Gracewood International Limited v Zhan
[2023] NZHC 307
•27 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-416
[2023] NZHC 307
BETWEEN GRACEWOOD INTERNATIONAL LIMITED
ApplicantAND
XIANGMING ZHAN
First Respondent
HONGJUN YANG
Second Respondent
Hearing: 11 August 2022 Appearances:
M A Corlett KC, I Rosic and Y Lee for Applicant
D M Salmon KC and S J Humphrey for First Respondent D P H Jones KC and T P Kelly for Second Respondent
Judgment:
27 February 2023
JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 27 February 2023 at 4.30 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Solicitors: Gilbert Walker, Auckland
Lee Salmon Long, Auckland
Grove Darlow & Partners, Auckland
Counsel:M A Corlett KC, Auckland D M Salmon KC, Auckland D P H Jones KC, Auckland
GRACEWOOD INTERNATIONAL LTD v ZHAN [2023] NZHC 307 [27 February 2023]
Introduction
[1] This judgment determines an application by the applicant (“Gracewood”) for a worldwide freezing order, and an ancillary order against each of the first and second respondents, Mr Zhan and Ms Yang, pursuant to Part 32, High Court Rules 2016.
[2] Gracewood is incorporated in Hong Kong. In April 2022, it commenced proceedings in the High Court of Hong Kong against Mr Zhan for more than US$32 million, claiming under a guarantee it says Mr Zhan gave in May 2002 (“Hong Kong proceedings”). The guarantee is governed by Hong Kong law and both Gracewood and Mr Zhan have adduced expert evidence, from Mr J Scott SC and Mr J Bartlett SC respectively, on the legal issues which do or will arise in the Hong Kong proceedings. Gracewood’s present application is intended to ensure that Mr Zhan’s assets are identified and preserved pending the resolution of those proceedings.
[3] Gracewood has no claim against the second respondent, Ms Yang, to whom Mr Zhan was previously married. However, Gracewood contends that Mr Zhan has a beneficial interest in substantial assets that are in Ms Yang’s name alone, this being the reason for its application against her. The respondents deny that Mr Zhan has any such interest.
[4] For reasons set out below, I make the orders sought against Mr Zhan. I decline to make the orders sought against Ms Yang. I direct, however, that she is to be served with the orders made against Mr Zhan when they are sealed.
Background
[5] The following background derives largely from the evidence of Wong Kai Wa (“Mr Wong”), Gracewood’s managing director.
[6] In the last quarter of 2000, Gracewood, a distributor of petroleum products, commenced supplying such products to Guangdong Province HuaGuang Light Industrial Co Ltd (“HuaGuang”).
[7] HuaGuang was a subsidiary of Guangdong Universal Group (“Universal”), which appears to have had business interests in, amongst other things, the distribution of such products and, because it is relevant to what follows, property development.
[8] Mr Zhan had a senior role in Universal. He had a 75 per cent shareholding in the company and was and remains Universal’s “legal representative”. Mr Zhan was also a director of HuaGuang. Gracewood’s evidence is that neither of these companies is now operating or trading.
2002 contracts
[9] Of the US$32 million referred to above, approximately US$16 million is principal due to Gracewood for supply in January and February 2002 under six contracts referred to as the “2002 contracts”.
[10] HuaGuang usually made payment by letter of credit. However, in mid-January 2002, Universal advised Gracewood that the necessary letter of credit for one of the contracts had been delayed and it proposed alternative payment arrangements for the sums due under that and the other 2002 contracts, to which Gracewood agreed.
[11] Mr Wong’s evidence is that, on the whole, HuaGuang and Universal did not comply with those arrangements, nor others that were made subsequently. Whilst some payments were made, a substantial sum remained outstanding.
[12] This led to a meeting between Mr Wong and Mr Zhan in May 2002, at which time Mr Zhan agreed to provide further security to Gracewood in return for Gracewood agreeing to extend the date for repayment of the outstanding sums.
Further security
[13] The further security, given on or about 27 May 2002, comprised the personal guarantee from Mr Zhan on which Gracewood is suing, and a charge given by Universal over a distribution base situated in Panyu, Guandong. Mr Zhan is also alleged to have executed the charge.
