Jiang v E Scaunich Nominees Pty Ltd (No 1)
[2025] VSC 297
•3 June 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2024 01966
| JIANG, MING | Plaintiff |
| v | |
| E SCAUNICH NOMINEES PTY LTD (ACN 005 315 060) as Trustee of the E & FA Scaunich Unit Trust No.2 (ABN 18 147 866 270) (and others according to the attached Schedule) | Defendant |
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JUDGE: | Harris J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 3 April 2025 |
DATE OF RULING: | 3 June 2025 |
CASE MAY BE CITED AS: | Jiang v E Scaunich Nominees Pty Ltd (No 1) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 297 |
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PRACTICE AND PROCEDURE – Costs – Interlocutory application for freezing orders – Application dismissed by consent and not resolved on merits – Whether it was unreasonable to bring and maintain application – Whether circumstances warrant departure from general practice of ordering that costs be costs in the proceeding – Supreme Court (General Civil Procedure) Rules 2015, r 63.20.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Simon Frauenfelder | Colin Biggers & Paisley |
| For the Defendant | Mr Charles Shaw KC with Mr Matthew Tennant | Thomson Geer |
TABLE OF CONTENTS
The context of the application......................................................................................................... 1
Principles on costs of an application which is not resolved on the merits............................. 2
The parties’ positions in summary................................................................................................. 4
Facts relevant to the issuing of the freezing order summons and Mr Jiang’s response...... 4
The purchase and sale of the Balwyn Property........................................................................ 5
Correspondence relating to the Balwyn Property sale............................................................ 9
Analysis – it was not unreasonable to bring the freezing order application....................... 10
Conclusion......................................................................................................................................... 14
HER HONOUR:
The context of the application
The primary proceeding in this matter relates to a sale of land contract for property comprising lots of land in Queen Street, Melbourne (Queen Street Property). The plaintiff (Mr Jiang) entered into a contract of sale to purchase the Queen Street Property from the defendant (Scaunich) for $27.5 million. After payment of the deposit Mr Jiang did not settle the sale. The statement of claim alleges that Scaunich, as vendor, did not disclose the existence of various material facts about the property, including matters relating to defects in the property such as anticipated expenses to address works on the property.
Mr Jiang alleges that he rescinded the contract of sale for cause. Scaunich disputed that the contract was validly rescinded. Mr Jiang seeks, in these proceedings, the return of the deposit moneys and damages based on claims made under the Australian Consumer LawandFair Trading Act 2012 (Vic).[1] Scaunich counterclaims, pleading that Mr Jiang repudiated the contract causing Scaunich loss and damage.[2]
[1]Amended Writ and Statement of Claim dated 19 March 2025, Prayer of Relief B, D.
[2]Defence and Counterclaim dated 5 June 2024, [53].
After becoming aware of a sale of a property in Balwyn (Balwyn Property) by Mr Jiang, Scaunich sought information from Mr Jiang about the circumstances of that transaction. Scaunich later, after corresponding with solicitors for Mr Jiang in terms discussed further below, applied on 13 March 2025 for orders freezing Mr Jiang’s assets and for disclosure of documents relating to the sale of the Balwyn Property (freezing order summons).
Scaunich subsequently proposed orders that the freezing order summons be dismissed with no order as to costs, after Mr Jiang deposed by affidavit, affirmed 24 March 2025, that he is impecunious.[3] Mr Jiang did not agree to the orders and sought his costs of the application. He also did not agree that costs of the freezing order summons be the parties’ costs in the proceeding, and continued to seek his costs. This necessitated a hearing on the question of costs, which took place on 3 April 2025.
[3]Affidavit of Ming Jiang affirmed 24 March 2025, [31]-[33] (Jiang Affidavit).
For the reasons which follow, I have determined that:
(a) the costs of the freezing order summons other than the costs of the hearing on 3 April 2025 be the parties’ costs in the proceeding; and
(b) the plaintiff pay the defendant’s costs of the hearing on 3 April 2025, limited to the cost of one member of counsel and an instructing solicitor.
