Jimei Investment Holding Pty Ltd v Chen - [2019] WASC 267

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   JIMEI INVESTMENT HOLDING PTY LTD -v- CHEN [2019] WASC 267
CORAM:   SMITH J
HEARD:   17 JULY 2019
DELIVERED          :   17 JULY 2019
PUBLISHED           :   24 JULY 2019
FILE NO/S:   CIV 2245 of 2019
BETWEEN:   JIMEI INVESTMENT HOLDING PTY LTD
Applicant
AND
HUI MIN CHEN
First Respondent
HUAFANG JIANG
Second Respondent

Catchwords:

Caveat - Application to extend the operation of a caveat - Whether applicant has established claim to equitable interest in property - Procedural and substantive deficiencies

Legislation:

Transfer of Land Act 1893 (WA), s 138B, s 138C

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant	:	Ms L Chen
First Respondent	:	Mr J Choo
Second Respondent	:	Mr J Choo

Solicitors:

Applicant	:	Lily Chen & Associates
First Respondent	:	Chan Galic
Second Respondent	:	Chan Galic

Case(s) referred to in decision(s):

Nil

SMITH J:

(This decision was delivered extemporaneously on 17 July 2019 and has been edited from the transcript to correct matters of grammar and infelicity of expression.)

Jimei Investment Holding Pty Ltd commenced proceedings by originating summons dated 15 July 2019. The summons does not set out the orders which are sought by Jimei Investment Holding. However, in a minute of proposed orders, Jimei Investment Holding seeks an order that caveat number 0140298 be extended to seek leave from a competent court to recover a debt from the defendants.
Section 138C of the Transfer of Land Act 1893 (WA) provides that:
138C.Supreme Court's powers on application by caveator
(1)A caveator who is served with a notice under section 138B(1) may apply to the Supreme Court, in accordance with the rules of the court, for an order extending the operation of the caveat.
(2)On the hearing of an application under subsection (1), the Supreme Court –
(a)if satisfied that the caveator's claim has or may have substance –
(i)may make an order extending the operation of the caveat for such period as is specified in the order; or
(ii)make an order extending the operation of the caveat until further order of the court; or
(iii)may make such other orders as it thinks fit concerning the caveat or the land in respect of which the caveat was lodged;
It is noted that the order sought is not in the usual form. The usual form of an order to extend a caveat is an order (without leave) that a particular caveat numbered and lodged on a specified date and registered against land located at a specified place continue to operate until further order of the court.
However, the form of order sought in this matter is not material, as it is within the discretion of the court to make an order in a form that is appropriate.
To extend a caveat the court must be satisfied that the caveator's claim has or may have substance. I am not so satisfied in this application.
The originating summons is supported by an affidavit sworn by Choi San Leung on 12 July 2019 in Macao, China. The affidavit is brief.
In her affidavit, Ms Leung states that she is a senior accounts manager of Jimei Investment Holding. As counsel for the defendants point out, Ms Leung does not attest that she has been authorised by the office holders of Jimei Investment Holding to bring these proceedings.
Leaving this issue aside, in par 1 of her affidavit Ms Leung states that on 28 March 2018 she sent a notice of reminder to the first defendant, requesting him to repay 3,620,278 HKD to Jimei International Club and attached a copy of a settlement form. Despite the fact that Ms Leung refers to only one notice and one settlement form, Attachment A to her affidavit attaches copies of four notices and three settlement forms. Of the four notices, two are written in English and two are written in Chinese characters. Of the notices written in English, one notice is dated 28 March 2018, and the other is 18 December 2012.
I understand from the submissions made by Ms Chen that the copies of the notices in English reflect what is stated in the notices written in Chinese characters.
Also annexed to Ms Leung's affidavit as part of Annexure A is a copy of what appears to be a copy of one page of Ms Leung's passport, being a photo and information, which indicates her nationality, as Chinese, and her date and place of birth.
The three settlement forms annexed as part of Annexure A are forms which are partly in Chinese characters and partly in English. It can be discerned from the English notations on each of those three forms that:
(a)they are titled 'Jimei International Club, Seoul, Korea, Settlement Form';
(b)they appear to record a 'settlement' occurred on particular dates for particular amounts of Hong Kong currency;
