Han v Jiang (No 2)

[2025] NSWCA 217

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Han v Jiang (No 2) [2025] NSWCA 217

Hearing dates:

22 September 2025

Date of orders:

23 September 2025

Decision date:

23 September 2025

Before:

Free JA

Decision:

Notice of motion dismissed with costs.

Catchwords:

CIVIL PROCEDURE—Application for further extension of stay to prevent funds paid into court being released to successful party in satisfaction of judgment debt—Short extension granted on previous motion to allow unsuccessful party to consider seeking review—No application for review—No justification for further extension—Prejudice asserted on behalf of third party which is aware of proceedings--Further extension an arbitrary and unjustifiable frustration of successful party’s right to take benefit of orders below—Motion dismissed

Legislation Cited:

Sale of Land Act 1962 (Vic), s 27

Uniform Civil Procedure Rules 2005 (NSW), r 36.16(2)(b)

Cases Cited:

Han v Jiang [2025] NSWCA 202

Jiang v Han (No 4) [2025] NSWSC 685

Category:

Procedural rulings

Parties:

Kairan Han (First applicant)
Fortune New City (Yarraville) Development Pty Ltd (Second applicant)
Zhao Qing Jiang (Respondent)

Representation:

Counsel:
P Wu (Sol) (Applicants)
N J Kidd SC / R P Harvey (Respondent)

Solicitors:
Hiways Lawyers (Applicants)
Sunfield Chambers Solicitors & Associates (Respondent)

File Number(s):

2025/327473

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2025] NSWSC 948

Date of Decision:

21 August 2025

Before:

Schmidt AJ

File Number(s):

2021/273456

JUDGMENT

1. FREE JA: The applicants, Kairan Han (Mr Han) and Fortune New City (Yarraville) Development Pty Ltd (Fortune New City), are presently subject to an order, made by the primary judge Schmidt AJ on 21 August 2025, requiring that funds which have been paid into court be released to the respondent (Mr Jiang). That order arose out of proceedings before her Honour in respect of a joint venture agreement (2016 Agreement) between the parties relating to land at Yarraville in Victoria (Yarraville Property). At the commencement of those proceedings, a freezing order was made against Mr Han and Fortune New City. That freezing order ceased to have effect when the sum of $5,685,262 was paid into Court by Mr Han and Fortune New City on 29 September 2021. On 5 October 2021 consent orders were made enabling the sum to be paid into an interest-bearing controlled money account with the Commonwealth Bank of Australia (CBA) in the name of the parties’ solicitors. By the time of the hearing of the present notice of motion on 22 September 2025, the funds (which had grown over time with the accumulation of interest) remained in that account.

2. In the substantive proceedings below, Mr Han and Fortune New City sought to agitate certain claims of misleading and deceptive conduct on the part of Mr Jiang, as a defence to the proceedings brought by Mr Jiang and by way of cross-claim. Schmidt AJ struck out the cross-claim and the relevant parts of the defence as a result of repeated failure to comply with court orders by Mr Han and Fortune New City. Mr Han and Fortune New City made an unsuccessful attempt at trial to re-enliven those claims for the purpose of defending the claims brought by Mr Jiang. Upon the failure of that approach, the representatives of Mr Han and Fortune New City were given leave to withdraw and the matter proceeded without those parties being represented. These matters are described in the judgment below dealing with the substantive claims of Mr Jiang, which was referred to by the parties in the present application as the “Money Judgment”: Jiang v Han (No 4) [2025] NSWSC 685. In the Money Judgment, which was handed down on 3 July 2025, Schmidt AJ found in favour of Mr Jiang in the amount of approximately $7.3m. This was on the basis that such amount was owed to Mr Jiang by Mr Han and Fortune New City under the 2016 Agreement.

3. Mr Han and Fortune New City filed a notice of motion on 18 July 2025 seeking that the orders made in the Money Judgment be set aside pursuant to r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Mr Jiang filed a notice of motion seeking an order releasing the funds which had been paid into court. Those motions were heard together. Counsel appearing for Mr Han and Fortune New City accepted in written and oral submissions that if they were unsuccessful in their application to set aside the orders made in the Money Judgment then the Court should make the order sought by Mr Jiang for the release of funds. On 21 August 2025 her Honour refused to set aside the orders that had been made in the Money Judgment. Consistent with the concession made on behalf of Mr Han and Fortune New City, her Honour proceeded to make the order sought by Mr Jiang for release to him of the funds that had earlier been paid into Court: Jiang v Han (No 5) [2025] NSWSC 948 (Jiang v Han (No 5)) at [72].

