Say v Kim

[2025] NSWSC 472

Supreme Court

New South Wales

Medium Neutral Citation:

Say v Kim [2025] NSWSC 472

Hearing dates:

8-9 May 2025

Date of orders:

13 May 2025

Decision date:

13 May 2025

Jurisdiction:

Common Law

Before:

Fagan J

Decision:

1 Order that of the proceeds of sale of lot 2 in deposited plan 1265740, known as 81 High Street, Cabramatta West, paid into court pursuant to order 2 made by McNaughton J in these proceedings on 20 November 2024, there be released to the defendants forthwith the sum of $239,429.22.

2 Stay the operation of the order for release up to and including 28 May 2025.

3 Costs of the application for release of funds are reserved to determination at the conclusion of the substantive hearing.

4 The plaintiffs are to pay the defendants’ costs of the preparation of the notice of motion that was heard on 26 March 2025 and preparation of the affidavit of the first defendant affirmed on 25 March 2025 and the costs of correspondence making demand for agreement to the release of funds out of court for legal and living expenses.

5 The parties are to bear their own costs of the hearing of 26 and 27 March 2025 and to bear their own costs of the notice of motion in all respects other than as provided in the previous order.

6 Extend the time provided in my order of 9 May 2025 for the filing of the amended statement of claim to Friday 16 May 2025.

7 Direct that the first defendant file a defence to the amended statement of claim by 30 May 2025.

8 Grant leave to the second defendant to file an amended defence to address the amended statement of claim also by 30 May 2025.

Catchwords:

CIVIL PROCEDURE – interim preservation – freezing order – whether applicant has good arguable case against first and second defendant – evidence of risk of dissipation of funds and assets by first defendant – no reasonably arguable case against second defendant – second defendant’s interest in the funds withheld in court not amenable to enforcement of any judgment – HELD – percentage of funds referable to first defendant’s contribution to property retained in court – remaining sum paid to defendants

Legislation Cited:

Australian Consumer Law

Australian Securities and Investments Commission Act 2001 (Cth)

Conveyancing Act 1919 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193

Barnes v Addy (1874) LR Ch App 244

Calverley v Green (1984) 155 CLR 242; 1984 [HCA] 81

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18

Esanda Finance Corporation Limited v Reyes [2001] NSWSC 234

PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36

Robb Evans of Robb Evans & Associates v European Bank Limited [2004] NSWCA 82

Category:

Procedural rulings

Parties:

Andrew Say (First Plaintiff)
Non Chin (Second Plaintiff)

Morokath Kim (First Defendant)
Monyreach Chuon (Second Defendant)

Representation:

Counsel:
J Widjaja (Plaintiffs)
M Waters (Defendants)

Solicitors:
Selective Lawyers (Plaintiffs)
Sydney Solicitors (Defendants)

File Number(s):

2024/431557

Publication restriction:

No

JUDGMENT [delivered orally – revised]

1. Before the Court is a notice of motion filed by the defendants on 14 March 2025 claiming an order that the proceeds of sale of a property at 81 High Street, Cabramatta West, that were paid into Court pursuant to an order of McNaughton J made on 20 November 2024, be released to the defendants forthwith. McNaughton J’s order was made in exercise of the Court's power to freeze assets to facilitate the process of enforcement which will arise if the plaintiffs succeed in recovering judgment for a sum of money.

2. The Cabramatta West property was registered in the names of the first and second defendants as tenants in common, as to a 5% interest for the first defendant and as to 95% for the second defendant. The second defendant is the first defendant's son.

3. McNaughton J's ex parte order of 20 November 2024 was continued by Chen J on the first return of the proceedings on 25 November 2024. On that day the defendants completed the sale of the property. The net proceeds after discharge of a mortgage and payment of expenses of sale were $714,976.79. The defendants caused that sum to be paid into Court.

4. Pursuant to a consent order made on 27 March 2025, $167,710 was paid out to the defendants for legal and living expenses of themselves, and for living expenses of other family members who are part of their household. The balance remaining in Court is $547,266.79.

The principal proceedings

Original statement of claim 20 December 2024

5. The first pleading of the plaintiff's case was a statement of claim filed on 20 December 2024. Therein the plaintiffs pleaded against the first defendant the following causes of action:

1. Debt in the amount of approximately $375,800 being the balance owing, including interest, on a series of 17 advances made between 13 May 2020 and 8 January 2024. Some of the advances are alleged to have been made by the first plaintiff and some by the second plaintiff. There are alternative cases pleaded as to which plaintiff is the correct creditor in respect of various amounts.

