FEDERAL COURT OF AUSTRALIA

Guoao Holding Group Co Ltd v Xue (Contempt) [2024] FCA 278

ORDERS

THE COURT ORDERS THAT:

1.    The applicant have leave to amend the further amended statement of charge in the form of the second further amended statement of charge furnished by email on 2 February 2024 at about 5.30pm.

2.    The applicant file and serve the second further amended statement of charge forthwith.

3.    The applicant pay the first respondent her costs thrown away by the applicant’s further amended statement of charge and further amended interlocutory application filed on 14 July 2023.

4.    The costs of the first respondent’s interlocutory application for costs lodged for filing on 17 November 2023 be costs in the cause of the applicant’s contempt application.

THE COURT DECLARES THAT:

5.    The first respondent, Lijuan Xue, is guilty of criminal contempt of the Court for breaching order 5 of the orders made by the Court on 31 August 2022 and amended on 29 September 2022 (Orders) by engaging in the conduct referred to in charge 1 of the second further amended statement of charge (Statement of Charge), namely making transfers from her account to an account in the name of the third respondent on 14 September 2022 in the sum of $798,687.65.

6.    The first respondent, Lijuan Xue, is guilty of:

(a)    Criminal contempt of the Court for breaching order 9(a) of the Orders by engaging in the conduct referred to in charge 2 of the Statement of Charge, namely paying for ordinary living expenses in the period 14 September 2022 to 21 December 2022 in the sum of $59,303 in excess of what was allowed; and

(b)    Civil contempt of the Court for breaching order 9(d) of the Orders by engaging in the conduct referred to in charge 2 of the Statement of Charge, namely dealing with or disposing of assets in the period 14 September 2022 to 21 December 2022 in the sum of $245,433.65 without giving the required notice.

7.    The first respondent, Lijuan Xue, is not guilty of contempt of the Court on charge 3 of the statement of charge.

AND THE COURT ORDERS THAT:

8.    The first respondent, Lijuan Xue, be convicted on charges 1 and 2 of contempt of court in the Statement of Charge.

9.    The costs of the applicant’s contempt application be reserved to be dealt with at the hearing on penalty.

10.    The matter be listed on 12 April 2024 for case management in relation to a hearing on penalty.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction

1    The applicant, Guoao Holding Group Co Ltd, seeks orders that the first respondent, Lijuan Xue (Ms Xue), be found guilty of criminal or, alternatively, civil contempt of court by acting in breach of freezing orders. As is customary, the question of penalty, if it arises, is to be dealt with separately: Mead v Mead [2007] HCA 25; 235 ALR 197 at [3].

2    There are three charges against Ms Xue. In summary form, the charges allege that contrary to the freezing orders and with knowledge of them Ms Xue (1) transferred nearly $800,000 to an account that she controlled but which was in the name of her mother, (2) spent more than $300,000 either in excess of maximum limits applicable to exceptions to the freezing orders or not referable to any permitted exception, and (3) failed to disclose the account in her mother’s name under orders obliging her to disclose her assets and assets in which she has an interest.

3    Ms Xue did not give evidence in the case. Although a number of affidavits deposed by her were filed and served, none was read on the hearing of the matter. That caused Guoao to tender portions of the affidavits as admissions. There was no objection to that course.

The course of events

The original freezing orders on 31 August 2022

4    On 31 August 2022, I made freezing orders against Ms Xue and Tredmore Pty Ltd, the second respondent, in support of a prospective judgment enforcing a foreign arbitral award against Ms Xue. Tredmore is an Australian registered corporation which is the trustee of the Xue Family Trust and is said to have been the repository of significant wealth by Ms Xue which is why freezing orders were sought against it, but the arbitral award was not against it.

5    The freezing orders are in the usual form and are accompanied by the prescribed penal notice. They include orders freezing Ms Xue’s assets up to the amount of the prospective judgment, providing for exceptions for certain expenses which were allowed to still be paid, and compelling the provision of information about her assets.

6    The relevant orders are the following, noting that they were later amended as detailed further below:

FREEZING OF ASSETS

(5)    (a)    You must not remove from Australia, or in any way dispose of, deal with or diminish the value of any of your assets in Australia and throughout the world (‘Australian and Worldwide assets’) up to the unencumbered value of AUD$43,409,320.56. (‘the Relevant Amount’). …

(6)     For the purposes of this order,

(a)     your assets include:

(i)     all your assets, whether or not they are in your name and whether they are solely or co-owned;

(ii)     any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and …

PROVISION OF INFORMATION

(7)     Subject to paragraph (8), you must:

(a)     at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets in Australia and Worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;

(b)     within five working days after being served with this order, swear by a proper officer and serve on the applicant an affidavit setting out the above information. …

EXCEPTIONS TO THIS ORDER

(9)     This order does not prohibit:

(a)     paying up to $2,000 a week for your ordinary living expenses;

(b)     paying up to $200,000 for your reasonable legal expenses;

(c)     dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(d)     in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

The events on 14 September 2022

7    At 10.45 am on 14 September 2022, the freezing orders were served personally on Ms Xue at her home at Bondi Junction in Sydney. The way in which they were served by a process server can be explained as follows.

8    Two sealed plastic courier’s delivery packets were served. One was addressed to Ms Xue and the other to Tredmore. In each packet was an envelope addressed to the relevant addressee containing a letter also addressed to the relevant addressee, another envelope containing a USB drive and a number of documents, and two lever arch folders containing the court book for the ex parte hearing on 31 August 2022. There were about 1,300 hard copy pages and a further 500 pages on the USB drive in each packet.

9    Each letter conveyed essentially the same information. The letter to Ms Xue personally commenced as follows:

Dear Ms Xue

Guoao Holding Group Co Ltd v Lijuan Xie & Anor Federal Court of Australia proceeding no. NSD580 of 2022 (Proceeding)

1.    We refer to the above matter where we act for the applicant, Guoao Holding Group Co Ltd.

2.    Please note that an application to enforce an arbitral award dated 26 January 2021 (Award) has been made against you by Guoao Group Holding Co., Ltd in the Federal Court of Australia (Enforcement Application). The Enforcement Application was made before Stewart J without notice to you on 31 August 2022. The return date for the Enforcement Application is 5 October 2022 at 10.15am.

3.    The Federal Court has also issued orders against you and Tredmore Pty Ltd (Tredmore), freezing your and Tredmore Pty Limited’s assets. This means you cannot dispose of, deal with or diminish the value of your assets in Australia and throughout the world up to the unencumbered value of AUD$43,409,320.56. We enclose a Short Minute of the Orders made by Justice Stewart on 31 August 2022 (Orders). You must read the Orders carefully as a failure to comply with them may lead to imprisonment, sequestration of property or other punishment.

10    The parties agree that the orders of 31 August 2022 were served with the letter.

11    The process server’s evidence is that the following conversation took place between him and Ms Xue in English when he served the package on her in her personal capacity:

I said:     Are you Lijuan Xue?

She said:     Yes.

I said:     I have a delivery for you. These are court documents.

She said:     Who are they from?

I said:     MinterEllison lawyers.

She said:     Oh.

12    The process server’s evidence is that he then served the package for Tredmore on Ms Xue and the following exchange took place in English:

I said:     I also have a package of documents addressed to Tredmore Pty Ltd at this address. Are you the Director of that company?

She said:     Yes.

I said:     Okay, I will leave this with you.

13    At 10.49 am on the same day, ie merely minutes later, Ms Xue sent a photograph to her then solicitor, Ms Chen, with the following message in Mandarin on the messaging service WeChat:

Hi Lawyer Chen, I suddenly received so many documents, weird?

Could you please give me a call when you are available? Thank you.

14    At that time, Tredmore was a party to litigation in the Supreme Court of New South Wales in which Ms Chen was Tredmore’s solicitor. That would explain Ms Xue’s immediate access to Ms Chen by way of WeChat.

15    The photograph shows that Ms Xue had opened the packet addressed to Tredmore. One can see the two envelopes and the two lever arch folders lying next to the apparently empty courier packet. The other packet appears to be unopened.

16    At 10.57 am, ie within minutes of sending the WeChat message to Ms Chen, Ms Xue made an electronic transfer of $20,000 from her account #0386 to the account in her mother’s name, account #3837. I will refer to this account as Ms Xue’s mother’s account, but it needs to be remembered that Ms Xue had control of the account. Ms Xue’s mother, Juying Xue, is the third respondent but she plays no role in the contempt application.

17    After that transfer, Ms Xue and Ms Chen had a telephone conversation.

18    Thereafter, Ms Xue made the following electronic transfers:

(1)    At 12.26 pm, $78,687.65 from her account #0386 to her mother’s account; and

(2)    At 12.28 pm, $700,000 from her account #3845 to her mother’s account.

19    Ms Xue gave the following explanation for the three transactions identified above:

At the time of making the above transactions, with the exception of the $20,000, I was extremely worried about what would happen in my domestic day-to-day life if I suddenly had no money left or available to pay for expenses. I do not have any relatives and am in a foreign country, renting my current property. I have a 79-year-old mother and a 15-year-old son by my side that are dependent on me, that I am responsible for providing and caring for. My mother is sick and requires long-term medication and I need funds available to purchase that medication and associated medical treatment for her. I was extremely scared of what would happen if I had no funds and at the time of making the above transfers and thought no matter what happens in the future, I just need to continue to maintain a normal life for my family.