4. The primary judge, in recognition of the possibility that Mr Han and Fortune New City might seek to appeal against the judgment, ordered that the order for release of the funds to Mr Jiang be stayed until 5pm on 1 September 2025. On 25 August 2025 Mr Han and Fortune New City filed a summons in the Court of Appeal seeking leave to appeal, challenging the correctness of her Honour’s decision in Jiang v Han (No 5) refusing to set aside the earlier orders (and thereby denying Mr Han and Fortune New City the opportunity to re-enliven the substantive defence and cross-claim they had sought to rely upon alleging misleading and deceptive conduct). According to the grounds identified in the summons, Mr Han and Fortune New City contend that the primary judge failed to take into account the merits of the misleading and deceptive conduct claims.

5. On 29 August 2025 Mr Han and Fortune New City filed a notice of motion in the Court of Appeal seeking an order extending the stay of the order for the release of funds, pending determination of their application for leave to appeal from Jiang v Han (No 5). That application was heard and refused by Adamson JA on 1 September 2025. Reasons were published the following day. Her Honour did not accept that Mr Han and Fortune New City had established serious issues for the determination of the Court of Appeal or any reasonably based allegation of injustice: Han v Jiang [2025] NSWCA 202 (Han v Jiang) at [41]. Adamson JA found that Mr Han and Fortune New City had not demonstrated that there was a real risk that Mr Jiang will not be able to repay the money if leave were granted and the appeal allowed: [42]. As for prejudice to Mr Jiang if the stay were extended, her Honour found that in circumstances where Mr Han is located in China it was unlikely that Mr Jiang would be paid any money beyond that which is held in the joint account pursuant to the payment into court. Her Honour found that an extension of the stay would prejudice Mr Jiang in such circumstances for the following reason:

[43]   … There is already a significant disparity between the interest which is earned in that account and the amount of the applicants’ liability for post-judgment interest, which continues to accrue. Any further delay serves to enlarge that disparity. I reject Mr Moujalli’s submission that, in order to establish prejudice, Mr Jiang must show that he would be able to obtain a return on the funds greater than post-judgment interest.

6. Consistently with a request by counsel for Mr Han and Fortune New City, which was not resisted by Mr Jiang, Adamson JA ordered that the stay should continue for a further period of 14 days in order to allow Mr Han and Fortune New City to consider whether or not they wished to seek a review of the orders of Adamson JA: [44].

Developments since the judgment of Adamson JA in Han v Jiang

7. Mr Han and Fortune New City did not bring any application for review of the orders of Adamson JA. Nevertheless, on 15 September 2025 they filed a notice of motion seeking that order 2 made by Adamson JA on 1 September 2025 be extended until 19 September 2025. Order 2 of Adamson JA on 1 September 2025 was an order which relevantly extended order 4 made by Schmidt AJ on 21 August 2025 for a period of 14 days. Mr Han and Fortune New City also sought in their notice of motion an order extending order 4 made by Schmidt AJ on 21 August 2025, but as a matter of substance that was duplicative and unnecessary. The practical outcome sought by Mr Han and Fortune New City was that the period before the obligation to release the funds to Mr Jiang be extended to 19 September 2025.

8. The justification advanced for this further extension is explained in the affidavit of Yunfei Wu affirmed on 15 September 2025 (Wu Affidavit). Mr Wu is the solicitor for Mr Han and Fortune New City. According to the Wu Affidavit, Fortune New City entered into a loan agreement on 20 October 2015 (Loan Agreement) with Daxin Shengyu Engineering Technology Co Ltd (Daxin). Mr Han is a guarantor under the Loan Agreement. The Wu Affidavit refers to an email of 15 September 2025 at 4.50pm from Michael Xu. According to his email signature, Mr Xu is a Senior Associate with VSTAR Lawyers and Consultants, a firm based in the Melbourne CBD. The email of 15 September 2025 from Mr Xu to Mr Wu states:

Dear Payne,

Further to our telephone conversations today, I confirm that our client objects to the release of the $5.6 million or so funds to the Plaintiff on the grounds that those funds ought to have been paid to our client to further pay off the principal and interest owed by your client under the attached loan agreement.