Principles on costs of an application which is not resolved on the merits
Costs are in the broad discretion of the Court, a discretion which is to be exercised judicially by reference to relevant considerations. There are certain considerations which are established as relevant to the discretion, including the guiding principle that in general, costs follow the event, so that the successful party is prima facie entitled to their costs.[4]
[4]Latoudis v Casey (1990) 170 CLR 534, 543, 566-568 (McHugh J).
In the case of interlocutory applications, the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provide by rule 63.20 that:
Where an interlocutory or other application is made in a proceeding and –
(a) no order is made on the application; or
(b) the order made is silent as to costs –
the costs are the parties’ costs in the proceeding, unless the Court otherwise orders.
This indicates a default position that the costs of an interlocutory application which is not determined by the Court on the merits are to be the parties’ costs in the proceeding. That position may be displaced in appropriate circumstances and the Court may make a different order, again exercising the broad costs discretion judicially.[5] Considerations which may lead to a different order than that the costs be the parties’ costs in the proceeding were discussed by Justice McHugh in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin.[6] In that case, McHugh J, having noted the usual position that costs follow the event, observed:
When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted so unreasonably in exercising or refusing to exercise a power that the plaintiff had no reasonable alternative but to commence a litigation.
….
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ….
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. …
The critical question in this case then is whether or not the prosecutrix acted reasonably in bringing these proceedings and whether the respondents acted so unreasonably in not informing the prosecutor that an application to review the decision to refuse a visa was being considered that it would be proper for the Minister to pay the whole or part of the cost of the proceedings.[7]
[5]Dale v Clayton Utz (No 3) [2013] VSC 593, [13] (Hollingworth J).
[6](1997) 186 CLR 622.
[7]Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, 624-625 (McHugh J).
In circumstances where interlocutory applications raise discrete issues which would play no part in the main hearing of a matter, it may be appropriate to order that costs be payable forthwith, without a requirement of taxation, particularly if there is a finding that there was no adequate basis for the application.[8]
[8]Eg Moustapha v Nelson (No 3) [2020] NSWSC 1263, [93]-[100] (Parker J); see also Dale v Clayton Utz (No 3) [2013] VSC 593 at [20], [27] (Hollingworth J).
The parties’ positions in summary
Mr Jiang as plaintiff and defendant by counterclaim submits that the freezing order summons was issued without any sufficient basis, when regard is had to matters relevant to the disposition of the Balwyn Property. It is submitted that in circumstances where the application was unreasonably brought and has ‘wholly failed’, costs should follow the event. It is also submitted that the matters are unrelated to any matters which will arise at trial so that a gross sum costs order should be made against Scaunich payable forthwith.
Scaunich submits that the transaction relating to the Balwyn Property raised real questions as to whether the Balwyn Property was disposed of by Mr Jiang at a significant undervalue to his mother, Rong Dai, and that it was appropriate to issue the freezing order summons. It is said that Mr Jiang refused to provide requested information about the transaction or his financial position prior to the issue of the summons, and only at a late stage deposed to being impecunious, at which time Scaunich accepted the inutility of the summons and proposed that it be dismissed. It is submitted that in these circumstances it is appropriate that the costs of the summons be costs in the proceeding.
Facts relevant to the issuing of the freezing order summons and Mr Jiang’s response
The parties’ positions, involving on Mr Jiang’s part the submission that the freezing order summons had no reasonable basis, and Scaunich’s position that Mr Jiang’s lack of response to requests for information until after the summons was issued was the cause of both bringing the freezing order summons and later agreeing that it should be dismissed, make it necessary to consider two broad issues:
(a) the information available about the sale of the Balwyn Property which motivated Scaunich to issue the freezing order summons. In addressing this matter it is important, for the reasons noted by Justice McHugh in Lai Qin, to ensure that the determination of the costs of the application on summons which did not proceed does not descend to such a degree of analysis of the merit that it is tantamount to hearing the application itself; and
(b) the communications between the parties leading to and following the issue of the freezing order summons.