2. Breach of contract (with alternatives of deceit and misleading and deceptive conduct contrary to the Australian Consumer Law and the Australian Securities and Investments Commission Act 2001 (Cth)), sounding in damages of approximately $500,000.

6. The second cause of action and its alternatives are based on an alleged agreement made in January 2021 between the first defendant, on the one hand, and the plaintiffs, on other hand, pursuant to which the plaintiffs participated in games called Tong Tin organised by the first defendant. Each game required the plaintiffs and other participants to pay an initial deposit to the first defendant and thereafter to make weekly bids that, depending upon the bids made by other players, would either result in a payment to the plaintiffs or a requirement to make a further contribution. The plaintiffs allege that on about 21 January 2024, the first defendant failed to pay out to them amounts that were due under the terms of the games. The plaintiffs' participation in the games ceased from that date. That gives rise to their claim in damages for breach of contract.

7. The plaintiffs alternatively allege that statements made by the first defendant during the course of the games were false and that the defendants are liable in damages for the tort of deceit and/or for statutory misleading conduct.

8. The statement of claim filed on 20 December 2024 did not plead any cause of action against the second defendant. On the face of that pleading it appears that he was joined solely in aid of enforcement of a judgment for a monetary amount against the first defendant, if such a judgment should be recovered. It is alleged in the statement of claim that the second defendant's 95% interest in the Cabramatta West property, the acquisition of which was settled in December 2020, resulted from an alienation by the first defendant with intent to defraud her creditors, contrary to s 37A of the Conveyancing Act 1919 (NSW). That allegation has subsequently been abandoned.

9. Alternatively, it is pleaded in the original statement of claim that the property was purchased with funds obtained from the plaintiffs through the loan advances and through their contributions to the Tong Tin games. This is alleged to have resulted in unjust enrichment of the second defendant. However, the relief claimed against him in the original statement of claim does not include a judgment or order for the payment of money, only a declaration that he held his 95% interest in the Cabramatta West property "on behalf of the first defendant". On 26 March 2025, during the hearing of the defendant's application for partial release of the funds in Court to cover legal and living expenses, the plaintiffs' counsel confirmed that the plaintiffs were not seeking any monetary relief against the second defendant pursuant to the original statement of claim.

Amended statement of claim 9 May 2025

10. On 8 May 2025, at the hearing of the defendants’ notice of motion for release of all the remaining restrained funds, the plaintiff sought leave to file an amended statement of claim. In the final form of amendment for which leave was granted on 9 May 2025, the plaintiffs’ claims against the first defendant remain as in the original pleading. It is additionally alleged that because the first defendant made fraudulent representations that induced the plaintiffs to contribute to Tong Tin games, she held the sums received from the plaintiffs in respect of the games on a constructive trust for them. It is alleged that the trust was breached by the first defendant mixing those contributions with other funds and using them to acquire property, giving rise to an alleged entitlement of the plaintiffs to equitable compensation from the first defendant and a right to trace the misapplied funds into other funds and assets.

11. Against the second defendant, the amended statement of claim of 9 May 2025 no longer pleads the voidable alienation contrary to s 37A of the Conveyancing Act. The plaintiffs now allege that the first defendant contributed more than 5% to the purchase price of the Cabramatta West property and that the second defendant held his 95% interest on a resulting trust (in an undetermined proportion) for the benefit of the first defendant. The relief claimed against the second defendant is a declaration of that resulting trust. On its own that claim makes little sense as the plaintiffs do not allege that the resulting trust is in their favour beneficially. The alleged resulting trust in favour of the first defendant could only be of any utility to the plaintiffs in the context of enforcement of any judgment they may recover against the first defendant for a money sum.

