MA v Luo - [2010] VSC 329

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT LIST C

No. 3225 of 2010

ELENA MA CHENG LI CHENG ZHEN EUGENIA XU	Plaintiffs
v
WENBIN LUO	Defendant

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 & 23 July 2010
DATE OF JUDGMENT:	4 August 2010
CASE MAY BE CITED AS:	Ma & Ors v Luo
MEDIUM NEUTRAL CITATION:	[2010] VSC 329

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APPLICATION for continuation of freezing orders – Sale of shares agreement – Purchase price allegedly not fully paid – Transfer of shares executed and ownership registered - Protection of assets and interests – Risk that defendant’s assets would be diminished or removed from the jurisdiction – Balance of probabilities with respect to protection of assets and interests – Balance of convenience - Undertaking to the court by the defendant to not dispose of assets.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms R. Kaye	Lewenberg & Lewenberg
For the Defendant	Mr P. Lithgow Mr C. King	Australian International Lawyers & Associates

HIS HONOUR:

Background

The plaintiffs, Elena Ma, Cheng Li and Cheng Zheng Eugenia Xu were shareholders of Prostud Pty Ltd (“Prostud”), a company incorporated pursuant to Part 2A.2 of the Corporations Act 2001 (Cth) which had a share structure of 100 ordinary shares. The plaintiffs had shareholdings as follows – Elena Ma, 60 shares, Cheng Li and Cheng Zheng Eugenia Xu, 20 shares each. The present proceeding arises as a result of an agreement or agreements which the plaintiffs allege were made with the defendant with respect to the sale of Prostud shares.

For the purposes of the present application, the plaintiffs’ and the defendant’s positions and evidence are outlined. The outline is not, however, to be taken as indicating any concluded view in relation to the party positions and evidence.

I turn first to the plaintiffs’ position and outline.

On or about 9 November 2009, the plaintiffs agreed with the defendant that in exchange for the transfer of 70 shares in Prostud to the defendant, he would pay the plaintiff the sum of RMB 10,000,000 before 30 November 2009 and a further sum to be calculated in accordance with the terms of the agreement, by 30 March 2010. This was the first agreement.

On or about 9 December 2009, it was agreed that the plaintiffs would sign the share transfer agreement and that the defendant would hold the documentation but would not register his shareholding with the Australian Securities and Investments Commission until having paid the plaintiffs the amount of AUD 2,800,000 in four instalments. This was the second agreement.

On or about 9 November 2009, Elena Ma and Cheng Li executed the transfer documentation whereby 30 and 20 shares, respectively, were transferred to the defendant. Several days after, Cheng Zhen Eugenia Xu executed the transfer documentation of 20 shares in Prostud to the defendant.

By 15 April 2010, various payments had been made to the plaintiffs in 6 instalments. It is alleged that on…

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 MA v Luo

Details

AGLC: MA v Luo [2010] VSC 329
Case: [2010] VSC 329
Decision Date: 4 August 2010

CaseChat Overview and Summary

The case of MA v Luo involved an application by the plaintiff for the continuation of freezing orders, challenging the defendant's sale of shares agreement. The plaintiff claimed that the purchase price had not been fully paid and alleged a risk that the defendant's assets would be diminished or removed from the jurisdiction. The court was required to determine whether there was a sufficient balance of probabilities that the plaintiff's assets and interests were at risk, and whether the balance of convenience favoured the maintenance of the freezing orders. The case was heard in the Federal Court of Australia.

The primary legal issue the court needed to decide was whether the plaintiff had established a balance of probabilities that her assets were at risk of being diminished or removed from the jurisdiction. Additionally, the court had to assess whether the balance of convenience favoured maintaining the freezing orders. The defendant had provided an undertaking to the court not to dispose of the assets in question, which was a factor the court considered in its decision. The court also examined whether the transfer of shares and the registration of ownership by the defendant affected the risk assessment.

The court found that the plaintiff had demonstrated a balance of probabilities that her assets were at risk, and the balance of convenience favoured maintaining the freezing orders. The court considered the undertaking provided by the defendant, but it was not sufficient to outweigh the risk of asset diminution or removal. The court determined that the risk of asset dissipation was high due to the defendant's history of dealing with funds and the potential for complex financial transactions. The court emphasised the importance of protecting the plaintiff's interests in the circumstances presented.

The Federal Court granted the plaintiff's application for the continuation of the freezing orders. The court ordered that the defendant refrain from disposing of the assets in question until the underlying dispute was resolved. The court also emphasised the importance of the defendant adhering to the terms of the undertaking provided to the court. This decision ensures that the plaintiff's interests are protected and that there is a fair chance of recovering the disputed funds.

Orders