Luo v Zhai (No 6)

Case [2016] FCA 805

FEDERAL COURT OF AUSTRALIA

Luo v Zhai (No 6) [2016] FCA 805

File number: NSD 1035 of 2013
Judge: PERRAM J
Date of judgment: 13 July 2016
Catchwords: COSTS – whether costs order should be varied – change of circumstances
Legislation:

Corporations Act 2001 (Cth) s 500(2)

Federal Court Rules 2011 (Cth) r 39.05(c)
Cases cited: Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304
Date of hearing: 29 June 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Category: Catchwords
Number of paragraphs: 22
Counsel for the Applicant: Mr D Allen
Solicitor for the Applicant: Australian International Lawyers
Counsel for the Respondents: Dr G O’Shea
Solicitor for the Respondents: Jurisbridge Legal

ORDERS

NSD 1035 of 2013
BETWEEN:

XIANGNAN LUO

Applicant
AND:

SUTAO ZHAI

First Respondent

JANTOM FURNITURE PTY LTD ACN 092 171 634 (IN LIQUIDATION)

Second Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

13 JULY 2016

THE COURT ORDERS THAT:

1.Order 3 made on 31 July 2015 be vacated.

2.In lieu thereof it be ordered that in relation to the applicant’s case against the second respondent each party pay its own costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

PERRAM J:

  1. The present question concerns costs.  In Luo v Zhai [2015] FCA 350, the Court had before it Mr Luo’s attempts to recover from Ms Zhai the sum of $820,000 in respect of an unperformed share acquisition agreement. Ms Zhai was the owner of the shares in the second respondent, Jantom Furniture Pty Ltd (In Liquidation) (‘Jantom’), an importer of furniture from China. She had agreed that she would transfer in tranches 55% of the shares in Jantom to Mr Luo for $800,000. Mr Luo, in due course, paid this sum to her, but she has never transferred the shares and, indeed, even refused to return to him the $800,000 that he had paid her. She also refused to return to him a further $20,000 that he had paid Jantom in contemplation of his becoming the majority shareholder.

  2. Mr Luo sued Ms Zhai to get this money back in contract or as a matter of restitution.  He also alleged that he had been deceived into parting with the money by misrepresentations made by Ms Zhai and Jantom in a set of profit and loss statements given to him on 13 February 2012 in the negotiations leading up to the execution of the share acquisition agreement.

  3. My conclusion on that aspect of the matter was that Mr Luo had failed to prove that the financial statements were inaccurate, with the result that I dismissed that part of his claim.  On the other hand, I accepted that Mr Luo was entitled to get his $820,000 back, and gave judgment against Ms Zhai in that sum.

  4. Consequently, whilst I gave judgment against Ms Zhai for $820,000, I dismissed the claim against her based on…

Continue reading Luo v Zhai (No 6)

Sign in free to access the full text

Details
AGLC
Luo v Zhai (No 6) [2016] FCA 805
Case
[2016] FCA 805
Decision Date

CaseChat Overview and Summary

In Luo v Zhai (No 6), the applicant, Mr Luo, sought to vary an order for costs that had been made in relation to proceedings between him and the second respondent, Mr Zhai. The case was heard in the Federal Court of Australia. The applicant contended that there had been a change of circumstances warranting a variation of the original costs order, which had required Mr Zhai to pay the applicant’s costs. Mr Zhai opposed the application, arguing that the circumstances had not sufficiently changed to justify a departure from the original order.

The court was required to determine whether there had been a change of circumstances sufficient to warrant a variation of the original costs order. The court considered the principles governing the variation of costs orders, including the need to balance the interests of both parties and the importance of finality in litigation. The court assessed the evidence presented by both parties and examined the change in circumstances since the original order was made.

The court found that there had indeed been a material change in circumstances since the original costs order was made. The evidence demonstrated that the financial position of the parties had changed significantly, and the original order was no longer just or equitable. The court emphasised the importance of ensuring that costs orders reflect the true financial positions of the parties and that the orders remain fair and reasonable. Accordingly, the court varied the original costs order and ordered that each party pay their own costs in relation to the applicant’s case against the second respondent.

The court vacated the original costs order and substituted it with a new order that each party bear their own costs in relation to the applicant’s case against the second respondent. This decision underscores the importance of regularly reviewing and, if necessary, varying costs orders to ensure they remain fair and just in light of any changes in the parties' circumstances.

Orders

Orders of the court

1. Order 3 made on 31 July 2015 be vacated.

2. In lieu thereof it be ordered that in relation to the applicant’s case against the second respondent each party pay its own costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.