Federal Court of Australia

Fine China Capital Investment Limited v Qi [2023] FCA 861

ORDERS

THE COURT ORDERS THAT:

1.    The application for interlocutory relief be returnable instanter.

2.    Upon the usual undertaking as to damages and upon the undertakings given by the Prospective Applicant (Fine China) set out in Schedule A to the document entitled “Penal Notice”, a copy of which is Annexure A to these orders, a freezing order be made against the Prospective Respondent (QT) in the terms specified in that document.

3.    Pursuant to r 10.44 of the Federal Court Rules 2011, Fine China has leave to serve the following documents outside Australia:

(a)    the urgent application before start of a proceeding;

(b)    the affidavit of Luyao Mei dated 21 July 2023 and the affidavit of Jack Ryan dated 24 July 2023; and

(c)    these orders,

(the Documents).

4.    Personal service and service in accordance with the law in place in Singapore of the Documents on QT be dispensed with.

5.    Pursuant to r 10.24 of the Federal Court Rules, Fine China have leave to serve the Documents on QT by way of substituted service as follows:

(a)    by emailing copies of the documents to: [REDACTED];

(b)    by sending copies of the documents by registered post to: c/- John Richards, Carswell & Company Solicitors and Notary, GPO Box 1628, Brisbane 4001 QLD;

(c)    by sending a message to the Prospective Respondent’s WeChat account [REDACTED], which reads as follows: “Orders have been made against Tao Qi by the Federal Court of Australia. Please contact John Richards at Carswell & Company Solicitors and Notary on +61 7 3229 7798”;

(d)    by sending a message to the Prospective Respondent’s Signal account [REDACTED], which reads as follows: “Orders have been made against Tao Qi by the Federal Court of Australia. Please contact John Richards at Carswell & Company Solicitors and Notary on +61 7 3229 7798”; and

(e)    by emailing copies of the documents to the Prospective Respondent’s email addresses: [REDACTED].

6.    Fine China serve the Documents on QT pursuant to the means in paragraph 5 above by 4.00 pm on 25 July 2023.

7.    Service of the Documents be deemed to have been effected on QT immediately once the steps set out in paragraph 5 have been undertaken.

8.    By 4.00 pm on 27 July 2023, Fine China file the following documents and serve the following documents by the methods set out in paragraph 5(a), (b) and (e) above:

(a)    an originating application;

(b)    a statement of claim;

(c)    any further affidavit material in support of the continuation of the freezing order beyond 28 July 2023, including in relation to security for the undertaking as to damages.

9.    Until such time as QT files and serves a notice of address for service or further order, service of any further documents in this proceeding may be effected by Fine China by sending a copy of those documents to QT by the methods set out in paragraph 5(a), (b) and (e) above.

10.    QT file a notice of address for service within 28 days of these orders.

11.    The matter be listed for a case management hearing at 9.30 am on 28 July 2023.

12.    Costs be reserved.

13.    There be liberty to apply.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    This is an urgent application for a freezing order, combined with an application for leave to serve out of the jurisdiction and an application for substituted service.

2    The application first came before me for hearing at 8.30 am this morning. At that stage, I was not satisfied with the affidavit material and stood the matter down to enable the Prospective Applicant, Fine China Capital Investment Ltd (Fine China), to put on additional material. The matter came back before me at 4.00 pm today, by which time Fine China had filed an additional affidavit.

3    Fine China has filed an “urgent application before start of a proceeding” dated 21 July 2023. It relies on two affidavits:

(a)    an affidavit of its director and shareholder, Ms Luyao Mei, dated 21 July 2023; and

(b)    an affidavit of Mr Jack Ryan, a solicitor of AJH Lawyers, the solicitors acting for Fine China, dated 24 July 2023.

Background

4    The background to the application, as set out in Ms Mei’s affidavit, is as follows. Fine China, which is a company incorporated in Hong Kong, alleges that it is the beneficiary under a trust (the Trust) established by a trust deed dated 24 March 2021 (the Trust Deed) (Annexure LM-9). Fine China alleges that a person named Tao Qi (QT) is the trustee of the Trust, and the assets of the Trust comprise 100% of the shares in CSJH (Australia) Pty Ltd (ACN 617 042 010) (CSJH), a company incorporated in Australia.