20    I will return to that explanation when considering what Ms Xue understood about what had been served on her.

The period 15-28 September 2022

21    In the two weeks following service of the freezing orders on her, Ms Xue withdrew the sum of $2,000 in cash from account #3845 on three separate occasions – on 16, 23 and 28 September. She has sought to characterise those withdrawals as being for “ordinary living expenses” within the exception in freezing order 9(a).

The variations to the freezing orders on 29 September 2022

22    On 29 September 2022, I made orders varying the freezing orders following an interlocutory application by Ms Xue. The variation orders were ultimately made by consent. The orders noted that the parties agreed that Ms Xue was permitted to pay from other bank accounts held by her with Westpac Banking Corporation, or any other account, the sum of $30,000 into Westpac account number #3845. That account was characterised as an unrestricted account which would allow Ms Xue to pay expenses from it without the administrative burden of convincing the bank and Guoao on the occasion of each payment that the payment was justified as an “ordinary living expense”. The orders also noted the possibility of the parties agreeing to a further amount being paid into the unrestricted account sometime in the future. As I will come to, that carried the inescapable implication that in the absence of further order or agreement, the initial payment of $30,000 was a once-off payment.

23    The relevant variations to the freezing orders were as follows:

(1)    The sum of $2,000 per week for ordinary living expenses in freezing order 9(a) was varied to $4,200 per week; and

(2)    The sum of $200,000 for legal expenses in freezing order 9(b) was qualified as being for such expenses “in relation to these proceedings”, ie not for other proceedings such as Tredmore’s then ongoing proceeding in the Supreme Court.

Ms Xue’s asset disclosure affidavits

24    On 7 October 2022, Ms Xue filed an affidavit deposed to by her on that day setting out her assets and those of Tredmore. The affidavit was made in response to the requirements of freezing order 7 in relation to disclosure of assets.

25    Relevantly for present purposes, the affidavit lists amongst Ms Xue’s Australian assets:

(c)    Deposit in bank accounts of Westpac in the amount of $778,865.73 as at the date of this affidavit; …

26    It is common ground that that sum included all of the amount then standing to the credit of Ms Xue’s mother’s account although Guoao and its lawyers did not at that time know about the existence of that account.

27    By letter dated 19 October 2022, MinterEllison raised queries about the assets disclosed in the affidavit with Ms Xue’s solicitors, Chen Shan Lawyers. In relation to the Australian assets, the letter raised questions with regard to a particular property and money said to have been invested with Atlas Advisors. No request was made for the details of the Westpac bank accounts referred to and how much stood to the credit of each, even though MinterEllison had received a long list of accounts from Westpac on 12 October 2022, ie Guoao knew that there were several Westpac accounts but it did not ask for further details.

28    On 24 October 2022, Chen Shan filed a further affidavit by Ms Xue, deposed to on that day, in response to MinterEllison’s queries. The affidavit records that the affidavit of 7 October 2022 contains “a complete and exhaustive list of assets” of Tredmore and Ms Xue in Australia.

Judgment entered

29    On 22 December 2022, I granted judgment against Ms Xue by way of enforcement of the arbitral award in amounts that total approximately $43 million: Guoao Holding Group Co Ltd v Xue (No 2) [2022] FCA 1584 (Guoao No 2). From then on, the freezing orders have stood in support of the judgment, rather than a prospective judgment.

30    Guoao and Ms Xue accept that the factual findings made by me in the disputed hearing on the enforcement of the arbitral award, ie in Guoao No 2, are binding between them in the present proceeding.

Excepted payments

31    Ms Xue engaged in a number of bank transactions following those in September 2022 (which are dealt with above) and the amendments to the freezing orders on 29 September 2022. On 28 March 2023, Guoao’s solicitors, MinterEllison, produced a spreadsheet of the transactions that they contended were in contravention of the freezing orders. Ms Xue then responded to each of the transactions to categorise them by their nature and thereby seek to justify them as not being in contravention of the freezing orders as referable to one or other permitted exception. The spreadsheet became, or became the basis for, annexure A to the statement of charge. A later version of the spreadsheet became MFI-4 which shows, by a system of colour-coding, which transactions Ms Xue says were made as ordinary living expenses (blue), accepts were made without notice (yellow) and with inadequate notice (pink), and says were made properly with notice (green) (T111).

32    The payments are all from either Ms Xue’s #3845 account or from her mother’s account (#0386). They appear to have been able to be made because neither account was frozen by the bank. In respect of #3845, that was initially the case for reasons that are not apparent to me and following the orders of 29 September 2022 in order to enable certain expenses to be paid without administrative burden and delay (as explained at [22] above). In respect of the mother’s account, that appears to be because neither the bank nor Guoao was aware of it as an account controlled by Ms Xue until late in the piece. Lack of disclosure in relation to it is the subject of charge 3.

33    In summary, the spreadsheet shows the following to be the position in the 14 weeks between 16 September and 21 December 2022.

34    In respect of the “ordinary living expenses” exception in order 9(a):

(1)    $52,200 was withdrawn in cash from account #3845.

(2)    $61,503 was paid by way of online payments from account #3845.

(3)    Only $54,400 was permitted to be spent in that period, being $2,000 per week up until the variation to the orders on 29 September 2022 and $4,200 per week thereafter.

(4)    That amounts to prohibited expenditure on “ordinary living expenses” in the amount of $59,303 (ie $113,703 - $54,400).

35    In respect of the “reasonable legal expenses in relation to these proceedings” exception in order 9(b), Ms Xue spent $100,604. That is well within the permissible limit and no issue is taken with it.

36    The exception in order 9(c), being the disposal of assets in the ordinary and proper course of business, is not relevant.

37    There was expenditure of approximately $250,000 that Ms Xue contends was allowed by the exception in order 9(d). I will deal with the details of that in relation to charge 2.

The relevant principles

Power and rationale

38    The Court’s power in relation to the punishment of contempts of court is set out in s 31 of the Federal Court of Australia Act 1976 (Cth), which relevantly provides as follows:

(1)     Subject to any other Act, the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court.

39    The underlying rationale for the exercise of the contempt power is that it is necessary to uphold and protect the effective administration of justice; although the primary purpose in committing a respondent who disobeys an injunction is to enforce the injunction for the benefit of the applicant, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced: Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd [1986] HCA 46; 161 CLR 98 (AMIEU) at 107 per Gibbs CJ, Mason, Wilson and Deane JJ. Contempt proceedings are essentially protective in nature as to the judicial function and the role of the courts, even if they also serve to vindicate private interests and rights; contempt proceedings are therefore to be viewed as essential in facilitating the proper functioning of courts: Kazal v Thunder Studios Inc (California) [2017] FCAFC 111; 256 FCR 90 at [97] per Besanko, Wigney and Bromwich JJ.

Classes of contempt

40    There are three classes of contempt: technical, wilful and contumacious. Technical contempt is where disobedience of a court order is casual, accidental or unintentional. Wilful contempt is where the disobedience is more than that, but is not contumacious. Contumacious contempt is where there is a specific intention to disobey a court order, which evidences a conscious defiance of the court’s authority. See Burwood Council v Ruan [2008] NSWLEC 167 at [7] per Biscoe J; ACCC v Halkalia Pty Ltd (No 3) [2017] FCA 522 at [25] per Tracey J and Humane Society International Inc v Kyodo Senpaku Kaisha Ltd [2015] FCA 1275; 238 FCR 209 at [11] per Jagot J.

41    A wilful contempt in the above sense amounts to a civil contempt, whereas a contumacious contempt amounts to a criminal contempt: AMIEU at 108 (criminal) and 113 (civil); Witham v Holloway [1995] HCA 3; 183 CLR 525 at 538 per McHugh J. Whether the contempt that is alleged is civil contempt or criminal contempt, the proceeding remains in the civil jurisdiction of the court; it remains a civil proceeding prosecuted between private parties before a judge and not a jury: CFMEU v Boral [2015] HCA 21; 256 CLR 375 at [40]-[45] per French CJ, Kiefel, Bell, Gageler and Keane JJ and [65]-[66] per Nettle J.

Standard of proof

42    The applicable standard of proof for both civil and criminal contempt is the criminal standard of proof beyond a reasonable doubt. That is because both forms of contempt can result in punishment, including committal to prison. See Witham v Holloway at 534 per Brennan, Deane, Toohey and Gaudron JJ and at 545 per McHugh J. Although a question once arose as to whether the advent of the uniform Evidence Acts, relevantly ss 140 and 141 of the Evidence Act 1995 (Cth), means that Witham v Holloway no longer applies in relation to civil contempt and that proof on a balance of probabilities would suffice (see ASIC v Sigalla (No 4) [2011] NSWSC 62; 80 NSWLR 113 at [93]-[94] per White J), it is common ground that I am bound to apply the criminal standard: Boral at [42] per French CJ, Kiefel, Bell, Gageler and Keane JJ referring to Witham v Holloway without reservation and [59] per Nettle J; Sigalla v TZ Ltd [2011] NSWCA 334 at [25] per Young JA, Macfarlan JA and Handley AJA agreeing; Kazal at [21] (T28:5). However, in order to preserve its ability to contend at some higher level that proof on a balance of probabilities is sufficient, Guoao asks that in the event that I am not satisfied that some or other element is established to the criminal standard, I should indicate whether I am nevertheless satisfied to the civil standard (T28:25).