The purchase and sale of the Balwyn Property
Scaunich’s evidence was, in summary, that documents discovered in the proceeding in November 2024 disclosed that in the process of discussion with the Commonwealth Bank of Australia for financing of the Queen Street Property, the Commonwealth Bank had indicated that security requirements for lending would include taking a first registered mortgage over the Balwyn Property. This caused the solicitors for Scaunich to undertake a historical title search of the Balwyn Property which disclosed the following matters, of which they were previously unaware:
(a) Mr Jiang became sole registered proprietor of the Balwyn Property on 25 November 2021, following a sale for which the consideration was described as $3,200,000;
(b) a mortgage was registered over the Balwyn Property in favour of Mr Jiang’s mother, Rong Dai, on 25 November 2021; and
(c) on 19 June 2024, Rong Dai became the sole registered proprietor of the Balwyn Property, following a sale for consideration described as $2,520,000.[9]
[9]Affidavit of Norman Samuel Fryde sworn 6 March 2025, [19]-[23], [25] (Fryde Affidavit).
Scaunich notes that the transfer of the Balwyn Property from Mr Jiang to his mother took place 56 days after the commencement of the proceeding, and 14 days after Scaunich filed its defence and counterclaim, and that the price for the sale was $680,000 or 21.25% less than the consideration Mr Jiang had paid for the property in November 2021.[10]
[10]Fryde Affidavit, [22(e)], [24].
Scaunich also provided evidence as to the value of the Balwyn Property, including:
(a) a report of Julian Valmorbida of Wallace Commercial, valuing the property at $3,400,000 as at 8 April 2024, the date on which the property was recorded on the register as having been sold by Mr Jiang to his mother; and
(b) a valuation obtained by the Commonwealth Bank from CBRE Residential Valuations and produced by subpoena, dated 30 November 2023, valuing the property at $3,400,000.[11]
[11]Fryde Affidavit, [33]-[39].
Mr Jiang’s evidence is that the circumstances in which he bought the Balwyn Property were that he had told his parents that he wished to learn more about how to invest in property. As he did not have sufficient money of his own to invest, his mother had agreed to lend him money to buy and develop a property, and he would pay her back when the development was completed.[12] In October 2021, Rong Dai purchased the Balwyn Property, paid the deposit and nominated Mr Jiang to complete the contract of sale. Mr Jiang borrowed $8,000,000 from his mother for the purchase price and the development of the property pursuant to a Loan Agreement dated 8 November 2021. His mother took a registered mortgage over the property and he commenced developing the property, but found it difficult to progress work because of objections made by neighbours to the proposed building works.[13]
[12]Jiang Affidavit, [5].
[13]Jiang Affidavit, [6]-[10].
Mr Jiang relied on an affidavit he affirmed on 24 March 2025. In the affidavit he gave evidence that he told his mother in about May 2023 of concerns about the holding costs on the property and the delays in development, and his view that it was a bad investment.[14] Mr Jiang said that his mother agreed to purchase the property from him and take over the development. They were advised by a conveyancer to obtain an independent valuation as they were related entities. He said that RT Edgar valued the property and advised that they would sell the property for $2.4 million, and provided a letter on 29 November 2023 estimating the selling price to be ‘around $2.4 m’.[15] Mr Jiang said he then negotiated the price with his mother and she agreed to pay $2.52 million. His evidence was that they signed a contract of sale for that amount on 28 November 2023.[16] He also states that:
Sometime later, on 8 April 2024, I signed a second contract of sale for the [Balwyn Property] for the same price of $2,520,000.[17]
[14]Jiang Affidavit, [15]-[16].
[15]Jiang Affidavit, [14]; see also letter from Annabelle Feng of RT Edgar dated 29 November 2023 exhibited to the Affidavit of Rong Dai affirmed 24 March 2025 (Dai Affidavit), at Exhibit RD-1, 93.
[16]Jiang Affidavit, [16]; see also the contract exhibited to the Dai Affidavit at Exhibit RD-1, 94-148.
[17]Jiang Affidavit, [17]; see also contract of sale exhibited to the Dai Affidavit at Exhibit RD-1, 149-209.
