be granted (to prevent an abuse of the Court's process in the sense considered in Williams). 40In that context, I note that if the dispute here is seen more broadly as a dispute as to the entitlements to matrimonial property (whether pursuant to an agreement made in China or under the applicable law in China governing the disposition of property consequent upon a divorce), then it would by no means be the case that this was not a clearly inappropriate forum. 41The factors on which Mr Zhao relies for the stay relate, broadly, to: the residency of both parties outside the jurisdiction; the fact that the underlying dispute between them is a matrimonial dispute in respect of which there are proceedings already on foot in China (which law, it can be assumed, would have governed the couple's marriage and divorce, both of which took place in China); the potential need for witnesses resident in China and not compellable in this jurisdiction to give evidence as to the events in China surrounding the execution of the Divorce Agreement; the difficulties occasioned by the likely need for evidence from a number of witnesses to be given through interpreters; the need for expert evidence as to Chinese law in relation to the enforceability of the oral agreement and as to the entitlement of the parties to avoid the Divorce Agreement in accordance with Chinese law or have it varied; and the unique character of real estate (in the sense that if the property is sold by trustees appointed for sale under s 66G and Mr Zhao is ultimately found to have been entitled to a transfer of the property under the earlier oral agreement or, the Divorce Agreement having been set aside, under the law applicable in China to the disposition of matrimonial assets following a divorce, then Mr Zhao will have lost the property and will be left to a claim in respect of the proceeds of sale). 42As to the last point, while the property has been on the market with Mr Zhao's consent for some time, and hence it could be inferred that there will be no prejudice arising from a desire by Mr Zhao to retain the property as opposed to his claim to the whole of the proceeds of sale, I was invited by Mr Insall to take judicial note of the common preference of vendors to control the sale of their own property rather than for there to be a (forced) sale of their property by trustees appointed for sale. 43In relation to the position with overseas witnesses, Mr Golledge emphasises (and I accept) that there may well be a need for the parties to come to Australia to give evidence in any event (having regard to the security that has now apparently been granted over the property and which Ms Wang denies was entered into with her authority). Further, he notes that there is no indication as to the number or identity of witnesses that Mr Zhao might wish to call as to his intoxication at the time he signed the Divorce Agreement. (In that regard, to the extent that the time for affidavit evidence to be served by the defendant in the s 66G application has already passed, there may be a question as to the ability to rely on evidence of other Chinese witnesses in any event. Mr Zhao was first ordered to serve any evidence in these proceedings by 26 April 2012. A further order for service of evidence by 3 May 2012 was made. The proceedings have apparently been in limbo since the filing of the Notice of Motion for a stay but this does not explain the earlier non-compliance with orders for the service of Mr Zhao's evidence.) Hence the non-compellability of any such witnesses may not prove to be a real issue were the dispute as to the validity of the Divorce Agreement to be tested in this jurisdiction. 44Mr Golledge submits that there are a number of factors that weigh against the grant of any stay. 45First, it is noted that the statutory jurisdiction here invoked (s 66G of the Conveyancing Act, 1919 (NSW)) is not a jurisdiction, which the Courts in China are in a position to exercise. I accept that is the case. 46Second, it is noted that in the proceedings commenced by Ms Wang in China she seeks no relief in respect of the Vaucluse property (so that it cannot be said that Ms Wang is concurrently making the same claim in two different jurisdictions). In that regard, however, I note that the defence sought to be raised by Mr Zhao will involve a determination of the validity of agreements between the parties as to their rights in respect of that property which would be of relevance when the s 66G application is determined. 47Third, as already adverted to, Mr Golledge relies on the lack of a complete overlap between the jurisdiction granted by s 66G and that being exercised in China. While it is accepted that a finding for or against the validity of the December Agreement may well create an issue estoppel on that matter (or on subsidiary factual issues relating to that matter), it is submitted that such a finding would not foreclose argument for or against the exercise of the discretionary power granted under the legislation in New South Wales (as the exercise of power under s 66G depends upon proof of co-ownership). Mr Golledge submits that proof that, at a time after the property had been jointly acquired, the parties had come to an agreement as to what was to happen to that property (being an agreement from which one of them seeks to resile) or that a foreign court had made an order that the property should be conveyed from one to the other would not foreclose argument in this Court about the exercise of the statutory jurisdiction. 