FEDERAL COURT OF AUSTRALIA
Protelight Pharmaceuticals (Australia) Pty Ltd v Wen [2024] FCA 581
File number(s): QUD 246 of 2024 Judgment of: COLLIER J Date of judgment: 3 June 2024 Catchwords: PRACTICE AND PROCEDURE – ex parte application for freezing orders pursuant to rr 7.32 and 7.35 Federal Court Rules 2011 (Cth) – affidavits filed by officer of applicant and lawyer – onus of proof – relevant criteria for satisfaction of Court in granting freezing order – “good arguable case” – danger that judgment will be unsatisfied in whole or in part – substituted service permitted Legislation: Corporations Act 2001 (Cth) ss 181, 182, 1317H
Federal Court of Australia Act 1976 (Cth) s 45(2)
Federal Court Rules 2011 (Cth) rr 7.32, 7.35, 10.24, 10.49
Convention on The Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965
Cases cited: Cardile v Led Builders Pty Ltd [1999] 198 CLR 380
Insolvency Guardian Melbourne Pty Ltd v Carlei [2016] FCA 72
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271
Division: General Division Registry: Queensland National Practice Area: Other Federal Jurisdiction Number of paragraphs: 37 Date of hearing: 3 June 2024 Counsel for the Prospective Applicant: Mr J Wang Solicitor for the Prospective Applicant: AHL Lawyers ORDERS
QUD 246 of 2024 BETWEEN: PROTELIGHT PHARMACEUTICALS (AUSTRALIA) PTY LTD
Prospective Applicant
AND: DA WEN
Prospective First Respondent
LI WEN MA
Prospective Second Respondent
ORDER MADE BY:
COLLIER J
DATE OF ORDER:
3 JUNE 2024
TO: Da WEN and Li Wen MA
IF YOU (BEING THE PERSONS BOUND BY THIS ORDER):
(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR
(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO
YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.
ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.
TO: Da WEN and Li Wen MA
This is a 'freezing order' made against you on 3 June 2024 by Justice Collier at a hearing after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS THAT:
1.The assets of Da WEN be subject to a freezing order pursuant to rule 7.32 of the Federal Court Rules 2011 (Cth) (Rules) in accordance with the terms set out below.
2.The Prospective Applicant, Protelight Pharmaceuticals (Australia) Pty Ltd (Applicant), fulfils its undertakings to the Court in accordance with the terms set out in Schedule A below.
3.Pursuant to rule 10.24 of the Rules, leave is granted for service of the Urgent Application Before Start of a Proceeding filed 15 May 2024 (Urgent Application) and…
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- Case
- [2024] FCA 581
- Decision Date
CaseChat Overview and Summary
The court concluded that Protelight Pharmaceuticals had demonstrated a good arguable case for the prospective cause of action. It accepted that there was a sufficient prospect of success in the main proceeding and that there was a danger that the judgment would be unsatisfied if the assets were not frozen. The court also ruled that substituted service via WeChat and iMessage was permissible under rule 10.49 of the Federal Court Rules. The freezing order restrained the respondent from removing or diminishing the value of assets up to AUD$550,000. Protelight Pharmaceuticals was required to provide certain documents and information to the court and was granted leave to serve the application and supporting documents by the specified means. The court reserved costs pending the outcome of the main proceeding.
Orders
Orders of the court
1. The assets of Da WEN be subject to a freezing order pursuant to rule 7.32 of the Federal Court Rules 2011 (Cth) (Rules) in accordance with the terms set out below.
2. The Prospective Applicant, Protelight Pharmaceuticals (Australia) Pty Ltd (Applicant), fulfils its undertakings to the Court in accordance with the terms set out in Schedule A below.