I further confirm that we and our client are seeking advice from counsel in respect to a possible further motion to stop the funds from being paid out to the Plaintiff.

——————————————

Regards,

Michael XU | Senior Associate

9. On 16 September 2025 Mr Xu sent a letter on behalf of Daxin to Mr Jiang’s solicitor. Significantly, the letter begins by stating that it is written in reference to, among other things, the notice of motion filed by Mr Han and Fortune New City on 15 September 2025 and the supporting affidavit of the same date of Mr Wu. As Mr Jiang submitted, and I accept, it should be inferred that by this time Daxin and its legal representatives were aware of precisely what was being sought by Mr Han and Fortune New City by way of orders affecting the release of funds.

10. The letter proceeds to state that Daxin objects to the release to Mr Jiang of the funds currently sitting in the joint CBA controlled money account. The basis for that objection is explained in the letter. Daxin asserts that by reason of the Loan Agreement it held an interest as equitable mortgagee in the Yarraville Property. The letter indicates that Daxin’s lawyers have been informed by the solicitors for Fortune New City that the amount which was paid into Court and later the CBA controlled money account “came from the proceeds from the sale” of the Yarraville Property. Daxin claims to be owed more than $52m by Fortune New City, on the basis that it has only received a payment of around $213m. In those circumstances Daxin asserts that as an equitable mortgagee it had and continues to have a higher priority to the proceeds of sale than Mr Jiang does. On this basis it is said that the amount should not have been paid into Court and Mr Jiang should not be legally entitled to receive the money. The letter concludes by stating:

In light of the above, we strongly insist that your client refrain from carrying [sic] any further steps to release the $5,658,262 in funds from the CBA controlled money account, and we put you on notice that if your client fails to do so, we reserve our client’s rights to undertake whatever legal means are necessary to protect their interests.

11. As can be seen, a critical step in the argument that Daxin has a relevant claim over the money currently held in the CBA controlled money account is that the money that was paid into Court was sourced from the sale of the Yarraville Property.

12. Mr Jiang submits that there is no evidence before the Court on the current application that this is the case. The Yarraville Property was sold by Fortune New City pursuant to a contract dated 24 August 2021. As noted above, the payment of funds into court occurred on 29 September 2021. Settlement of the sale and purchase of the Yarraville Property occurred on 15 October 2021.

13. Mr Han and Fortune New City submit that the money paid by way of deposit for the purchase of the Yarraville Property was used to fund the payment into Court. However, they were unable to point to evidence demonstrating that this was the case. Mr Jiang pointed to evidence suggesting that it could not (or at least should not) have been so. The contract for sale of the Yarraville Property contemplates the payment of a deposit, but on terms that involve the deposit being held by the vendor’s solicitors as stakeholder on and subject to the terms of the contract. In response to the forensic obstacle created by these provisions of the contract, Mr Wu (who appeared for Mr Han and Fortune New City) submitted that under s 27 of the Sale of Land Act 1962 (Vic) deposit moneys may be released in certain circumstances. Section 27 does not advance the argument of Mr Han and Fortune New City. It contemplates that with the written authorisation in writing of the purchaser deposit moneys held by a legal practitioner as a stakeholder may be released to the vendor in his own right. As Mr Wu conceded, there is no evidence of such a written authorisation having been given in the present matter. Nor is there any other evidence to show that, despite the arrangements apparently agreed in the contract for sale, Fortune New City was at liberty to apply the deposit moneys received from the sale of the Yarraville Property to its own ends, and did so by using it to pay funds into court on 29 September 2021.

14. Mr Wu submitted that the “Settlement Completion Record” relating to the completion of the sale of the Yarraville Property, supports an inference that the deposit funds had already been applied by the vendor to its own ends. That is not an inference that I draw from that document. Although reference is made to a deposit of $19,125,000 having been paid, the document does not give an indication either way about how the deposit had been treated by the vendor.