[14] Under the guarantee, Mr Zhan guaranteed the payment of all outstanding sums due under the 2002 contracts, and undertook the liability of a principal debtor. Mr Zhan’s evidence on this application is that he does not recall signing the guarantee, but Mr Wong’s evidence is that he witnessed Mr Zhan do so. If the giving of the guarantee is proved, other issues, to be determined under Hong Kong law in due course, are whether Gracewood gave consideration for the guarantee and, if so, whether enforcement is barred by a limitation period.
[15] A separate debt falls outside the guarantee and the Hong Kong proceedings. However, I refer to it as Gracewood submits it is revealing of the manner in which Mr Zhan conducts, or at least conducted, himself. On 11 June 2002, Gracewood advanced RMB1,920,410, approximately NZ$445,000 at today’s rates, to Mr Zhan personally. Mr Wong’s evidence is that Gracewood made the advance on the basis of representations by Mr Zhan that this sum was required as a deposit on a letter of credit facility which, when established, would enable repayment of the sums due to Gracewood. Mr Zhan is alleged to have signed an IOU pursuant to which he agreed to repay this loan by 20 June 2002. Mr Zhan did not repay the debt then, and nor has he done so since. Mr Zhan does not challenge Mr Wong’s evidence on this point.
[16] Mr Wong’s evidence is that in early July 2002 senior personnel at Universal advised him that Mr Zhan had left China for Thailand, and also that he, Mr Zhan, had instructed Ms Yang, then employed in the finance department at Universal, to transfer US$11 million to private bank accounts overseas. Mr Zhan and Ms Yang deny transferring any funds overseas and say that foreign exchange controls in China would have made this difficult if not impossible. Mr Zhan’s evidence is that his departure from China was due to political persecution rather than the financial state of Universal.
[17] Attempts by Gracewood and other creditors to restructure HuaGuang and Universal after June 2002, so as to recover some of their losses, proved unsuccessful. Likewise Gracewood’s attempts to realise the Panyu asset. Mr Wong’s evidence is that, on seeking to enforce the security, it transpired that Universal was in default on financial obligations in respect of the asset, and indeed had been in default when the security was given. Gracewood could not realise the security until those defaults were rectified, which it elected not to do. Mr Zhan denies any such default by Universal.
Bankruptcy and discharge
[18] In July 2005, on the application of the Bank of China, the Court of First Instance of the High Court of Hong Kong made an order adjudicating Mr Zhan bankrupt in absentia. Gracewood did not prove in the bankruptcy. Mr Wong’s evidence is that Gracewood was unaware of the bankruptcy until June 2021.
[19] Mr Zhan was discharged from bankruptcy in July 2009, by operation of s 30A of Cap 6 Bankruptcy Ordinance (“Ordinance”). The effect of the discharge on any liability that Mr Zhan may have under the guarantee is another important issue, as Mr Zhan’s case is that any such liability ceased on his discharge.
June 2021
[20] Despite efforts to locate Mr Zhan over many years, it was not until June 2021 that Gracewood discovered that Mr Zhan was living in New Zealand. Gracewood served demand on Mr Zhan under the guarantee on 9 March 2022. The demand was not met.
[21] Gracewood filed this application in March 2022; commenced the Hong Kong proceedings in April 2022; and then, having obtained leave to serve out of the jurisdiction, served the Hong Kong proceedings on Mr Zhan in New Zealand on 15 June 2022.
[22] Mr Zhan is highly critical of what he characterises as Gracewood’s “delay” in “finding” him, that is from 2002 to 2021, and then having so found him, in making this application and issuing proceedings. Gracewood’s evidence explains the delay, and, in my view, nothing turns on any delay there may have been. There is no suggestion of any prejudice to the respondents. Also, as Mr Corlett KC submits for Gracewood, matters would have been expedited had Mr Zhan communicated his whereabouts to Gracewood, which he did not.
Mr Zhan/Ms Yang
[23] It is necessary to say here something about the respective asset positions of Mr Zhan and Ms Yang. The short point is that Ms Yang has many valuable assets in
New Zealand which are in her name alone, and Mr Zhan appears to have very few. Gracewood submits that the couple have deliberately structured their affairs to conceal Mr Zhan’s beneficial interest in those assets, a suggestion strongly rejected by both respondents.
