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

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

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: [2022] NSWSC 752
Decision Date: 03 June 2022

CaseChat Overview and Summary

The case of Zhang v Zhang involved two defendants, the second of whom held the proceeds from the sale of a property in Australia that had previously been owned by the foreign first defendant. The first defendant sought a freezing order over the proceeds in aid of a cross-claim for contribution against the second defendant. Subsequently, the second defendant applied to vary the freezing order, arguing that it caused hardship and that there were insufficient funds to defend the proceedings. The second defendant also claimed that there was no assurance the funds would be used for the intended purpose. The court had to decide whether the hardship alleged by the second defendant was sufficient to warrant varying the freezing order and whether the second defendant had provided adequate assurance regarding the use of the funds.

The court considered the principles surrounding the grant of freezing orders, the importance of ensuring that the assets remain available for the purpose of satisfying any judgment, and the potential hardship caused to the second defendant. The court found that the second defendant had not demonstrated sufficient hardship to warrant a variation of the freezing order. Furthermore, the court was not satisfied that the second defendant had provided adequate assurance that the funds would be used for the purpose of defending the proceedings. The court emphasised the importance of preserving the integrity of the legal process and the need to ensure that assets subject to a freezing order are not dissipated.

Consequently, the application to vary the freezing order was refused. The court maintained the freezing order over the proceeds of sale, ensuring that they remained available to satisfy any judgment that might be entered against the first defendant in the cross-claim for contribution. The court's decision underscores the stringent criteria that must be met for a freezing order to be varied and the importance of maintaining the integrity of the legal process.

Orders