Wu v Bi

Case [2022] VSCA 22 2 March 2022

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0118

YONG CHAO WU	Applicant
v
HANJUN BI	First Respondent
- and -
ZHONGDA INVESTMENT PTY LTD (ACN 614 449 553)	Second Respondent

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JUDGES:	McLEISH and EMERTON JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18 February 2022
DATE OF ORDERS:	18 February 2022
DATE OF JUDGMENT:	2 March 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 22

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PRACTICE AND PROCEDURE – Security for costs – Application for leave to appeal – Whether unacceptable risk costs order in respondents’ favour would go unsatisfied – Whether applicant impecunious – Applicant subject of bankruptcy proceeding in respect of unpaid judgment debt – Separate proceeding against applicant claiming amount in excess of unencumbered interest in land – Applicant accepts ‘cash flow problems’ but asserts valuable shareholding assets – Risk established – Risk unacceptable in circumstances including taking account of likely merits of proposed appeal – Djordjevich v Rohrt [2021] VSCA 279, applied – Supreme Court (General Civil Procedure) Rules 2015 r 64.38(2) – Application allowed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	In person
For the Respondents	Mr I Hristovski	Rigby Cooke Lawyers

McLEISH JA
EMERTON JA:

Introduction

The respondents, Ms Bi and Zhongda Investment Pty Ltd (‘Zhongda’), were found by a judge of the Trial Division to be parties to an agreement with the applicant, Mr Wu, under the terms of which Mr Wu was obliged to purchase shares held by Zhongda in Faster Enterprises Ltd (‘FEL’). FEL is a company listed on the Australian Stock Exchange and Mr Wu is its former chief executive officer. Ms Bi is the sole director of Zhongda, a special purpose corporate vehicle which she owns in equal shares with her husband.

Under the agreement, ‘Party B’ agreed to subscribe for shares in FEL on the basis that, if the shares did not achieve a specified value by a given date, Mr Wu could be required to purchase ‘the shares of Party B’ at that price. At the given date, the shares had not achieved the specified value, but Mr Wu declined to purchase the shares at the specified price, on the basis that they were not held by Ms Bi.

Ms Bi and Zhongda brought a proceeding in the Trial Division. They were successful.[1] The judge ordered Mr Wu to pay damages in the sum of $2,706,000, together with interest of $31,705.52.
[1]Bi v Wu [2021] VSC 447.

The focus of the dispute is the proper construction of the expressions ‘Party B’ and ‘the shares of Party B’ in the agreement. The judge found that the expression ‘Party B’ encompassed both Ms Bi (who executed the agreement along with Mr Wu) and Zhongda,[2] and that the expression ‘shares of Party B’ encompassed the shares in FEL held by Zhongda.[3]
[2]Ibid [140].
[3]Ibid [136].

Mr Wu contended at trial, and wishes to establish by way of appeal, that ‘Party B’ meant only Ms Bi and that ‘the shares of Party B’ meant only…

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.

Continue reading Wu v Bi

Details

AGLC: Yong Chao Wu v Hanjun Bi , and and Zhongda Investment Pty Ltd (ACN 614 449 553) [2022] VSCA 22
Case: [2022] VSCA 22
Decision Date: 2 March 2022

CaseChat Overview and Summary

The parties in the case of Wu v Bi were the applicant, Wu, and the respondents, Bi. The nature of the dispute involved an application for leave to appeal against a decision regarding security for costs. The court hearing the matter was the Supreme Court of Victoria. The central issue before the court was whether an unacceptable risk existed that an order for security for costs in favour of the respondents would go unsatisfied, and if the applicant was impecunious.

The court had to determine whether there was an unacceptable risk that the applicant, Wu, would be unable to satisfy an order for security for costs in favour of the respondents. This assessment involved considering Wu’s financial circumstances, including the fact that he was the subject of a bankruptcy proceeding in respect of an unpaid judgment debt and that there was a separate proceeding against him claiming an amount in excess of the unencumbered interest in his land. The applicant admitted to experiencing cash flow problems but argued that he possessed valuable shareholding assets. The court was required to weigh these factors in determining the acceptability of the risk of costs going unsatisfied.

The court concluded that the risk of Wu being unable to satisfy an order for security for costs was unacceptable, particularly when considering the likely merits of the proposed appeal. The court applied the principles established in Djordjevich v Rohrt, noting that the risk was unacceptable given Wu’s financial situation. The court further referenced Supreme Court (General Civil Procedure) Rules 2015 r 64.38(2) in reaching its decision. As a result, the court granted the application for leave to appeal.

Orders