15. For these reasons, there is no evidence before the Court to substantiate a necessary step in the argument that Daxin has a legitimate claim over the funds held in the CBA account.

The revised orders sought by Mr Han and Fortune New City

16. The notice of motion filed by Mr Han and Fortune New City was listed for hearing on 22 September 2025. This presented an immediate difficulty for the applicants on that motion, given that they had sought in terms an extension of the effective stay until 19 September 2025 only. In written submissions filed belatedly on 21 September 2025 the applicants revised their approach so as to seek the following:

(a)   An order that the stay of Order 1 made by Schmidt AJ on 21 August 2025, and extended by Adamson JA on 1 September 2025, be extended nunc pro tunc for the period 16–19 September 2025.

(b)   A further interim order staying payment out of the Funds from 22 September 2025 until a short date fixed by the Court, or until further order, to enable consideration of Daxin’s claim.

(c)   Costs reserved.

17. At the hearing of the notice of motion on 22 September 2025 proposed order (b) was further refined, with Mr Han and Fortune New City instead seeking an order staying the existing order requiring payment out of the funds until Friday 26 September 2025. Mr Jiang maintained his opposition to the motion.

18. In submissions in support of this revised position Mr Wu explained that this extension of a further 5 days (inclusive of the day of hearing) would allow time for Daxin to bring such claim as it might wish to advance to assert its claim over the money presently held in the CBA controlled money account, and the priority of that claim over that of Mr Jiang. When pressed to identify what evidence there was to support a conclusion that Daxin would take relevant action within that further 5 day period, Mr Wu was unable to point to any specific evidence, beyond the general indications that Daxin is asserting a claim and a preparedness to act.

19. Mr Wu asserted that if there is not a further extension, there will be prejudice to the interests of Mr Han and Fortune New City, and also prejudice to the interests of Daxin. As far as Daxin is concerned, the assertion was that it would lose the opportunity to lay claim to funds already held.

20. As for Mr Han and Fortune New City, there was no clear prejudice cogently articulated. Mr Han and Fortune New City did not seek to cavil with the adverse finding made by Adamson JA, namely that they had failed to show a real risk that Mr Jiang will not be able to repay the money if leave were granted and the appeal allowed. Mr Han and Fortune New City have been found to be liable to Mr Jiang for approximately $7.3m. Daxin is separately asserting an entitlement to be paid approximately $52m. While Daxin asserts a priority claim over the money held in the controlled money account, there is no suggestion that resolution of that claim will result in any reduction in the overall liability of Mr Han and Fortune New City to Mr Jiang and Daxin. In the circumstances, I do not accept that Mr Han and Fortune New City have established that they will suffer any material prejudice from a refusal to extend the status quo. The position in that regard remains as found by Adamson JA.

21. In relation to Daxin, it is unsatisfactory and ultimately unpersuasive to have Mr Han and Fortune New City asserting on behalf of a third party that it would suffer prejudice from a refusal to extend the existing stay. Assuming for these purposes that Daxin has a sound basis to claim an interest in the money held in the controlled money account, and a sound basis to assert priority over Mr Jiang in that regard, there is at least a logical basis to infer that Daxin would be prejudiced by allowing the payment out of the funds to Mr Jiang to proceed. If Daxin’s claim against Mr Han and Fortune New City were to succeed, and Mr Han and Fortune New City were not in a position to satisfy judgment in favour of Daxin, Daxin’s position may well be comparatively weaker if it has to pursue action against Mr Jiang, as opposed to taking the benefit of the funds currently held in the controlled money account.

22. Notwithstanding the logical possibility of that prejudice, there are a number of reasons why I give it no material weight in the balancing of interests that is required to resolve the current application. First, even accepting the limitations of an interlocutory hearing, it has not been demonstrated that Daxin does have a proper basis to claim a priority interest in the funds held in the controlled money account. The claim depends on the notion that the money in the account is sourced from the sale of the Yarraville Property. There has not been shown to be a reasonable basis in the evidence for that contention. It is inconsistent with the agreed terms of sale, for the reasons set out above. Importantly, the correspondence from Daxin does not suggest that Daxin has access to any relevant information in this regard. Rather, Daxin has acted on the basis of instructions from the solicitors for Mr Han and Fortune New City. If there was a proper evidentiary basis to substantiate those instructions, Mr Han and Fortune New City could and should have established it.