48While I accept that the orders made in China would not necessarily foreclose debate in the present proceedings as to the relief that should be granted, I consider there to be force in the submission by Mr Insall that any such agreement or finding would be a relevant factor to take into account on the exercise of the discretion under s 66G. 49Fourth, it is noted by Mr Golledge that a judgment obtained in the Court in China is not registrable pursuant to the Foreign Judgments Act 1991 (Cth) (and an in personam judgment is not enforceable at common law, though it may give rise to an issue estoppel). Mr Golledge notes that in Henry (at [39]) it was said that the fact that an order of the foreign court would not be enforced in Australia "will ordinarily dispose of any suggestion that the local proceedings should not continue". He submits that there remains therefore the substantial likelihood that litigation between the parties in this jurisdiction concerning the fate of this property will be necessary in any event. I accept that there may well need to be further proceedings. However, the fact that a judgment in the proceedings in China would not necessarily be enforceable as such in this jurisdiction does not seem to me to be the determinative factor in circumstances where an issue estoppel might well arise in that event. (Mr Golledge further submits, and I accept, that insofar as there has been an apparent dealing with the property involving the National Australia Bank there is the potential for litigation to determine the validity of its security and hence the grant of a stay is unlikely to avoid the need for the parties to the present proceedings to engage in litigation in this jurisdiction). 50The fifth factor relied upon by Mr Golledge is that, although the proceedings China were commenced before these proceedings, they are not at an advanced stage, whereas the local proceedings are in a position where they could be allocated a date for final hearing (subject only to Ms Wang swearing a final affidavit in reply responding to the allegation of fraud on her part). (That may depend, of course, on whether any further evidence is sought to be adduced in the present proceedings by Mr Zhao to deal with the allegations of drunkenness on his part and trickery on his former wife's part, though leave may be necessary for any such further evidence.) Mr Golledge further notes that all of the matters apparently to be raised by Mr Zhao in opposition to Ms Wang's claim for relief are able to be dealt with in the s 66G proceedings (and that even if it is necessary for both parties to be present at the trial, having regard to the present allegation of fraud, that is not an expense or obligation which could be described as being 'out of proportion' to the issues raised in the case, having regard in particular to the amount paid for the purchase of the Vaucluse property). I accept that the issues raised by Mr Zhao could be dealt with in this jurisdiction (albeit that this may involve the expense and inconvenience of interpreters and/or expert witnesses). However, it seems unarguable but that factual and legal issues of the kind raised by Mr Zhao would more conveniently be dealt with in the China proceedings. 51A further issue raised as going to the exercise of discretion on this application, and in my view this is not an insignificant factor, Mr Golledge points to the recent dealings at the Land Titles Office (with the lodgement of the withdrawal of caveat and the mortgage transaction, executed under the power of attorney purportedly granted, but disavowed, by Ms Wang) that are said to demonstrate that her interest in the property is presently at risk. I have noted above the response conveyed through Mr Zhao's legal representatives on this issue. 52Mr Insall informs me that it is the defendant's case that the dealings with the property were not unauthorised and that this is an issue to be determined in due course on a final basis. I accept that it would not be appropriate to make any final findings on this issue in the context of the present application, though the evidence at this stage suggests that the concerns as to the potential for further unauthorised dealings is not unwarranted. However, it seems to me that it is incumbent on Mr Zhao (if he wishes to contend that the fear by Ms Wang of further unauthorised dealings is groundless) satisfactorily to explain to the Court the basis for that contention. 53Finally, it is said by Mr Golledge that determination of the s 66G proceeding will not deprive Mr Zhao of the ability to make a claim to the whole of the proceeds of the sale of the Vaucluse property based upon the alleged oral agreement that he was to retain sole ownership of the overseas matrimonial assets; rather, the current proceeding will (if successful) result in the sale of the property. Mr Golledge points to the fact that the property has been on the market for some time (as noted earlier). 54It is submitted that the dealing with the National Australia Bank raises the spectre of the parties' present equity being eroded by an accruing liability to the lender such that the sale of the property and the repayment of that debt, to the extent it is secured over the interest of either or both of the co-owners in the property, will be in their mutual interest. (In that regard, the ability of Mr Zhao to encumber Ms Wang's interest in the property without her consent is doubtful, particularly given the existence of the caveat and the indication that dealings will not be registered on the title pending determination of the dispute. Nevertheless, I accept that if Mr Zhao were to encumber the property it might expose Ms Wang to the risk of a forced mortgagee sale.) 55Mr Golledge submits that in light of the above factors, the New South Wales Court cannot be said to be a clearly inappropriate forum nor can it be said that the commencement or maintenance of the local proceeding is vexatious or oppressive. He submits that the evidence does not favour the grant of a temporary stay on general discretionary grounds. Further, he points to the lack of any evidence from Mr Zhao as to any serious disadvantage that would be occasioned to him if the proceedings in this jurisdiction were to continue. Mr Insall argues to the contrary (and has proffered his client's undertakings to address some of the concerns raised above). Conclusion 56There are obviously a large number of connecting factors with China in relation to the issues that will determine the entitlement as between the two parties to the property currently held as joint tenants in equal shares (not least being the residence of the parties in that jurisdiction, the presence of potential witnesses in that jurisdiction, language difficulties if the proceedings were to be heard in this jurisdiction, the likely applicable law in relation to both the family law issues and the contractual issues,, and the fact that there are already proceedings on foot to enforce the Divorce Agreement in that jurisdiction). The matters sought to be raised by Mr Zhao in defence to Ms Wang's claim to an interest in the property (under the divorce arrangements that he says were agreed or under the law of China) are matters that I agree would most appropriately be dealt with in the proceedings in China. 