3. Pursuant to rule 10.24 of the Rules, leave is granted for service of the Urgent Application Before Start of a Proceeding filed 15 May 2024 (Urgent Application) and supporting documents, as well as any prospective Application by the Applicant for breach of director’s duties under the Corporations Act 2001 (Cth) and the common law (Prospective Application) and supporting documents (Documents) by the following means:
(a) By WeChat to WeChat ID: Michael902274
(b) By iMessage to iMessage number: +61 411 193 378
4. The Documents shall be deemed to be served on the Prospective Respondents, Da WEN and Li Wen MA (Respondents) 7 days after service in accordance with order 3.
5. The Commonwealth Bank of Australia, within 7 days, produce and provide to the Applicant all documents and information in its possession, custody, or control relating to:
(a) The accounts of Da WEN and Li Wen MA, including but not limited to account statements, transaction records, and identification documents.
(b) All transactions conducted by or on behalf of Da WEN and Li Wen MA from 1 September 2023 to 3 June 2024, including but not limited to wire transfers, deposits, withdrawals, and internal transfers.
(c) Any correspondence, communications, or records related to the opening, maintenance, and operation of the accounts associated with Da WEN and Li Wen MA.
6. Costs of and incidental to the Urgent Application be reserved pending the outcome of the Prospective Application.
7. Each party has liberty to apply to the Court with one day’s written notice.
Introduction
8. The Urgent Application is made returnable at 9:30 am on 14 June 2024 before Justice Collier (Return Date).
9. The time for service of the Urgent Application and supporting affidavits is abridged and service is to be effected by 4:00 pm on 4 June 2024.
10. This order has effect up to and including the Return Date.
11. The Prospective Application is to be filed and served by 4:00 pm on 13 June 2024.
12. Anyone served with or notified of this order, including you, may apply to the Court at any time with one day’s written notice, to vary or discharge this order or so much of it as affects the person served or notified.
13. In this order:
(a) 'Applicant', if there is more than one applicant, includes all the Applicants;
(b) 'you', where there is more than one of you, includes all of you and includes you if you are a corporation;
(c) 'third party' means a person other than you and the Applicant;
(d) 'unencumbered value' means value free of mortgages, charges, liens or other encumbrances.
14. If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(a) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.
Freezing of Assets
15. You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (Australian Assets) up to the unencumbered value of AUD$550,000.00 (Relevant Amount).
(a) If the unencumbered value of your Australian Assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.
(b) If the unencumbered value of your Australian Assets is less than the Relevant Amount, and you have assets outside Australia (Ex-Australian Assets):
(i) You must not dispose of, deal with or diminish the value of any of your Australian Assets and Ex-Australian Assets up to the unencumbered value of your Australian and Ex-Australian assets of the Relevant Amount; and
(ii) You may dispose of, deal with or diminish the value of any of your Ex-Australian Assets, so long as the unencumbered value of your Australian Assets and Ex-Australian Assets still exceeds the Relevant Amount.
16. For the purposes of this order,
(a) your assets include:
(i) all your assets, whether or not they are in your name and whether they are solely or co-owned;
(ii) any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and
(iii) the following assets in particular:
A. the property known as 57/2-26 Wattle Crescent, Pyrmont, NSW 2009 or, if it has been sold, the net proceeds of the sale;
B. any money in accounts in the name of Da WEN or Li Wen MA at the COMMONWEALTH BANK OF AUSTRALIA.
(b) the value of your assets is the value of the interest you have individually in your assets.
Provision of Information
17. Subject to paragraph 18, you must:
(a) at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the Applicant in writing of all your assets world-wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;
(b) within 7 working days after being served with this order, swear and serve on the Applicant an affidavit setting out the above information.
18. This paragraph applies if you:
(a) are not a corporation and you wish to object to complying with paragraph 17 on the grounds that some or all of the information required to be disclosed may tend to prove that you:
(i) have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii) are liable to a civil penalty.
(b) are a corporation and all of the persons who are able to comply with paragraph 17 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 17 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:
(i) have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii) are liable to a civil penalty.
(c) You must:
(i) disclose so much of the information required to be disclosed to which no objection is taken; and
(ii) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and
(iii) file and serve on each other party a separate affidavit setting out the basis of the objection.
