Keynes Capital Global Ltd v Guo [2022] NSWCA 254
Where funds were frozen by consent pending resolution of proceeding in Hong Kong – Establishing a good arguable case in support of a further freezing order in respect of the additional amount following an amended claim in Hong Kong.
The existence of a consent order to freeze assets in Australia while a judgment in a foreign jurisdiction is pending does not prevent a Court from making a further freezing order in respect of an additional amount.
An Application to amend the existing consent order to freeze the assets which is based on a contract between the parties requires:
- either that the underpinning contract be set aside or varied; or
- Exceptional circumstances existed to warrant the discharge of the consent order.
A new freestanding application under R 25.14 of the Uniform Civil Procedure Rules 2005 (NSW)(UCPR), on the other hand, requires that the applicant has a good arguable case on an accrued or future cause of action.
Courts in Australia generally have the power to make freezing orders in relation to prospective judgments of foreign courts which would be registrable under the Foreign Judgements Act 1991
Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36
R 25.14 UCPR allows an order against a judgment debtor or prospective judgment debtor (or third party) if the applicant has a good arguable case on an accrued or future cause of action (UCPR r 25.14 (1)(b)). For foreign judgements, the application of the Rule requires a sufficient prospect that the Judgement in favour of the applicant will be made and that the Judgement will be registered and enforced (UCPR r 25.14(3)). A freezing or ancillary order also requires that the Court is satisfied that there is a danger that the judgment cannot be enforced because the debtor flees or the assets are removed from Australia or will be disposed of.
Where the Circumstances in your Overseas Trial Change, you have to consider whether you can make a new “freestanding” application for a new Freezing Order.
On 9 December 2022, in Keynes Capital Global Ltd v Guo, the NSW Court of appeal had to consider whether, following a consent order to freeze $22,6 Million for claims for dividend payments and unrealised capital gains made on the shares, the Court could grant a further freezing order for claims that would arise out of an amended statement of claim in Hong Kong after the original freezing order was made.
The original freezing order was made on 12 October 2022, and due to the effluxion of time (with further dividends being paid a year after the commencement of the Australian proceedings) and the amendment of the plaintiff’s claim in Hong Kong, the plaintiff’s claim increased by $985,893.
If a consent order is based on a contract that can not be set aside or varied, the Court can only grant a new order that exceeds the initial contract’s content if exceptional circumstances exist.
Whether the application to extend the existing freezing order to include future dividend payments is successful requires the Court to consider whether “[…][the] party [asking] that a consent order based on a contract should be set aside or varied [while] the underlying contract could not be set aside or varied, the case would need to be exceptional before the Court would exercise its discretion in favour of an applicant.” (Paino v Hofbauer (1988) 13 NSWLR 193 at 198 (J[162])).
However, if the application for the extended freezing order would be considered a “freestanding” application, the Court would have to consider whether the applicant has a “good arguable case”.
Amending the Claim in the overseas Trial allowed the Applicant to make a new freestanding application which only required that the Applicant was able to prove that it is likely that the Judgement in favour of him/her will be made and that the Judgement will be registered and enforced.
In Keynes Capital Global Ltd v Guo, her Honour proceeded on the basis that the application was not one to vary the original Freezing Order. The fact that the amended statement of Claim in Hong Kong for an equitable interest in the underlying shares may give rise to accessorial liability met the requirements of UCPR r 25.14(3)(a). The prospects of the Judgement in Hong Kong in favour of the Applicant and that the Judgement will be registered and enforced was sufficient to grant the further freezing order.