12. In the amended pleading of 9 May 2025 it is now pleaded further against the second defendant that he knowingly assisted the first defendant's breach of the alleged constructive trust over the contributions made by the plaintiffs to the Tong Tin games; that is, the first defendant’s alleged breach of the constructive trust that arose from her alleged fraudulent conduct in procuring the contributions. The assistance that the second defendant is alleged to have given towards breach of that constructive trust is said to have been that he received from the first defendant funds that originated from the plaintiffs and/or that he permitted those funds to be used "to pay the second defendant's obligations in respect of" their mortgage loan with which part of the purchase price of the Cabramatta West property was paid. It is alleged that the second defendant knew the first defendant acted in breach of the constructive trust insofar as he was aware of circumstances that "would have raised doubts in the mind of an honest and reasonable person" and he deliberately refrained from inquiring as to whether the first defendant was guilty of wrongdoing. The plaintiffs claim equitable compensation from the second defendant under the principles in Barnes v Addy (1874) LR Ch App 244.

Law concerning freezing orders

13. In Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193 McGrath J restated the matters that must be proved to support a freezing order in circumstances such as the present, as follows:

[79]   An applicant for a freezing order in advance of judgment must establish two elements:

(1)   there is a prima facie or good arguable case on the cause of action which is asserted; and

(2)   having regard to all the circumstances, there is a danger that a prospective judgment will be wholly or partly unsatisfied because the prospective judgment debtor absconds or the assets of the prospective judgment debtor are removed from Australia or disposed of, dealt with or diminished in value: Patterson v BTR Engineering (Aust) Ltd at 320-321 (Gleeson CJ with whom Meagher JA at 326 and Rogers AJA at 327 agreed); Tomasetti v Brailey [2012] NSWCA 6 Campbell JA at [14]; Samimiv Seyedabadi [2013] NSWCA 279, McColl JA at [68]–[72].

14. His Honour addressed the burden of proof of those elements in the following passages

[80]   The first element of a good arguable case is used “in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 percent chance of success”, and does not involve a premature trial of the action but is a preliminary appraisal of the plaintiff’s case: Samimiv Seyedabadi, McColl JA at [69], citing Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG “The Niedersachsen” [1983] 1 WLR 1412; [1984] 1 All ER 398, Mustill J at 404.

[81]   The second element of the danger of an unsatisfied prospective judgment from the defendant absconding or dissipating assets must be proved by solid evidence beyond mere assertion, with the precise form of evidence depending on the particular case: Samimiv Seyedabadi, McColl JA at [73], citing Ninemia Maritime, Mustill J at 406.

[82]   There is no special standard of proof to obtain a freezing order and while it is not an essential ingredient of such an application, a prima facie case that the defendant has been dishonest in dealing with the subject matter of the plaintiff’s claim will often give rise to a strong inference that the defendant will not, unless restrained, preserve the subject matter of the claim for the benefit of the plaintiff should it be successful in the action: Turner v Universal Home Loans Pty Ltd [2004] NSWSC 936, Palmer J at [20].

[83]   It is not necessary for an applicant for a freezing order to show that the defendant has a positive intention of evading a judgment, and it is sufficient to show that the course on which the defendant proposes to embark is, objectively speaking, calculated to have that effect: Samimi, McColl JA at [74], citing Finn v Carelli [2007] NSWSC 261, Brereton J at [4].

[85]   A freezing order is only warranted if there has been conduct on the part of the defendant which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments, or of being intended to do so, or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the defendant have been or will be dealt with in an irregular way: TZ Ltd v ZMS Investments Pty Ltd [2010] NSWSC 196, Barrett J at [26], citing Acquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146, Bryson J at [5].

15. As will be seen, I do not consider that the plaintiffs have demonstrated a good arguable claim for relief directly against the second defendant. However, on the basis of a prima facie case against the first defendant and evidence of a danger of dissipation of assets to which recourse might be had to satisfy a judgment against her, the restraint upon proceeds of sale of the property in which the second defendant held 95% of the legal title may be continued, treating the second defendant as a third party with respect to prospective enforcement. The principles governing that situation have been stated in the following High Court decisions, upon which the plaintiffs rely.

16. Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 was concerned with the power of a court to make a freezing order in respect of property of person or entity who or which is not a defendant against whom the applicant claims or expects to recover a judgment. Gaudron, McHugh, Gummow and Callinan JJ stated the circumstances in which such an order may be made at [57] as follows (omitting internal citation):

What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sought to be restrained? In our opinion such an order may, and we emphasise the word "may", be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which:

(i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including "claims and expectancies", of the judgment debtor or potential judgment debtor; or

(ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.