Mr Jiang says that the sale proceeds were used to pay back the principal owing under the Loan Agreement, and that he ‘still owe[s] her the rest, plus interest’.[18] Subsequently, he and his mother entered into a Deed of Variation of Loan Agreement to the effect that he owes her $900,000 plus interest.[19] He has not paid the amount owing, and on 19 June 2024, the Balwyn Property was transferred to his mother.[20]
[18]Jiang Affidavit, [19].
[19]Jiang Affidavit, [19]-[21]; see also the deed exhibited to the Dai Affidavit at Exhibit RD-1, 217-222.
[20]Jiang Affidavit, [21], [23].
In his 24 March 2025 affidavit, Mr Jiang also gave evidence as to his assets, salary and finances. In summary, his evidence was that he does not currently own land in his name, he owns a Porsche Cayenne originally purchased in 2017 for around $120,000 and works in managing his mother’s properties for which he is paid approximately $6,000 per month after tax. He also owns shares in companies which he deposes do not hold any value, has no cryptocurrency or other financial assets, has bank accounts with balances under $100, and lives with his parents and does not pay rent.
Mr Jiang’s mother, Rong Dai, gave evidence by an affidavit affirmed on 24 March 2025. She gave evidence that together with her husband she manages and invests in commercial and residential property, which are owned within company and trust structures, and that her son Mr Jiang is paid a regular salary ‘to help manage the investment properties’.[21] She also gave evidence that she had lent Mr Jiang money to buy the Balwyn Property to help him ‘learn more about how to invest in property and manage property construction’.[22] Ms Dai gave evidence that she had signed the contract of sale of the Balwyn Property and nominated Mr Jiang to complete it, and entered a Loan Agreement with him to lend him $8,000,000 at 6.7% interest per annum. Her evidence was that she only ever gave him $3.42 million under that Loan Agreement, for the purchase price of the property, as the remainder was intended for construction costs of building on the land.[23] On 25 November 2021, Ms Dai took a registered mortgage over the Balwyn Property.[24]
[21]Dai Affidavit, [5].
[22]Dai Affidavit, [5]-[6].
[23]Dai Affidavit, [10]-[11].
[24]Dai Affidavit, [12].
Ms Dai gave evidence to the same effect as Mr Jiang’s evidence that he had trouble developing the property, thought it was a bad investment, and asked her to take over the Balwyn Property. She also said that a conveyancer advised them to get a valuation because it was a related party sale, which they had done. RT Edgar gave a ‘verbal indication’ that the property was valued at $2.4 million and provided a letter dated 29 November 2023, identifying an estimated sale value of $2.4 million.[25] On 28 November 2023, Ms Dai signed a contract of sale for the property for $2.52 million. Ms Dai and Mr Jiang signed a second contact of sale for the property on 8 April 2024 because the conveyancer ‘asked us to resign the contracts as there had been almost a six month delay since we signed the first version’.[26]
[25]Dai Affidavit, [14]-[19]; Exhibit RD-1, 93.
[26]Dai Affidavit, [20]-[24]; Exhibit RD-1, 149-209.
No evidence was given by the conveyancer, and no evidence was given as to why a second version of the contract was necessary, or which elucidated the relevance of the six month delay since the first contract was executed.
Ms Dai gave evidence that she obtained a valuation by Opteon Property Group Pty Ltd on 3 May 2024, valuing the Balwyn Property at a price of $2,520,000, in connection with seeking separate finance to construct a house on the property.[27]
[27]Dai Affidavit, [25]; Exhibit RD-1, 210-216.
Ms Dai also gave evidence confirming that on 8 April 2024 she had entered into a Deed of Variation of the Loan Agreement, that reduced the sum of the loan to Mr Jiang amount to $900,000 plus interest, and that she has taken over development of the Balwyn Property.[28]
[28]Dai Affidavit, [26]-[30].