43    Ms Xue bears an evidential onus to adduce evidence that raises a reasonable possibility that the impugned withdrawals fall within the ambit of the stated exceptions. It is then for the applicants, who at all material times bear the legal onus, to negative this proposition beyond reasonable doubt. See Fortune Holding Group Pty Ltd v Zhang (No 2) [2017] VSC 738 at [49] per Zammit J; Jorgensen v Fair Work Ombudsman [2019] FCAFC 113; 271 FCR 461 at [15] and [69] per Greenwood, Reeves and Wigney JJ. The facts showing a reasonable possibility of the exception applying, being facts advantageous to Ms Xue, may be proved on a balance of probabilities: Huang v Liao [2022] NSWSC 526 at [3] per Black J.

44    Guoao accepts that as a correct statement of the position (T28:36, T33:8), although in written submissions it had argued that Ms Xue bears the burden to prove on a balance of probabilities that a particular transaction falls within an exception. That was with reference to a line of authority that is at odds with those referred to in the preceding paragraph, namely: ASIC v Sigalla (No 3) [2010] NSWSC 1076 at [46]-[47] per White J; ASIC v Sigalla (No 4) at [168]; CC Containers Pty Ltd v Lee (No 7) [2015] VSC 477 at [42]-[43] per Ginnane J; Zhang v Shi (No 5) [2021] VSC 695 at [88]-[89] per Delany J.

Jones v Dunkel

45    In proceedings for contempt of court, there is no scope for the proposition that an unexplained refusal by the alleged contemnor to call evidence or witnesses may entitle the court to draw an inference that the uncalled evidence would not have assisted that party’s case. That is to say, there is very little scope, if any, for the drawing of an inference of the type identified in Jones v Dunkel [1959] HCA 8; 101 CLR 298. See Jones v ACCC [2010] FCAFC 136; 189 FCR 390 at [34] per Keane CJ, Dowsett and Reeves JJ; Mirus Australia Pty Ltd v Gage [2017] NSWSC 1046 at [122] per Ward CJ in Eq.

Contumacy and knowledge

46    An issue in this proceeding is the degree to which the contemnor must have understood the court order before they can be held to have disobeyed it with contumacy, particularly where the contemnor’s understanding of the order may be limited because of their limited knowledge of the language in which the order is written. The relevant principles were recently identified by Black J in Huang v Liao [2022] NSWSC 347 at [33]-[40] and can be summarised as follows:

(1)    it is not necessary for the applicant to demonstrate that the alleged contemnor was aware of the full terms of the order, or the true meaning of the terms of the order;

(2)    it is sufficient if the alleged contemnor:

(a)    had knowledge of the order or was otherwise aware of the order;

(b)    knew the substance of what was being prohibited by the orders and knowingly acted contrary to it; or

(c)    had knowledge at a level that would induce an honest, reasonable and responsible person to check the precise terms of the order;

(3)    the alleged contemnor cannot circumvent the requirement of knowledge by engaging in wilful blindness to the terms of the order;

(4)    the alleged contemnor is expected to try to understand and obey the orders.

47    Prior authorities in support of those principles are cited by Black J so there is no need to cite them here. However, the following can be added to them: Amalgamated Television Services Pty Ltd v Marsden [2001] NSWCCA 32; 122 A Crim R 166 at [53] per Ipp AJA, Powell and Giles JJA agreeing; Eshow v Zaia [2020] NSWCA 10 at [18] per Macfarlan JA, Bell P and White JA agreeing; Huang v Liao [2022] NSWSC 526 at [13] per Black J and Yuan v Huang [2023] NSWSC 1021 at [20] where Richmond J held that “it is sufficient that the alleged contemnor knew the substance of the prohibition in the court order or had knowledge at a level that would induce an honest, reasonable and responsible person to check the precise terms of the order”. That characterisation is accepted by counsel for Ms Xue. See also Madeira v Roggette Pty Ltd [1990] 2 Qd R 357 at 365-366 per de Jersey J; Madeira v Roggette Pty Ltd (No 2) [1990] 1 Qd R 394 at 402 per Thomas J, Moynihan and Ambrose JJ agreeing; Tchia v Rogerson (1992) 111 FLR 1 at 12 per Angel J.

48    In Deputy Commissioner of Taxation v Gashi (No 2) [2011] VSC 351; 84 ATR 175 at [45]-[46] and [61], Dixon J had no doubt that an alleged contemnor with “quite limited” English had the requisite knowledge. Justice Dixon referred to the fact that the contemnor had signed contracts and other documents in relation to commercial transactions without having them translated, in addition to considering the nature of the various applications made to discharge or vary the order, the extensive involvement of legal and financial advisers and the oral evidence given before him to determine that the respondent’s limited English did not impair his understanding of the constraints of the freezing order.

The elements of contempt

49    There are five matters to be proved to establish a contempt of court by disobedience of a court order, namely:

(1)     an order was made by the court;

(2)     the terms of the order are clear, unambiguous and capable of compliance;

(3)     the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to rules of court;

(4)     the alleged contemnor had knowledge of the terms of the order; and

(5)     the alleged contemnor breached the terms of the order.

(Humane Society at [9].)

50    The principal dispute in this case is about element (4), ie Ms Xue’s knowledge (and understanding) of the terms of the freezing orders.

The charges against Ms Xue

The history of the framing of the charges

51    It is necessary to deal with the history of the charges levelled against Ms Xue by Guoao in some detail. That is because Ms Xue seeks her costs in relation to charge 4 that was abandoned by way of the further amended statement of charge in July 2023, and because Guoao seeks leave to file and rely on a second further amended statement of charge.

52    The original interlocutory application for contempt in November 2022 sought a finding that Ms Xue be found guilty of contempt of court for disobeying the freezing orders as set out in the statement of charge. The original statement of charge alleged three charges against Ms Xue. Charge 1 was for transferring sums of money from her accounts to her mother’s account on 14 September 2022, charge 2 was for failing to disclose those transfers and charge 3 was for failing to disclose a property.

53    The amended interlocutory application in January 2023 made it express that a finding of criminal contempt was sought. In respect of each charge, findings were sought that Ms Xue acted “in deliberate defiance” of the court orders. The amended statement of charge alleged five charges against Ms Xue. Charge 1 remained much the same, although further particularity was given. A new charge 2 was introduced. It alleged the deliberate disobedience of the freezing orders by intentionally spending beyond the maximums allowed by about $200,000. Charge 3 was that Ms Xue failed to disclose her mother’s account when detailing her assets. Charge 4 was that Ms Xue failed to disclose the property that was previously the subject of charge 3. Charge 5 was that Ms Xue deliberately and intentionally sought to circumvent the regime established by the orders of 29 September 2022 enabling her to spend about $320,000 more than the $30,000 permitted by that regime.

54    The further amended interlocutory application in July 2023 inserted an alternative finding to deliberate defiance of the freezing orders, namely that Ms Xue acted “in defiance” of them. The further amended statement of charge deleted charges 4 and 5. It also amended charges 1 to 3 in certain respects.

55    The further amended statement of charge, with the amendments sought on the morning of the second day of the hearing in the second further amended statement of charge for which leave is sought reflected in strikethrough and underlining, is in the following terms:

1.    You intentionally deliberately disobeyed, or alternatively disobeyed, order 5 of the orders in Annexure A to orders first made by the Honourable Justice Stewart on 31 August 2022 (the Freezing Order) (as subsequently varied and extended on 29 September 2022, 30 November 2022, 7 December 2022) by intentionally causing, on 14 September 2022, the transfer of 798,687.65 from various Westpac accounts in your name to the Westpac account numbered 732-102 / 583837 in the name of a third party, Juying Xue (the Mother’s Account), thereby disposing of, dealing with or diminishing the value of your assets in Australia and throughout the world by $798,687.65 in circumstances where, as at 14 September 2022, your assets in Australia had an unencumbered value of less than AUD $43,409,320.56, being the ‘Relevant Amount’ stated in the Freezing Order.

Particulars of Charge 1

In these particulars, all times and dates refer to the time and date in Sydney, Australia.

