FEDERAL COURT OF AUSTRALIA

Ye v Zeng (No 6) [2016] FCA 923

ORDERS

THE COURT ORDERS THAT:

1.    Andrew Hugh Jenner Wily of Armstrong Wily Pty Ltd of Level 5, 75 Castlereagh Street, Sydney in the State of New South Wales (Receiver) be appointed until further order as the receiver of all property in which any or all of the Respondents have any legal or beneficial interest which is located within Australia (Respondents' Australian Assets), including the property set out in the Schedule of Respondents' Assets hereto.

1A.     The said Mr Wily, within seven days, file a guarantee for the due performance of his duties in accordance with form 30.

2.    The Receiver take possession of and sell, or otherwise convert into money, such of the Respondents' Australian Assets as will permit the payment of the following amounts:

(a)    the judgment debt of AUD $10,471,991.40 payable by the Respondents to the Applicant pursuant to the order of this Court of 15 April 2016;

(b)    the interest payable on this judgment debt;

(c)    the Applicant's taxed costs of these proceedings;

(d)    daily accrual of post-award interest of AUD$1964.77 as at 15 June 2016;

(e)    the Receiver's remuneration, costs and expenses as fixed by this Court; and

(f)    such other amounts as this Court may order be paid from the Respondents' Australian Assets.

3.    For the purposes of Order 2, the Receiver have the power (either in his own name or that of the Respondents or any of them) to do anything that is necessary or convenient to be done for or in connection with, or incidental to, him taking possession of and selling, or converting into money, any of the Respondents' Australian Assets.

4.    Without limiting the scope of Order 3, the Receiver have power:

(a)    to enter into possession and take control of the Respondents' Australian Assets;

(b)    to sell or otherwise convert into money the Respondents' Australian Assets;

(c)    subject to him fully indemnifying the relevant Respondent against the costs of the proceedings, to bring legal proceedings in the name of any of the Respondents in respect of:

(i)    any mortgage, charge or other security interest to which any of the Respondents' Australian Assets is claimed to be subject; or

(ii)    any other matter preventing or impeding the sale of any of the Respondents' Australian Assets or which will or likely will reduce the net proceeds received from the sale of the asset;

(d)    to borrow funds from the Applicant or any third party up to a maximum amount of $40,000.00 to permit him to discharge his duties and exercise his powers, with the repayment of the funds and any interest payable on such funds to be treated as an expense of the Receiver's appointment;

(e)    to collect rent or other income from such of the Respondents' Australian Assets as are income producing;

(f)    to lease or let on hire any of the Respondents' Australian Assets so far as is necessary or desirable for the beneficial disposal of that asset;

(g)    to grant options over any of the Respondents' Australian Assets on such conditions as the Receiver thinks fit;

(h)    to insure the Respondents' Australian Assets;

(i)    to repair, renew or enlarge the Respondents' Australian Assets;

(j)    if any of the Respondents' Australian Assets consists of a business, to carry on that business so far as is necessary or desirable for the beneficial disposal of the business;

(k)    to execute documents in the name of and on behalf of any of the Respondents;

(l)    to use a seal of either of the corporate Respondents;

(m)    to appoint a solicitor, accountant or other professionally qualified person to assist him;

(n)    to appoint an agent to do any business that the Receiver is unable to do, or that it is unreasonable to expect the Receiver to do in person; and

(o)    where a debt or liability is owed to a Respondent, to prove for the debt or liability in a bankruptcy, insolvency or winding up, and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement.

5.    As soon as practicable after his appointment, the Receiver open a bank account (Receiver's Account) for the purpose of holding the proceeds of sale of the Respondents' Australian Assets.

6.    Except for funds required to:

(a)    discharge any mortgage, charge or other security interest to which the asset is subject;

(b)    pay any taxes or charges required to be paid in respect of the sale of the asset; and

(c)    pay the reasonable costs and expenses of and incidental to the sale,

the Receiver pay into the Receiver's Account the proceeds of the sale of each of the Respondents' Australian Assets and not disburse them from the account except pursuant to Order 11 or a further Order of this Court.

