FremantleMedia Ltd v Le
[2016] NSWSC 983
•12 July 2016
Supreme Court
New South Wales
Medium Neutral Citation: FremantleMedia Ltd v Le [2016] NSWSC 983 Hearing dates: 5 and 11 July 2016 Decision date: 12 July 2016 Jurisdiction: Equity - Duty List Before: Stevenson J Decision: Disclosure requirement in freezing order varied
Catchwords: PROCEDURE – interlocutory orders – freezing order – variation of freezing order – where freezing order required disclosure of assets within Australia and world wide – where plaintiff proposes to commence proceedings against defendants in People’s Republic of China and if successful enforce judgment in Australia – where freezing order obtained on basis of concern that defendants will move or dispose of assets within Australia – whether freezing order should be varied to require disclosure only of Australian and not world wide assets – whether standard ancillary asset disclosure order requires disclosure of world wide assets Legislation Cited: Practice Note SC Gen 14 Cases Cited: Deputy Commissioner of Taxation v Karas [2011] VSC 673 Category: Procedural and other rulings Parties: FremantleMedia Ltd (Plaintiff)
Yu Le (also known as Le Yu) (First Defendant)
Gan Lu (also known as Lu Gan) (Second Defendant)Representation: Counsel:
Solicitors:
D Sulan (Plaintiff)
D A Allen (Defendants)
Baker & McKenzie (Plaintiff)
Wisdom Lawyers (Defendants)
File Number(s): SC 2016/196179
EX TEMPORE Judgment (REVISED)
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On 28 June 2016, Rein J made an ex parte freezing order against the defendants, who I was told during argument I could refer to, without showing disrespect, as Mr and Mrs Yu.
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Mr and Mrs Yu are husband and wife and reside in the People’s Republic of China. The effect of the freezing order is to restrain Mr and Mrs Yu from disposing of or dealing with or diminishing their assets in Australia up to an amount in the order of $1.7 million.
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The freezing order was sought on the basis that the plaintiff, FremantleMedia Ltd will shortly commence proceedings against Mr and Mrs Yu and against First Elite Global Ltd (a company incorporated in the British Virgin Islands and in which Mr and Mrs Yu are equal shareholders and Mr Yu the sole director) in the People’s Court of the People’s Republic of China (“the PRC Court”) seeking damages in an amount equivalent to that figure.
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Fremantle is incorporated in the United Kingdom and is the producer and distributor of television brands including titles such as “Got Talent” and “Idol”.
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Mr Yu was the Managing Director, China of the relevant part of the Fremantle group of companies and was responsible for negotiating licences with various television broadcasters and production companies. Mr Yu’s role included sourcing potential clients in China for Fremantle, seeking to license Fremantle’s intellectual property rights for clients and negotiate commercial terms in respect of intellectual property rights.
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In the proposed proceedings in the PRC Court, Fremantle will allege that Mr and Mrs Yu caused First Elite to act as an intermediary between Fremantle and various Chinese television and production interests and to misappropriate funds properly payable by those interests to Fremantle.
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In an affidavit sworn in support of the freezing order, the Chief Operating Officer of Fremantle’s Australian operative company, Mr Simon Rabbitt, said:
“In the event that [Fremantle] is successful in obtaining a judgment against [Mr and Mrs Yu] in the PRC Proceedings, [Fremantle] intends to seek to have the judgment registered in these proceedings and to execute the judgment against [Mr and Mrs Yu’s] assets in Australia.
I believe that once [Mr and Mrs Yu] are served and/or become aware of the PRC Proceedings, there is a significant risk that [they] may move or dispose of the assets within Australia, in order to avoid or frustrate any judgment which may be registered, such that execution of the judgment in this Court will go wholly or partially unsatisfied as a result. Accordingly, [Fremantle] seeks orders that each of [Mr and Mrs Yu] be restrained from removing from Australia, or in any way disposing of, dealing with or diminishing the value of any assets…of one or both of [them] in Australia up to the value of [$1.7 million].”
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Although the freezing order was sought on this basis, Fremantle also sought, and his Honour made, a disclosure order requiring Mr and Mrs Yu to inform Fremantle of their assets and the assets of First Elite “world wide”.
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Mr and Mrs Yu now seek to have that order varied so as only to compel disclosure of their assets in Australia. Mr Yu has affirmed and Mrs Yu has signed, but not yet affirmed, an affidavit setting out those assets.
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In the particular circumstances of this case, in the light of the stated object of this freezing order, and its ambit, I cannot see how it could be relevant to compel Mr and Mrs Yu to disclose assets beyond those in Australia, as it is only such assets, and the apprehended risk that Mr and Mrs Yu “may move or dispose of” them that was said to enliven the Court’s jurisdiction for the freezing order.
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Fremantle proposes to commence proceedings to recover its alleged loss in the PRC Court. It does not propose to commence such proceedings here. Fremantle sought and obtained the freezing order against the possibility that it obtained judgment in the PRC Court and was able to register that judgment in this Court, but that Mr and Mrs Yu had in the meantime dissipated assets in Australia that might otherwise have been available in Australia in satisfaction of the judgment in this Court.
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Such assets as Mr and Mrs Yu have outside Australia are irrelevant to the order it has obtained here, the object of which was to preserve assets in Australia in case that eventuality came to pass.
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It may be, as Mr Sulan who appeared for Fremantle submitted, that Mr and Mrs Yu’s assets in Australia will be insufficient to meet any judgment obtained by Fremantle in the PRC Court.
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But that is not the point of the freezing order, which is to do no more than restrain Mr and Mrs Yu from disposing of such assets as they have in this jurisdiction (whether or not they will be sufficient to meet any judgment which Fremantle obtains) which will be available if Fremantle is successful in the PRC Court and is then able to enforce the judgment here.
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If Mr and Mrs Yu have assets in other jurisdictions, they could conceivably be attached if a judgment obtained by Fremantle in Australia was able to be enforced in that other jurisdiction. But this freezing order was not sought on that basis and is not addressed to that possible circumstance.
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In these circumstances, I vary the freezing order made on 28 June 2016 to substitute the words “in Australia” for the words “world wide” in par 8(a).
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Mr Allen, who appeared for Mr and Mrs Yu, submitted that a separate basis on which the disclosure order should be set aside was a statement made by Mr Sulan to Rein J that the disclosure order was the “standard ancillary asset disclosure order”.
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The “standard” order is that in Practice Note SC Gen 14 which, so far as disclosure is concerned, refers to disclosure of assets “in [Australia] [world wide]”. Thus, the “standard order” may require disclosure of either Australian or world wide assets.
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Mr Sulan drew my attention to the observations of Bell J in Deputy Commissioner of Taxation v Karas [2011] VSC 673 at 11 that “freezing orders usually require [the defendant] to swear an affidavit disclosing all of their world wide assets”. I must say, that is not my experience and my conclusion is that such a requirement cannot be justified in the particular circumstances of this case.
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However, I do not accept the implication of Mr Allen’s submission, namely, that Mr Sulan inadvertently misled Rein J, and would not have set aside the disclosure order on this basis alone.
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Decision last updated: 15 July 2016