Hong and Cao - [2016] FamCA 605

FAMILY COURT OF AUSTRALIA

HONG & CAO

[2016] FamCA 605

FAMILY LAW – PROPERTY – Injunctions – Where the matrimonial pool subject to a freezing Order of this Court – Whether there has been a change in circumstances such to qualify an existing injunction – Where the proposed commercial transaction is intended to benefit Country D investments – Where the risk of loss is minimal in relation to the magnitude of the matrimonial pool – Where any loss suffered as a result of the commercial transaction may be limited to the husband at trial.

Hospital Products Limited v Ballabil Holdings Pty Ltd [1984] 2 NSWLR 622
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

APPLICANT:

Mr Hong

RESPONDENT:

Ms Cao

FILE NUMBER:

BRC

5044

2015

DATE DELIVERED:

27 July 2016

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Carew J

HEARING DATE:

25 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Wilson QC
with Mr Alexander

SOLICITOR FOR THE APPLICANT:

Hillhouse Burrough McKeown

COUNSEL FOR THE RESPONDENT:

Mr Hackett

SOLICITOR FOR THE RESPONDENT:

AHL Legal

Orders

That notwithstanding paragraphs 5 to 8 of the Order dated 22 October 2015, the Husband shall be permitted to:
(a)Purchase 1,221,000 shares in B Incorporated from Mr J with such shares to be held in the name of B Industrial Limited;
(b)Obtain a line of credit with Bank I in the name of B Industrial Limited in the amount of NTD$68,000,000 to facilitate the purchase of B Incorporated shares from Mr J;
(c)Provide the B Incorporated shares held in his personal name and in the name of B Industrial Limited as collateral for the line of credit obtained from Bank I pursuant to paragraph 1(b) herein.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hong & Cao has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 5044 of 2015

Mr Hong

Applicant

And

Ms Cao

Respondent

REASONS FOR JUDGMENT

The parties to this dispute are Mr Hong (“the husband”) and Ms Cao (“the wife”).
The husband is seeking permission, despite a freezing order made on 15 October 2015, to purchase a tranche of shares in B Incorporated (a company in Country D) for AUD$2,800,000 and for that purpose, to borrow funds using an entity wholly owned by the husband namely, B Industrial Limited. The husband’s shares and B Industrial Limited’s shares in B Incorporated are to be provided by way of security.
The wife does not oppose the purchase of shares…

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.

Continue reading Hong and Cao

Details

AGLC: Hong and Cao [2016] FamCA 605
Case: [2016] FamCA 605
Decision Date: 27 July 2016

CaseChat Overview and Summary

In the matter of *Hong and Cao*, heard before Carew J, the dispute concerned an application by the Husband to vary existing court orders made on 22 October 2015. The Husband sought permission to purchase a significant number of shares in B Incorporated from a Mr J, with these shares to be held by B Industrial Limited. He also sought to obtain a substantial line of credit from Bank I in the name of B Industrial Limited to fund this share acquisition, and to offer both his personally held and B Industrial Limited's B Incorporated shares as collateral for this credit facility.

The central legal issue before the court was whether to permit the Husband to proceed with the proposed share purchase and associated financing, notwithstanding the terms of the previous orders. This required the court to consider the implications of these proposed actions on the existing financial arrangements and potentially the division of assets or liabilities between the parties.

Carew J granted the Husband's application, permitting him to purchase 1,221,000 shares in B Incorporated from Mr J, with these shares to be registered in the name of B Industrial Limited. The court also authorised the Husband to secure a line of credit for NTD$68,000,000 in the name of B Industrial Limited from Bank I to facilitate this purchase. Crucially, the Husband was permitted to use both the B Incorporated shares held in his personal name and those held by B Industrial Limited as collateral for this line of credit.

Orders

Orders of the court

That notwithstanding paragraphs 5 to 8 of the Order dated 22 October 2015, the Husband shall be permitted to:

(a) Purchase 1,221,000 shares in B Incorporated from Mr J with such shares to be held in the name of B Industrial Limited;

(b) Obtain a line of credit with Bank I in the name of B Industrial Limited in the amount of NTD$68,000,000 to facilitate the purchase of B Incorporated shares from Mr J;

(c) Provide the B Incorporated shares held in his personal name and in the name of B Industrial Limited as collateral for the line of credit obtained from Bank I pursuant to paragraph 1(b) herein.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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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