7.    Within seven days of him completing the sale of any of the Respondents' Australian Assets, the Receiver notify the Applicant and the Respondents of the completion of the sale and provide to them a written sale statement setting out:

(a)    the asset sold;

(b)    the gross sale price of the asset;

(c)    any amount paid to discharge any mortgage, charge or other security interest to which the asset was subject;

(d)    any taxes or charges paid in respect of the sale of the asset;

(e)    the costs and expenses of and incidental to the sale of the asset; and

(f)    the net amount received by him from the sale of the asset.

8.    The Receiver be paid remuneration calculated on a time-cost basis and reimbursed for the costs and expenses incurred by him in discharging his duties and exercising his powers as Receiver, with such remuneration, costs and expenses to be paid from the funds in the Receiver's Account after being approved and fixed by the Registrar and ordered to be so paid.

9.    For the purposes of Order 8, the Receiver may apply to the Court:

(a)    after the end of the period of six months from the date of his appointment;

(b)    after the end of every subsequent period of six months during which he acts as Receiver; and

(c)    after he ceases to act as Receiver,

to have his remuneration, costs and expenses approved and fixed by the Registrar for each such period or, where he ceases to act as Receiver, for the period from the end of the period for which his remuneration, costs and expenses last was fixed or from the date of his appointment, as the case requires, up to the date of him ceasing to act.

10.    The Receiver file with the Court within fourteen days:

(a)    after the end of the period of six months from the date of his appointment;

(b)    after the end of every subsequent period of six months during which he acts as Receiver; and

(c)    after he ceases to act as Receiver,

an account of his receipts and his payments during each such period or, where he ceases to act as Receiver, during the period from the end of the period to which the last preceding account relates or from the date of his appointment, as the case requires, up to the date of him ceasing to act.

11.    The Receiver be at liberty from time to time to pay to the Applicant from the Receiver's Account in discharge or partial discharge of amounts owing by the Respondents to the Applicant as specified in Order 2 the funds in the Receiver's Account to the extent to which the account balance exceeds AUD$100,000.00.

12.    The Applicant have liberty to apply on two days' notice to the Respondents and the Receiver for funds to be paid from the Receiver's Account to the Applicant in discharge or partial discharge of amounts owing by the Respondents to the Applicant as specified in Order 2.

13.    The Receiver have liberty to apply on two days' notice to the Applicant and the Respondents in respect of any matter concerning these Orders or his appointment.

14.    Without prejudice to the operation of any current restraining order, each of the Respondents be restrained from selling, mortgaging, encumbering or in any other way dealing with his, her or its interest in any of the Respondents’ Australian Assets, including any of the assets in the Schedule of Respondents’ Assets.

15.    The Respondents pay the Applicant's costs of this application on a party/party basis.

16.    The parties have liberty to apply otherwise on two days’ notice.

17.    These orders will be subject to variation in terms upon publication of the reasons. Any such variation which may affect the position of any party will be the subject of an opportunity to be heard.

SCHEDULE OF RESPONDENTS’ ASSETS

A.    3/507 Pacific Highway, Killara (Folio #3/SP86801);

B.    39 Stanhope Road, Killara (Folio #1/551876);

C.    39A Stanhope Road, Killara (Folio #2/551876);

D.    109 Pitt St, Sydney (Folio #99/SP72095 & #100/SP72095);

E.    Unit 73 and 74/20 Beissel St, Belconnen, ACT;

F.    Such or any interest of any kind as any or each of the Respondents may have in:

i.    Xiang Rong (Australia) Construction Group Pty Ltd as trustee for the Xiang Rong Management Trust;

ii.    Xiang Rong Management Trust, whether as beneficiaries or otherwise;

iii.    any other company, trust or legal structure or entity having any interest in or any control over 7 Help Street Chatswood (Folio #6/SP33531 & #8/SP33531);

iv.    the said property at 7 Help Street, Chatswood;

v.    1/507 Pacific Highway, Killara (Folio #1/86801);

vi.    22/507 Pacific Highway, Killara (Folio #22/SP86801);

vii.    23/507 Pacific Highway, Killara (Folio #23/SP86801);

viii.    307 Cattai Road, Cattai (Folio #l/783613); and

ix.    309 Cattai Road, Cattai (Folio #A/155796).

