INTERLOCUTORY INJUNCTION – Freezing Order – Arguable case – Danger of unsatisfied judgment – Balance of convenience
CAVEAT – Proper purpose of caveat – Constructive trust - Existence of de facto relationship does not of itself give rise to constructive trust
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APPEARANCES:
Counsel
Solicitors
For the Plaintiff
Mr J. Love
Australian Legal Advisory Centre
For the First to Fourth Defendants
Mr G. Thompson SC and Mr G. Maloney
Pryles & Co
HIS HONOUR:
INTRODUCTION
The question that I am required to determine is whether an order for freezing made on 15 July 2008 in respect of the defendants’ assets (or any part of them) ought to be continued.
The plaintiff initiated proceedings in this court against her former partner, Min Zhi Mo, the first defendant, his son the fourth defendant, Jia Ren Mo and two companies associated with the first defendant, MS International Trading Pty Ltd (“Trading”) and MS International Group Pty Ltd (“Group”), the second and third defendants respectively.
The plaintiff and the first defendant had, since approximately 1993, been in a de facto relationship. They also engaged in a number of business ventures which appear to have been extremely profitable.
In 2007, the relationship between the plaintiff and the first defendant deteriorated and they separated. They then entered into a settlement agreement (“the agreement”) in September 2007 which the plaintiff now contends was procured by duress.
The plaintiff issued proceedings in this court on 15 July 2008 under Part IX of the Property Law Act (“the Act”), as well as seeking orders that the agreement be set aside. The plaintiff also sought orders on the basis that a “business partnership” existed between the plaintiff and the first defendant.
On 15 July 2008, Hansen J of this court made freezing orders ex parte pursuant to r.37A.02 against the first to fourth defendants restraining them from dealing with assets up to the amount of $3,500,000.
FACTS
Having established a de facto relationship in or about 1993, the plaintiff and the first defendant purchased a property at Vermont. In 1996, they purchased a milk bar business at Frankston which they operated until approximately April 1998. From about 1998 they operated a number of “$2 shops” in the suburbs of Melbourne.
In recent years, the shops were operated by Trading; that company was also involved in importing goods from China. The first defendant was the prime mover in relation to the import side of the business, whilst the plaintiff played a significant role in relation to the retail operations.
Both the plaintiff and the first defendant were directors of Trading and held shares…
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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AGLC
Zhen v Mo [2008] VSC 300
Case
[2008] VSC 300
Decision Date
CaseChat Overview and Summary
The case of Zhen v Mo involved a dispute over a property in which Mo sought a freezing order against Zhen. Mo argued that Zhen had engaged in a de facto relationship with the vendor of the property, had received gifts from the vendor, and had therefore acquired an interest in the property. Mo sought to freeze Zhen's assets to prevent dissipation of funds pending the resolution of the matter. The matter was heard in the Supreme Court of Victoria.
The primary legal issues before the court were whether Mo had established an arguable case for the grant of an interlocutory freezing order, and whether the balance of convenience favoured the grant of such an order. The court had to consider the likelihood of Mo succeeding on the merits of the case, the risk of dissipation of assets, and the relative hardship to each party if the order was granted or refused.
The court found that Mo had not established an arguable case for the grant of a freezing order. While there was evidence of a de facto relationship and gifts received by Zhen, the court found that these factors did not necessarily establish a constructive trust or other proprietary interest in the property. The court also found that the balance of convenience did not favour the grant of a freezing order, as the potential hardship to Zhen if the order was granted outweighed the risk of dissipation of assets by Zhen. The court noted that the proper purpose of a caveat was to prevent the registration of a dealing with property and did not extend to preventing the grant of an interlocutory injunction.
The court refused to grant the freezing order sought by Mo. The court did not make any orders as to the merits of the underlying dispute between the parties.