(c)the first settlement form is dated 9 October 2007 for an amount 1,734,117 HKD, the second is dated 14 January 2008 for the amount of 1,005,392 HKD, and the third is dated 21 January 2008 for the amount of 1,886,161 HKD; and
(d)the name of the client on each form is printed in Chinese characters, and the signature on each form is in Chinese characters.
A submission is made by counsel on behalf of Jimei International Holding that the signature on each settlement form is the signature of Mr Hui Min Chen, but there is no evidence before the court to that effect, and this point is not addressed by Ms Leung in her affidavit.
In par 2, of Ms Leung's affidavit, she states that:
The debt owed has not been repaid to date. As a result, on 16 and 17 April 2009, I authorised Lily Chen & Associates to lodge a caveat over the property located at 159 Wellington Street, Mosman Park in the name of the second defendant. Attachment B is the said authorities.
Attachment B to the affidavit of Ms Leung is a letter of instruction to the plaintiff's solicitors, dated 16 April 2019. In the letter Ms Leung states:
We instruct you to please put a caveat over any property owned by Mr Hui Min Chen and Huafang Jiang (wife).
In February 2008, Jimei International Club lent HKD 3,620,278 to Mr Chen and wife.
Attached is a notice of reminder to Mr Chen.
Jimei's conditions of loan includes the ability to put charges on the borrower's property.
Attachment C to the affidavit of Ms Leung is a notice under s 138B of the Transfer of Land Act signed by the Registrar of Titles on 27 June 2019. The notice records:
(a)an application number O180368;
(b)the applicant, as the second defendant in these proceedings, Huafang Jiang (the wife of Mr Hui Min Chen);
(c)the caveat number O140298; and
(d)the caveator as named as Jimei Investment Holdings Limited.
The s 138B notice records the lapse date (of the caveat) as 19 July 2019.
Ms Leung in par 3 of her affidavit states that:
Once I was advised about the Lapsing Notice, I immediately instructed Lily Chen & Associates to write to Chan Galic, lawyer for the Defendants, requesting to pay the outstanding debt by 11 July 2019, failing which the Lapsing Notice would be challenged in the Court.
In par 4 of her affidavit, Ms Leung states:
Should the caveat be removed, the property is sold, then we have no opportunity to recover the debt owed by the First and Second Defendants. The assets in China cannot be seized as the law in China is totally different. We will seek leave of the court to commence recovery proceedings in WA, as before we were unable to sue the First and Second Defendants in Australia as they were not permanent residents of Australia but now they have become.
In a letter signed by Lily Chen, of Lily Chen & Associates, to the court dated 12 July 2019 (which was filed in the court as the certificate of urgency) it is stated that:
The Plaintiff has been locating the First Defendant for a very long period of time because the First Defendant was hiding himself from the Plaintiff. Secondly, the Defendants were not permanent residents before but now they are. Thirdly, when the First Defendant was in China, the gamble is illegal, so the Chinese jurisdiction was and still not an option for the Plaintiff.
It is also stated in the letter from Ms Chen that 'the plaintiff undertakes that there is no damage caused to the defendants' by extending the caveat over the property (159 Wellington Street, Mosman Park).
Such an 'undertaking' is not an undertaking as to damages. An undertaking as to damages in this context, properly given, is an undertaking given to the defendants that a plaintiff will pay any damages that are caused, by the lodgement of a caveat, to a defendant or defendants.
On 16 July 2019, the defendants entered an appearance by solicitors Chan Chalic and filed an affidavit of Jonathan Zhan De Choo, sworn on the same date in which Mr Choo sets out the grounds upon which the defendants oppose the order sought.
In Mr Choo's affidavit, he helpfully annexes a copy of the caveat lodged by the plaintiff's solicitors, and the certificate of title details of the property against which the caveat was lodged.
The caveat is annexed as JC‑1 to the affidavit of Mr Choo and contains information that is inconsistent with the documents annexed to the affidavit of Ms Leung. In particular, it is stated (under the heading 'Grounds of Claim') that the grounds are 'Charge contained in an agreement with the following Parties and Date'. The Parties are specified as Huafang Jiang and Jimei Investment Holding Limited and the 'Date' is specified as '1st March 2018'.
Also annexed to the affidavit of Mr Choo is a document that appears to be signed by Ms Leung, which is said to be, by its title, a 'full indemnity'. The document states:
Lily Chen & Associates and its principal Lily Chen are fully indemnified from any legal consequences for lodging the caveat for Jimei Investment Holding Limited over 159 Wellington Street, Mosman Park.