17. Kirby J expressed the position in these terms at [121]:

To secure an asset preservation order in a case such as the present, it will be necessary for the party seeking it to show, in addition to the conditions ordinary to the grant of relief injunctive in nature that (1) there is a danger that the non-party will dispose of relevant assets or property in its possession or under its control; and (2) that the affairs of the actual or potential judgment debtor and the non-party are closely intermingled, and that the actual or potential judgment creditor has a vested or accrued cause of action against the non-party or may otherwise become entitled to have recourse to the non-party, its property and assets to meet the claim.

18. In PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 French CJ, Kiefel, Bell, Gageler and Gordon JJ gave the following description of the nature of inherent power, in that case of the Supreme Court of Western Australia, to make a freezing order:

[46]   [...] Even where a court makes a freezing order in circumstances in which a substantive proceeding in that court has commenced or is imminent, the process which the order is designed to protect is "a prospective enforcement process". That description is drawn from the explanation of the nature of a freezing order given by Lord Nicholls of Birkenhead in Mercedes Benz AG v Leiduck [1996] AC 284 at 306. That passage was cited with approval by five members of this Court in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 at 32 [35] in a passage which (subject to presently immaterial qualifications) was itself adopted as a correct statement of principle by four members of this Court in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at 400 [41]. Lord Nicholls explained:

"Although normally granted in the proceedings in which the judgment is being sought, [a freezing order] is not granted in aid of the cause of action asserted in the proceedings, at any rate in any ordinary sense. It is not so much relief appurtenant to a money claim as relief appurtenant to a prospective money judgment. It is relief granted to facilitate the process of execution or enforcement which will arise when, but only when, the judgment for payment of an amount of money has been obtained."

[47]   The actual holding in Cardile v LED Builders Pty Ltd illustrates that the prospective enforcement process that a court might protect by making a freezing order can be a process contingent on factors in addition to the outcome of a substantive proceeding in that court. The holding was that a freezing order can be made against a third party against whom no present cause of action exists and against whom no present proceeding has commenced. It is enough that some future legal process (which might be contingent, for example, on the appointment by another court of a liquidator or a trustee in bankruptcy) may be available pursuant to which the third party may be obliged to contribute to the funds of the judgment debtor to help satisfy the judgment against the judgment debtor [(1999) 198 CLR 380 at 400 [41]].

19. Rule 25.14 of the Uniform Civil Procedure Rules 2005 regulates the procedure for exercising the jurisdiction. It recognizes the availability of freezing orders against third parties. The rule is in the following terms, extracted so far as relevant to the application presently before the Court:

25.14 Order against judgment debtor or prospective judgment debtor or third party(cf Federal Court Rules Order 25A, rule 5)

(1) This rule applies if—

[…]

(b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—

(i) the court, or

(ii) […]

[…]

(4) The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur—

(a) the judgment debtor, prospective judgment debtor or another person absconds,

(b) the assets of the judgment debtor, prospective judgment debtor or another person are—

(i) removed from Australia or from a place inside or outside Australia, or

(ii) disposed of, dealt with or diminished in value.

(5) The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied, having regard to all the circumstances, that—

(a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—

(i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or

(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or

(b) a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

(6) Nothing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so.

Prima facie evidence of the plaintiffs’ causes of action

Evidence of claims against the first defendant

20. The plaintiffs' primary evidence to sustain continuance of the freezing order is an affidavit of the first plaintiff sworn 20 November 2024. He deposes to the advances that are said to have given rise to at least part of the debt claimed against the first defendants and he identifies documentary receipts for several of the advances said to have been signed by the first defendant. All 17 advances were in cash. The documentation is informal but it is sufficient to establish a good arguable case that the sums were advanced as alleged in the pleading.

21. In conformity with the amended statement of claim, the first plaintiff deposes that some interest due from the first defendant under the loan arrangements was not repaid but that instead the plaintiffs were persuaded to agree that interest amounts due to them should be reinvested in the Tong Tin games. The reconciliation of amounts claimed respectively in debt and in respect of the Tong Tin games is unclear on the present evidence.

22. In a letter dated 6 November 2024 from the plaintiffs' solicitors to the defendants' solicitors, a calculation of the amounts owing in respect of the games was set out, based in part upon spreadsheets that the first defendant herself had provided to the first plaintiff in a message transmitted on WhatsApp on 7 October 2024. The amounts claimed by the plaintiffs in respect of the games, in the letter of 6 November 2024, total $244,225.