[24] Mr Zhan and Ms Yang commenced their relationship in China in the late 1990s when Ms Yang was an employee of Universal. She left Universal in early 1999, and then in November 1999 came to New Zealand to study here, where she obtained a post graduate business degree. Ms Yang and Mr Zhan married in February 2001 in Auckland. Ms Yang’s evidence is that Mr Zhan came to New Zealand to live permanently in July 2002 “with about $5,000”. The couple separated in January 2015, entered into a relationship property agreement in July 2015 (“separation agreement”), and divorced in May 2017.
[25] With two early and short-lived exceptions, it appears that every asset acquired during the marriage was in Ms Yang’s name. These assets included residential properties in which the couple and their children lived, and shareholdings in several companies.
[26] The two exceptions are an apartment purchased in central Auckland in May 2002. This was purchased in the couple’s joint names. However, Mr Zhan transferred his interest in the property to Ms Yang shortly thereafter, in July 2002. The other exception is NZCN Building Material Ltd (“NZCN”), a company incorporated in June 2005. Mr Zhan was a director and 33 per cent shareholder on incorporation but then, in September 2005, resigned as a director and transferred his shares in the company to Ms Yang, who then became a director.
[27] The respondents’ explanation for Mr Zhan’s short lived appearance on the title documents is that Ms Yang’s father financed the assets and insisted that she should have sole ownership.
[28] Aside from those two exceptions, as I have said, a succession of residential properties and shareholdings acquired during the marriage were in Ms Yang’s name alone. In the usual course of events, assets acquired during a marriage are relationship
property and subject to equal division. However, the separation agreement referred to above provided that each would retain as their separate property the assets then in their name. The respondents’ evidence is that this was consistent with the manner in which they conducted their financial affairs throughout the marriage, ie entirely separate. In Ms Yang’s case the assets in her name at the date of separation were shareholdings in nine companies, and real property. In the case of Mr Zhan, the identified assets comprised two units or apartments in China, and several bank accounts the balances of which are unknown.
[29] As at the date of hearing Ms Yang owned a residential property in Long Bay, Auckland, and shareholdings in, amongst others, NZ Rose Garden Development Ltd and NZ Highland Development Ltd. These companies are or have undertaken substantial property developments. Taking as an example what appears to be the largest, NZ Rose Garden is undertaking a development in Auckland intended to comprise 800 units, of which 227 have been built. Ms Yang holds a 25 per cent shareholding in this company of which she holds 17.2 per cent for third party investors and the remaining 7.8 per cent for herself. Ms Yang and Mr Zhan are adamant that none of that 7.8 per cent is held for Mr Zhan.
[30] I shall return to this matter below when addressing the application against Ms Yang.
Orders sought against Mr Zhan
[31] A freezing order restrains a respondent from removing assets located in or outside New Zealand or from disposing of, dealing with, or diminishing their value.1 It is common ground that there are such assets in this instance.
[32] Gracewood must then establish grounds for its application under r 32.5, which insofar as is relevant provides:
32.5Order against judgment debtor or prospective judgment debtor or third party
(1)This rule applies if—
1 High Court Rules 2016, r 32.2(2).
...
(b)an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(i)…; or
(ii)in the case of a cause of action to which subclause (3) applies, another court.
(2) …
(3)This subclause applies to a cause of action if—
(a)there is sufficient prospect that the other court will give judgment in favour of the applicant; and
(b)there is a sufficient prospect that the judgment will be registered in or enforced by the court; and
(c)there is a real connecting link between the subject matter of the order sought and the territorial jurisdiction of the New Zealand court; and
(d)the order sought would not be inconsistent with interim relief granted by the other court.
(4)The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(a)the judgment debtor, prospective judgment debtor, or another person might abscond; or
(b)the assets of the judgment debtor, prospective judgment debtor, or another person might be—
(i)removed from New Zealand or from a place inside or outside New Zealand; or
(ii)disposed of, dealt with, or diminished in value (whether the assets are in or outside New Zealand).
...
[33] Accordingly, to succeed on its application against Mr Zhan, Gracewood must establish:
(a)A good arguable case on its cause(s) of action in the Hong Kong proceedings — r 32.5(1)(b)(ii).
(b)A sufficient prospect that the High Court of Hong Kong will give judgment in its favour — r 32.5(3)(a).
(c)A sufficient prospect the judgment will be registered in or enforced by the Court — r 32.5(3)(b).
(d)A “real connecting link” between the subject matter of the order sought and the territorial jurisdiction of the New Zealand Court — r 32.5(3)(c).
