Wang v Liu - [2019] NSWSC 420

Supreme Court

New South Wales

Medium Neutral Citation: Wang v Liu [2019] NSWSC 420
Hearing dates: 12 April 2019
Decision date: 16 April 2019
Jurisdiction: Equity - Commercial List
Before: Ball J
Decision:
See [29] of this judgment

Catchwords: COSTS – Security for costs – From the plaintiff – Relevant factors – whether cross-claim is defensive – plaintiff’s prospects of success – other factors
Cases Cited: PS Chellaram & Co v China Ocean Shipping Company (1991) 102 ALR 321; [1991] HCA 36
Green Camel Pty Ltd v Urban Ecological Systems Ltd [2017] NSWSC 362
Sydmar v Statewise Developments (1987) 73 ALR 289; 5 ACLC 480; 11 ACLR 616
Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293
Category: Procedural and other rulings
Parties: Ruifa Wang (Plaintiff)
Wengsheng Liu (First Defendant)
Lan Liu (Second Defendant)
Representation:
Counsel:

W G Muddle SC with J Mee (Plaintiff)
H K Insall SC (Defendants)
Solicitors:
Tan Ling & Co (Plaintiff)
Hugh & Associates (Defendants)

File Number(s): 2018/375643
Publication restriction: Nil

Judgment

By a notice of motion filed on 14 March 2019, the defendants seek security for costs in respect of proceedings brought by the plaintiff to recover a debt of approximately $5.1 million (including interest of $1.51 million) said to be owing by the defendants to the plaintiff under a written agreement (in Chinese) made on or about 13 April 2016.

Background

The plaintiff is a Chinese national resident in China. He has no assets in Australia. The evidence is that he is wealthy; and it is not suggested that an order for security would have the effect of stultifying the proceedings.
The defendants are Australian citizens of Chinese origin. Their first language is Mandarin. The second defendant is the de facto spouse of the first defendant.
It appears from a Cross-Claim Statement filed by the defendants that in 2011, Yang Wang (Ms Wang), who is the daughter of the plaintiff, the second defendant and Xiuju Shi (Mrs Shi) established a company known as GR Capital Pty Limited. The paid up capital of the company was $20 million consisting of $7 million in respect of 35 shares held by Ms Wang, $7 million in respect of 35 shares held by Mrs Shi and $6 million in respect of 30 shares held by the second defendant.
On or about 8 May 2014, the company’s members resolved to reduce the company’s capital from $500,000 per share to $1 per share.
On or about 25 May 2015, Ms Wang, Mr Li, Mrs Shi’s spouse, and the first defendant signed a document (in Mandarin) (the 2015 Document) which purported to be an agreement between Ms Wang and the plaintiff (Party A), Mr Li and Mrs Shi (Party B) and the defendants (Party C) by which Party B and Party C would return Party A’s capital in the company.
Pursuant to that agreement, the first defendant is said to have made two payments in cash, one 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.

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Details

Case: [2019] NSWSC 420
Decision Date: 16 April 2019

CaseChat Overview and Summary

In the Federal Circuit Court of Australia, Wang, the plaintiff, filed an action against Liu, the defendant, over a contractual dispute. The plaintiff sought an order for security of costs, a common procedural step where the party initiating the action is required to provide a financial guarantee to cover potential legal expenses of the opposing party should they lose the case. The defendant contested this request, arguing it was not necessary. The primary focus of the court's deliberation was to determine whether the plaintiff was required to provide security for costs, considering various legal principles and factors.

The central legal issue was whether the plaintiff was obligated to furnish security for costs, and if so, what factors should be considered in this determination. The court had to assess the nature of the defendant's cross-claim, whether it was defensive, the likelihood of the plaintiff succeeding in the action, and other pertinent considerations. The court's analysis involved a detailed examination of the evidence and arguments presented by both parties, with a particular emphasis on the prospects of success of the plaintiff's case and the nature of the defendant's cross-claim.

The court concluded that the plaintiff was required to provide security for costs. It found that the cross-claim by the defendant was not purely defensive, and the plaintiff's prospects of success were not strong enough to warrant an exemption from providing security. The court also took into account other relevant factors, such as the potential financial burden on the defendant if security was not provided. As a result, the plaintiff was ordered to provide security for costs within the specified timeframe.

The final orders of the court mandated that the plaintiff must provide security for costs as per the terms outlined in the judgment. This decision highlights the importance of evaluating the merits of a case and the nature of any cross-claims when determining the need for security of costs. The court's ruling ensures that both parties are protected from undue financial risk while maintaining the integrity of the legal process.

Orders