Friday, September 30, 2011

Anderson & Ors v Xie [2011] VSC 486

The matter of Anderson & Ors v Xie [2011] VSC 486 was a freezing order application before Dixon J in the Supreme Court of Victoria. This matter is an example of a freezing order obtained in circumstances where there is delay, after judgment, in having costs taxed. Here the plaintiff sought to freeze the defendant's assets to prevent the defendant from dissipating her assets to thwart the judgment.

I have included a brief summary and extracts below.

I recently gave a case summary of Zhen v Mo. In Anderson & Ors v Xie, Dixon J refers to and affirms the nine relevant principles in Zhen v Mo in reaching his decision. These are set out at [11] as follows:
  1. First, that a freezing order by its very nature is a drastic remedy which a court must exercise a high degree of caution before taking a step which will interfere with a party’s capacity to deal with his or her assets.
  2. Second, the order is not designed to provide security for the applicant’s claim. It is solely directed to preserving assets from being dissipated thereby frustrating the court processes.
  3. Third, the applicant bears the onus both in satisfying the court that the order should be continued and in satisfying the court as to the amount which is to be the subject of the order.
  4. Fourth, that the order can only be made on the basis of admissible evidence which supports the contentions made by the party seeking the order. Speculation and guesswork is no subject for either the facts or inferences properly drawn from proved facts.
  5. Fifth, before such an order can be made, it is necessary that the applicant establish: (a) an arguable case against the defendant; and (b) that there is a danger that the prospective judgment will be wholly or party unsatisfied as a result of the defendant’s actions in either removing the assets or disposing or dealing with them so as to diminish their value.
  6. Sixth, the balance of convenience must favour the granting of the freezing order.
  7. Seventh, that there is no set process for determining the exact nature of the order. The order will be framed according to the circumstances of the case.
  8. Eighth, the applicant must establish with some precision the value of the prospective judgment. The orders should not unnecessarily tie up party’s assets and property.
  9. Finally, there may be discretionary considerations which militate against the granting of a freezing order, such as delay in bringing the application on before the court or a lack of candour in the materials placed before the court.
In Anderson & Ors v Xie the plaintiff prepared a bill of costs which assessed the legal costs at $739,763.46.  The plaintiff's sought a freezing order because the defendant was selling her assets around the time of the judgment and the plaintiff was concerned that the proceeds of the sales and the defendant's assets generally would be moved to, and dissipated in, China (at [21]). The movement of assets to China is problematic because an Australian is unable to enforce a judgment in China, as there is no provision for this under the Foreign Judgments Act 1991 (Cth). For that reason, if the assets were moved to China then the judgment would likely be thwarted. 

Dixon J was satisfied that the material demonstrating property sales and the risk of assets being moved to China was sufficient to allow the Court to infer that there is a risk that the court's processes may be open to abuse (at [21] to [24]). Dixon J was also satisfied that because the defendant was wealthy, the freezing order would not prejudice the defendant's economic activity and the balance of convenience therefore favoured the plaintiff (at [27]).

Anderson & Ors v Xie is an example of the usefulness of the principles from Zhen v Mo in dealing with Freezing Orders under Rule 37A. 

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