Correspondence relating to the Balwyn Property sale
On 10 December 2024, having ascertained the matters referred to at [13] above, the solicitors for Scaunich sent a letter to the solicitors for Mr Jiang, making observations about the acquisition and sale of the Balwyn Property, and expressing the view that ‘the transfer of the [Balwyn Property] by Mr Jiang to his mother on 19 June 2024 was undertaken with the intent to delay, hinder, defeat and/or defraud Mr Jiang’s creditors, specifically our client, and to ensure that a judgment on the counterclaim would be wholly or partly unsatisfied’.[29] The letter contained a request that Mr Jiang provide information as to why the Balwyn Property was transferred to his mother for that price, and in the circumstances what had happened to the proceeds of sale, details of Mr Jiang’s assets in Australia and of any dispositions of those assets since December 2023. The letter stated that if the information was not provided the solicitors were instructed to issue an application for a freezing order.
[29]Fryde Affidavit, [27]-[28]; Exhibit NSF-1, 51-53.
Solicitors for Mr Jiang responded by letter dated 13 December 2024, in which they stated that they rejected the proposition that the Balwyn Property was transferred for the purpose of defeating a potential judgment or that it was transferred undervalue. The letter included a valuation by Opteon on 3 May 2024, valuing the Balwyn Property at a price of $2,520,000.[30]
[30]Fryde Affidavit, [30]-[31]; Exhibit NSF-1, 62-69.
On 24 March 2025, Mr Jiang affirmed his affidavit in the context of the freezing order application, in which he confirmed that he had no significant assets.
On 27 March 2025, the solicitors for Scaunich wrote to Mr Jiang’s solicitors, and noted that given the lack of utility in the freezing order application, it was appropriate to have it dismissed with no order as to costs.[31]
[31]Fryde Affidavit sworn 31 March 2025, [9] (Second Fryde Affidavit); Exhibit NSF-2, 97-99.
Solicitors for Mr Jiang responded to that proposal on 28 March 2025 with a letter in which it asserted that the freezing order application would fail. It rejected the explanation that the application was being withdrawn because of the evidence of the financial circumstances of Mr Jiang. It proposed orders that Scaunich pay Mr Jiang’s costs of the application fixed in an amount of $26,700.[32]
[32]Second Fryde Affidavit, [10]; Exhibit NSF-2, 127-128.
On 31 March 2025, Scaunich proposed that the costs of the application should be costs in the proceeding, consistent with rule 63.20 of the Rules, and that the application be otherwise dismissed.[33] Mr Jiang did not accept that proposal and the application went to a hearing on 3 April 2025 on the question of costs alone.
[33]Second Fryde Affidavit, [11]; Exhibit NSF-2, 129.
Analysis – it was not unreasonable to bring the freezing order application
Mr Jiang submits that the freezing order application would have wholly failed and costs for that reason should follow the event. I do not accept that submission for the reasons below.
First, the application did in fact elicit information on affidavit from Mr Jiang as to his assets and financial situation, which was, broadly, information of the kind that Scaunich was seeking in the ancillary orders in the freezing order summons. To that extent, it had a measure of success even before the application was heard.
Secondly, it is not clear that the application to freeze any assets, based on the circumstances in which the Balwyn Property was sold by Mr Jiang to his mother, would have failed. The circumstances in which Mr Jiang and Ms Dai agreed that she would buy the property back from Mr Jiang raise questions as to the nature and regularity of the transaction which support the view that the property may not have been sold at its true value. The evidence does not support the submission that it was unreasonable to make the application for the freezing and ancillary orders.
Both Mr Jiang and Ms Dai gave evidence that they were informed by a conveyancer that it was essential to obtain a valuation of the property, as the transfer was not ‘an arm’s length transaction’. Notwithstanding that advice, on their own evidence they entered into a contract of sale of the property for $2.52 million on 28 November 2023, and did not get a written estimate of value until the next day, 29 November 2023. Even that document was not a formal valuation but an estimate by real estate agent RT Edgar of the property’s selling price. Ms Dai observes that RT Edgar had given a verbal indication of a $2.4 million selling price at an unspecified date. Even if that was before the execution of a contract of sale on 28 November 2023, it does not provide a convincing explanation of why they would execute the sale contract before the valuation was then obtained on 29 November 2023, in circumstances where they had been advised by the conveyancer that it was ‘required’ that they obtain an ‘independent valuation’.[34]
[34]Dai Affidavit, [18].