[particulars (a)-(f), being uncontroversial details of the freezing orders, service and that Ms Xue’s assets are less than the Relevant Amount are omitted]

g.    At the time the Freezing Order was made, you were the holder of, among other accounts:

i.    account number [redacted] 3845 with Westpac (the Unrestricted Account); and

ii.    account number [redacted] 0386 with Westpac,

(together, the Westpac Accounts).

h.    Since the Freezing Order was made, you were the only person with authority to operate the Westpac Accounts and therefore the only person on whose instructions Westpac would act in relation to the Westpac Accounts.

i.    On 14 September 2022, after you knew (actually or in the sense of wilful blindness) of the terms of or the substance of the Freezing Order:

i.    you authorised Westpac to transfer the amount of $700,000 from the Unrestricted Account to the Mother’s Account;

ii.    following this instruction, Westpac transferred $700,000 from the Unrestricted Account to the Mother’s Account on 14 September 2022.

j.    On 14 September 2022, after you knew (actually or in the sense of wilful blindness) of the terms of or the substance of the Freezing Order:

i.    you additionally authorised Westpac to transfer the amount of $78,687.65 and the amount of $20,000.00 from account number [redacted] 0386 to the Mother’s Account.

ii.    following this instruction, Westpac transferred the amount of $78,687.65 and the amount of $20,000.00 from account number [redacted] 0386 to the Mother’s Account.

k.    By reason of the matters in particulars (i) and (j), you disposed of, dealt with or diminished the value of your assets in Australia (as defined by the Freezing Order) by $798,687.65 in circumstances where, as at 14 September 2022, you had assets in Australia and throughout the world with an unencumbered value of less than AUD $43,409,320.56, being the ‘Relevant Amount’ stated in the Freezing Order.

l.    By reason of the matters in particulars (b)-(k), you did so knowing that such dealings were in breach of order 5 of the Freezing Order.

2.    You deliberately disobeyed, or alternatively disobeyed, order 5 of the Freezing Order (as subsequently varied and extended on 29 September 2022, 30 November 2022, and 7 December 2022) by intentionally spending sums of money in the period between 14 September 2022 and 21 December 2022 (the Relevant Period), which exceeded the amount which you were permitted to spend pursuant to paragraph 9 of the Freezing Order (as subsequently varied on 29 September 2022), thereby disposing of, dealing with or diminishing the value of your assets in Australia and throughout the world in circumstances where, during the Relevant Period, your assets in Australia had an unencumbered value of less than AUD $43,409,320.56, being the ‘Relevant Amount’ stated in the Freezing Order.

Particulars of Charge 2

a.    Particulars (a)-(f) of Charge 1 are repeated.

b.    On 15 September 2022 at 2:14 pm, your solicitors, Chen Shan Lawyers, sent an email to MinterEllison acknowledging receipt of the Freezing Order.

c.    During the Relevant Period, you spent a substantial sum of up to $464,919.01:

i.    of which:

1.    you spent sums of money totalling up to $113,703.74 on ordinary living expenses, which was $59,303.74 above the amount of $54,400 permitted under paragraph 9(a) of the Freezing Order (as subsequently varied on 29 September 2022) as ordinary living expenses during the Relevant Period;

2.    you spent sums of money totalling up to $100,604 on legal expenses in relation to these proceedings, as permitted under paragraph 9(b) of the Freezing Order (as subsequently varied on 29 September 2022) subject to such expenses being reasonable;

3.    $nil was permitted by paragraph 9(c) of the Freezing Order;

4.    $nil was permitted by paragraph 9(d) of the Freezing Order;

5.    you spent sums of money totalling up to $250,611.27 on transactions not referable to any exception under the Freezing Order;

ii.    such that during the Relevant Period, you spent up to $309,915.01 more than you were permitted by paragraph 9 of the Freezing Order (as subsequently varied on 29 September 2022) to spend.

d.    further particulars of Charge 2 are set out in Annexure A which is a table:

i.    summarising all withdrawals during the Relevant Period from the following accounts:

1.    the Unrestricted Account;

2.    the Mother’s Account; and

3.    account number [redacted] 0386 held with Westpac in the name of the first respondent; and

ii.    identifying which (if any) exception within paragraph 9 of the Freezing Order (as subsequently varied on 29 September 2022) applies or potentially applies to that transaction.

e.    By reason of the matters in particular (c), you disposed of, dealt with or diminished the value of your assets in Australia (as defined by the Freezing Order) by up to $464,919.01 in circumstances where, as at 14 September 2022, you had assets in Australia and throughout the world with an unencumbered value of less than AUD $43,409,320.56, being the ‘Relevant Amount’ stated in the Freezing Order.

f.    By reason of the matters in particulars (a) and/or (b), you did so knowing (actually or in the sense of wilful blindness) that such dealings were in breach of order 5 of the Freezing Order.

g.    Further, your conduct was contumacious for the reasons summarised at AS [103(a), (c), and (d)] at Court Book tab 8 p.80.

3.    You deliberately disobeyed, or alternatively disobeyed order 7 of the Freezing Order by preparing and filing affidavits dated 7 October 2022, and 24 October 2022 and 8 November 2022, in which you knowingly omitted, or alternatively omitted, to identify and disclose the Mother’s Account amongst the Respondents’ assets (within the meaning of order 6(a) of the Freezing Order) or the extent of the First Respondent’s interest in that asset.

Particulars of Charge 3

In these particulars, all times and dates refer to the time and date in Sydney, Australia.

a.    On 7 October 2022, you filed and served an affidavit (First Xue Affidavit) in which you purported to set out an exhaustive list of the Respondents’ assets in Australia and Worldwide.

b.    On 24 October 2022, you filed and served an affidavit (Second Xue Affidavit) in which you stated that the First Xue Affidavit “is a complete and exhaustive list of assets with respect to Tredmore Pty Ltd (ACN 617 491 022) (“Tredmore”) and myself in Australia.”

c.    On 8 November 2022, you filed and served an affidavit (Third Xue Affidavit) in which you repeated that the First Xue Affidavit was a complete disclosure.

d.    Throughout the Relevant Period:

i.    the Mother’s Account was in the name of Ms Xue’s mother, Juying Xue;

ii.    you had the power, directly or indirectly, to dispose of or deal with the Mother’s Account as if it were your own.

e.    Throughout the Relevant Period, you did in fact dispose of and deal with the Mother’s Account as if it were your own.

f.    You did not disclose, in the First Xue Affidavit, or the Second Xue Affidavit or the Third Xue Affidavit, that the Mother’s Account was one of your assets.

56    Particular (g) to charge 2, as sought to be introduced, refers to [103(a)], [103(c)] and [103(d)] of Guoao’s submissions that were served in July 2023, ie some six months before the trial. The allegation there is that the relevant conduct that is the subject of charge 2 is contumacious because:

(1)     the amount of the overspending is egregious;

(2)    Ms Xue’s conduct in circumventing the regime established by the Court on 29 September 2022 to facilitate access to funds pursuant to the exceptions in freezing order 9, which enabled her to whittle down her available cash from $818,011.52 on 14 September 2022 to $113,240.52 on 22 March 2023; and

(3)    the continued over-spending notwithstanding the undertaking given by Ms Xue to return the full amount that she had transferred to her mother’s account, even after only part of that amount had been returned to what should have been her restricted personal account.

The application for leave to amend the statement of charge

57    During the first day of the two-day hearing of the contempt application, senior counsel for Ms Xue raised certain criticisms regarding the way in which the case was being put by counsel for Guoao in view of what was said to be limitations in the further amended statement of charge. That led to an application by Guoao the following morning for leave to further amend the further amended statement of charge, although Guoao disputed that any amendment was necessary – leave to amend was sought merely out of an abundance of caution.

58    The objections raised by senior counsel for Ms Xue with regard to the way in which the case was being put were that:

(1)    Charge 1 encompasses an allegation of criminal contempt only, and not civil contempt in the alternative;

(2)    A case based on “wilful blindness” could not be run on charge 1; and

(3)    The matters put in Guoao’s submissions at [103(c)] and [103(d)] (ie the matters in [56(2)] and [56(3)] above) cannot be relied on as circumstances of contumacy in respect of charge 2.

The principles with regard to the specificity of a charge of contempt

59    It has long been settled that “no person should be punished for contempt of Court, which is a criminal offence, unless the specific offence charged against him be distinctly stated, and an opportunity of answering it given to him”: Coward v Stapleton [1953] HCA 48; 90 CLR 573 at 579-580 per Williams ACJ, Kitto and Taylor JJ. When what is involved is a charge of common law contempt, depending on the circumstances, it may not be necessary to formulate the charge in a series of specific allegations, provided that “the gist of the accusation” is made clear to the person charged: Macgroarty v Clauson [1989] HCA 34; 167 CLR 251 at 255 per Mason CJ, Deane, Dawson, Toohey and McHugh JJ.

60    Those principles are now expressed in r 42.21 of the Federal Court Rules 2011 in the requirement that the statement of charge specify the contempt with sufficient particularity to allow the person charged to answer the charge. That is obviously a procedural fairness requirement. It must be understood in recognition of the seriousness of a contempt of court charge – so serious that it can result in the loss of liberty and it is required to be proved beyond a reasonable doubt.

61    It has been said that the concept of the “gist” of the charge is one that should be approached with caution in this area where precision in the formulation of the charge is critical: Inghams Enterprises Pty Ltd v Timania Pty Ltd [2005] FCAFC 155; 221 ALR 823 at [34] per Tamberlin, North and Dowsett JJ. In that case, the appeal succeeded because the trial judge had unilaterally made material amendments to the statement of charge after the hearing without giving the alleged contemnor the opportunity to argue that it would suffer prejudice from the reformulation or to call further evidence to meet the reformulated case if desired to do so (at [35]-[36]).

62    A contemnor is entitled to conduct their case on the basis that the only charge which they were required to meet was that which had been particularised against them: Australian Building Construction Employees’ and Builders Labourers’ Federation v Minister of State for Industrial Relations [1982] FCA 327; 43 ALR 189 at 206 per Evatt and Deane JJ. See also CFMEU v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 at [32] per Lee and Finn JJ.

