Zhen v Mo & Ors

[2008] VSC 598

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 7266 of 2008

DE WEI ZHEN	Plaintiff
v
MIN ZHI MO & ORS	Defendants

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 December 2008
DATE OF JUDGMENT:	17 December 2008
CASE MAY BE CITED AS:	Zhen v Mo & Ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 598

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PRACTICE AND PROCEDURE – Freezing order – Variation – Continuation of order against non-parties – Supreme Court (General Civil Procedure) Rules 2005, O 37A.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Meldrum QC and Mr J Love	Australian Legal Advisory Centre
For the First and Second Defendants	Mr G. Moloney	Pryles & Co

HIS HONOUR:

1           There are two aspects to this morning's application and an additional minor one concerning the proper identification of the parties, that is to say the proper identification of the defendants as between those who were and those who now are defendants.  Some sloppy work has taken place which makes it very confusing to read the papers and know to which person one is actually referring to as the second to fourth defendant.  It will be necessary to make some correcting order to deal with that.  As I observed to counsel, if I may say so, in addition, during the course of argument, a greater degree of assistance should have been provided to the judge when he was making the orders dated 29 August 2008.  They are not in a completely appropriate form.  They should have been made by way of the variation or amendment of my orders.

2           But the principal matters concern the amount, if any, to be allowed by way of addition to the sum specified in paragraph 6(b) of the last order.  That order uplifted the amount that the first, second and third defendants could pay on their reasonable legal expenses to $70,000. 

3           The evidence of Mr Pryles, but in particular that of Mr White, the costs consultant, details a forecast of amounts that would be expended up to and including the end of a mediation, and then up until the commencement of trial, and then to the conclusion of a trial and judgment.  It is one thing to try to estimate costs to the end of a mediation but it is entirely speculative, in litigation of this type, to go beyond that and I think, with great respect, it serves little useful purpose to do so.  Experience in litigation indicates that the twists and turns of it are such that whether on an exercise like this or on an exercise of assessing an amount for security for costs, it is best not to try to go too far ahead.

4           As I said to counsel, I will allow an increase up to the end of mediation which will probably take the parties to the middle of next year, and as to that I will not allow the full amount that Mr White has specified.  I can only express the concern of one looking at these figures at their level, I will allow a further $80,000, that is 80 on top of the 70, as I follow it.

5           The second aspect is whether or not the former second and third defendants ought be removed from the freezing order with a series of consequential amendments that are specified in the summons. 

6           The basis upon which the application is made is that in November the plaintiff filed an amended statement of claim which removed those parties as defendants to the proceeding and that process was completed by the filing of a notice of discontinuance.

7 It is said that there is no claim made against them and furthermore, that standing as they now do as an independent party to the proceeding or, as order 37A calls them, a third party, there is no basis upon which, under the rules, a freezing order can go against them. Mr Meldrum relies on rule 37.05(5)(a)(ii) which refers to the third party being “in possession of, or in a position of control and influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor”.

8 The word "influence" or the expression "influence concerning assets", has not been the subject of any judicial consideration, as I am informed by Mr Moloney, and as I accept. They are words of a potentially very wide import, in my view, and that they would be intended to so operate is not surprising in view of the nature and purpose of a Mareva injunction which the common law developed and is now expressed for better or worse in order 37A. I would give to those words, although without time for reflection, a broad operation bearing in mind the purpose of the order.

9           The difficulty that Mr Meldrum faces in seeking to sustain a continuance of the restraint against the former second and third defendants, is whether there is evidence to sustain the injunction, that is to say evidence to an appropriate level that attracts the power that I have mentioned and which he relies upon.

10          The case is a heavy one.  I recall it when I first granted the freezing order in July and heard the parties a few days later and I have now had the opportunity to peruse the papers again as they have now developed.

11          I am of the view that sufficient is shown to warrant a continuance of the order running against the second and third defendants, at least at the present time, in the development of the issues in the case.  These things, of course, are always subject to review but that is the view which I presently hold.

12          Accordingly, while I will allow a further sum for costs and thus vary paragraph 6(b) of the last order, I will not grant the application that is otherwise made.  However, the previous order will have to be varied because the parties who are referred to as the second and third defendants have been removed from the schedule of parties, thus it is necessary to make corrective orders to deal with who exactly are the parties to the proceeding.  As I said in the course of argument, it was wrong for the plaintiff to remove the second and third defendants as though they had never been parties to the proceeding and start referring to others as the second and third defendants.  I will correct that with the order and my inclination, subject to anything I will hear, is that the costs of the application should be reserved and I will so order.