The execution of two sales contracts for the Balwyn Property, in the same terms, one said to have been executed on 28 November 2023, and the other on 8 April 2024, is irregular and entirely unexplained. The explanation by Ms Dai that the conveyancer required it because of six months’ delay since the first contract was executed, is not an explanation which provides any rational foundation for the execution of two contracts. The 28 November 2023 contract also has a signature of a purchaser, but it does not identify the name of the person who signed. The particulars of sale in the contract do not have any details of who the purchaser is. It does not name Ms Dai nor any other person, nor does it have a settlement date. The section 32 Vendor Statement accompanying that contract is signed by Ms Dai as purchaser, however it remains the case that no purchaser is named in the body of the contract itself. It is open to infer from these problems with the 28 November 2023 contract that it was only by the 8 April 2024 contract that Mr Jiang and Ms Dai entered into a contract by which they did intend to be bound. That date, 8 April 2024, was 6 days after settlement of Mr Jiang’s purchase of the Queen Street Property for $27,500,000 was due to occur on 2 April 2024.
The various valuations of the property do raise questions as to whether the Opteon valuation at $2.52 million, obtained on 3 May 2024, after the contracts of sale for that price had been executed, is likely to reflect the true value at which the property was transferred to Ms Dai. The fact that it reflects exactly the sale price raises questions as to whether the actual recent sale price in the sale between Mr Jiang and Ms Dai factored unduly into the valuation. The observation of the Opteon valuer that the sale by Mr Jiang was ‘an arm’s length transaction albeit without a real estate agent’ suggests a misunderstanding of the sale.[35] The fact that the sale was wrongly apprehended as being at arm’s length may have altered the significance given to the sale price identified for that sale.
[35]Fryde Affidavit, [31]; see Opteon valuation of the Balwyn Property dated 3 May 2024, 4 at Exhibit NSF-1, 66.
I prefer the evidence of the other two valuations of the Balwyn Property. These were the report produced by Mr Valmorbida dated 4 February 2025 obtained by Scaunich, valuing the property at $3,400,000 as at 8 April 2024,[36] and the valuation independently obtained by the Commonwealth Bank from CBRE, dated 30 November 2023, valuing the property at $3,400,000.[37] Like the Opteon report, these reports valued the property at a time when it was vacant land and are comparable. The two reports, and the original purchase price of the land in 2021 at $3,200,000 suggest that a $3,400,000 valuation is the more realistic value of the Balwyn Property.
[36]Fryde Affidavit, [34]-[35].
[37]Fryde Affidavit, [37]-[38].
It is open on that basis, in my view, to have taken the perspective that, on the basis of available evidence, the property was sold at an undervalue.
This was the rationale identified by the solicitors for Scaunich when seeking information from Mr Jiang about the circumstances of the sale of the Balwyn Property. Although Scaunich did not at that time have the two valuations identifying a $3.4 million dollar valuation for that property, it was aware of the purchase price of $3.2 million in November 2021 which did provide support for a view that the property was sold at an undervalue. It was in my view a reasonable rationale and the request for information (accompanied by an observation that instructions were held to seek a freezing order if information was not forthcoming) was also reasonable.
These conclusions also mean that I do not accept the submissions for Mr Jiang that Scaunich ‘must have known its application had poor prospects of success’.[38] Mr Jiang’s counsel was correct to say that there are demanding requirements of obtaining a freezing order.[39] However it is not necessary for present purposes to express a view as to whether Scaunich would have succeeded in the application (had it not been rendered moot by the disclosure that Mr Jiang had no assets). Considering the merits too closely for that purpose would be to effectively hear the primary application which has not been pursued. It is only necessary to consider whether, in the sense identified by McHugh J in Lai Qin, Scaunich as the applicant for interlocutory relief which was not ultimately pursued, acted so unreasonably in bringing the application that costs should be awarded against it. I accept that Scaunich did have a reasonable basis in issuing the freezing order summons, in that there was a real question as to whether Mr Jiang had transferred the Balwyn Property to his mother at an undervalue.
[38]Plaintiff’s Submissions on Costs of Freezing Order Application dated 2 April 2024, [24].