Charge 1: pleading civil contempt

63    Ms Xue’s objection to a case of a civil contempt being run in relation to charge 1 is without foundation. That is because civil contempt is a lesser charge and is based on lesser allegations than the charge of criminal contempt. It is, in this context, the equivalent of a competent verdict on the main charge. That seems to have been appreciated on behalf of Ms Xue – her submissions filed on 10 October 2023 acknowledge that the charges she faces are “for both criminal and civil contempt”. There can be no prejudice to Ms Xue having explicitly faced a charge of criminal contempt to then be found instead to have committed the lesser offence of civil contempt.

64    In any event, the requirement that the charge be properly particularised does not encompass a requirement that contumacy is specifically alleged. That is because contumacy is not an element of the offence of criminal contempt when constituted by a breach of court orders, but is rather a circumstance of aggravation. There is no obligation to plead the contemnor’s alleged state of mind. See CFMEU v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 261; 47 VR 527 at [242]-[301] per Ashley, Redlich and Weinberg JJA. Since it was not necessary to allege contumacy, if contumacy is not proved a finding of civil contempt will still be possible. That is available within the charge as currently pleaded.

65    To similar effect, in Kazal at [27] it was said that it is required to at least allege that a particular order was breached and what was allegedly done to constitute that breach, but that particular terms of art are not required.

66    In the circumstances, Guoao should have leave to amend charge 1 to bring it into line with the further amended interlocutory application which by alleging “defiance” as an alternative to “deliberate defiance” made it clear that civil contempt was also alleged. The amendment is, however, not a pre-requisite to a finding of civil contempt.

Charge 1: particularising the form of “knowledge”

67    It is submitted on behalf of Ms Xue that the case against her in the statement of charge makes a generalised allegation of knowledge, and that a case of wilful blindness is different.

68    That objection should be rejected. Wilful blindness is merely a type of knowledge, or a way of establishing knowledge. The allegation in the relevant particulars that Ms Xue “knew” of the terms or the substance of the freezing orders is not confined to actual conscious knowledge, and is broad enough to encompass actual knowledge in the form of wilful blindness. It is sufficient to allege knowledge without specifying that that could be by way of actual conscious knowledge or wilful blindness. See R v Crabbe [1985] HCA 22; 156 CLR 464 at 470-471 per Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ; Giorgianni v The Queen [1985] HCA 29; 156 CLR 473 at 482 per Gibbs CJ, 495 per Mason J and 505 and 507-508 per Wilson, Deane and Dawson JJ; He Kaw Teh v The Queen [1985] HCA 43; 157 CLR 523 at 536 per Gibbs CJ, Mason J agreeing; Pereira v Director of Public Prosecutions [1988] HCA 57; 82 ALR 217 at 219-220 per Mason CJ, Deane, Dawson, Toohey and Gaudron JJ; Rafferty v Madgwicks [2012] FCAFC 37; 203 FCR 1 at [261] per Kenny, Stone and Logan JJ; Humane Society at [18] per Jagot J.

69    In the circumstances, although Guoao’s amendment by introducing “wilful blindness” in particulars (i) and (j) to charge 1 is unnecessary, it should be allowed for the sake of completeness.

Charge 2: particularising the basis for contumacy

70    The issue here is that particular circumstances from which the Court is asked to conclude that Ms Xue acted contumaciously are not particularised in the further amended statement of charge, and were sought to be relied on only in written submissions. However, as mentioned with reference to Grocon, it is not necessary to allege contumacy, and in those circumstances it cannot be necessary to allege the particulars from which contumacy is to be inferred.

71    Again, although the amendment is unnecessary, for the sake of completeness Guoao should have leave to amend charge 2 by introducing particular (g).

72    Guoao also seeks to introduce an allegation of wilful blindness in particular (f) to charge 2. It is not clear whether Ms Xue opposes that. The amendment should be allowed for the same reasons as those given in relation to introducing wilful blindness in charge 1.

Conclusion on leave to amend

73    That deals with the amendment application and identifying what is pleaded – Guoao should have leave to file and rely on the second further amended statement of charge. It has not been suggested that the amendments give rise to any costs thrown away.

74    I turn now to considering whether each charge is proved. 

Charge 1: bank transfers on 14 September 2022

75    There is no dispute that after having been personally served with the freezing orders at 10.45 am on 14 September 2022, Ms Xue made bank transfers from accounts in her name to her mother’s account totalling $798,687.65 contrary to freezing order 5.

76    Ms Xue’s defence to the charge is that she did not have knowledge of the substance of the freezing orders when the transfers were made, and for that reason it has not been established beyond reasonable doubt that she knowingly or intentionally breached the freezing orders.

77    It is convenient to deal first with Ms Xue’s proficiency in English. As she did not give evidence, there is no direct evidence from her on that issue. There is also no direct evidence from someone else who might be thought to be able to give such evidence, such as her Australian solicitors, past or present. All the evidence is circumstantial.

78    I accept, as submitted on her behalf, that Ms Xue’s first language is Mandarin. She comes from China. The arbitral award that is the basis for the judgment against her arises from business dealings that she had in China. She communicated with her initial Australian solicitors (Chen Shan) in Mandarin. Her affidavits that were tendered (none was read) in this proceeding were all translated from English to Mandarin for the purpose of her being able to affirm their contents.

79    However, against that are indications of her ability to nevertheless understand English. She lives in Australia and has substantial business interests here. When liaising with her former Australian solicitors about finalising at least one of her affidavits, they sent drafts to her in English as the basis for discussion. Ms Xue received bills by email from utilities suppliers in English and was able to understand them sufficiently to be able to pay them and to forward them to her solicitors as proof of her ordinary living expenses. Ms Xue operated extensively on the Westpac mobile banking app which appears to be available only in English – that appears from there being no dropdown menu in the settings options adjacent to “language” where only English is reflected as being available. In any event, she operated the app in English as is apparent from screenshots from the app that she sent to her then solicitors.

80    Ms Xue’s bank, Westpac, wrote to her in English. She also wrote to Westpac staff in English, although the indications are that that correspondence was drafted in template form for her by Chen Shan and she then merely changed the relevant details on each occasion that she requested bank authorisation to do a transaction.

81    There is, however, a text message conversation conducted by Ms Xue where her correspondent wrote in English and Ms Xue responded in Chinese characters. Ms Xue was apparently able to understand the texts sent to her in English sufficiently to be able to meaningfully reply – that the replies were meaningful is indicated by the responses to them. Ms Xue was also able to identify that the email by which she was served electronically with the freezing orders was of such a nature that she should forward it to her solicitors. The email and its attachments are written only in English.

82    Perhaps most significant is that Ms Xue’s then solicitors, with whom she communicated in Mandarin on WeChat, sent some documents to her that were only in English, and she did not respond to say that she could not understand them. For example, on 9 November 2022, one of the solicitors sent a document to Ms Xue with the message in Mandarin that it was their plan for the week “for the Guoao case” and that she should familiarise herself with it. The document was written only in English and set out in detail the work on the case that was planned for that week. There would have been no purpose in sending the document other than with the expectation that Ms Xue could understand it.

83    There is also the evidence of the process server of the conversations that he had with Ms Xue when he served the freezing orders on her as set out at [11]-[12] above. That conversation shows that Ms Xue understood English sufficiently to be able to ask who the delivered documents were from. She was also able to correctly answer whether she is Lijuan Xue and whether she is a director of Tredmore.

84    Senior counsel for Ms Xue points to a voice message on WeChat from Ms Chen to Ms Xue on 15 September 2022 in which Ms Chen said that she had said to Ms Xue’s bank that Ms Xue’s “English is not good”. Senior counsel submits that is evidence of Ms Xue’s poor command of English. But in my assessment, even accepting the statement as a truthful statement to the bank, it goes both ways. It is evidence that her English “is not good”, but equally it is evidence that her English is not non-existent or very poor; it carries an implication that she has at least some workable English.

85    From the above, I am satisfied that Ms Xue had at least a working knowledge of English. I do not say that it is established that she is proficient in English, but she can certainly understand written and spoken English well enough to navigate the challenges of daily life in Sydney and to understand that what was served on her were court orders to do with her dispute with Guoao. Further, she was well able to understand the information in paragraph 3 of the covering letter to the freezing orders that the Federal Court had issued orders against her and Tredmore freezing their assets which meant that she was prevented from disposing of or dealing with her assets (see [9] above). I am satisfied of those matters beyond any reasonable doubt.

86    Ms Xue’s understanding of what was served on her is further revealed by her explanation of why she made the transfers of funds immediately following service of the freezing orders on her (as set out at [19] above). She appreciated that she was being advised that she could suddenly have no money left or available to pay for expenses. She was extremely scared of what would happen if she had no funds and that she made the transfers to ensure that she could “continue to maintain a normal life for [her] family”.

