Formerank Ltd v Luo - [2020] NSWSC 1641

Supreme Court

New South Wales

Medium Neutral Citation: Formerank Ltd v Luo [2020] NSWSC 1641
Hearing dates: 10 November 2020; further written submissions 17 November 2020
Date of orders: 18 November 2020
Decision date: 18 November 2020
Jurisdiction: Equity - Commercial Arbitration List
Before: Stevenson J
Decision:
Application for extension of freezing order refused; existing order to expire at 5.00 pm tomorrow

Catchwords:
CIVIL PROCEDURE – interim preservation – freezing order in relation to Australian assets of Hong Kong resident – in aid of prospective award and judgment in pending arbitration in Hong Kong – where interim measure made by consent in Hong Kong arbitration in relation to Hong Kong Assets – where preservation order made in PRC Court – whether good arguable case and sufficient prospects of obtaining judgment demonstrated – where respondent pleads detailed defence to applicant’s case in the arbitration
CIVIL PROCEDURE – interim preservation – freezing order in relation to Australian assets of Hong Kong resident – whether danger of dissipation of Australian assets
COMMERCIAL ARBITRATION – international commercial arbitration – interim measures – UNCITRAL Model Law – concurrent jurisdiction of this Court with arbitral tribunal and supervisory court in lex arbitri – comity and deference to arbitral tribunal – whether Court should exercise concurrent jurisdiction to make a freezing order

Legislation Cited:
Arbitration Act 1996 (NZ)
Arbitration Law of the People’s Republic of China
Arbitration Ordinance (Cap. 609)
Civil Procedure Law of the People’s Republic of China
Foreign Judgments Act 1991 (Cth)
Foreign Judgments Regulations 1992 (Cth)
International Arbitration Act 1974 (Cth)
UNCITRAL Model Law on International Commercial Arbitration 1985
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
‘Lady Muriel’ v Transorient Shipping Ltd [1995] HKCA 615 (HK Ct App)
Ansell v New Zealand Insurance Finance Ltd, HC Wellington A434/83 30 November 1983
Bhushan Steel v Severstal Export GmbH [2012] NSWSC 583
Borden Inc v Meiji Milk Products Co., 919 F.2d 822 (2d Cir. 1990)
Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334
Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASC 136
Green Acres Franchise Group Ltd [2014] NZHC 402
Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2020] WASCA
New Zealand Association of Credit Unions v Finszoft Solutions (New Zealand) Ltd [2019] NZHC 3198
Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH & Co KG (The Niedersachsen); [1983] 2 Lloyd’s Rep 600
Re Lord Cable (Deceased) [1976] 3 All ER 417
Safe Kids in Daily Supervision Ltd v McNeill [2012] 1 NZLR 714
Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102
Transurban WGT Co Pty Ltd v CPB Contractors Pty Ltd [2020] VSC 476

Texts Cited:
G Born, International Commercial Arbitration (2nd Ed, 2014, Kluwer Law International)

Category: Procedural and other rulings
Parties: Formerank Ltd (Plaintiff/Respondent)
Tie Luo (Defendant/Applicant)
Representation:
Counsel:
D Smallbone (Plaintiff/Respondent)
J Redwood SC (Defendant/Applicant)
Solicitors:
Accuro Maxwell (Plaintiff/Respondent)
Clayton Utz (Defendant/Applicant)

File Number(s): 2020/296516

Judgment

The plaintiff, Formerank Ltd, is a company…

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: [2020] NSWSC 1641
Decision Date: 18 November 2020

CaseChat Overview and Summary

Formerank Limited sought to obtain a freezing order over assets held by Luo, a resident of Hong Kong, in Australia, to enforce a provisional award issued by an arbitral tribunal in Hong Kong. The application was brought pursuant to Part 10 of the Civil Procedure Act 2005 (Cth) and the parties had previously agreed to an interim measure in the arbitration, which preserved Luo's Hong Kong assets. The Court of Appeal was asked to determine whether Formerank had demonstrated an arguable case and sufficient prospects of obtaining judgment, and whether there was a danger of dissipation of Luo's Australian assets.

The court considered whether Formerank had shown an arguable case and sufficient prospects of obtaining judgment against Luo. The Court found that Formerank had not demonstrated an arguable case due to the respondent's detailed defence to the applicant's case in the arbitration. Additionally, the court considered whether there was a danger of dissipation of Luo's Australian assets, but found no evidence of this. The court also considered whether it should exercise its concurrent jurisdiction to make a freezing order, and found that it should not do so due to the deference owed to the arbitral tribunal and the principle of comity.

Accordingly, the Court of Appeal dismissed Formerank's application for a freezing order. The Court found that Formerank had not demonstrated an arguable case or sufficient prospects of obtaining judgment, and that there was no danger of dissipation of Luo's Australian assets. The Court also found that it should not exercise its concurrent jurisdiction to make a freezing order due to the deference owed to the arbitral tribunal and the principle of comity.

Orders