MHN Asset Management P/L v Yang

[2025] NSWSC 462

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

MHN Asset Management P/L v Yang [2025] NSWSC 462

Hearing dates:

13 May 2025

Date of orders:

14 May 2025

Decision date:

14 May 2025

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

See Annexure “A”

Catchwords:

CIVIL PROCEDURE – freezing orders – where default judgment has been set aside – dispute about an agreement for funding of proceedings in the Equity Division – issue as to validity and construction of parties’ agreements –good arguable case –real risk that the defendant’s assets would be disposed of and plaintiff unable to recover judgment made in its favour – freezing orders made against defendant and against non-party respondents

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Cardile v LED Builders Pty Limited [1999] HCA 18

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18

In the matter of Vaucluse 29 Pty Ltd; Bayview 66 Pty Ltd; One Lake Macquarie Pty Ltd; Point Piper One Pty Ltd [2023] NSWSC 631

Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23

Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319

PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36

Samimi v Seyedabadi [2013] NSWCA 279

Category:

Principal judgment

Parties:

MHN Asset Management Pty Limited (Plaintiff)
Meihong Yang (Defendant)

Representation:

S E Gray (Plaintiff)
M J Wells (Defendant)

Solicitors:
W Advisers (Plaintiff)
Snelgrove Herman Lawyers (Defendant)

File Number(s):

2024/184139

Publication restriction:

Nil

JUDGMENT

1. In June 2023 Ms Yang succeeded in proceedings she brought in the Corporations List against her estranged husband Mr Li and various corporate defendants. Declarations and orders were then made about the shareholdings of companies including Point Piper One Pty Ltd and a costs order was made in her favour: In the matter of Vaucluse 29 Pty Ltd; Bayview 66 Pty Ltd; One Lake Macquarie Pty Ltd; Point Piper One Pty Ltd [2023] NSWSC 631.

2. Ms Yang’s costs in those proceedings were originally funded by Slap Pty Ltd and she later also entered another funding agreement with MHN. But despite her success in the proceedings, she has not transferred shares to MHN for which that agreement provided or paid it what it claims she had to pay under the agreement, despite its demands.

3. In August 2024 MHN obtained a default judgment against Ms Yang, who had not entered a defence or appearance, in the sum of $939,793.74, that reflecting the costs incurred in the Equity proceedings. It later registered a writ on Ms Yang’s Zetland property to enforce that judgment.

4. Ms Yang then applied to have the judgment set aside and later MHN applied to have a freezing order made against her. Ms Yang’s motion was resolved with the result that consent orders were made at the hearing of the motions. But the application for the freezing order had to be decided.

5. MHN’s motion was amended at the hearing to seek ex parte freezing orders against companies which are defendants in further proceedings that Ms Yang has recently brought in the Equity Division. There she claims again that her shares in Point Piper One have again been cancelled by Mr Li without her consent and that ASIC records incorrectly show that the defendant companies hold shares in Point Piper One.

6. Ms Yang did not consent to or oppose the freezing orders MHN sought against those companies. ASIC records suggest that she is a shareholder in two of them and Mr Li is their director.

7. This judgment explains the reasons for which I made the freezing orders finally pressed by MHN, it having relied on the affidavit evidence of its solicitor Mr Parsons and a process server, as well as affidavits Ms Yang had sworn and served and documents she had provided. Ms Yang having relied on her affidavits and those of her solicitor Mr Pearlman. I being satisfied that there was a real risk that Ms Yang’s assets would be disposed of and MHN would be unable to recover judgment made in its favour.

8. All the freezing orders are attached to this judgment.

Issues

9. There was no issue about the Court’s power to make the freezing orders sought under r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) or the applicable principles. The Rules permitting the making of a freezing order for “the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.”: r 25.11(b)(i) UCPR.

10. Such orders may be made even against a respondent not party to the proceedings, the relevant connection being the hand in which assets pursued are placed: r 25.13 and 25.14 and Cardile v LED Builders Pty Limited [1999] HCA 18 at [57].