87    Senior counsel for Ms Xue submits that her explanation about why she made the transfers does not establish that she was aware that any freezing orders had been made, but only that she feared that they might be made. That is to say, her concern was about what might happen in the future as opposed to what had already happened. Reference was made to further explanation by Ms Xue in her 22 March 2023 affidavit which was tendered by Guoao, namely (as written):

I have never heard about freezing orders in Australia. The only experience I had with assets been frozen is under an asset preservation measure in the arbitration award process in China applied for by Guoao. When I was first served with the documents on 14 September 2022 and was advised by Ms Chen that the documents received relate to Guoao, I thought steps were being taken by Guoao, similar to what they had done in China, to enforce my assets in Australia. I only remember one time when an employee of my company tried to operate the bank account, she found that it could not be operated. When she asked the bank, she was told that it had been frozen by the court order but the reason was unknown. A few days after, my Chinese counsel received the notification of the preservation measure. …

As set out above, given the steps taken by Guoao in China, I understood they had come to Australia to enforce their award against my debt, and I was concerned if the debt was enforced it would adversely impact my life. I was frightened as to what would happen if I did not have access to any money. As a result, I transferred funds held in my bank account to my mother’s account.

88    The reference to the debt being enforced by Guoao in China, and in particular the reference to a Chinese bank account being frozen by a court order without prior notice, is to freezing orders made in China on 8 March 2021 “to safeguard the legitimate rights and interests” of Guoao. Further orders referred to as “restriction of consumption” orders were also made in China on 14 May 2021. See Guoao No 2 at [30]. Thus, Ms Xue had prior experience of Guoao taking steps to enforce its award by obtaining freezing orders against her without notice. She said that she understood that Guoao had come to Australia to enforce the award which would “adversely impact” her life and she was consequently “frightened”. That is to say, she appreciated that Guoao might be doing exactly the same thing in Australia.

89    As mentioned, I am satisfied beyond a reasonable doubt that when the freezing orders were served on her Ms Xue had the capacity to understand that orders had been made relating to her dispute with Guoao which had the effect of freezing her assets. Ms Xue knew and understood that the documents that had been served were “court documents” as she had been told that by the process server and she immediately contacted her solicitor about them. Although she had opened one of the packets when she took the photograph, it is not known to what extent she read the documents at that time. However, after having been told by Ms Chen that the documents related to Guoao, and before she made the transfers other than the initial transfer of $20,000, Ms Xue at least knew that steps were likely being taken by Guoao to freeze her assets in Australia. It was in the light of that knowledge that she immediately made the other transfers.

90    In circumstances where MinterEllison’s letter and the freezing orders were right in front of her, and she knew that the documents related to steps being taken by Guoao to freeze her assets in Australia, I am satisfied that even if Ms Xue did not know that a freezing order was already in place, she was undoubtedly wilfully blind to that possibility; she simply failed to read the words in front of her which would have advised her of that fact.

91    On the authorities discussed above, that is sufficient knowledge of the freezing orders – an honest, reasonable and responsible person would undoubtedly have read the documents to see whether they prohibited the transfers rather than turning from the documents and rushing to try to get the transfers through before any freezing order took practical effect (ie by the bank freezing her accounts). Ms Xue’s situation is a lot like the example given by Pincus J in Sun Newspapers Pty Ltd v Brisbane TV Ltd [1989] FCA 805; 92 ALR 535 at 538:

If a person sitting in court heard most, but not all, of the terms of an injunction pronounced by a judge and then promptly left to arrange matters so that what he knew to be the court’s intention would not take effect, it does not seem likely that his not having heard the full terms of the order would be a defence to a charge of contempt, whether or not he was a party to the proceedings.

92    I am satisfied on a balance of probabilities that Ms Xue actually read the letter from MinterEllison and understood it sufficiently to have actual knowledge that her assets had been frozen by freezing orders made on 31 August 2022 which meant that she could not dispose of, deal with or diminish the value of her assets. Any reasonable person would have at least read the letter and the attached orders. However, I cannot be satisfied beyond a reasonable doubt that Ms Xue actually read the letter or the freezing orders before she made the transfers – she may have chosen not to read them, either through fear of what they might tell her or because she did not want to take up time reading them which would delay her ability to quickly make any possible transfers before they took practical effect.

93    In that event, I am satisfied beyond any reasonable doubt that she was wilfully blind to what the letter and the freezing orders said and made the transfers with knowledge that freezing orders might well already have been made. That amounts to not only contempt of the freezing orders, but to contumacious contempt – she had a specific intention to disobey the court order, which evidences a conscious defiance of the Court’s authority.

94    That is true also before Ms Xue’s telephone discussion with Ms Chen, ie it applies to the transfer of $20,000 before that call. The transfer is unexplained other than that it was done quickly to defeat freezing orders that were either known about by Ms Xue having read the letter and/or the orders, or were sufficiently feared to exist to cause Ms Xue not to read the letter or orders but rather to quickly make the transfer.

95    It was submitted on Ms Xue’s behalf that the transfers from her accounts to her mother’s account did not breach the freezing orders because they were merely transfers between accounts held by her. That is to say, the contention is that such transfers did not diminish her assets and therefore were not prohibited by the freezing orders. I reject that submission because it is not only disposal or diminishing of assets that is prohibited, but also dealing with assets. On any view, the transfers amount to dealing with Ms Xue’s assets. Moreover, because the mother’s account was not in Ms Xue’s name and was for a long time not known about by Guoao, the transfers to that account facilitated the diminishing of Ms Xue’s assets contrary to the freezing orders. That is the subject of charge 2.

96    As there is no dispute with regard to the other elements of charge 1, I find that the charge is proven beyond a reasonable doubt. Moreover, because of her contumacy, Ms Xue is in criminal contempt of the freezing orders on charge 1.

Charge 2: payments in excess of or not referable to exceptions in order 9

Introduction

97    Charge 2 alleges that Ms Xue spent up to $309,915 more than she was permitted by order 9 in the period 14 September 2022 to 21 December 2022. More specifically, the dispute concerns her spending $59,303 on ordinary living expenses in excess of the sums that she was permitted to spend on those items in the relevant period and whether her expenditure of the further sum of $249,219 was permitted by the exception in order 9(d).

Ordinary living expenses, order 9(a) exception

98    There is no dispute on the figures. Ms Xue accepts that she spent $59,303 more than she was permitted to spend on ordinary living expenses (see [34] above). That amounts to expenditure of more than double what she was permitted in that period.

99    There is also no dispute that by the time of these transactions Ms Xue knew the terms of the freezing orders.

100    Ms Xue contends that many of the transactions were to pay debts on pre-existing contracts which could therefore have been categorised under order 9(d). She blames Chen Shan lawyers for not having given notice of them under that exception. But that contention is simply wrong. The order 9(d) exception applies only “to matters not falling within (a) or (b)”. Since Ms Xue admits (indeed, asserts) that the transactions in question are within (a), they cannot be within (d).

101    Ms Xue also submits that the transactions in question were in significant measure incurred not for her own personal benefit but for the benefit of her son and mother, who are her dependents. That is at best a mitigation point which is not relevant at this stage, but it is in any event questionable whether some of these expenses were “ordinary” living expenses when one has regard to the fact that some $23,000 was spent on school fees for her son over a period of three months. There is no right to send one’s child to one of the most expensive private schools in the country. The responsible course for someone owing and unable to pay a debt of $43 million dollars would have been to cut down on that kind of expenditure. Ms Xue’s attitude to such expenses is characterised by her statement to Ms Chen the day after Ms Xue had made the transfers of nearly $800,000 to her mother’s account that “seven hundred thousand something is not much to spend”.

102    Finally, Ms Xue submits that the breach of the ordinary living expenses cap was not done deliberately because she bona fide believed that what she was doing was allowed by the freezing orders (T113:46). Her counsel point out that on 15 September 2022, Ms Xue said to Ms Chen “I will follow the Court’s arrangements, and I have no problem doing that”. But that was very early in the piece. The problematic expenditure arose much later, and in particular after an arrangement had been specifically put in place for a once-off payment of $30,000 to an unrestricted account, but Ms Xue made several further such payments. I do not accept that that statement establishes Ms Xue’s bona fides.

103    Payments were made to the unrestricted account as follows (with reference to MFI-4):

104    At the time the variation orders were made allowing for the payment of $30,000 to the unrestricted account, Ms Xue acknowledged in a message to Ms Chen that the orders meant that she had “an account to put thirty thousand dollars in”. There is no sense of any understanding there that the account could be continuously topped up. Nor could any such understanding be reasonably held as it would completely defeat the ordinary living expenditure cap – it would in effect give her unlimited expenditure. That is reflected in the above schedule of payments – within nine days of making the first transfer, Ms Xue made another transfer. There is no reasonable basis to infer that she bona fide believed that that was permitted, noting that what made it possible was the fact that she had transferred nearly $800,000 to her mother’s account which MinterEllison did not know about. Also, the correspondence with the bank shows that in each case she arranged the transfer herself even though there was sometimes also the involvement of Chen Shan, so she cannot blame her lawyers for the transfers.

105    It is to be noted, to avoid confusion, that item 152 in the above table does not form part of charge 2 as exceeding the ordinary living expenses cap – that transfer was to make an allowed payment under order 9(b). It is included in the table as one of the transfers of $30,000 to the unrestricted account as it gives a fuller picture of how Ms Xue topped up that account from time to time without regard to the fact that the orders allowed only one such transfer.