Exceptions to this Order
19. This order does not prohibit you from:
(a) paying your ordinary living expenses;
(b) paying your reasonable legal expenses;
(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and
(d) in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the Applicant, if possible, at least two working days written notice of the particulars of the obligation.
20. You and the Applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the Applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the Applicant and you, and the Court may order that the exceptions are varied accordingly.
21. This order will cease to have effect if you:
(a) pay the sum of $550,000.00 into Court; or
(b) pay that sum into a joint bank account in the name of your lawyer and the lawyer for the Applicant as agreed in writing between them; or
(c) provide security in that sum by a method agreed in writing with the Applicant to be held subject to the order of the Court.
22. Any such payment and any such security will not provide the Applicant with any priority over your other creditors in the event of your insolvency.
23. If this order ceases to have effect pursuant 21.a. above, you must as soon as practicable file with the Court and serve on the Applicant notice of that fact.
Costs
24. The costs of and incidental to the Urgent Application be reserved pending the outcome of the Prospective Application.
Persons other than the Applicant and Respondent
25. Set off by banks
(a) This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.
26. Bank withdrawals by the Respondent
(a) No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.
27. Persons outside Australia
(a) Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia.
(b) The terms of this order will affect the following persons outside Australia:
(i) you and your directors, officers, employees and agents (except banks and financial institutions);
(ii) any person (including a bank or financial institution) who:
A. is subject to the jurisdiction of this Court; and
B. has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and
C. is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and
(iii) any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person's assets.
28. Assets located outside Australia
(a) Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party's application, reasonable written notice of the making of the application is given to the Applicant.
SCHEDULE A
Applicant’s Undertaking
1. The Applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
2. By 4:00 pm on 4 June 2024, the applicant will file and serve upon the respondent copies of:
(a) this order;
(b) the Urgent Application;
(c) the following material in so far as it was relied on by the Applicant at the hearing when the order was made:
(i) affidavits (or draft affidavits);
(ii) exhibits capable of being copied;
(iii) any written submission; and
(iv) any other document that was provided to the Court.
(d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court.
3. Subject to these orders, as soon as practicable, the Applicant will cause anyone notified of this order to be given a copy of it.
4. The Applicant will pay the reasonable costs of anyone other than the Respondents which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the Respondents’ assets.
5. If this order ceases to have effect the Applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
6. The Applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.
7. The Applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the Respondent or the Respondent's assets.
8. The Applicant will:
(a) cause an irrevocable undertaking to pay in a sum to be issued by a bank with a place of business within Australia, in respect of any order the court may make pursuant to undertaking (1) above; and
(b) immediately upon issue of the irrevocable undertaking, cause a copy of it to be served on the Respondent.
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
Ratio Decidendi
Legal Principle Established
Protelight Australia also submitted that, given that Mr Wen’s address in China was unknown, the Convention on The Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 did not apply, and the Court’s discretion to order substituted service pursuant to rule 10.49 of the Federal Court Rules was enlivened. Protelight Australia proposed substituted service on Mr Wen by way of WeChat and iMessage.CONSIDERATION Rule 7.32 of the Federal Court Rules provides:Freezing order(1) The Court may make an order (a freezing order), with or without notice to a 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.Note: Without notice is defined in the Dictionary. Further, rule 7.35 provides:Order against judgment debtor or prospective judgment debtor or third party(1) This rule applies if:(a) judgment has been given in favour of an applicant by:(i) the Court; or(ii) for a judgment to which subrule (2) applies—another court; or(b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in:(i) the Court; or(ii) for a cause of action to which subrule (3) applies—another court.(2) This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court.(3) This subrule applies to a cause of action if:(a) there is a sufficient prospect that the other court will give judgment in favour of the applicant; and(b) there is a sufficient prospect that the judgment will be registered in or enforced by the Court.(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;(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.(5) The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that:(a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because:(i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or(b) a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.(6) Nothing in this rule affects the power of the Court to make a freezing order or ancillary order if the Court considers it is in the interests of justice to do so.