11. But whether the Court should exercise its undoubted discretion to make the orders pressed against Ms Yang was in issue.

12. The relevant principles include:

• The power to make a freezing order exists not to create additional rights, but to enable the Court to protect its process from abuse in relation to the enforcement of its orders: Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 619; [1987] HCA 23;

• Its primary object is to protect a prospective enforcement process and not to grant aid to the cause of action pursued in the proceedings: PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [46];

• Such an order is not intended to create security for the plaintiff, or to require a defendant to provide security as a condition of being allowed to defend the action: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 323;

• Such an order is an exceptional or drastic remedy which should not be granted lightly: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [51];

• The applicant must establish by evidence and not mere assertion that:

1. There is a prima facie or good arguable case on the cause of action asserted; and

2. In all the circumstances there is a danger that a prospective judgment will be wholly or partly unsatisfied because the prospective judgment debtor absconds or the assets of the prospective judgment debtor are removed from Australia or disposed of, dealt with or diminished in value: Patterson at 320-321.

• It is not necessary to establish dishonesty or a positive intention of evading a judgment, it being sufficient to show that the course on which the defendant proposes to embark is, objectively speaking, calculated to have that effect: Samimi v Seyedabadi [2013] NSWCA 279 at [73]-[74];

• Impecuniosity does not establish an abuse of process, nor does the mere prospect of impending insolvency: Samimi at [74]; and

• Account must be taken of matters such as the expedition or delay with which the application was made and the balance of convenience: Patterson at 323.

13. In the case of the application for ex parte orders there is a duty of candour which MHN sought to meet by its evidence and submissions. The necessary undertaking as to damages has also been given.

14. I was satisfied that MHN had established an evidentiary case which satisfied these requirements and established a just basis for the making of the orders it finally pressed, which had necessary regard, in particular, to Ms Yang’s financial circumstances.

15. There was no issue about pertinent facts which included that:

1. Point Piper One had paid for the purchase of the Point Piper property, Edgewater, at a time when Ms Yang was its sole shareholder and Mr Li its sole director, with very considerable borrowings, much of which had been provided by Mr Li’s former wife. Given those borrowings and what it may also owe the State for various reasons, its value was not known to Ms Yang;

2. Edgewater is where Mr Li resides. Ms Yang lives elsewhere in rented accommodation, but owns one property which is considerably encumbered by a mortgage;

3. Edgewater has two certificates of title and Point Piper One is presently the registered proprietor of only one of them, but has certain rights in respect of the other;

4. In July 2022 Mr Li notified ASIC, without Ms Yang’s consent or any resolution of Point Piper One, that Ms Yang had forfeited her shares in Point Piper One;

5. The Corporations List proceedings restored Ms Yang’s shareholding, and Mr Li was ordered to pay her costs of the proceedings, as agreed or assessed;

6. MHN had pursued Ms Yang for payment of what it claims she owed it and obtained default judgment at a time when it understood, on information a process server had provided, that its statement of claim had been served on her at Edgewater;

7. Ms Yang later entered two agreements to transfer her shares in Point Piper One for a total of $1 million to Mr Li, but there is no evidence that she has ever executed any share transfer, on her case because Mr Li has never paid her what they agreed;

8. Still ASIC records reflect that Ms Yang is no longer a registered shareholder of Point Piper One, Mr Li having notified ASIC that she had forfeited her shares, with the result that she has brought further proceedings in the Equity Division to have her 100 shares restored to her again; and

9. MHN also registered a writ on the title of Ms Yang’s property, which it accepts will now have to be withdrawn, given that the default judgment has been set aside.

16. In issue was whether MHN had established an evidentiary basis for the making of the freezing orders it pursued against Ms Yang and even if it had, whether the Court would exercise its discretion to make a freezing order against her. She relying on its delay in consenting to the setting aside of the default judgment, to urge the Court not to exercise its discretion to make such an order.