106    On 28 November 2022, MinterEllison wrote to Chen Shan seeking an undertaking from Ms Xue that the $798,786.65 that she had transferred to her mother’s account on 14 September 2022 would be repaid to a restricted account. That undertaking was given on 29 November 2022. However, because of the transfers referred to above, as well as other payments, only $492,408.95 remained when the re-transfer was made on 1 December 2022. That led to Chen Shan asking Ms Xue for an explanation for the “missing” $306,278. Ms Xue responded as follows to Chen Shan in voice messages on WeChat:

Oh, Lawyer Li, … Then, as for my expenses, there’s rent and what’s it called, the loan. I didn’t overspend in this area, absolutely not. I can calculate it tonight, but you can rest assured and provide him with those numbers. I didn’t overspend.

Additionally, as mentioned before, my expenses include rent for which there was a previous contract, my child’s tuition, including utilities, and, um, the loan. I haven’t paid anything else.

107    Ms Xue was aware of the terms of the freezing orders when she made the $30,000 transfers that in turn enabled her to exceed the cap on ordinary living expenses by $59,303 in three months. To the extent that she harboured under some misapprehension as to the precise effect of the freezing orders, I do not accept that that constitutes lack of knowledge of them such as to enable her to avoid conviction. Chen Shan were taken by surprise at how much she had managed to spend in such a short time, as evidenced by their inquiry as to the “missing” $306,278. That suggests that Chen Shan had not advised Ms Xue that she could spend on ordinary living expenses in the way in which she was spending. The terms of the freezing order were clear and unambiguous in restricting such expenditure to $2,000 and later $4,200 per week.

108    Ms Xue was legally represented. She could easily have sought clarification as to the effect of the freezing orders. An honest, reasonable and responsible person would have done so. She either knew she was breaching the freezing orders by her level of expenditure, or she proceeded with that expenditure because she could get away with it, wilfully blind to whether or not it was allowed. In that sense, she had actual knowledge that it was not allowed.

109    What happened here is that Ms Xue used the funds that she had hurriedly secreted away into her mother’s account to brazenly continue the extraordinary level of personal spending that she had enjoyed prior to the freezing orders against her. By breaching the freezing orders in that way, she was living luxuriously at the expense of Guoao. That constitutes an intention to disobey the Court’s orders; a defiance of the Court’s authority. It is contumacious.

110    For those reasons, Ms Xue is guilty of criminal contempt on this aspect of charge 2.

Pre-existing contractual obligations, order 9(d) exception

Introduction

111    In respect of the exception in order 9(d) (quoted at [6] above), being expenditure not falling within (a) or (b) in discharging obligations bona fide and properly incurred under a contract entered into before the freezing orders were made provided that at least two working days written notice of the particulars of the obligation was given, the position is more complicated.

112    The relevant sum is $249,219, noting that Guoao claims that it is actually $250,611 but it does not claim that there is any significance in the difference between those figures. Guoao is content that I use Ms Xue’s figures.

113    The principal issue in relation to this category is the question of notice as Guoao accepts that the payments are capable of falling within order 9(d) if notice had been given. It is common ground that three purported notices were given, on 20 October 2022, 16 November 2022 and 6 December 2022. All were given by Chen Shan lawyers on behalf of Ms Xue.

114    The proviso to order 9(d) makes it clear that any dealing to discharge an obligation bona fide and properly incurred under a contract entered into before the freezing orders was only excepted from the freezing orders, ie allowed, if before the dealing Guoao was given at least two working days written notice of the particulars of the obligation, if such notice was possible. The obvious purpose of the notice requirement is to give the applicant the opportunity to contest whether the dealing in question is really within the exception. Thus, failure to give notice at all or to give short notice amounts to contempt of the order, unless it can be shown that giving the required notice was “not possible”.

115    Ms Xue has not sought to establish in respect of any dealing that notice was not possible. The questions then are, what notice was given and what payments were made that are referable to such notice.

Payments before any notice was given

116    The following payments that could conceivably be of such a nature that they are within the order 9(d) exception were made before any notice of order 9(d) payments was given (the item numbers are from the schedule that is MFI-4):

117    Ms Xue accepts that those dealings were made without notice and therefore in breach of the freezing orders (T111:31). That arises from them being coloured yellow in MFI-4. Here and below, I have omitted the transactions for $1.00 that are reflected in MFI-4.

The 20 October 2022 notice

118    On 20 October 2022 at 10.00 am, Chen Shan gave MinterEllison the following notice with express reference to order 9(d):

We hereby give you notice that our clients Tredmore Pty Ltd and Ms XUE will have the following liability to meet that falls within the scope of Order 9(d):

1.     Home loan liability, currently $14,198 per month, repayment due date is 3rd of each month;

2.     Legal costs for appeal proceedings 2022/186871 and 2022/198571 in the Supreme Court of NSW, Court of Appeal, as both the appellants and cross-respondents, payment amount $50,000.

119    Save for saying that the first identified liability was due on the third of each month, the notice did not indicate when it was intended that the liabilities be paid. Nor was particularity given with regard to the contracts under which they were said to arise. In respect of the “home loan liability”, neither the property that it related to, nor the lender were identified.

120    On the same day, ie 20 October 2022, at 2.30 pm, Chen Shan wrote to Westpac advising that they had given notice to Guoao for an amount of $50,000 as legal costs to be paid into Chen Shan’s trust account. Westpac replied indicating that the transfer would be allowed.

121    Still on the same day, ie 20 October 2022, at 7.15 pm, MinterEllison replied to Chen Shan as follows:

In relation to the home loan liability, please provide evidence of the liability including evidence of when the liability came into existence.

In relation to the payment of legal fees in respect of proceedings 2022/186871 and 2022/198571, please provide us with copies of the retainers for both the solicitors and counsel representing your clients in those proceedings together with all invoices for the amounts which comprise the $50,000. Further, please confirm whether this amount represents the totality of legal fees in respect of those Proceedings or whether your clients anticipate further fees to be incurred.

We look forward to your urgent response.

122    That is to say, MinterEllison immediately sought further details about the liabilities in order to be able to assess whether they properly fell within the exception to the freezing orders. Chen Shan failed to respond to those inquiries. In the meanwhile, MinterEllison reasonably laboured under the misapprehension that the payments would not be made, not knowing that Ms Xue and Chen Shan were going ahead with them.

123    After the notice on 20 October 2022 and before the next notice, a number of payments were made that could conceivably be within the order 9(d) exception. They were:

124    Ms Xue accepts that the dealings reflected in items 149, 150 and 136 were made without notice and therefore in breach of the freezing orders (T111:31).

125    In my assessment, none of the other transfers qualify as being covered by the 20 October notice which, in respect of a loan repayment, gave notice of one payment per month of $14,198 in respect of a “home loan liability”. Ms Xue’s home was at a property in Bondi Junction. None of the Bellevue Hill, Zeltand or North Ryde properties was Ms Xue’s home, so payment in respect of those properties do not come within the description of “home loan”. Also, the amounts paid each month, even for just the Bellevue Hill property, substantially exceed the amount in respect of which notice was given. Finally, insufficient particulars were given, even after MinterEllison made inquiries. It was not at the time, and it is not now, possible to identify what obligation was intended to be covered by the “home loan liability” notice.

The 16 November 2022 notice

126    On 16 November 2022, Chen Shan gave MinterEllison the following notice with express reference to order 9(d):

Pursuant to Order 9(d) of the freezing orders, we have confirmed with our client and hereby provide information regarding her monthly loan repayment information as the following:

Loan : 037170 627569

Repayment : $3,783.00

Due date: 21/11/2022

Loan: 037170 654954

Repayment: $3,512.00

Due date: 06/11/2022

Loan: 032102 258308 Tremore (sic)

Repayment: $14,198.00

Due date: 3/11/2022

127    MinterEllison does not appear to have replied to that notice.

128    After the notice on 16 November 2022 and before the next notice, a number of payments were made that could conceivably be within the order 9(d) exception. They were:

129    I accept that the payment in respect of the Zetland property, ie item 98, was covered by the 16 November notice as the details match the first item in the notice, but not the payment in respect of Bellevue Hill. It does not appear to match any of the three payments for which notice was given. It is also not covered by the 20 October notice for the same reasons as given in respect of the earlier Bellevue Hill payments.

The 6 December 2022 notice

130    On 6 December 2022, Chen Shan gave MinterEllison the following notice with express reference to order 9(d):

Pursuant to Order 9(d), we hereby give you notice that Ms XUE intends to withdraw the following amounts:

1.     $100,000 for her upfront legal fees and disbursements for her Supreme Court of NSW proceedings case no. 71911 of 2020; NSW Court of Appeal case no. 2022/186871; NSW Court of Appeal case no. 2022/198571; and

2.     $15,000 for her legal fees and disbursements for her costs assessment proceedings including 22/265604.

We will give notice to the Westpac bank to arrange Ms XUE to arrange the above transactions tomorrow. (sic)

131    On 8 December 2022, MinterEllison replied to Chen Shan as follows:

We repeat our client’s request for evidence that these amounts are pursuant to your clients’ obligations bona fide and properly incurred under a contract entered into before the freezing orders were made on 31 August 2022, including a copy of the contract itself and any invoices issued pursuant to any such contract. Unless you provide us with such evidence, we are not presently satisfied that the withdrawal of the amounts falls within the exception of Annexure A, order 9(d).

