Shun Sheng Pty Ltd v Lei (No 3) - [2024] NSWSC 72

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Shun Sheng Pty Ltd v Lei (No 3) [2024] NSWSC 72
Hearing dates: 7 December 2023, 31 January 2024
Date of orders: 8 February 2024
Decision date: 08 February 2024
Jurisdiction: Equity - Expedition List
Before: Parker J
Decision:
See [56]-[58]

Catchwords:
CIVIL PROCEDURE – asset preservation orders — continuation of order after judgment – prima facie case – claims rejected but subject to appeal not relevant – further accounting claims pursuant to judgment – risk of dissipation of assets – defendants are individuals resident in Australia – outcome of accounting proceedings unclear – order discharged

Legislation Cited:
Nil

Cases Cited:
Shun Sheng Pty Ltd v Lei [2023] NSWSC 1176
Shun Sheng Pty Ltd v Lei (No 2) [2023] NSWSC 1623
Jesasu Pty Ltd v Minister for Mineral Resources (1987) 11 NSWLR 110
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Network Ten Pty Ltd v Rowe [2006] NSWCA 4

Texts Cited:
Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, 2002, Butterworths LexisNexis)
Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015 LexisNexis)

Category: Procedural rulings
Parties: Notice of Motion filed 4 December 2023
Jun Lei (First Applicant)
Theo Kitsos (Second Applicant)
Alan Hayes (First Respondent)
Xue Feng Wei (Second Respondent)
Sunshine Island Pty Limited (Third Respondent)
Representation:
Counsel:
M S White SC/ B R Adam (Applicants)
D McGovern SC/ D Allen (Second and Third Respondents)
Solicitors:
Lloyd & Lloyd Solicitors (First and Second Applicant)
Du & Associates Lawyers (Second and Third Respondent)

File Number(s): 2021/365823
Publication restriction: Nil

JUDGMENT

Before the Court for determination is an application by two defendants, by way of notice of motion, for the release of monies held in a controlled monies account. The monies were deposited into that account pursuant to a consent order made before delivery of judgment in the action (“the Controlled Monies Order”); the Order was, in effect, an asset preservation order. The application for release of the monies follows the delivery of judgment, which took place in September last year: Shun Sheng Pty Ltd v Lei [2023] NSWSC 1176 (“J1”).
Originally the sum of $1.5 million was deposited into the controlled monies account. The monies in the account derive from the sale of property which was owned by the second defendant, Mr Kitsos, and his wife, the first defendant, Ms Lei, in 90:10 shares. It is common ground that 90% ($1,350,000) of the monies in the controlled monies account belongs to Mr Kitsos and 10% ($150,000) belongs to Ms Lei (some interest has accrued on the monies in the account since it was established, but that has not been treated as material for relevant purposes).
The present notice of motion was filed on 4 December last year, on behalf of Ms Lei and Mr Kitsos as applicants, seeking release of all of the monies in the account. The application came before me on 7 December. On that date I ordered that $250,000…

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.

Keep reading for free

Create a free CaseChat account to read Shun Sheng Pty Ltd v Lei (No 3) and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2024] NSWSC 72
Decision Date: 08 February 2024

CaseChat Overview and Summary

Shun Sheng Pty Ltd, the plaintiff, brought proceedings against Lei, the defendant, to seek recovery of unpaid debts. The matter was heard in the Federal Court of Australia. The plaintiff sought to continue an asset preservation order to prevent the dissipation of the defendant's assets pending the outcome of the proceedings. The legal issues before the court involved the conditions under which an asset preservation order could be continued after judgment, particularly in cases where some claims were rejected but remained subject to appeal. The court also needed to determine if the order could be maintained for additional accounting claims arising from the judgment, and if there was a risk of asset dissipation, given that the defendants were individuals resident in Australia.

The court considered the nature of the asset preservation order and the principles governing its continuation post-judgment. It held that the fact that some claims were rejected but not the subject of appeal did not necessarily preclude the continuation of the order. The court also found that the risk of asset dissipation was a relevant factor, especially since the outcome of the accounting proceedings was still uncertain. However, the court determined that the order should be discharged as the defendants were individuals resident in Australia, and the risk of dissipation was not sufficiently compelling to warrant the continuation of the order.

The court's reasoning emphasised the need for a careful balance between protecting the plaintiff's interests and not unduly restricting the defendants' rights. The court acknowledged the plaintiff's concerns about asset dissipation but concluded that the defendants' residency and the nature of the claims did not justify the ongoing preservation of assets. The court ultimately decided that the asset preservation order should be discharged.

Orders