FEDERAL COURT OF AUSTRALIA
DC Rd DC Pty Ltd v Zhang [2023] FCA 342
File number(s): NSD 247 of 2023 Judgment of: JACKMAN J Date of judgment: 11 April 2023 Catchwords: PRACTICE AND PROCEDURE – application to extend freezing orders – proceedings on ex parte basis against some respondents – whether there is a good arguable case that the respondents acted as the applicants’ agents – whether the relationship between accountants and clients was fiduciary in nature – whether there is a good arguable case of breach of fiduciary duty – whether there is a good arguable case of misleading or deceptive conduct – whether there is a sufficient risk of dissipation of assets – where the preliminary evidence arguably indicates that there has been a fraudulent misappropriation of funds – where funds have been transferred offshore to various entities Legislation: Corporations Act 2001 (Cth) s 1323(3)
Federal Court Rules 2011 (Cth) rr 7.35(1)(b), 7.35(4)(b), 16.21, 16.51
Cases cited: Curtis v NID Pty Ltd [2010] FCA 1072
Demagogue Pty Ltd v Ramensky Pty Ltd [1992] FCA 851; (1992) 39 FCR 31
Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; (2010) 273 ALR 194
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 41 Date of hearing: 11 April 2023 Counsel for the Applicants: Mr C Colquhoun SC and Mr B Smith Solicitor for the Applicants: Corrs Chambers Westgarth Counsel for the Second, Third and Sixth Respondents: Mr P Newton SC and Mr J Foley Solicitor for the Second, Third and Sixth Respondents: Dentons Counsel for the Eighth Respondent: Mr J Brezniak Solicitor for the Eighth Respondent: Piper Alderman ORDERS
NSD 247 of 2023 BETWEEN: DC RD DC PTY LTD
First Applicant
STANLEY XUE
Second Applicant
SIT FAMILY PTY LTD
Third Applicant
AND: DONG (TONY) ZHANG
First Respondent
ZHENGJUN (BOB) CAI
Second Respondent
CENTRAL ADVISORY GROUP PTY LTD (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JACKMAN J
DATE OF ORDER:
11 APRIL 2023
THE COURT ORDERS THAT:
1.Orders 8 and 11 of the orders made on 17 March 2023 and extended on 22 March 2023 (being freezing orders against the second and sixth respondents) be extended until further order of the Court.
2.Orders 9 and 12 of those orders (being freezing orders against the fourth and seventh respondents) be extended until further order of the Court.
3.Paragraph 10(b) of annexures B and E to those orders be varied so that the reference to $50,000 by way of legal expenses is deleted and a figure of $300,000 is inserted.
4.Any amended statement of claim be filed and served by the applicants by 5 May 2023.
5.Any application to strike out the amended statement of claim be filed and served by 12 May 2023.
6.Order 5A be inserted into the orders made on 11…
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- AGLC
- DC Rd DC Pty Ltd v Zhang [2023] FCA 342
- Case
- [2023] FCA 342
- Decision Date
CaseChat Overview and Summary
In examining these issues, the Court considered the nature of the relationships between the parties and the evidence presented. It found that there was a good arguable case that the second and sixth respondents had acted as agents for the applicants, and that a fiduciary relationship existed between them. Furthermore, the Court was satisfied that there was a good arguable case of breach of fiduciary duty and misleading or deceptive conduct. Given the evidence of the transfer of funds offshore, the Court concluded that there was a significant risk of dissipation of assets, warranting the extension of the freezing orders. As such, the Court granted the application to extend the freezing orders against the specified respondents and made various orders concerning the conduct of the proceedings, including timelines for filing and serving documents and costs orders.
The Court's orders included the extension of the freezing orders against the second and sixth respondents until further order, and against the fourth and seventh respondents until further order. Additionally, the Court varied the legal expenses provision in the annexures to reflect a new figure of $300,000. It also set deadlines for the filing and serving of any amended statement of claim and any application to strike out the amended statement of claim. The Court further inserted and varied certain orders concerning the extension of the freezing orders against other respondents and scheduled a case management conference to address the further conduct of the proceedings. The Court also ordered the second and sixth respondents to pay the applicants' costs of the hearing and granted the parties liberty to apply on two days' notice.
Orders
Orders of the court
1. Orders 8 and 11 of the orders made on 17 March 2023 and extended on 22 March 2023 (being freezing orders against the second and sixth respondents) be extended until further order of the Court.
2. Orders 9 and 12 of those orders (being freezing orders against the fourth and seventh respondents) be extended until further order of the Court.
3. Paragraph 10(b) of annexures B and E to those orders be varied so that the reference to $50,000 by way of legal expenses is deleted and a figure of $300,000 is inserted.
4. Any amended statement of claim be filed and served by the applicants by 5 May 2023.
5. Any application to strike out the amended statement of claim be filed and served by 12 May 2023.
6. Order 5A be inserted into the orders made on 11 April 2023 (concerning the extension of the freezing orders against the first, fifth and ninth respondents) in the following form:
The applicants file and serve any amended statement of claim by 5 May 2023.
7. Order 6 of the orders made on 11 April 2023 (concerning the extension of the freezing orders against the first, fifth and ninth respondents) be varied so as to read:
The Tony Parties file and serve any application to strike out the amended statement of claim under rule 16.21 of the Federal Court Rules 2011 (Cth) by 12 May 2023.
8. Order 7 of the orders made on 11 April 2023 (concerning the extension of the freezing orders against the first, fifth and ninth respondents) be deleted.
9. The proceedings be listed for case management on 19 May 2023 at 9.30 am, to deal with the further conduct of the proceedings, including the question whether there is any opposition to Dentons acting as solicitors for the second, third and sixth respondents.
10. The second and sixth respondents pay the applicants’ costs of the hearing today.
11. The parties have liberty to apply on two days’ notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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