G.    Shares owned by the Respondents in:

i.    Xiang Rong (Australia) Construction Group Pty Ltd (ACN 109 083 445);

ii.    Xiang Rong Construction Pty Ltd (ACN 103 980 267);

iii.    Xiang Rong (Australia) Investment Group Pty Ltd (ACN 101 611 732);

iv.    Diatreme Resources Ltd (ACN 061 267 061); and

v.    Mindax Ltd (ACN 106 866 442).

H.    Any other Respondents' Australian Assets.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ALLSOP CJ:

1    On 27 July 2016, I made orders appointing a receiver (Mr Wily of Armstrong Wily Pty Ltd) to all of the property of the respondents in Australia. These are the reasons for making those orders.

2    I do not propose to set out again the history of this matter. That history can be found in the previous decisions: Ye v Zeng [2015] FCA 1192; Ye v Zeng (No 2) [2015] FCA 1243; Ye v Zeng (No 3) [2015] FCA 1279; Ye v Zeng (No 4) [2016] FCA 386; and Ye v Zeng (No 5) [2016] FCA 850.

3    I awarded indemnity costs because I came to the view (see Ye v Zeng (No 5) at [18]-[20]) that the respondents had delayed the applicant in enforcing a just commercial claim for over 8 months without any legitimate basis.

4    The debt being enforced is an arbitral award of an arbitral commission in China. The courts should be ready to give speedy and effective enforcement and support to international commercial arbitration awards when no reason can be shown not to enforce such awards under the New York Convention.

5    The respondents have extensive assets in Australia and China. There is no basis to conclude that any of the respondents is insolvent. So, there is no apparent basis to conclude that the appointment of the receiver and his conduct in liquidating assets for the purpose of satisfying the applicant’s judgment debt might interfere with the conduct of any insolvency by a trustee in bankruptcy or liquidator on behalf of general creditors.

6    There was no submission put on behalf of the respondents that the Court had no power to appoint the receiver or that the appointment should not be made and some other mode of execution against Australian assets be preferred. Two principal submissions were put. First, the applicant should first have recourse to the assets in China owned by some of the respondents, and no receiver should be appointed until such steps have been taken. Secondly, the respondents should have time to arrange their affairs to organise the sale of the Australian properties (especially the family homes of the first, second and third respondents). Neither submission should be accepted.

7    The fact that there are assets in China and that the applicant had sought their freezing by courts in China are irrelevant. There was evidence that was the subject of comment in earlier judgments that the respondents had been less than co-operative in fulfilling their commercial obligations of payment. There had been ample opportunity for the respondents to tender co-operation to the applicant to pay their debt.

8    That two assets are the Australian family homes of the first, second and third respondents is unfortunate. But the remedy to prevent such personal disruption has always been there: to pay the legitimate debt owed to the applicant.

9    It was just and convenient to appoint the receiver to provide the applicant with effective enforcement of the award and the judgment therein. The conduct of the proceedings has revealed an unwillingness on the part of the respondents to meet their commercial obligations. The Court should strive to provide effective, swift and complete enforcement of judgments based on agreements to arbitrate, certainly those governed by the International Arbitration Act 1974 (Cth). In circumstances where it can be inferred that the award creditor is being held out of its money by the use of the Court by the respondents for unreasonable delay, the clearest and most effective remedy is called for.

Associate:

Dated:    11 August 2016