(e)That the order sought would not be inconsistent with interim relief granted by the High Court of Hong Kong — r 32.5(3)(d).
(f)A danger that Gracewood’s prospective judgment will be wholly or partly unsatisfied for one or both of the reasons in r 32.5(4).
[34] If these matters are established, it is necessary to stand back and address the overall balance of convenience.2
[35] The principal issues in dispute as regards Mr Zhan are whether Gracewood can establish a good arguable case on its Hong Kong proceedings; whether there is a real risk of dissipation so as to give rise to the necessary danger; and where the balance of convenience lies.
Good arguable case — r 32.5(1)(b)(ii) and “sufficient prospect” — r 32.5(3)(a)
Good arguable case
[36] A good arguable case in the Hong Kong proceedings requires that Gracewood’s allegations are capable of tenable argument, supported by sufficient evidence and a sufficiently plausible foundation.3
2 Murren v Schaeffer [2018] NZCA 318.
3 Dotcom v Twentieth Century Fox Film Corporation [2014] NZCA 509 at [18]; and Twentieth Century Fox Film Corp v Dotcom [2014] NZHC 1789 at [30].
[37] Gracewood submits this requirement is satisfied. On its case this is a straightforward claim under a guarantee, on which it would expect to obtain summary judgment in New Zealand.
[38] Mr Salmon KC, counsel for Mr Zhan, submits that Gracewood does not have a good arguable case. In making this submission, Mr Salmon was willing to proceed on the basis that Gracewood has a good arguable case on all issues which arise under Hong Kong law, subject to the following. Mr Salmon submits the effect of Mr Zhan’s discharge from bankruptcy was to release him from any liability he may have had under the guarantee, and such presents an insuperable difficulty for Gracewood’s claim.
[39] This submission is made in reliance on s 32(2) of the Ordinance, which provides:
32. Effect of order of discharge
(2)Subject to subsections (1) and (3) to (8), where a bankrupt is discharged, the discharge releases him from all the bankruptcy debts, but has no effect—
(a)on the functions (so far as they remain to be carried out) of the trustee and the operation of the provisions of this Ordinance for the purposes of carrying out those functions; or
(b)on the liability of the discharged bankrupt to make continuing contributions to his estate pursuant to an order made under section 30A(9). (Replaced 76 of 1996 s. 23)
[40] There is no dispute that the sum due under the guarantee would constitute a “bankruptcy debt”, and no suggestion that subsections 1 and 3 to 8 are relevant. Regardless, and for two reasons, Gracewood does not accept the contention that liability ceased on discharge.
[41] First, Gracewood has filed proceedings in Hong Kong to annul the bankruptcy adjudication. There is no dispute that an order for adjudication may be annulled, even if the debtor concerned has been discharged.
[42] The application has been made on the grounds that the Court did not have jurisdiction to make the order. Jurisdiction requires that the debtor be domiciled in Hong Kong, or present in Hong Kong on the day on which the petition is presented, or to have been ordinarily resident or to have carried on business in Hong Kong in the three years preceding adjudication.4 It seems clear on the evidence before me that the only possible ground for jurisdiction is the “carrying on business” limb. At the time the order was made Mr Zhan was a director of several Hong Kong companies, but there is no evidence beyond that, and it seems to be accepted that on its own may be insufficient to constitute carrying on business. Mr Zhan’s evidence does not address whether he was carrying on business, although Mr Salmon rejected any suggestion that it might have been expected to do so, given that Gracewood has the onus, and also the relatively late stage at which the annulment point arose.
[43] Secondly, it is common ground that cl 7(e) of the guarantee provides that Mr Zhan’s liability continues despite any discharge from bankruptcy, ie essentially that the parties contracted out of the bankruptcy regime.
[44] Mr Salmon submits that, on the basis of Mr Bartlett’s evidence, there is no prospect of cl 7(e) being given effect in the Hong Kong proceedings. This is because s 32(2), giving the debtor a “fresh start” on discharge, confers both a private and public advantage or good. It is not possible to contract out of such a provision.5 Again, that is a matter in dispute. The High Court of Hong Kong has not had occasion to rule on the point as yet, and Mr Scott’s evidence is that the matter is arguable. Mr Salmon was highly critical of Mr Scott’s evidence on this point and submits that it cannot be correct. Mr Bartlett makes the point that, if it were possible to contract out, every bank for instance could be expected to include a provision in their loan documents to that effect. However, I am unable to reach a definitive view on the matter. The best that can be said is that two experienced, senior Hong Kong counsel have differing views on whether the point is arguable.
