Zhang v Zhang

[2022] NSWSC 752

Supreme Court

New South Wales

Medium Neutral Citation:

Zhang v Zhang [2022] NSWSC 752

Hearing dates:

3 June 2022

Date of orders:

3 June 2022

Decision date:

03 June 2022

Jurisdiction:

Equity - Expedition List

Before:

Parker J

Decision:

See [17]

Catchwords:

CIVIL PROCEDURE – freezing orders – proceeds of sale of Australian property formerly owned by foreign defendants – proceeds held by second defendant – freezing order made in aid of cross-claim for contribution by first defendant – second defendant applies to vary freezing order on ground of hardship – alleged lack of funds to defend proceedings – no assurance that funds released would be used for that purpose – application refused

Cases Cited:

Ip v Chiang [2019] NSWSC 1549

Category:

Procedural rulings

Parties:

Motion filed 12 January 2022
Ran Zhang (Plaintiff)
Jing Yang (Applicant/Second Defendant)
Jianjian Zhang (Respondent/First Defendant)

Representation:

Appearances:
D Zhu (Solicitor Advocate) (Plaintiff)
Y Gao (Solicitor Advocate) (Respondent/First Defendant)

In person
J Yang (Applicant/Second Defendant)

Solicitors:
JC Legal Practice (Plaintiff)
Novolaw (Respondent/First Defendant)

File Number(s):

2020/332753

Publication restriction:

Nil

Judgment- ex tempore

Revised from transcript; issued 8 June 2022

1. Last Friday I heard an application to vary a freezing order which I dismissed. I now set out the reasons for my decision.

2. The proceedings concern a sum of approximately $440,000 which represents part of the proceeds of a sale of a property at Wolli Creek in Sydney. The parties to the dispute are related. Without intending any disrespect, I will refer to the parties by their given names.

3. The property in question formerly belonged to the first defendant (“Jianjian”) and the second defendant (“Jing”). At the time the property was purchased by them they were married. They are now separated. Both are living in China. The purchase was financed in part with money from the plaintiff (“Ran”). She is Jianjian’s sister and lives in Australia.

4. Two separate freezing orders have been made by the Court over the money in question, which is now held in an account with the National Australia Bank (“NAB”) in the name of Jing. Initially the Court made a freezing order in the sum of $233,000 in aid of Ran’s claim against Jianjian and Jing. Soon afterwards the Court made a freezing order in the sum of $140,000 in favour of Jianjian in aid of his cross-claim against Jing. Later the amount specified in the freezing order in aid of Ran’s claim against Jianjian and Jing was increased to $318,033.

5. The total amount which is the subject of the freezing orders is thus $458,033. That exceeds the monies held by NAB. It seems that Jianjian accepts that Ran’s order takes priority, but it was not necessary to go into that question for the purposes of the application which is the subject of this judgment.

6. Ran claims that she provided $245,795 towards the purchase of the Wolli Creek property. She says that Jianjian and Jing agreed to give her security over the property, as a result of which she had a proprietary interest in it. She claims that this gave her a proprietary interest in the proceeds. The freezing order in her favour was made in aid of her claim for unpaid principal and interest ($252,033) together with costs. Whether the order could have been supported by reference to a proprietary claim for the unpaid principal and interest (see Ip v Chiang [2019] NSWSC 1549 at [129]) does not need to be discussed for present purposes.

7. As already indicated, it is the freezing order for $140,000 in aid of Jianjian’s cross-claim against Jing which was in issue before me. That cross-claim arises in the following way. Jianjian does not contest Ran’s claim. She has in fact obtained default judgment against him for the amount of unpaid principal and interest claimed. But Jianjian says that he was entitled, as co-owner, to a one-half share of the balance of the funds after Ran was paid out.

8. The amount in fact received from the sale of the property appears to have been about $550,000; the other $110,000 is said to have been paid into some other bank account belonging to Jing. Jianjian therefore has a claim for about $150,000 (total proceeds $550,000; less amount owing to Ran $250,000; divided by two). This exceeds the $140,000 figure in his freezing order.

9. Jianjian’s freezing order was made at a relatively early stage of the proceedings. Jing was given an opportunity to challenge the order but did not take that up. Strictly speaking, therefore, no question arose in the application before me about whether the order is justified. But plainly, given that Jing is no longer in the country, there was, and is, a reasonable apprehension that if not restrained she would remove the money from this jurisdiction, which would make any judgment obtained against her worthless.

10. Jing’s notice of motion for variation of the order was filed in January this year, supported by an affidavit made by her. At that time, Jing had lawyers acting for her in the proceedings. She is now self-represented. She appeared at the hearing by telephone from China, with the assistance of an interpreter who was present by telephone from Sydney. The hearing of the application was urgent because the proceedings are in the Expedition List and have been fixed for trial beginning on 20 June.

11. The essential basis for Jing’s application was hardship. In her affidavit in support of the application, she stated that she and her daughter are living in poverty in China. She had brought divorce proceedings against Jianjian but had been unable to enforce the judgment which she had obtained against him. Other legal proceedings were pending. In the meantime, she stated, she needed money to support herself and her daughter, and also to conduct her defence to the proceedings in this Court.

12. An affidavit was filed in response from Jianjian. He identified a property in China which he said was still in Jing’s name and was available to be sold. He stated that he had paid substantial monies by way of divorce settlement or child support.

13. Jing’s affidavit in reply acknowledged that she remains the owner of a property in China. She stated, however, that she was unable to find a buyer for the property, even after having reduced the asking price below market value. She denied (or appeared to deny; the wording on her affidavit on this point was indirect) that she had received monies from Jianjian for herself or her daughter. She stated that she and Jianjian had agreed as part of their divorce that she was to receive all of the Australian property for herself; the claim being made in the cross-claim involved Jianjian reneging on that agreement. She repeated that she was unable to raise funds to defend herself in these proceedings.

14. The last point was emphasised by Jing in her oral submissions to the Court on the application. It is certainly a valid consideration in an application such as this. But it would need to be balanced against the potential risk to Jianjian of the monies being taken offshore so as to defeat his claim against Jing in these proceedings. For this purpose it is relevant that Jing retains property in China, albeit that, as she claims, she is unable to sell it.

15. I did not think it was necessary to go further into this balancing exercise for the purpose of resolving the application. The fundamental difficulty with the application was that it was not accompanied by any undertaking which would ensure that, to the extent that monies were released, they would only be used for the purposes of paying for lawyers to defend these proceedings. The orders sought involved an unconditional release of the freezing order. If I had made an order in those terms, I would have had no assurance that the monies would not have simply been removed to China by Jing and used for her own purposes.

16. On Jing’s case, she clearly has a defence to Jianjian’s claim. But if she is right that Jianjian agreed that she was to have all of the Australian assets of the marriage, then that would have been a reason to resist the making of any freezing order in the first place. Jing clearly had an opportunity to do that at a much earlier stage of the proceedings. In my view, it is too late to do it now under the guise of a variation application.

17. For these reasons, I made the following orders on the notice of motion:

1. Motion dismissed.

2. Order the applicant pay the respondent’s costs of the motion.

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Decision last updated: 08 June 2022