Nikolic v Guo
[2022] WASC 386
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NIKOLIC -v- GUO [2022] WASC 386
CORAM: MASTER SANDERSON
HEARD: 7 NOVEMBER 2022
DELIVERED : 7 NOVEMBER 2022
PUBLISHED : 15 NOVEMBER 2022
FILE NO/S: CIV 2059 of 2021
BETWEEN: DAVOR NIKOLIC
Plaintiff
AND
XIUYI GUO
First Defendant
SHUYA DUAN
Second Defendant
Catchwords:
Practice and procedure - Application for freezing order - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | In Person |
| First Defendant | : | D Chandler |
| Second Defendant | : | D Chandler |
Solicitors:
| Plaintiff | : | In Person |
| First Defendant | : | AH2 Legal |
| Second Defendant | : | AH2 Legal |
Case(s) referred to in decision(s):
Nedroc Pty Ltd v Welling [2016] WASC 363
MASTER SANDERSON:
By a chamber summons filed 19 July 2022, the plaintiff sought a freezing order in relation to two properties in Northbridge owned by the first and second defendants. The application was supported by an affidavit of the plaintiff sworn 8 July 2022. In opposition to the application, both the first and second defendants filed affidavits sworn 8 August 2022. (The defendants also relied on an affidavit of Qunhua Dai sworn 8 August 2022. This affidavit provided a translation of the affidavit of the first defendant who speaks limited English). The plaintiff filed a further affidavit sworn 26 August 2022 and the defendants filed an affidavit of Anfernee Hok Ming Lai affirmed 21 September 2022. This last affidavit attached a copy of a conditional contract for the sale of the two Northbridge properties, the subject of the application. The plaintiff and the defendants filed written submissions. After hearing oral argument I dismissed the plaintiff's application. I said I would provide reasons for my decision. These are those reasons.
By reference to the statement of claim, the plaintiff's claim can be summarised as follows. The plaintiff was at all material times the sole proprietor of Architectural Online. The first and second defendants, as registered proprietors of the two properties in Northbridge, proposed to construct a hotel on the site. The plaintiff alleges on 20 April 2019, the plaintiff entered into a written contract with the first and second defendants to project manage the construction of the new proposed hotel. The plaintiff alleges on 20 November 2020, the first and second defendants repudiated the contract. The plaintiff says he accepted the repudiation of the contract and pursuant to the terms of the contract he is entitled to damages. It is the defendants' position they never entered into any contract with the plaintiff and accordingly they are not liable for damages.
It is clear then the plaintiff's claim is a claim in personam. That is to say, he is not claiming any interest in the two properties. If he were claiming such an interest he could no doubt lodge caveats to protect his interest. But that option is not available to him. He brought the application for a freezing order because he was concerned the defendants might remove assets from the jurisdiction. The plaintiff's concerns arose in this way.
The plaintiff says the defendants are attempting to dispose of the two properties. This is admitted by the defendants. In fact, as noted above, a copy of the conditional contract entered into by the defendants for the sale of the properties is in evidence. The plaintiff says the circumstances are such that the defendants are attempting to conceal from the plaintiff that the properties are for sale. The defendants maintain there has been no attempt to hide from the plaintiff the fact the properties are for sale. The defendants say the disposal of these two properties is in the normal course of business. Furthermore, both defendants say they are committed to remain resident in the jurisdiction and to develop their business interests. There is no evidence to the contrary provided by the plaintiff.
In his written submissions the plaintiff referred to O 52A r 2 and r 5(4) of the Rules of the Supreme Court 1971 (WA). These two rules are in the following form:
2. Freezing order
(1)The Court may make an order (a freezing order), upon or without notice to the respondent, 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.
(2)A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
…
5. Order against judgment debtor, prospective judgment debtor or third party
…
(4)The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur -
(a)the judgment debtor, prospective judgment debtor or another person absconds; or
(b)the assets of the judgment debtor, prospective judgment debtor or another person are —
(i)removed from Australia or from a place inside or outside Australia; or
(ii)disposed of, dealt with or diminished in value.
The plaintiff in his submissions relied on the decision of Pritchard J in Nedroc Pty Ltd v Welling [2016] WASC 363. In particular, the plaintiff relied upon [15], [19] and [33] of her Honour's decision. These paragraphs read as follows:
15A freezing order may be made under O 52A r 5(4) RSC against a prospective judgment debtor arising from a cause of action in this Court if certain requirements are met. Those requirements are, first, that the applicant must have a good arguable case on an accrued or prospective cause of action that is justiciable in this Court. Secondly, the Court must be satisfied, having regard to all of the circumstances, that there is a danger that the prospective judgment will be wholly or partly unsatisfied because, amongst other things, the prospective judgment debtor may abscond or because the assets of the prospective judgment debtor may be disposed of, dealt with or diminished in value. Finally, given that a freezing order is a discretionary remedy, the Court must consider whether the balance of convenience favours the grant of the freezing order.
…
19In Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG (The Niedersachsen), Mustill J considered that a good arguable case in the context of a Mareva order is one which 'is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success'. In BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 3], Le Miere J observed that he did not think that there was any difference between that test and the requirement that the applicant for a Mareva order show a reasonably arguable case on legal as well as factual matters', which was the test set out by Gaudron, McHugh, Gummow and Callinan JJ in Cardile. Justice Le Miere applied the same approach in respect of a freezing order application under O 52A. In other words, the requirement that an applicant for a freezing order must establish that there is a good arguable case, for the purpose of O 52A r 5 RSC, is a relatively modest threshold.
…
33In cases where there is said to be a risk of dissipation of assets in circumstances where dishonesty is involved, the interests of justice may support the grant of a freezing order to prevent the dissipation of assets in the hearing of an action even though the risk of dissipation is less probable than not. As for the evidence to establish the risk of dissipation, it is rarely the case that there is any direct evidence to establish a danger of dissipation of assets. It is more often the case that the Court will be invited to draw the inference that a danger exists having regard to other conduct of a party. In this respect, it is well established that in determining whether there is a danger of a party disposing of assets in order to defeat a judgment, the Court is permitted to consider the evidence adduced by the applicant to establish its claim to the substantive relief sought. In Patterson v BTR Engineering (Australia) Ltd, Meagher JA observed:
Normally proof of the first ingredient alone [i.e. a good arguable case against the defendant] will not suffice; normally one cannot infer a risk of dissipation of assets from the mere fact that the plaintiff has a prima facie cause of action. In normal circumstances this is particularly so in cases like the present, where there is no evidence at all what the defendant's assets are. However, in exceptional cases (of which the present is unfortunately one) one can infer the existence of the latter ingredient partly or wholly from proof of the former. This may well be the situation in all cases where the plaintiff's prima facie case against the defendant involves proof of gross dishonesty.
For the purposes of this application, I am prepared to accept the plaintiff has a good arguable case. But I am not satisfied there is any evidence which would indicate the judgment debtor may abscond from the jurisdiction or that assets will otherwise be dissipated so as to frustrate the plaintiff enforcing any judgment he may obtain. There is simply no evidence to that effect. The fact the defendants are selling the Northbridge properties is not sufficient. They say they are doing that in the course of their business and there is no evidence to the contrary. Furthermore, both defendants say they are committed to remaining in this jurisdiction and there is nothing to suggest otherwise. On this basis, the plaintiff's claim for a freezing order fails.
As I indicated at the hearing, the plaintiff's application will be dismissed. If the parties cannot agree on costs short written submissions should be filed on that issue within seven days of the publication of these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AH
Associate to Master Sanderson
15 NOVEMBER 2022