[45] Aside from that, Mr Salmon submits that the possibility of annulment must be put to one side in making a current evaluation of whether Gracewood has a good
4 Cap 6 Bankruptcy Ordinance, s 4.
5 Admiralty Commissioners v Valverda (Owners) [1938] AC 173.
arguable case in the Hong Kong proceedings. He submits that the assessment must be made on circumstances as they are at present, that is that Mr Zhan is a discharged bankrupt released from all liability. If that changes, then Gracewood may make a fresh application.
[46] It is not apparent to me why I am required to ignore the possibility of an annulment. As Mr Corlett submits, r 32.5 permits the Court to take into account proceedings commenced and in contemplation. I accept his submission that there is no good reason to disregard the possibility of annulment. In determining whether Gracewood has a “good arguable case”, I consider it necessary to have regard to all the circumstances, of which the application to annul seems to me to be an important one. As I have said, that application appears arguable and, if Gracewood were to succeed, submissions on the effect of s 32(2) of the Ordinance and cl 7(e) of the guarantee fall away in their entirety. To conclude, I am satisfied Gracewood’s case is capable of tenable argument and thus the requirement of a good arguable case is made out.
Sufficient prospect
[47] In this case, this requirement is inextricably linked to the requirement that a good arguable case be demonstrated. It does not call for separate consideration.
Rules 32.5(3)(b) and (d)
[48] These provisions are satisfied. It will be open to Gracewood to register and enforce in New Zealand any judgment it obtains, and Gracewood does not intend to seek interim relief in Hong Kong, as it has not identified any assets in that jurisdiction.6
Real connecting link — r 32.5(3)(c)
[49] This requires a “real connecting link” between the subject matter of the order sought and the territorial jurisdiction of the New Zealand Court. Gracewood submits this is satisfied because Mr Zhan has assets in New Zealand to which the freezing
6 Reciprocal Enforcement of Judgments Act 1934; and Reciprocal Enforcement of Judgments (Hong Kong) Order 1957.
order can apply. The known assets in New Zealand are a BMW motor vehicle registered in Mr Zhan’s name and a bank account at the ANZ Bank. Of course, Gracewood contends Mr Zhan’s assets vastly exceed these but, in any event, submits these are sufficient to provide the “real connecting link” required.7
[50] More importantly in my view is that Mr Zhan has lived in this jurisdiction for some 20 years. He has children who were born here, has been on the electoral roll here, and to all intents and purposes appears has made his life here.
Risk of dissipation — r 32.5(4)
[51] Next, I must be satisfied that there is a danger Gracewood’s prospective judgment will be wholly or partially unsatisfied for one or both of the reasons specified in r 32.5(4). This risk is established if there are circumstances from which a prudent, sensible commercial person could properly infer a risk of default.8
[52] Mr Corlett submits that this danger is apparent. In making this submission, he relies on Universal’s and Mr Zhan’s dealings with Gracewood from January 2002. Mr Corlett characterises these as replete with promises made but not kept; misrepresentations about when payment would be made; security that turned out to be worthless; the circumstances in which the personal loan referred to above was made; Mr Zhan’s departure from China leaving financial disarray behind him; what Gracewood contends is a deliberate attempt by the respondents to structure their affairs so as to conceal Mr Zhan’s presence here; and Mr Zhan’s failure in the intervening 20 years to inform Gracewood of his whereabouts.
[53] Mr Salmon submits that, whatever view might be taken of Mr Zhan’s actions in or about 2002, greater weight should be attributed to his conduct in the intervening 20 years, that is a settled, modest, quiet existence in New Zealand. Mr Salmon also makes the point that Mr Zhan has made no attempt to flee the jurisdiction since Gracewood located him.
7 Yos v Heng HC Wellington CIV-2009-485-2346, 1 December 2009.
8 Murren v Schaeffer, above n 2, at [16].
[54] I accept that Mr Zhan’s career here does not seem to have been marked by the same controversy that existed in connection with Universal and HuaGuang. Ultimately, however, I accept Mr Corlett’s submission that the danger with which r 32.5(4) is concerned arises. In reaching this conclusion I take into account the manner in which Mr Zhan conducted himself in the early 2000s, and the paucity of information he has provided as to his assets and his means of support. Mr Zhan’s affidavit evidence refers to “my companies in China” and suchlike, but no more than that. Mr Salmon was adamant that it is not for a respondent to assist an applicant. That may be so but the only person who could have the requisite information is Mr Zhan, and if he does not provide it, the Court is required to make the orders it considers necessary.
