Lisson Nominees Pty Ltd Trading as BGC Builders Supplies as trustee for the PBS Unit Trust v Conview Victoria Pty Ltd [No 3]

[2023] WASC 344

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   LISSON NOMINEES PTY LTD TRADING AS BGC BUILDERS SUPPLIES AS TRUSTEE FOR THE PBS UNIT TRUST -v- CONVIEW VICTORIA PTY LTD [No 3] [2023] WASC 344

CORAM:   TOTTLE J

HEARD:   1 SEPTEMBER 2023

DELIVERED          :   1 SEPTEMBER 2023

PUBLISHED           :   7 SEPTEMBER 2023

FILE NO/S:   CIV 1698 of 2021

BETWEEN:   LISSON NOMINEES PTY LTD TRADING AS BGC BUILDERS SUPPLIES AS TRUSTEE FOR THE PBS UNIT TRUST

First Plaintiff

BGC (AUSTRALIA) PTY LTD

Second Plaintiff

AND

CONVIEW VICTORIA PTY LTD

First Defendant

SHARON JING CHEN

Second Defendant

JIE LU

Third Defendant

ANGELA LIXIA HUANG

Fourth Defendant

Catchwords:

Practice and procedure - Application for variation of freezing orders - Where variation sought to provide for legal costs of defence - Where freezing orders extended by consent - Where the second and third defendants challenge the reliability of the plaintiffs' evidence - Where application made soon after an earlier unsuccessful application - Where the second and third defendants challenge the conduct of their previous lawyers - Application dismissed

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

First Plaintiff	:	C P K Russell
Second Plaintiff	:	C P K Russell
First Defendant	:	No appearance
Second Defendant	:	In person
Third Defendant	:	In person
Fourth Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Jones Day
Second Plaintiff	:	Jones Day
First Defendant	:	No appearance
Second Defendant	:	In person
Third Defendant	:	In person
Fourth Defendant	:	No appearance

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

Nil

TOTTLE J:

(This decision was delivered extemporaneously on 1 September 2023 and has been edited from the transcript.)

Introduction

1. This is an application made by the second and third defendants by way of chamber summons filed on 12 July 2023.  By that application, the second and third defendants sought eight different orders.  The most significant of those orders was an order to the effect that funds held by the lawyers who acted for the first defendant at the time the application was made be released into an account in the name of the second and third defendants on the basis that those funds would not be transferred out of the country and would be used solely for future legal costs. 

Background

1. The amount of money concerned is $500,000.  That sum is what remains of a larger sum of $700,000 that was held in the trust account of the first defendant's lawyers pursuant to orders made by the court by the consent of the plaintiff, the first defendant, the second defendant and the third defendant on 28 July 2021. 

2. The order made on 28 July 2021 replaced a freezing order that had been made on 22 July 2021.  It is a matter of some significance that in July 2021 the first, second and third defendants did not challenge the making of the freezing order on 22 July 2021 as they were entitled to do at that time.

3. This is the second application made by the second and third defendants for the release of funds held in the trust account. 

4. On 13 February 2023, the second defendant sought an order that $120,000 of the funds held in trust be made available to her to pay legal costs.  At that time $200,000 out of the original $700,000 deposited into the trust account had been used for the first, second and third defendants' legal costs.

5. The February application was made by experienced counsel and solicitors for the second defendant.

6. Following a hearing on 18 April 2023, the application was refused.  In summary, there were four reasons which, taken in combination, led to the refusal of that application.  These four reasons were as follows. 

7. First, the second and third defendants had used resources available to them to meet legal costs for other expenditure. 

8. Secondly, the second and third defendants were the owners of a property in Beijing that was available to use as security for the raising of funds to meet legal costs.

9. Thirdly, the plaintiffs' claims were of a proprietary nature.  That is, if established they created an interest on the part of the plaintiffs in the funds held in the trust account. 

10. Fourthly, the funds held in the trust account were the only funds against which the plaintiffs could enforce any judgment they may obtain.  If the funds were released and used for legal expenditure, that would most likely frustrate the court's processes. 

The application

1. The grounds of the application filed on 12 July 2023 may be summarised as follows. 

2. First, the evidence relied upon by the plaintiffs in support of the application for a freezing order was unreliable and, in some cases, untruthful.  If the plaintiffs' case had been challenged by the defendants they would have been able to demonstrate the unreliability of the evidence and that they had a complete defence to the allegations against them.  

3. Secondly, the second and third defendants' previous lawyers have served their interests very poorly.  More specifically, the second and third defendants say that their previous lawyers were both incompetent and guilty of misconduct.  It is unnecessary for me to descend into the detail of the allegations.

Consideration

1. The application faces fundamental difficulties.  First of all, the freezing order made on 22 July 2021 was replaced by the consent order made on 28 July 2021, which was made with the agreement of the first, second and third defendants. 

2. The significance of the agreement of the first, second and third defendants for this application is that it renders their submissions about the evidence relied upon to obtain the freezing order on 22 July 2021 irrelevant.  Put another way, it was open to the second and third defendants to challenge the freezing order shortly after it was made, but they did not do so.  It is not now open to them in the present application to challenge that evidence.  This is not an occasion for the court to investigate the underlying merits of the plaintiffs' claim.

3. The second difficulty that the application faces is that the first, second and third defendants are bound by the way in which their lawyers have conducted the case on their behalf to this date. 

4. I have read and listened to the criticisms that the second and third defendants have made of their previous lawyers.  Today is not the day on which to review those criticisms in detail.  It appears that many of the criticisms are based upon a misunderstanding of the procedure that is followed in this court in relation to freezing orders and the litigation more generally.  That remark is not intended as a personal criticism of the second and third defendants.  To lay people, the legal system, and in particular the processes relating to freezing orders, can be difficult to understand and, without a full appreciation of the underlying principles, may appear to operate in a manner that is unjust.

5. The third difficulty this application faces is that it is an attempt to re‑argue the application determined by the court on 18 April 2023, when there appears to be no material change in the circumstances since April 2023. In the absence of exceptional circumstances, the court will not entertain the same application being made on more than one occasion. 

Conclusion

1. For those reasons, the application will be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

OK

Associate to the Honourable Justice Tottle

7 SEPTEMBER 2023