It appears clear that this document is signed by Ms Leung as the signature that appears on that document appears to be the same signature as that which appears on her affidavit. This 'full indemnity' document is also not an undertaking as to damages. The undertaking is an indemnity to the plaintiff's solicitors and not to the defendants.
During the hearing of this application, I indicated that there is a lack of evidence to support the application to extend the caveat both procedurally and substantively.
The procedural defects are:
(a)there is no proper undertaking as to damages given by or on behalf of Jimei Investment Holding. In any event, issues may arise if the court was to consider the balance of convenience whether an undertaking (if properly given) could be enforced, given that Jimei Investment Holding is incorporated overseas. In these circumstances, any undertaking may have to be secured in some way by an appropriate bank guarantee enforceable in Western Australia or some other security;
(b)the supporting affidavit is deficient. The affidavit of Ms Leung does not depose that she has the authority of Jimei Investment Holding to commence proceedings in Western Australia;
(c)the affidavit of Ms Leung does not attach copies of the certificate of title to the land or the caveat application lodged on behalf of Jimei Investment Holding;
(d)the affidavit of Ms Leung contains documents that are in Chinese characters and partly in Chinese characters. An affidavit should have been filed by an appropriately qualified accredited translator who is able to annex to their affidavit a copy of the documents in their original form and a translation of those documents.
There are substantive defects in the evidential material before the court.
Firstly, there is no evidence before the court of an equitable interest in the land over which the caveat has been registered. It is simply stated in the letter of instruction to the plaintiff's solicitors signed by Ms Leung that Jimei's conditions of loan include the ability to put charges on the borrower's property.
Counsel on behalf of Jimei Investment Holding attempted to put an argument that those terms are contained in the notices and the settlement forms. Plainly the settlement forms do not contain such terms nor do the notices. There are no such terms contained in these documents which could be said to constitute an express or implied term to allow property to be appropriated to discharge the debts, which are said to be created by the execution of the settlement forms.
In these circumstances, even if the court could be satisfied that settlement forms were signed by Mr Hui Min Chen and leaving aside the issue that the land in question is solely registered in the name of Mr Hui Min Chen's wife, there is not a shred of evidence before the court that evidences the terms of a loan upon which, as security, a charge on land lies to secure the debt.
Secondly, to enforce a debt owing in South Korea, there are three issues of private international law which are likely be raised. These are:
(a)what is the law that governs the capacity to enter into and enforce a contract in South Korea;
(b)would the debt which is sought to be enforced in Western Australia be valid and enforceable; and
(c)can the contract be enforced by the law of the country at which the debtor is resident or domiciled. This issue may well turn on the laws of the country where the contract was entered into and whether limitation periods that apply in the place of residence or domicile have no relevance to the law of the place where the contract was made.
For all of these reasons the application must fail.
Finally, there is one issue that is very troubling, and that goes to the circumstances in which the caveat was lodged, and that is the statement in the application for the caveat that the agreement that is said to give rise to an interest in the land is an agreement made between Huafang Jiang and Jimei Investment Holding on 1 March 2018.
On the material before this court, this statement is plainly not only wrong but is misleading and inconsistent with the evidence before the court, which is said to constitute the debt that Jimei Investment Holding claims in this court to be a debt owing by Hui Min Chen.
For these reasons I will dismiss the application, and I will hear from counsel as to costs.
In light of the material before the court, I presently consider an appropriate costs order to be that the defendants' costs be paid on an indemnity basis by the plaintiff's solicitors, subject to their showing cause otherwise. However, I will hear further argument on this issue. I will not determine the issue of costs today.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EH
Research Associate/Orderly to the Honourable Justice Smith
24 JULY 2019