Balance of convenience
[55] Similarly I am satisfied that the balance of convenience lies in making the orders sought. The gist of Mr Salmon’s submission on this issue is that it would be pointless to do so. I am not persuaded that it would be pointless. Aside from anything else, the ancillary order will require Mr Zhan to divulge information regarding his financial and asset position. In the circumstances, and having regard to the size of the debt, I consider Gracewood is entitled to preserve the status quo with a freezing order and the benefit of the discovery to which I have referred.
[56] There is one other point I should mention, which goes to criticism of Gracewood’s level of disclosure and the comfort that can be taken from its undertaking in damages. In his first affidavit, Mr Wong referred to Gracewood’s financial position as of 31 March 2020 (so some two years before it made this application), stating that as at that date it had cash on hand of approximately NZ$3.8 million. Then, in an affidavit sworn shortly before the hearing, Mr Zhan drew to the Court’s attention a judgment entered against Gracewood in the High Court of Hong Kong in October 2021, requiring Gracewood to pay damages of US$49.2 million, plus interest and costs. In response, Mr Wong stated that Gracewood had “largely settled” the sum due under the judgment; that the remaining sum was in the process of being resolved; and that Gracewood remained in a good financial position. In addition, Gracewood
has provided security in sums the respondents requested for costs and damages on this application.
[57] There is no doubt that Mr Wong’s first affidavit ought to have been more forthcoming than a reference to Gracewood’s financial position as at 31 March 2020. Regardless, given the most recent information, I am willing to proceed on the basis that Gracewood has the resources to meet any damages that it might be ordered to pay in respect of loss caused by the orders it seeks.
[58] To conclude on the case against Mr Zhan, I make the orders sought. These should be sealed accordingly.
Orders sought against Ms Yang
[59] Rule 32.5(5) provides for the making of a freezing and/or ancillary order against a third party, such as Ms Yang:
32.5Order against judgment debtor or prospective judgment debtor or third party
(5)The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied, having regard to all the circumstances, that—
(a)there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(b)a process in the court is or may ultimately be available to the applicant, as a result of a judgment or prospective judgment, under which the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
[60] I have already outlined Gracewood’s contention that Mr Zhan has a beneficial interest in assets in Ms Yang’s name. Gracewood’s submission is that it is wholly implausible that Mr Zhan has no beneficial interest in those assets. Mr Zhan built a substantial enterprise in China, and has experience in property development. Moreover, a private investigator retained by Gracewood has observed Mr Zhan visiting the Rose Garden development; driving the BMW vehicle registered in Ms Yang’s name; and plainly being present and staying overnight at Ms Yang’s address. Despite the separation, both respondents have continued to give the same address for the purposes of the electoral roll.
[61] The respondents’ response to this is that the couple retain an amicable relationship, for the sake of their children aside from anything else, and that to the extent Mr Zhan has been observed on the development sites, Ms Yang occasionally deputises him to go in her stead.
[62] Despite Gracewood’s suspicions, and however well founded they may seem to be, the evidence presently before me does not establish that Mr Zhan has a beneficial interest in any asset that Ms Yang holds. Such evidence is required to make out the necessary ground(s) for any order.
[63] Given this, I decline Gracewood’s application for orders against Ms Yang. However, in the circumstances, and given the information yet to come to hand from Mr Zhan via the ancillary order, I direct that Ms Yang be served with the sealed orders against Mr Zhan, so as to give her formal notice of them.
Result
[64] I grant the applicant’s application for freezing and ancillary orders dated 31 March 2022 against the first respondent. I decline the application in respect of the second respondent.
[65] The applicant is to serve the second respondent with the sealed orders made against the first respondent.
[66]I reserve leave to apply.
[67] Gracewood having succeeded, it is entitled to costs against the first respondent. Having failed against the second respondent, Gracewood must pay her costs on the application. I expect the parties will be able to agree all matters of costs but they may file short memoranda if they are unable to do so by close of business, 31 March 2023.
Peters J
3
0