57However, the relief sought in the New South Wales proceedings is relief uniquely available in this jurisdiction and the application concerns land situated in this State. Insofar as the essential question posed by Jacobson J in Armacel was whether the plaintiff would be able to obtain in the proceedings in the foreign court the relief it had sought in this jurisdiction under the particular legislation here applicable (in that case, the Trade Practices Act 1974 (NSW), the answer to such a question in the present case must be that Ms Wang would not be able to obtain the same relief in the China proceedings as would be available to her in this jurisdiction were she to be successful on the s 66G application. Further, I accept that proceedings in this jurisdiction to compel the termination of the joint tenancy by the appointment of trustees for sale may in due course be necessary whatever the outcome of the foreign proceedings (and whether or not there are proceedings involving the disputed mortgage). 58As to the effect of not granting a stay of the proceedings (a matter to which regard may be had in considering as a matter of discretion whether to grant the stay), while refusal of a stay will to an extent expose the parties to the risk of a duplicity of litigation (depending on whether Mr Zhao chooses to defend the s 66G proceedings on the basis of the issues sought to be raised in China or is prepared to allow the property to be sold and for there to be a later determination of the entitlement to the proceeds of sale), there will remain the prospect of litigation in both jurisdictions in any event (even without the question as to litigation over the security apparently granted to the third party bank). The question, as I see it, is rather as to the order in which that litigation will proceed. 59In other words, would it be vexatious and oppressive in the Voth sense (or otherwise an abuse of process) for Mr Zhao to be placed in a position where it is necessary for him, in effect, to conduct his defence on the matters raised in the China proceedings in this jurisdiction in defence to the s 66G application (that application being predicated on the property being and remaining in joint ownership) in circumstances where there are concurrent proceedings on foot in China in which those same issues will otherwise be raised. There is obviously a risk of inconsistent findings if the same issues fall to be litigated in both jurisdictions and it is prima facie vexatious and oppressive for a party to be exposed to the duplicity of litigation in that sense. Moreover, the fact that standing to seek the relief in the s 66G proceedings may be affected by the determination of the issues raised in the proceedings in China supports the view (as was the result in Williams) that the anterior question as to the parties' family law entitlements should be determined in advance of the s 66G application. If so, then there is force in the submission that those matters should be determined in China (and that the local jurisdiction would be a clearly inappropriate forum for that purpose). 60Antecedent to the question as to whether the joint tenancy should be terminated by the appointment of trustees for sale is, logically, the question whether (by reference to the consensual arrangements reached between them or otherwise as a consequence of the manner in which, under the law of China, their matrimonial property is to be divided between them following their divorce) Ms Wang is entitled to the whole of the property or it remains held by the couple as joint tenants in equal shares. If Mr Zhao is correct and he is ultimately held to be entitled (as between he and Ms Wang) to the whole of the beneficial interest in that property, then a sale of the property in the interim by trustees for sale appointed pursuant to s 66G will necessarily deprive him of the ability to retain the benefit of the land in its present form and, as vendor, to control the manner and timing of its sale (insofar as it is within his power as vendor to do). I accept that a trustee sale would not deprive him of access to the proceeds of sale and I do not accept that a trustee sale would necessarily lead to a sale at undervalue (or less than market value). However, the sensitivity shown to the unique quality of land in our legal system is such that there must be potential prejudice to Mr Zhao if the property were to be sold under a trustee sale and he were later to be found to have been entitled (as between he and his former wife) to the whole of the interest in that land (just as there is potential prejudice to Ms Wang if her interest in the property is eroded by unauthorised dealings of the kind suggested to have occurred already). 61While New South Wales cannot be said to be a clearly inappropriate forum to deal with the question whether there should be an exercise of the statutory discretion to order the sale of property located in this State (albeit held jointly by parties resident in China), in the present case it seems to me that it would be a clearly inappropriate forum to determine the parties' property rights consequent upon their divorce and, in that context, to determine the validity or otherwise of the Divorce Agreement and the existence of otherwise of any earlier binding oral agreement as to the disposition of the marital property. 