Zhang v Yan [2021] FCA 905

Zhang v Yan [2021] FCA 905

Clauses 1.10 to 1.12 of the Deed were not shown to be unenforceable under Australian public policy as they referenced prosecution in China and there was no proof of illegality in that jurisdiction. Even if they were unenforceable, the payment obligation (clause 1.8) was not severable and would also have been unenforceable, but as found, the clauses were lawful. No duress was found as the promise to withdraw a Chinese criminal complaint was introduced by the appellant and not the result of illegitimate pressure. The bankruptcy court was entitled to go behind the judgment, but the challenge failed, and the sequestration was upheld.

Jurisdiction
Australia
Judgment Date
05 August 2021
Procedural Posture
Bankruptcy Appeal / Final Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
['sequestration Order' 'going Behind Judgment' 'illegality and Public Policy' 'duress' 'severance of Contract Terms']
['bankruptcy and Insolvency' 'contracts'] ['sequestration Order' 'going Behind Judgment' 'illegality and Public Policy' 'duress' 'severance of Contract Terms']

Case Brief

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Procedural Posture

Bankruptcy Appeal / Final Appeal Judgment

Legal Issues

  1. 1 ['Whether sequestration order based on a judgment debt should be set aside for illegality or duress' 'Whether the Deed of Settlement clauses 1.10 to 1.12 are unenforceable as contrary to public policy' 'Whether those clauses are severable from the payment obligation in clause 1.8' 'Whether there was duress vitiating the Deed']

Ratio Decidendi

Clauses 1.10 to 1.12 of the Deed were not shown to be unenforceable under Australian public policy as they referenced prosecution in China and there was no proof of illegality in that jurisdiction. Even if they were unenforceable, the payment obligation (clause 1.8) was not severable and would also have been unenforceable, but as found, the clauses were lawful. No duress was found as the promise to withdraw a Chinese criminal complaint was introduced by the appellant and not the result of illegitimate pressure. The bankruptcy court was entitled to go behind the judgment, but the challenge failed, and the sequestration was upheld.

Court Disposition

Appeal dismissed

Orders

  • ["Respondents' notice of contention allowed in part" 'Appeal dismissed' 'Parties to file and serve short written submissions on costs, limited to 3 pages, within 14 days']