Chen v Tongsheng Associates Pty Limited

[2025] NSWSC 335

Supreme Court

New South Wales

Medium Neutral Citation:

Chen v Tongsheng Associates Pty Limited [2025] NSWSC 335

Hearing dates:

4 April 2025

Date of orders:

4 April 2025

Decision date:

04 April 2025

Jurisdiction:

Common Law

Before:

Campbell J

Decision:

Plaintiff’s application for a freezing order granted in terms of prayers 1, 2, 3, 4, 5, 6, and 8 of the notice of motion

Catchwords:

CIVIL PROCEDURE – Interim preservation – freezing orders – where freezing order sought in aid of enforcement of County Court of Victoria default judgment – where plaintiff seeks freezing order against net proceeds of the defendant developer’s only Australian asset – freezing order within Australia and worldwide – orders made

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 77

Uniform Civil Procedure Rules 2005 (NSW) r 25.11

Category:

Principal judgment

Parties:

Xi Chen (Plaintiff)
Tongsheng Associates Pty Limited (Defendant)

Representation:

Counsel:
N Li (Plaintiff)
No appearance (Defendant)

Solicitors:
James IP Lawyers (Plaintiff)

File Number(s):

2025/00078964

Publication restriction:

Nil

EX TEMPORE JUDGMENT (REVISED)

1. I am dealing with an application for a freezing order brought under r 25.11 Uniform Civil Procedure Rules 2005 (NSW). The proposal is that, if I make the order, it will be returnable on 7 April 2025 at 9am before the Common Law Registrar for the purpose of the question of its continuation to be referred to the duty judge for determination.

2. I have discussed with Mr Li of counsel, appearing for Mr Chen (the judgment creditor), the matters which I would include in the draft form of order he has proffered, and the content of that discussion will be clear from the transcript. In the interests of brevity, I do not propose to repeat all of that detail in these reasons.

3. I am satisfied that the evidence read before me establishes grounds for the making of the freezing order. In brief, the judgment creditor's cause of action against Tongsheng Associates Pty Ltd (the judgment debtor) was in respect of the purported purchase “off the plan” of an apartment in a development at Kew, Melbourne from the judgment debtor, who is apparently a property developer. Perhaps somewhat curiously however, the judgment creditor was persuaded to pay the whole of the purchase price to the judgment debtor without security. In any event, it transpired, according to the case pleaded by the judgment creditor in the County Court of Victoria, that the judgment debtor sold the apartment a second time with neither notice nor any apparent apology, and certainly without refunding the judgment creditor.

4. The judgment debtor is a company with a registered office in New South Wales. The company is operated by an individual, Mr Xiao, as its director and who also has a residential address in New South Wales. However, Mr Xiao took no part in the proceedings before the County Court of Victoria. Default judgment was duly entered there and registered in this Court under s 77 Civil Procedure Act 2005 (NSW) and in accordance with the requirements of the Uniform Civil Procedure Rules 2005 (NSW).

5. According to the affidavit of the plaintiff’s solicitor, Mr Wang (who practises in Victoria), the judgment debtor and its director previously communicated freely with Mr Wang about the matter, however, representatives of the judgment debtor have gone quite quiet and have not responded to any correspondence by email or otherwise about the matter since about 15 November 2024. It has come to Mr Wang's attention that the only known asset belonging to the judgment debtor in Australia is a development site of about half an acre in Mont Albert North, Victoria. That property is the subject of a contract for sale to an innocent third party which is due to settle in Victoria on 7 April 2025. I am satisfied to the relatively low level necessary for the purposes of this application to accept Mr Wang’s evidence about these matters.

6. Mr Wang’s evidence indicates that the director, Mr Xiao, has business interests overseas, particularly in Malaysia. But it would seem that the only asset here is likely to be lost to the judgment creditor if the order is not made. As I have discussed with Mr Li, it is evident from the title search that the property is heavily encumbered and the judgment creditor has no desire to stymie the completion of the sale; rather, the judgment creditor’s intent is to freeze only the net proceeds such as they may be in the hands of the judgment debtor or its agents.

7. It seems to me that this is an appropriate case to make a freezing order, and it should be made urgently. In the course of our dialogue, I have said to Mr Li that the orders for service as proposed in the notice of motion are appropriate and that the question of the order’s continuation should be listed, as I have said, on 7 April 2025 before the Common Law Registrar at 9am.

8. I am of the view that although the debt, including the costs of obtaining the default judgment and registering it in this State, is just short of $2.328 million, in order to cover the costs of enforcement, the appropriate amount for the freezing order is $2.4 million. And given the doubt about whether the net proceeds of the sale will cover the debt, I am of the view that a worldwide freezing order should be made.

9. I am also of the view that Mr Xiao, the director and guiding mind of the judgment creditor, should be required to make an affidavit as to assets held on behalf of the judgment debtor, and that affidavit should be made within seven days of service of the freezing order given the urgency of the matter.

10. It would seem to me, given that the judgment debtor is a corporation, no allowance would need to be made at this stage for ordinary living expenses, especially as one is purporting to freeze the net proceeds of the sale of a single asset. However, doubtless an application can be made in that regard in relation to the continuation of the freezing order should that seem appropriate on the application of the judgment debtor.

11. I have also said that I would require the undertaking as to damages and that some thought should be given to an appropriate security given that the judgment creditor, Mr Chen, is a foreign resident. However, having heard Mr Li on the topic, I am satisfied that that security need not be large given the size of the debt due from the judgment debtor and the consideration that there are no contemplated third parties who might suffer loss because of the freezing order.

12. In that regard, it would seem to me that the purchaser and the incoming mortgagee on the sale on 7 April 2025 have no reason to wish to terminate the contract prior to settlement because they are entirely unaffected by what is proposed. Likewise, the outgoing mortgagees, of whom there may be as many as four (or at least there may be four mortgages), would be pleased to receive their share of the proceeds rather than conjuring with the question of whether there is any default by reason of insolvency and, in the circumstances, as I have already said, the amount of the security need not be large.

13. I make orders in accordance with the prayers recited in the plaintiff’s notice of motion filed on 2 April 2025, other than prayers 7 and 9.

14. I also direct the judgment creditor to bring in an appropriate form of orders for entry by 12:45pm today.

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Decision last updated: 08 April 2025