62Subject to the qualifications I make below, that would, in my view, warrant a temporary stay of the present proceedings in order to permit the determination in the China proceedings of the matters relevant to determine whether Ms Wang would have standing to pursue her claim in the s 66G proceedings (such a stay being within the power of the Court to control its own proceedings of the kind exercised in Armacel and which I applied in Telesto Investments Ltd v UBS AG [2012] NSWSC 44). 63The qualifications I make are these. A temporary stay pending the determination of the matrimonial property dispute in China would not address the concern that the recent dealings with the property pose a risk to Ms Wang's interest as registered proprietor. I accept that there can be no finding as to the allegedly unauthorised dealings on the basis of the evidence at this point. However, there was no evidence from Mr Zhao addressing the circumstances in which the dealings were said to be authorised and, on the current (albeit untested) evidence, there are apparent grounds for concern. Therefore, I would only be prepared to grant a temporary stay if satisfied that it would not put at risk Ms Wang's current interest as registered proprietor (ie, until such time as it is determined, as between Ms Wang and Mr Zhao, what their interests in the property should be in accordance with the divorce arrangements agreed between them or as determined by the Court in China). 64Mr Insall indicated that, if this were to be of a matter of concern, his client would be prepared to give an undertaking in relation to any dealings with the property (and he notes that the Registrar-General has already indicated that no action will be permitted to be taken in relation to lodgement of dealings on the title in any event). Mr Golledge expressed concern, nevertheless, as to the risk that an unauthorised dealing might be registered or that other steps might be taken that would reduce the value of Ms Wang's interest in the property. 65In order to address the concerns as to unauthorised dealings (that seem to me to be not unfounded), I consider that any temporary stay should be conditional on the filing by Mr Zhao of a written undertaking to the Court that, while the proceedings are stayed, he will not directly or indirectly deal with, dispose of or encumber the Vaucluse property or any interest in the Vaucluse property without the leave of this Court. 66Such a temporary stay should also be conditional on the filing and service by Mr Zhao of a written undertaking to the Court to take all necessary steps to prosecute with all due diligence and expedition his defence in the proceedings in China (and subsequently any defence of the present s 66G proceedings once the stay is lifted). 67It will be incumbent on Mr Zhao's legal advisers to advise him as to the serious consequences of any breach of such undertakings. 68I also consider that it would be appropriate for Mr Zhao to file and serve an affidavit in these proceedings directly deposing to his knowledge of the circumstances in which the mortgage to the National Australia Bank came to be executed in Ms Wang's name (through the alleged attorney) and setting out the facts, matters and circumstances on which he relies for the assertion (made through his Counsel in these proceedings) that the dealings with the Vaucluse property (in relation to the withdrawal of caveat purportedly authorised by Ms Wang under the power of attorney that she denies having granted and the creation and lodgement of a mortgage over the property) were authorised dealings. As the provision of such an affidavit was not directly raised on the hearing of the stay application, I will hear any submissions against that course. Nevertheless, as presently minded, I consider that this is a matter relevant to the exercise of discretion in relation to the stay. 69Finally, I will give liberty to Ms Wang to apply to lift the stay in the event that there is a breach of the undertakings to be proffered to the Court by Mr Zhao or if there is action taken in this jurisdiction in relation to the security purportedly entered into on her behalf with the National Australia Bank or if there are matters arising out of the affidavit to be provided by Mr Zhao as to the alleged authorisation of the recent property dealings or there is a material change in circumstances in relation to the property. Orders 70Subject to submissions in relation to the form of the orders (or as to the affidavit I propose to require from Mr Zhao), these are the orders that I propose to make on Mr Zhao's application for a temporary stay of these proceedings. (1)Upon the filing by Mr Zhao of: (i)a written undertaking to the Court that, while the proceedings are stayed, he will not directly or indirectly deal with, dispose of or encumber the Vaucluse property or any interest in the Vaucluse property without the leave of this Court; (ii)a written undertaking to the Court that he will take all necessary steps to prosecute with all due diligence and expedition his defence in the proceedings in China (and subsequently any defence of the then resumed s 66G proceedings); and (iii)an affidavit attested by Mr Zhao deposing to the circumstances in which a mortgage was granted over the Vaucluse property in 2012 in the joint names of Mr Zhao and Ms Wang and the facts, matters and circumstances on which he relies for the assertion that this dealing with the Vaucluse property (and the earlier withdrawal of caveat executed in the name of Ms Wang under power of attorney) was an authorised dealing by Ms Wang, these proceedings be temporarily stayed pending the determination of the proceedings in China. (2)Liberty to Ms Wang on reasonable notice to apply for a discharge of the stay in any of the circumstances envisaged in para [69] above. 71I will hear the parties on the question of the costs of this application. ********** 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: 26 June 2012