5    Fine China alleges that, in breach of trust, QT has:

(a)    purported to sell shares in CSJH to third parties;

(b)    voluntarily deregistered CSJH;

(c)    transferred funds from, and closed the bank account of, CSJH; and

(d)    sought to obtain a benefit for himself.

6    On 5 June 2023, Bradley J of the Supreme Court of Queensland made a freezing order against QT and others on the application of certain persons, including persons who claimed to have entered into an agreement to purchase some of the shares in CSJH from QT. However, on the basis of the affidavit material before me, it appears likely (or, at least, there is a real possibility) that the freezing order will be vacated today or very soon.

7    In these circumstances, Fine China seeks a freezing order against QT.

Application for freezing order

8    I summarised the applicable principles for the making of a freezing order in Gecko Australia Pty Ltd v Montagnese [2022] FCA 488 at [16]-[19].

9    Although parts of the narrative raise questions (in particular, why Fine China did not take steps to commence a proceeding shortly after 9 June 2023, upon learning that QT had entered into an agreement to sell some of the shares in CSJH and had deregistered CSJH), I am satisfied that Fine China has presented a sufficiently arguable case as outlined above to support the making of a freezing order for a short period of time (namely, about four days). Whether it is appropriate for the freezing order to be extended beyond that date may depend on: (a) the articulation of Fine China’s claims in an originating application and statement of claim; and (b) whether it is able to provide adequate security for its undertaking as to damages. I therefore consider it appropriate to make a freezing order that will last (subject to further order) until the end of this Friday, 28 July 2023.

Service out of the jurisdiction

10    Rule 10.42 of the Federal Court Rules 2011 provides that an originating application may be served outside Australia without leave in certain cases. This rule is inapplicable in the present circumstances, as Fine China has not yet filed an originating application. However, it is relevant to note that, had it done so, the originating application would appear to fall within several of the categories referred to in r 10.42. For example, paragraph (e) of r 10.42 provides for service outside Australia without leave “if the subject matter of the proceeding is land or other property situated in Australia, or any act, deed, will, instrument, or thing affecting such land or property”. Here, the subject-matter of the proceeding is shares in CSJH, which are located in Australia (CSJH being an Australian company), and the Trust Deed, which affects those shares. See also paragraphs (b), (d), (f) of r 10.42.

11    Rule 10.44 provides for the service of other documents outside Australia with the leave of the Court. Having regard to the facts and matters set out in the affidavit material and outlined above, I consider it appropriate to give leave for the following documents to be served outside Australia:

(a)    the urgent application before start of a proceeding;

(b)    the affidavits of Ms Mei and Mr Ryan; and

(c)    the Court’s orders to be made today.

Substituted service

12    I recently considered the intersection of the rules for service outside Australia and the rules for substituted service in The Noco Company v Hong Kong Haowei Technology Co, Ltd [2023] FCA 533 (Noco) at [11]-[15].

13    The Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, done at The Hague on 15 November 1965, is not currently in force as between Australia and Singapore, where QT is believed to be located. There does not appear to be any other relevant convention in place. In these circumstances, the appropriate method of service on QT in Singapore is service in accordance with the laws of Singapore (see r 10.45(b)(iii) and r 10.46).

14    However, it is apparent from the affidavit material that this is likely to be a difficult and time-consuming process, given that QT’s whereabouts are unknown. Further, given the nature of the documents to be served, there is urgency about the matter. I have considered the issue of comity as referred to in Noco at [18].

15    In the circumstances, I consider it appropriate to make an order for substituted service on QT, utilising each of the methods of contacting QT referred to in the affidavit material. I am satisfied that these are likely to bring the documents to QT’s attention.

Conclusion

16    Fine China has provided a proposed form of order that includes the standard form of freezing order and a schedule of undertakings to be given by Fine China. Senior counsel for Fine China has confirmed that she has instructions to give the usual undertaking as to damages.

17    I will therefore make orders to the effect indicated above.

Associate:

Dated:    27 July 2023