The parties’ cases

17. There was no issue that MHN does have an arguable case. I was satisfied that it had a good arguable case. The case depends on the proper construction and validity of relevant documents, including the two funding agreements Ms Yang entered and the assignment of the first to MHN, as well as notices given to Ms Yang. Some aspects of the agreements were not clearly drafted and there is a challenge to their validity, but pertinent provisions are clear, and the evidence establishes that Ms Yang has not complied with them.

18. It was common ground that the evidence established that there was a question about the service of the statement of claim on Ms Yang, which had been resolved. Ms Yang has provided a proposed defence and particulars which had been sought and has also agreed to plead further material facts.

19. That the concession that the default judgment had to be set aside was not earlier made and communicated to the Court did not detract from the difficulty with the course which Ms Yang has pursued in respect of her shares in Point Piper One. On the evidence there was a proper basis for MHN to understand that the statement of claim had been served and its later conduct was consistent with it not having appreciated until recently, what affidavits Ms Yang relied on established as to that service.

20. MHN relied on evidence that it contended established that Ms Yang had pursued a course which could reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the Court and the enforcement of its judgments, or of being intended to be. Namely, her entry into an agreement to transfer her shares in Point Piper One to Mr Li for $1 million.

21. That agreement having been entered within 3 days of MHN’s demands being made upon her. At the heart of their funding agreement was the obligation imposed on Ms Yang to hold 45 of those shares in trust for MHN and to pay it a 30% share of their true value.

22. MHN contended that it was relevant that Ms Yang had advanced conflicting accounts about how she had dealt with her shares, which established the irregularity of her dealings with them and her failure to comply with her agreements with it. Aspects of her evidence was also argued to be at odds with what objective evidence established. This evidence well establishing a proper basis for the freezing orders sought against her and those who on the ASIC records currently hold the shares in Point Piper One.

23. This was disputed.

24. Ms Yang’s claim being that in determining whether the Court should exercise its discretion, it was relevant that MHN had no proper basis to apply to have default judgment entered against her, despite the service upon her which its process server informed it had been effected upon her at Edgewater. Nor should it have entered the writ on the title to her property. In the circumstances it had improperly delayed consenting to the default judgment being set aside, which should result in the refusal of the freezing order sought.

25. It was also urged that there was no other evidence which established a basis on which the freezing order could justly be made, Ms Yang not having absconded or dissipated her assets and now actively pursuing proceedings to protect her ownership of her shares in Point Piper One.

26. In those circumstances, it was submitted that the Court should refuse to exercise its discretion to make the freezing order sought against her.

Why the freezing order was made against Ms Yang

27. There was no issue that despite the agreement which Ms Yang entered with Mr Li in August 2024 to transfer her shares in Point Piper One to him, there is no evidence that she has ever done so. Still the ASIC records reflect that its shares are now held by various corporate entities, in two of which Ms Yang has a shareholding, she having forfeited her shares. She disputes this and is pursuing her claims about her ongoing entitlement to her shares in the further Equity proceedings she has brought. How that litigation is being funded is not apparent.

28. In these proceedings there is an issue as to the validity of the funding agreements entered in respect of the earlier Equity proceedings, given various statutory regimes. But nevertheless pertinent terms are clear. They including Ms Yang’s agreement that in consideration of MHN funding those proceedings, she would transfer 45 of her shares in Point Piper One to it and until that transfer was effected, she acknowledged and agreed that she held them in trust for MHN: cl 3 of the July 2023 deed.

29. It followed that the agreement which Ms Yang later entered with Mr Li to transfer all of her shares in Point Piper One to him for a total of $1 million, without MHN’s knowledge or agreement, was inconsistent with what she had earlier agreed with it. Why she did not transfer the shares to Mr Li, on her case, was explained by his failure to pay her the agreed $1 million.

