Luo v Windy Hills Australian Game Meats Pty Ltd (in liq) (No 4)

I published reasons for judgment in this matter on 10 July 2019: Luo v Windy Hills Australian Game Meats Pty Ltd (No 3) [2019] NSWSC 862.

On 18 July 2019, I entered judgment against each of the defendants in favour of the first plaintiff, Mr Luo, in the sum of $4,315,828.76 plus interest, and in favour of the second plaintiff in the sum of $2,535,774.70 plus interest.

Shortly after the proceedings were commenced, and in the face of a threatened application for a freezing order, the defendants gave undertakings to the Court.

Thus, on 16 March 2018, the defendants undertook, subject to a number of exceptions, not to remove from Australia or in any way dispose of, deal with or diminish the value of any of their assets in Australia up to an unencumbered value of US$1,455,581.

On 21 March 2018, the defendants repeated that undertaking.

On that day, the third defendant, Mr Coulter, also undertook until further order:

The “other registered proprietor” referred to is Mr Coulter’s wife. Each of the South Australian properties is held by Mr Coulter and his wife as joint tenants.

Mr and Mrs Coulter had mortgaged their interest in the South Australian properties to the CBA to secure their obligations as guarantors to CBA of the indebtedness of the first defendant, Windy Hills Australian Game Meats Pty Ltd (now in liquidation), to the CBA.

By Notice of Motion filed on 16 September 2019, Mr Coulter sought to be released by the undertakings given to the Court on 16 March 2018. In the alternative, Mr Coulter sought an order that the 16 March 2018 undertaking be varied to permit him to sell his interest in one of the South Australian properties and to pay the net proceeds of sale to the CBA.

In support of that application, Mr Coulter swore an affidavit on 13 September 2019 in which he stated:

On 20 September 2019, and without substantial opposition from the plaintiffs, I released Mr Coulter from the 16 March 2018 undertaking.

Since then, it has come to the attention of Mr Coulter’s legal representative that Mr Coulter also gave to the Court the undertaking of 21 March 2018.

On 15 October 2019, I heard an application made on behalf of Mr Coulter to be released from those undertakings.

For that purpose, I treated Mr Coulter’s Notice of Motion of 16 September 2019 as also seeking release of the 21 March 2018 undertaking.

Mr Gee, who appeared for the plaintiffs to oppose the release of those undertakings, read an affidavit from Mr Luo which explained that he had not been able to give effective instructions in relation to Mr Coulter’s application to release the 16 March 2018 undertaking because of his admission to hospital in China.

Mr Gee’s submissions in opposition to the release of the 21 March 2018 undertaking amounted, in effect, to a submission that a freezing order should be made substantially in the terms of the undertaking given by Mr Coulter to the Court on 21 March 2018 as set out at [6] above.

Mr Gee sought leave to file a Notice of Motion seeking relief to that effect and argument proceeded upon that basis.

The matters that must be demonstrated to justify a freezing have been stated in many cases. A convenient summary is that of McColl JA in Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [72] to [75]:

The plaintiffs have taken steps to enforce the 18 July 2019 judgments. They:

However, as the above authorities make clear, freezing orders are not intended simply to enable a judgment creditor to obtain security for a judgment in advance of execution. Rather, freezing orders are made when the Court’s process is being abused by a defendant or judgment debtor.

To support his submission that there was a risk that Mr Coulter would dissipate his assets with a view to defeating the plaintiffs’ prospects of enforcing the 18 July 2019 judgment, Mr Gee pointed to four matters.

The first was that, although Mr Coulter disclosed in his 13 September 2019 affidavit that he had received advice that the South Australian property in question was likely to sell for around $450,000, considerably less than the amount then owing to the CBA (some $570,000), a document produced on the Domain website showed that Mr Coulter had listed the same property for sale at $615,000.

Thus Mr Gee submitted:

I do not see this factor as weighing heavily in the balance.

The evidence does not reveal when the property was listed for sale at $615,000. In any event, a listing at that price is consistent with the undertaking that Mr Coulter gave in his 13 September 2019 affidavit to achieve the best sale price that he could.

Second, Mr Gee submitted that the findings that I made in the 10 July 2019 judgment bespeak a lack of probity on Mr Coulter’s part.

Mr Gee submitted:

I accept the submission that these findings are relevant to what conclusion I should draw as to the likelihood of Mr Coulter dissipating his assets to defeat the judgments the plaintiffs have obtained.

Third, Mr Gee pointed to the fact that on 16 July 2019, less than a week after I published my judgment on 10 July 2019, Mr Coulter caused the first defendant to be placed into voluntary liquidation.

In an email that Mr Coulter sent an officer at CBA on 24 July 2019, Mr Coulter explained that:

Thus, as Mr Gee submitted:

Finally, there is evidence to suggest that Mr Coulter is now causing the business formerly operated by Windy Hills Australian Game Meats Pty Ltd to be operated by another company, Windy Hills Export Meats Pty Ltd, using the same webpage.

Windy Hills Export Meats Pty Ltd was incorporated on 6 February 2019, evidently in anticipation of the possible entry of a substantial judgment against Windy Hills Australian Game Meats Pty Ltd.

Each of those factors has persuaded me that, although Mr Coulter should be released from the undertakings he gave to the Court on 21 March 2018, freezing orders in the form of the undertakings referred to at [6] should be made.

Mr Gee accepted that as the plaintiffs are taking steps to enforce the 18 July 2019 judgments, and as a freezing order is not intended to provide security for what would otherwise be unsecured debt, the order should be made for a limited period only.

For those reasons I make the following orders: