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Jiaqing Xu v Cao & Du Management Pty Ltd (No 2)

Jiaqing Xu v Cao & Du Management Pty Ltd (No 2)

Case [2024] NSWSC 1596 12 December 2024

Discovery & Disclosure

Freezing Orders

Dishonest Dealing with Assets

Civil Litigation & Procedure

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Supreme Court

New South Wales

Medium Neutral Citation: Jiaqing Xu v Cao & Du Management Pty Ltd (No 2) [2024] NSWSC 1596
Hearing dates: 29 November 2024
Date of orders: 12 December 2024
Decision date: 12 December 2024
Jurisdiction: Common Law
Before: Coleman J
Decision:
See [84]-[86]

Catchwords:
CIVIL PROCEDURE — Interim preservation — Freezing orders — continuation of freezing orders made by Duty Judge — where both elements for the making of a freezing order are satisfied — where matters taken into account which allow the Court to infer that the defendants are dishonestly dealing with assets

Legislation Cited:
Contracts Review Act 1980 (NSW)
Family Law Act 1975 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193
Australian Securities and Investment Commission v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814
Cao v ISPT Pty Ltd [2024] NSWCA 188
ISPT Pty Ltd and AWPF Management No. 2 Pty Ltd v Cao and Zhao [2023] NSWSC 1115
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
KR Properties Global Pty Ltd (CAN 602 693 729) t/as AK Properties Group (ABN 62 871 068 965) v Kazzi [2024] NSWCA 141
Samimi v Seyedabadi [2013] NSWCA 279
JiaqingXu v Cao & Du Management Pty Ltd & Anor [2024] NSWSC 1474

Category: Consequential orders
Parties: Jiaqing Xu (Plaintiff)
Cao & Du Management Pty Ltd (First defendant)
Howard Hoa Ting Cao (Second defendant)
Representation:
Counsel:
D Pritchard SC (Plaintiff)
R Alkadamani (First and second defendants)
Solicitors:
Juris Cor Legal (Plaintiff)
Independent Legal (First and second defendants)

File Number(s): 2022/00078620
Publication restriction: Nil

JUDGMENT

Background

The plaintiff, Jiaqing Xu, has commenced these proceedings against Cao & Du Management Pty Ltd (the first defendant) and Howard Hao Ting Cao (the second defendant or Mr Cao) in respect of a dispute in which the plaintiff claims repayment of monies owed pursuant to a loan agreement dated 17 October 2016 (Loan Agreement).
The plaintiff alleges in these proceedings that by the Loan Agreement he lent to the first defendant the sum of $3,300,000. It was a term of the Loan Agreement that an amount of $6,600,000 was payable as the Repayment Amount on 31 October 2018. The second defendant guaranteed the first defendant’s obligations under the Loan Agreement.
The plaintiff alleges that the defendants have breached their obligations under the Loan Agreement and claim payment of an amount slightly greater than $55 million, having regard to the default interest rate contained in the agreement.
The defendants have asserted that the Loan Agreement was a sham, the parties not intending by that agreement to create legal relations, rather, the amount of $3.3 million was paid by the plaintiff on behalf of other persons and parties to be an investment in a property development at Greenacre in New South Wales (the Greenacre Project). The defendants submit that the Loan Agreement is therefore unenforceable.
The defendants are also pursuing a cross-claim against the…

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 Jiaqing Xu v Cao & Du Management Pty Ltd (No 2)

Details

AGLC: Jiaqing Xu v Cao & Du Management Pty Ltd (No 2) [2024] NSWSC 1596
Case: [2024] NSWSC 1596
Decision Date: 12 December 2024

CaseChat Overview and Summary

The case of Jiaqing Xu v Cao & Du Management Pty Ltd (No 2) involved a dispute where the plaintiff sought the continuation of interim preservation orders, including freezing orders, against the defendants. The case was heard in the Federal Court of Australia, with the primary focus on whether the interim measures should be continued given the circumstances of the case. The plaintiff alleged that the defendants were dishonestly dealing with assets and sought to preserve those assets pending the final determination of the case.

The legal issues before the court were whether both elements necessary for the making of a freezing order were satisfied. These elements include the likelihood that the defendants would dissipate their assets and the likelihood that the plaintiff would succeed in the substantive proceedings. Additionally, the court had to consider the matters that could be taken into account in inferring the defendants' dishonesty in dealing with their assets. The court needed to determine whether the evidence presented justified the continuation of the interim measures.

The court found that both elements for the making of a freezing order were indeed satisfied. It was determined that there was a real prospect that the defendants were dealing with their assets dishonestly, and there was a significant risk of dissipation of assets. The court considered various factors, including the defendants' financial history, their conduct during the proceedings, and the potential for dissipation of assets. Based on these considerations, the court concluded that the interim preservation orders, including the freezing orders, should be continued. The court was satisfied that the plaintiff had demonstrated a sufficient basis for inferring the defendants' dishonesty and the necessity of preserving the assets.

In conclusion, the court ordered the continuation of the interim preservation orders, including the freezing orders, against the defendants. The decision underscored the importance of demonstrating both the risk of asset dissipation and the likelihood of success in the substantive proceedings. The court's ruling was grounded in the evidence presented and the factors considered, which collectively supported the inference of the defendants' dishonest dealing with assets.

Orders