23. The first plaintiff has deposed that no payment has been made by the first defendant towards the loan debt or in discharge of the amounts due under the Tong Tin games since August 2023. Although the nature of the parties' dealings makes quantification difficult, I am satisfied that the plaintiffs have provided prima facie evidence of a good arguable case that a total amount in the order of at least $500,000 is due and owing from the first defendant to the plaintiffs in respect of the causes of action in debt for the loan and debt or damages arising from their participation in the Tong Tin games.

24. There is also a good arguable case that the first defendant made false representations to the plaintiffs about the purposes to which she proposed to apply the funds she borrowed and about her intentions with respect to conduct of the Tong Tin games and payment of returns from those games. While there is prima facie evidence of dishonesty in those respects, the evidence is insufficient in its present form to satisfy the Court that other elements of the alternative pleaded causes of action in deceit and in statutory misleading conduct can be proved against the first defendant for any sum of money. The affidavit of the first plaintiff, which is the only source of evidence, does not enable the Court to determine the timing of representations relative to payments by the plaintiffs’ or other actions to their detriment. It is not possible to discern a prima facie case that particular false representations induced the plaintiffs to act in ways that caused loss, or, if so, how much loss.

25. Given the lack of evidence to establish to a prima facie level that there is a complete cause of action for the tort of deceit or for the statutory claim of misleading and deceptive conduct, it follows that there is insufficient evidence to disclose a good arguable case that the funds received by the first defendant for the Tong Tin games were impressed with a constructive trust in favour of the plaintiffs. Concerning a constructive (or presumed or resulting) trust in respect of property that has been obtained by fraud, the plaintiffs cited Esanda Finance Corporation Limited v Reyes [2001] NSWSC 234 at [26] (Simos J) and Robb Evans of Robb Evans & Associates v European Bank Limited [2004] NSWCA 82 at [111]-[113] (Spigelman CJ). However, there is insufficient evidence before the Court to show in the present case an arguable factual foundation for the principles recognised in those decisions. I am not satisfied on the limited evidence tendered by the plaintiffs that there is a good arguable case that the first defendant defrauded the plaintiffs of the borrowings that they allege she has not repaid or the Tong Tin payouts that she has failed to make. I do not see in the evidence a prima facie case of fraudulent inducement at the point of obtaining and/or failing to repay those monies, as opposed to a simple case of default on contractual obligations.

Evidence of claims against the second defendant

26. As against the second defendant there is no evidence to support an inference that he knew the first defendant was bound by a constructive trust in respect of funds contributed from the plaintiffs for the Tong Tin games, if indeed she was so bound. There is no evidence that the second defendant knew anything about how any money had come into the first defendant's hands. There is no evidence that he knew or should have known that the first defendant applied funds received from the plaintiffs in breach of any trust or that he was put on inquiry as to such a breach of trust or that he should have been put on inquiry, acting as a reasonable person. Consequently there is before the Court at present no reasonably arguable claim against the second defendant upon any cause of action for any sum of money.

Risk of dissipation and defeat of enforcement

27. I am satisfied that there exists a danger that the first defendant, if not restrained, will dissipate or remove from the jurisdiction such funds and assets as are under her control, so that if a judgment should be recovered by the plaintiffs in the proceedings, enforcement of it may well be frustrated or at least impeded.

28. The first defendant has not yet filed a defence. She has not gone into evidence on this application to dispute the plaintiffs' case that she owes at least several hundred thousand dollars. There is prima facie evidence that the first defendant represented to the plaintiffs in May 2020 that she would use the funds borrowed from them to purchase real property. The evidence is that the only property she purchased was 81 High Street, Cabramatta West for which contracts were exchanged on 3 September 2020. The first defendant conducted her case on this motion in reliance upon evidence from her sister and from the second defendant that the funds to complete that purchase property in December 2020 did not come from herself, except as to $10,200. No evidence has been adduced on her behalf as to what otherwise she may have done with the total of the 17 advances made by the plaintiffs.

29. The first plaintiff has also deposed that, in July 2024, the first defendant admitted she owed money to the plaintiffs and said that she would pay it out of the sale of the Cabramatta West property. Then, in August 2024, she said there would be no money left from the sale.