132    Following the notice on 6 December 2022, a number of payments were made that could conceivably be within the order 9(d) exception. They were:

133    Ms Xue accepts that the dealing reflected in item 155 was done without notice and therefore in breach of the freezing orders (T140:39).

134    In my assessment, none of these payments is covered by the notices. For the reasons already given in relation to the 20 October notice, none of the loan repayments is covered by that notice. Also, none is covered by the 16 November notice – although the day of the month that payment was made and the amounts of the payment in respect of the Zetland and the North Ryde properties match the details in respect of which notice was given, that notice was for one set of once-off payments, not recurring monthly payments. The legal fee payments are not covered because neither MinterEllison in response to their inquiry at the time, nor the Court for the purposes of the contempt case, has been given adequate details to show that the payments come within the parameters of order 9(d).

Conclusion

135    As explained, of all the payments listed in the tables at [116], [123], [128] and [132] above, only one (item 98) was allowed by order 9(d). The rest were in breach of the freezing orders, ie $245,433.65 worth of transactions.

136    Guoao accepts that the breaches in this category were not contumacious because it cannot be shown that Ms Xue knew that, or was wilfully blind to whether, Chen Shan had not given proper notice (T174:29).

137    I therefore conclude that Ms Xue was in civil contempt in respect of payments amounting to $245,433.65 which might conceivably have come within order 9(d) but in respect of which no or inadequate notice was given. That is the sum of transactions in breach of the freezing order on this part of the case.

138    It is however to be noted that except for the legal fees, it appears that each of the payments in this category was to discharge Ms Xue’s liabilities for loans secured by mortgages on properties. If that is right, the result is that the payments did not have the effect of reducing the ultimate sum available to satisfy the Guoao’s judgment – they were neutral in that respect. Although making the payments breached the freezing orders, the nature of the breach will be relevant on penalty – if indeed the payments did not prejudice the recovery of the judgment debt, that would be a mitigating factor.

Charge 3: non-disclosure

139    The gravamen of charge 3 is that Ms Xue failed to disclose her mother’s account in her asset disclosure affidavits.

140    Order 7 of the freezing orders (quoted at [6] above) required Ms Xue to identify her assets, “giving their value, location and details”. That was required to be done on affidavit. There is no dispute that Ms Xue’s mother’s account came within the description of “your assets” in order 6 because Ms Xue controlled that account.

141    As set out above (at [24]-[28]), Ms Xue disclosed the total amount standing to her credit at Westpac including the amount in her mother’s account, but she did not disclose the details of the individual accounts. Guoao’s complaint is that the existence of the mother’s account was not disclosed, which led to it not being frozen by the bank which in turn enabled the breaches that are the subject of charge 2, both in respect of exceeding the ordinary living expenses cap and the payments that could have come within order 9(d) but in respect of which no or inadequate notice was given.

142    In my view, it is not clear that order 7 required each individual account to be identified. What was required of each asset was its “value, location and details”. The value of the amount held with Westpac was disclosed. It is true that individual account “details” were not disclosed, but it is not clear that they were required to have been disclosed.

143    Moreover, it is instructive that MinterEllison was aware before the second affidavit was filed that Ms Xue had more than one account with Westpac but failed to seek any details from Ms Xue as to the accounts and how much stood to the credit of each when it sought further details about Ms Xue’s assets. That suggests that Guoao (by its lawyers) did not understand order 7 as requiring further particularity. Because the order must be construed objectively, MinterEllison’s subjective understanding is not relevant to its construction. That understanding, however, indicates that Ms Xue and her then solicitors, Chen Shan, may have been bona fide in having the same understanding. There is certainly no basis to find that Ms Xue knew that she was required to identify each separate account. She can also not have been wilfully blind to that possibility.

144    In the circumstances, charge 3 is not established and must be dismissed.

Conclusion on contempt charges

145    To summarise, I have concluded as follows.

146    First, charge 1 is established. Moreover, Ms Xue is in criminal contempt in relation to charge 1.

147    Secondly, charge 2 is established. In relation to the first part of the charge, being spending over the ordinary living expenses cap by $59,303, Ms Xue was in criminal contempt. However, in relation to the second part of the charge, being expenditure of $245,433.65 in respect of which no or inadequate notice was given under order 9(d), Ms Xue is guilty only of civil contempt.

148    Thirdly, charge 3 is not established and falls to be dismissed.

Costs issues

149    A few issues arise in relation to costs.

150    The first is that Ms Xue seeks:

(1)    indemnity costs in relation to charge 4, which was abandoned by way of the further amended statement of charge and further amended interlocutory application filed on 14 July 2023 (the July 2023 amendments), from 11 November 2022;

(2)    the costs thrown away by the July 2023 amendments; and

(3)    the costs of applying for the above costs.

151    It is hard to see the point of Ms Xue’s costs application in view of the fact that the costs were paid under an exception to the freezing orders that were made in aid of a huge judgment that Ms Xue looks to have little prospect of satisfying. In other words, the costs she seeks were in any event in effect paid by Guoao by reducing its ability to recover on the judgment, and any costs order in her favour must inevitably be set-off against the judgment. Such a set-off would make little discernible difference to the judgment debt.

152    Guoao nevertheless accepts that it should pay Ms Xue’s costs thrown away by the July 2023 amendments by way of set-off against the judgment in its favour. It submits that Ms Xue’s application for costs should otherwise be dismissed.

153    Charge 4 that was deleted in July 2023 alleged that Ms Xue had not revealed her ownership of a property in Footbridge Boulevard, Wentworth Point, New South Wales. That property came to the attention of MinterEllison because it is owned by someone bearing exactly the same name as Ms Xue – it was therefore revealed in the property searches undertaken by MinterEllison.

154    The relevant chronology is as follows.

155    On 19 October 2022, MinterEllison asserted to Chen Shan that Ms Xue owned the Wentworth property and complained that it had not been disclosed.

156    On 8 November 2022, by her third disclosure affidavit, Ms Xue stated that she did not own the Wentworth property.

157    On 22 November 2022, Guoao filed its original contempt application and statement of charge which included a charge in relation to failure to disclose the Wentworth property.

158    On 12 December 2022, ANZ Bank produced documents in response to a subpoena by Guoao which showed that although the Wentworth property was owned by someone with the same name as Ms Xue, there were several indications that it was not the same person. Those included that their signatures were different, they had different birth dates, they had different numbers of children, they had different email addresses and they had different jobs.

159    On 20 January 2023, Guoao filed an amended statement of charge that maintained the charge in relation to failure to disclose the Wentworth property.

160    On 15 March 2023, Ms Xue’s new solicitors, Squire Patton Boggs, wrote to MinterEllison disputing that Ms Xue owned the Wentworth property and giving details to support that denial.

161    On 30 June 2023, Guoao served a proposed further amended interlocutory application and proposed further amended statement of charge that proposed to withdraw the charge in relation to the Wentworth property. Ms Xue naturally consented to that withdrawal.

162    Guoao’s solicitor, Mr Nolan, has explained why the charge in relation to the Wentworth property was brought and then maintained until June 2023, notwithstanding the receipt of the documents from ANZ Bank in December 2022 which should have indicated that there was little to no prospect of being successful on the charge. Mr Nolan’s explanation includes that there were several apparent links between a property that included the description “Wentworth” and Ms Xue, he did not give thorough attention to the documents produced by ANZ Bank until after he returned to work from annual leave in late January 2023, he had reason to distrust what Ms Xue had disclosed and what was said on her behalf, his focus in early 2023 was on the list of transactions from the mother’s account, Ms Xue’s evidence on the contempt charges was delayed a few times and he then thought it prudent to wait and see what it said, thereafter issues arose as a waiver of Ms Xue’s legal professional privilege in respect of communications with Chen Shan which enabled getting documents from Chen Shan, and in any event there was no date for the rescheduled contempt hearing.

163    Having closely analysed the relevant facts, I am not persuaded that Guoao’s conduct in relation to charge 4 rises to the level of deserving the criticism of the Court in the form of a punitive costs order. Charge 4 was never put at any hearing. It was only ever included in earlier versions of the statement of charge. It is true that it could have been dropped at an earlier time, but other than having put Ms Xue to the cost and trouble of responding to it by way of evidence, no harm was done by maintaining the charge until the point at which it was dropped. Given that the costs of preparing that evidence are in any event borne by Guoao in the sense that they are paid from an estate that is woefully insufficient to pay Guoao’s judgment, there is no real prejudice to Ms Xue even in relation to those costs, and the party and party costs are covered by the costs order that Guoao has conceded.

164    In the result, I conclude that there should be an order that Guoao pay Ms Xue’s costs thrown away by the further amended statement of charge and further amended interlocutory application filed on 14 July 2023. The costs of Ms Xue’s application for those costs should be costs in the cause of the contempt application.

165    The second costs issue is the costs of the contempt application. In view of my findings, those costs must inevitably be paid by Ms Xue. However, since I have not heard any submissions in relation to those costs, and in particular whether they should be assessed on an indemnity basis, I will reserve them to be dealt with at the penalty hearing.

Associate:

Dated:    25 March 2024