Fine China Capital Investment Limited v Qi (No 2)

In the case of Fine China Capital Investment Limited v Qi (No 2), the Federal Court was asked to decide whether an existing freezing order should continue in light of conflicting evidence from the parties. The dispute revolves around allegations that Mr Qi, acting as an agent or trustee for Fine China, misappropriated funds and improperly deregistered a company. Fine China sought to maintain the freezing order to prevent dissipation of assets, while Mr Qi argued against it, citing inconsistencies in the evidence. The court considered the principles set forth in Parbery v QNI Metals Pty Ltd, focusing on the strength of the applicant's case and the need to exercise caution when faced with conflicting evidence. The court ultimately concluded that the applicant had established a good arguable case, warranting the continuation of the freezing order. However, the amount specified in the freezing order was reduced from AUD$23,870,000 to AUD$19,510,000 based on the evidence presented.

The legal issues before the court included whether Fine China had established a good arguable case for the continuation of the freezing order and whether there was a danger of asset dissipation. The court held that the applicant had discharged its burden of proving the likelihood of success on the merits of the case, despite the conflicting evidence. The court also found that there was a real risk of asset dissipation, justifying the continuation of the freezing order. The court exercised caution in its assessment, taking into account the respective strengths and weaknesses of the evidence provided by both parties. The court determined that the applicant's case was sufficiently strong to warrant the drastic remedy of a freezing order.

The court’s reasoning was grounded in the principles of caution and the need for a realistic assessment of the merits. It emphasised that, in the face of conflicting evidence, the court should not make findings on contested questions of fact. Instead, the court should focus on whether the applicant’s claim is strong enough to warrant the remedy sought. The court found that Fine China had met this burden, despite the conflicting evidence, by showing a likelihood of success on the merits and a real risk of asset dissipation. Consequently, the freezing order was continued with the amount adjusted to AUD$19,510,000.

The final orders included the continuation of the freezing order, with specific provisions regarding the amount, the undertakings as to damages, and the liberty to apply for further orders. The court also granted leave for Fine China to file and serve an amended originating application and reserved costs for later determination.