Shi v Cheng [2017] NSWSC 1004

Supreme Court New South Wales

Medium Neutral Citation: Shi v Cheng [2017] NSWSC 1004 Hearing dates: 24, 25 July 2017 Date of orders: 25 July 2017 Decision date: 28 July 2017 Jurisdiction: Common Law Before: Lonergan J Decision: See para [24] Catchwords: CIVIL PROCEDURE – interlocutory relief – asset freezing order - ex parte application – whether good arguable case that defendant is in breach of loan deed – where defendant has no other assets in Australia – where defendant resides abroad – where third party holds asset as stakeholder for defendant Legislation Cited: Uniform Civil Procedure Rules rr 25.11, 25.14 Cases Cited: Cardile v Led Builders Pty Ltd (1998) 198 CLR 380; [1999] HCA 18 Finn v Carelli [2007] NSWSC 261 Frigo v Culhaci [1998] NSWCA 88 Newcastle City Council v Caverstock Group Pty Ltd; (2008) 163 LGERA 83; [2008] NSWCA 249 Ninemia Maritime Corporation v Trace Schiffahrtsgesellschaft mbH & Co KG (The Niedersachsen) [1984] 1 All ER 398 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Tomasetti v Brailey [2012] NSWCA 6 Category: Consequential orders (other than Costs) Parties: Julie Shi (Plaintiff) Jianzhao Cheng (Defendant) Representation: Counsel: A Norrie (Plaintiff)

Solicitors: Maxim Legal Pty Ltd (Plaintiff) File Number(s): 2017/225050 Publication restriction: Nil

Judgment 1. The plaintiff seeks various orders in the nature of freezing orders in accordance with the Uniform Civil Procedure Rules 2005 (NSW) r 25.11. In issue in these proceedings is a claim for money which was, in effect, loaned by the plaintiff to the defendant in early 2017 and which the defendant has refused to repay despite numerous requests. The freezing order and summons commencing proceedings has been sought to be filed on an urgent basis because the plaintiff's solicitors were instructed that there is a risk that property owned by the defendant in New South Wales and the only known asset he has in New South Wales is about to be sold, with settlement due to take place in the next few weeks. 2. The plaintiff's case was that there was a danger if the freezing order was not made that the deposit held on trust for the defendant as part of the proceeds of the sale of the apartment bought off the plan at Kensington ("Apartment 306") would be dissipated to the defendant who left for China in March 2017 and has apparently not returned. The Notice of Motion proposed a freezing order against the defendant personally in relation to any assets in Australia held by the defendant, as well as the company which manages the real estate agency which holds 10% of the purchase price for the unit as stakeholder for the defendant. 3. There is a high duty of candour imposed on a party who pursues a stay on an ex parte basis. 4. I am satisfied that the application should be heard ex parte. The correspondence attached to the affidavit of the plaintiff suggests a lack of cooperation and lack of intention on the part of the defendant to acknowledge and/or cooperate with any process to repay the money identified in the Deed. In particular, an exchange on "WeChat", which has been translated by an accredited translator shows an entry dated 1 May 2017 and timed at 7:29 pm which says, amongst other things: I just hate being threatened by people, damn the threators always. Go ahead with the litigation if you wish. Litigation in Australia would take years anyway, and my own property is in the process, isn't it? It does not hurt adding one more, it has been uneasy for quite some time, and I have been threatened by you for many times I cannot tell … I have been damn impoverished, the property will only settle by June and I could not even get a damn couple of days for consideration, and now you have got money just after I have sent the damn email? How weird 1. There is a further entry from the defendant on "WeChat" timed 7:56 pm: I think you do not have to spend your effort in vain, the Australian law is not as strong as the Chinese law, and you just need to wait with patience until June. I will write you an IOU note which is more effective than in Australia. In China, properties can be sealed at any time and cases won with such IOU notes and will not be as long or troublesome as in Australia! You can go along with litigation if you do not want it. Also, none of the properties in Australia belongs to me and hence cannot be used for the purpose of a mortgage contract, and did not your lawyer tell you that? It was only a loan contract between us, and at best it is that I owe you money and need to repay you if you win the litigation, and what does this have anything at all to do with the property? 1. It seems to me from these comments there is no intention to cooperate with an unlitigated approach. I have no evidence before me that the defendant is in Australia or intends to return to Australia. Accordingly, it is appropriate this application should be heard ex parte. This is particularly so because the timing relevant to the potential dissipation of Apartment 306 is that settlement of the property (and thus release of the deposit held with the agent as stakeholder for the defendant) is planned to take place in the next week or two. 2. I have approached the application in light of binding authority that: * The Court's power to grant a freezing order is based on its power to prevent the frustration of its process and to ensure that its judgments are not without value (see Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249; (2008) 163 LGERA 83 (at [43]) per Spigelman CJ (Bell JA and Handley AJA agreeing).) * A freezing order is nevertheless "a drastic remedy which should not be granted lightly … its purpose is to preserve the status quo, not to change it in favour of the [applicant]" (see Frigo v Culhaci [1998] NSWCA 88 (at p 6) per Mason P, Sheller JA, Sheppard AJA) as approved in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 (at [51]) per Gaudron, McHugh, Gummow and Callinan JJ.)