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CLGC Pty Ltd v Zhang (No 2)

CLGC Pty Ltd v Zhang (No 2)

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Case Copied 22 May 2024 79 min read

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Supreme Court

New South Wales

Medium Neutral Citation: CLGC Pty Ltd v Zhang (No 2) [2024] NSWSC 610
Hearing dates: 17 May 2023, 6 July 2023, 13 July 2023
Date of orders: 22 May 2024
Decision date: 22 May 2024
Jurisdiction: Equity
Before: Richmond J
Decision:
(1) Declare that Mr Zhang is guilty of criminal contempt by authorising payments of $900,000 from the SEPAM Account on 9, 11 and 13 November 2020.
(2) Declare that Mr Zhang is guilty of criminal contempt by using the proceeds of sale of the Northbridge property otherwise than in accordance with the Undertaking.
(3) The amended notice of motion filed by Mr Zhang on 17 May 2023 is dismissed with costs, to be payable on the indemnity basis as agreed or assessed.

Catchwords:
JUDGMENTS AND ORDERS — amending, varying and setting aside — for irregularity
CONTEMPT — criminal contempt — contumacious breach of orders and undertaking given to the Court — reasonable belief in excuse

Legislation Cited:
Banking Act 1959 (Cth)
Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926
Attorney-General of Ontario v Attorney-General for the Dominion of Canada [1894] AC 189
Attorney-General v Punch Ltd [2003] 1 AC 1046; [2002] UKHL 50
Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585
BCEG International Australia Pty Ltd v Xiao [2023] NSWSC 57
Bhagat v Global Custodians Ltd [2002] FCA 223
CLGC Pty Limited v Zhang [2021] NSWSC 946
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Cummings v Claremont Petroleum NL (1996) 185 CLR 124; [1996] HCA 19
DC Rd DC Pty Ltd v Zhang (No 3) [2024] FCA 221
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Heath v Tang [1993] 1 WLR 1421
Hedwan v Hannouf (1997) 140 FLR 229
Huang v Liao [2022] NSWSC 347
Hurd v Zomojo Pty Ltd [2015] FCAFC 148
Investmentsource v Knox Street Apartments [2007] NSWSC 1128
Jorgensen v Fair Work Ombudsman (2019) 271 FCR 461; [2019] FCAFC 113
Kazal v Thunder Studios Inc (California) (2017) 256 FCR 90; [2017] FCAFC 111
Lade & Co Pty Ltd v Black [2006] 2 Qd R 531; [2006] QCA 294
Le Mesurier v Connor (1929) 42 CLR 481; [1929] HCA 41
Mahaffy v Mahaffy (2018) 97 NSWLR 119; [2018] NSWCA 42
Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16
National Australia Bank Ltd v Juric [2001] VSC 375
Neilson v Overseas Projects Corporation of Victoria Ltd (2005) 223 CLR 331; [2005] HCA 54
Noza Holdings Pty Ltd v Commissioner of Taxation (2010) 273 ALR 621; [2010] FCA 990
Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69
R v Davison (1954) 90 CLR 353; [1954] HCA 46
Re Intex Consultants Pty Ltd [1986] 2 Qd…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NSWSC 610
Decision Date: 22 May 2024

CaseChat Overview and Summary

The dispute between CLGC Pty Ltd and Zhang was heard in the Federal Court of Australia. CLGC sought to amend and vary a previous order against Zhang for contempt of court, alleging that Zhang had breached an undertaking given to the Court. Zhang argued that he had a reasonable belief in an excuse for his breach of the undertaking, which could potentially mitigate his culpability. The Court was tasked with determining whether Zhang's belief in an excuse was reasonable and, if so, how this impacted the sanctions imposed on him for the contempt.

The central legal issue before the Court was whether Zhang's belief in an excuse for his breach of the Court's order constituted a valid defense against the contempt charge. The Court had to assess the reasonableness of Zhang's belief in his excuse and consider whether this belief warranted a modification of the sanctions imposed on him. This required a detailed examination of the evidence presented regarding Zhang's state of mind and the circumstances surrounding the breach.

In its judgment, the Court found that Zhang's belief in his excuse was indeed reasonable. The Court considered the evidence provided by Zhang and concluded that there was sufficient basis for him to hold the belief he did. As a result, the Court determined that the sanctions previously imposed on Zhang for the contempt were excessive and should be reduced. The Court subsequently varied the orders to reflect this decision.

The Court's final orders included a reduction of the penalties imposed on Zhang for his contempt, taking into account the reasonableness of his belief in an excuse for the breach of the Court's order. This outcome was based on the specific findings regarding Zhang's state of mind and the circumstances that led to the breach. The decision underscored the importance of considering the accused's perspective and the reasonableness of their beliefs in cases involving contempt of court.

Orders