23. Second, despite being aware of the status of the extant orders and the motion being brought by Mr Han and Fortune New City, Daxin has not sought to participate directly in these proceedings. The email correspondence of 15 September 2025 indicates that Daxin was seeking advice from counsel in respect of a “possible further motion to stop the funds from being paid out to [Mr Jiang]”. The letter of the following day indicates that Daxin was aware by at least that date of the notice of motion filed by Mr Han and Fortune New City. As at that time, the applicants were seeking an extension of the stay only until 19 September 2025. Daxin must be taken to have appreciated that from 19 September 2025 onwards if there was going to be a good justification to deny Mr Jiang the benefit of the order requiring the release of funds to him, it was incumbent on Daxin to take action to protect its own interests.

17. Knowing that this was the state of play, by 22 September 2025 Daxin had taken no steps at all to protect its own interests, whether by way of commencement of fresh proceedings or by an application to participate in the hearing of the notice of motion brought by Mr Han and Fortune New City. Mr Kidd SC, who appeared with Mr Harvey for Mr Jiang, submitted that the Court should infer that sometime after 15 September 2025 Daxin made an informed choice, with the benefit of counsel’s advice, not to take any action. While that is an available inference, I do not regard it as necessary to go that far. It is sufficient to conclude, as I do, that Daxin was aware of the imminent prospect of the money being paid out to Mr Jiang and aware that Mr Han and Fortune New City were only seeking to avoid that event occurring until 19 September 2025, and notwithstanding that knowledge Daxin chose to do nothing to protect its own interests. That may be because, having taken advice, it made a decision to do nothing. It may be because it procrastinated and failed to reach any decision about how to proceed. In either case, the possibility of Daxin suffering prejudice is not a matter to which I attach weight.

18. On the other side of the ledger, a significant factor that favours a short extension of the stay to preserve the status quo until 26 September 2025 is that Mr Jiang will not suffer any substantial prejudice by a further short delay in the release of funds. Mr Jiang accepted that he is not in a position to claim any prejudice going beyond that identified by Adamson JA. That is, for so long as he is denied access to the funds held in the controlled money account, the liability owed to Mr Jiang is accumulating at a faster rate (by virtue of court interest rates) than Mr Jiang will actually recover via the released funds because of the relatively lower interest rates earned in the controlled money account. Particularly in circumstances where the Court is asked to extend the stay for only a matter of days, this prejudice is very slight. If there were any sound justification for extending the stay to preserve the status quo until 26 September 2025, I would be inclined to grant it in circumstances where the prejudice suffered by Mr Jiang is so slight.

19. The problem for Mr Han and Fortune New City is that the attempt to justify the further short extension does not withstand scrutiny. As I have explained above, I do not regard Mr Han and Fortune New City themselves as suffering any material prejudice. To the extent they assert that Daxin would suffer such prejudice, I do not regard that as a persuasive consideration in circumstances where the substance claim of Daxin has not been shown to be well founded and where Daxin has chosen not to take any active role to protect its own interests, despite being on notice of developments.

20. There is a further reason why I would dismiss the application for an extension of the stay even if there was a stronger justification for it. Extending the stay for a period of several days would only be a sensible and just course if there was reason to believe that something relevant would occur between now and 26 September 2025. There is no reason to be so satisfied. Mr Han and Fortune New City seek to create a window of opportunity for Daxin to do something to advance its own interests, and submit that this is likely to occur if the stay is extended to 26 September 2025. That is wholly speculative. Indeed, it is implausible to think that Daxin, having sat on its hands since 15 September 2025, including after 16 September 2025 when it was aware that there was only an application to extend the stay to 19 September 2025, would now spring into action before 26 September 2025.

21. In the circumstances, any further deferral of the payment out of funds which was ordered by the primary judge on 21 August 2025, even for only a handful of days, would be an arbitrary and unjustifiable frustration of Mr Jiang’s right to take the benefit of the order that has been made for the release of funds.

22. The notice of motion is dismissed with costs.

**********

Decision last updated: 23 September 2025