30. On her unchallenged evidence Ms Yang’s other assets are not sufficient to fund what MHN claims she owes it in respect of the costs of the Equity proceedings, let alone to pay her ongoing living expenses, with the result that she needs to obtain further borrowings to fund even them. That helps explain why she entered an agreement with Mr Li to transfer her shares in Point Piper One to him, as she did. But her evidence did not suggest that she has pursued his payment of her costs in the Equity proceedings.

31. On Ms Yang’s case she does not know that her shares in Point Piper One have any value, given what it owns and what it owes Mr Li’s ex-wife, who funded its acquisition of Edgewater and all that the State claims Point Piper One also owes it. But her evidence does not explain documents which she executed, which do not appear to support the case she is apparently pursuing in the further Equity proceedings.

32. What arose to be considered on all that evidence was whether MHN had established that the Court’s power to protect its process from abuse, in relation to the enforcement of its orders in these proceedings, had been engaged.

33. I was satisfied that it had.

34. I could not see that the course Ms Yang had pursued when agreeing to transfer her shares in Point Piper One to Mr Li as she did accorded with what she had unquestionably earlier agreed with MHN, whose consent to entry into her agreement with Mr Li about her Point Piper One shares she did not seek.

35. Ms Yang properly accepted that MHN had an arguable case. The evidence also established, I was satisfied, that objectively the course she had already pursued was in order to dispose of her shares in Point Piper One, that being contrary to her agreement with MHN, despite being aware that it was pursuing her for payment and it having the result of potentially preventing the enforcement of any judgment or orders made in these proceedings.

36. In the result, despite Ms Yang’s pursuit of the shares in Point Piper One which she claims she has not forfeited, in the further Equity proceedings, I was also persuaded that the Court was empowered to exercise its discretion to make a freezing order against her in the terms finally agreed.

37. That was because Ms Yang’s conduct established the existence of a real risk that she would take further steps to effect the disposal of those shares, if they truly remain hers, thereby preventing the enforcement of any judgment or orders made in these proceedings against her. The obvious circumstances in which that possibility might eventuate being in the settlement of her further Equity proceedings.

Why the other freezing orders were made ex parte

38. What I have already explained, there being no evidence that Ms Yang had forfeited her shares as Mr Li informed ASIC she had, also persuaded me that the orders MHN finally pressed should also be made against the presently recorded shareholders of Point Piper One. Mr Li being the director of each of these companies and, apparently, their controlling mind.

39. The evidence having also established that despite their estrangement Mr Li supported Ms Yang in her resistance of these proceedings at a time when she was not legally represented. It also established his awareness of MHN’s pursuit of what Ms Yang owes it in respect of the costs of the earlier Equity proceedings, he seemingly not having paid Ms Yang’s costs, as had been ordered in those proceedings.

40. I was thus also satisfied that the course Mr Li has pursued, with the result that in the further Equity proceedings Ms Yang disputes advice he has given ASIC as to her shareholding in Point Piper One, provided a proper basis for the further conclusion that the Court’s power to protect its process from abuse in relation to the enforcement of its orders in these proceedings should also be exercised to make the ex parte freezing orders MHN pressed.

41. The evidence also establishing the existence of a real risk that the companies which are now identified in ASIC’s records as holding the shares in Point Piper One, may deal with them in a way that will potentially prevent the enforcement of a judgment or orders made in these proceedings in favour of MHN.

42. The further freezing orders were made in terms which accorded with the applicable Court Practice Note, preserving the shares in Point Piper One while MHN’s case is determined.

43. They will bring the matter before the Court on Thursday next at 10 am, when the companies the subject of the orders can be heard about their continuation and terms.

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ANNEXURE A Updated (220 KB, pdf)

Amendments

14 May 2025 - On the Cover Sheet, an error in the Counsel representation.

21 May 2025 - Incorrect ACN for Point Piper Sun Pty Ltd at page 21 of Annexure A.

Decision last updated: 21 May 2025