[39]Plaintiff’s Submissions on Costs of Freezing Order Application, [24]; citing Tremaine Developments Pty Ltd (in liq) v Courtney Developments Pty Ltd [2011] VSC 112, [16].
Further, Scaunich by its solicitors sought, in the letter of 10 December 2024, relevant information prior to issuing the freezing order summons. Mr Jiang through his solicitors’ letter of 13 December 2024 did not provide any information about his financial situation, and provided very limited information about the sale of the property. Despite the letter from Scaunich’s solicitors having referred to the instructions to seek a freezing order, the responding letter did not provide the requested information, which was plainly relevant to a foreshadowed application for a freezing order, that Mr Jiang had no assets.
It was not until the filing and service of Mr Jiang’s affidavit of 24 March 2025 that Mr Jiang made Scaunich aware that he had no assets. It was not until that time that Scaunich could have assessed that there was no utility in seeking a freezing order, as there were no assets to freeze. When Scaunich’s solicitors reviewed that information it proposed, by letter on 27 March 2025, that the application be dismissed with no order as to costs, because of the lack of utility in the freezing order application. I accept that this was the reason that the application was not pursued, rather than any issue as to whether it had merit or a proper basis.
Had Mr Jiang provided the information as to his financial situation including his very limited assets earlier, in response to the letter seeking that information sent in December 2024, most of the costs incurred in relation to the application would have been avoided. The suggestion that Mr Jiang may have delayed providing this information as it was potentially embarrassing to disclose that he had no assets is not an adequate reason in the context of commercial litigation initiated by Mr Jiang himself in the Supreme Court, involving a potential issue (amongst others) of whether he could have settled a property purchase in April 2024.
It is not appropriate to visit Mr Jiang’s costs of the application on Scaunich, which acted reasonably in the circumstances.
Conclusion
I consider that it is appropriate that the costs of the application be costs in the proceeding. This is consistent with rule 63.20 of the Rules. It is appropriate that the costs of the application are linked to the outcome of the proceeding as the application was not, contrary to the submission for Mr Jiang, discrete and unrelated to the issues that may arise at trial.[40] Documents tendered on the application demonstrate that the Balwyn Property was considered by the Commonwealth Bank as security for the Queen Street Property transaction and it may be that issues raised in this application will be relevant at trial.
[40]Plaintiff’s Submissions on Costs of Freezing order Application dated 2 April 2025, [35].
It was regrettable that it was necessary to have a half day hearing, with written submissions, to determine this question of costs. The final proposal of Scaunich made on 31 March 2025 that the summons be dismissed and the parties’ costs of the application be costs in the proceeding was an appropriate and reasonable one, and the rationale for it was explained in the letter in which it was proposed, against the background of a more detailed explanation in the letter of 27 March 2025. Although the proposal that costs be in the proceeding was only made two clear business days before the hearing, it still left adequate time for Mr Jiang to accept the proposal and make the hearing unnecessary.
I do also observe, however, that on an application of this nature, representation of Scaunich by both senior and junior counsel should not have been necessary.
I will, therefore, order that:
(a) the costs of, and incidental to, the summons other than the costs of the hearing on 3 April 2025 be the parties’ costs in the proceeding; and
(b) the plaintiff pay the defendant’s costs of, and incidental to, the hearing on 3 April 2025, limited to the cost of one member of counsel and an instructing solicitor.
SCHEDULE OF PARTIES
| S ECI 2024 01966 | |
BETWEEN: | |
| MING JIANG | Plaintiff |
| AND | |
| E SCAUNICH NOMINEES PTY LTD (ACN 005 315 060) AS TRUSTEE OF THE E & FA SCAUNICH UNIT TRUST NO. 2 (ABN 18 147 866 270) | Defendant |
| JONES LANG LASALLE (VIC) PTY LTD (ACN 004 582 423) | Third Party |
AND BETWEEN | |
| E SCAUNICH NOMINEES PTY LTD (ACN 005 315 060) AS (ABN 18 147 866 270) | Plaintiff by Counterclaim |
| AND | |
| MING JIANG | Defendant by Counterclaim |
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