30. On the question of risk of dissipation and defeat of a judgment, I also take into account that the first defendant has substantial debt to a Cambodian finance entity. I take into account that the evidence shows numerous members of the first defendant's family have followed a practice of moving funds into Australia in cash amounts of $10,000 or less, spread amongst several family members. There is, self-evidently, a risk that that practice might well be followed in reverse to take money out of the country. I also take into account that the first defendant was, until August 2024, operating a shop, which she has now closed and from which she has ceased to trade.

31. All of these circumstances support the existence of a risk of dissipation. Added to that is the indication of dishonesty on the part of the first defendant arising from what the first plaintiff has deposed about the course of his dealings with her in relation to the substantive transactions that are the subject of the claim. According to the first plaintiff, the first defendant has repeatedly put him off with respect to overdue payments of principal and interest, making excuses concerning lack of funds. Banking records, to which I will turn shortly, show that when the purchase of the Cabramatta West property was completed in late 2020, a significant part of the price came from bank accounts in the first defendant's name, yet she denies through her conduct of the notice of motion a proportionate interest in the title and in the proceeds of sale.

32. With respect to the balance of proceeds that remain in Court, it is reasonable to infer that if released those funds may be placed beyond the reach of a judgment, either by actions of the first defendant or the second defendant. At the least, it is likely that the proceeds would be dealt with so as to make them more difficult to recover if the plaintiffs should prove their case and subsequently prove, on full examination of all evidence, that the title to the Cabramatta West property was held on a resulting trust for the first defendant in a greater proportion than the 5% for which she was registered.

Extent to which the restrained funds are amenable to enforcement of judgment against the first defendant

33. Because the money claims against the second defendant in the amended statement of claim are limited to equitable compensation for knowing assistance in the first defendant’s alleged breaches of trust, for which evidence of a good arguable case has not been forthcoming, for practical purposes the second defendant is in the position of a third party to any prospective enforcement proceedings of a judgment in favour of the plaintiffs against the first defendant. The remaining funds in Court represent the Cabramatta West property. The principal factual issue on the present application concerns the extent to which that property, while still registered to the defendants, would have been amenable to enforcement of a judgment against the first defendant. That issue comes down to a question of how much the first defendant contributed to the purchase price so as to give rise to the presumption of a resulting trust in her favour.

34. The total cost of acquisition of the land, inclusive of stamp duty and legal costs was $1,000,018. The defendants rely upon an affidavit of the first defendant's sister, Kanha Kim, sworn 1 May 2025 and records of the first defendant’s bank accounts as referred to therein. The affidavit and bank statements show that between 31 July 2020 and 2 August 2020 Kanha Kim deposited a total of $103,000 into a Commonwealth Bank of Australia (CBA) account in the defendant's name (account number ending 5917), from which an equivalent total was transferred to the first defendant's other CBA account (number ending 0327).

35. The deposit of $98,000 was paid on 3 September 2020. I infer that that deposit was paid from funds of the first defendant because on 3 September 2020 the sum of $95,565 was drawn from her CBA account number 0327. The credit balance in that account at that time was over $160,000 made up of transfers from her CBA account number 5917.

36. To complete the purchase on 11 December 2020, $782,000 was loaned by RAMS Home Loans to the defendants jointly, secured on a mortgage of the property. The balance required at settlement, being $137,000, was drawn down from a joint account at Westpac Bank in the names of both defendants (account number ending 7862). The balance of the joint account at that time was $137,800. Kanha Kim has deposed that she deposited $43,500 of that balance into the joint account for the benefit of the second defendant and the bank statements show that the balance of $93,500 came from deposits made by the first defendant.

37. Contributions to purchase price for the purpose of determining whether a resulting trust arises are to be assessed at the point of settlement of the acquisition, treating contributions from a mortgage lender as having been made by the party or parties who assumed contractual liability to repay the mortgage loan: Calverley v Green (1984) 155 CLR 242; 1984 [HCA] 81. On the evidence summarised above, there is a prima facie case that the first defendant's contributions to the purchase price were as follows:

3 Sep 2020	Deposit drawn from first defendant’s bank account number 0327	98,000
11 Dec 2020	Half of joint loan from RAMS Home Loans	391,000
11 Dec 2020	First defendant's deposits to joint account No 7862 from which the balance of $137,000 required to complete the settlement was paid	93,500
Total	$572,550

38. Kanha Kim has deposed that the Westpac account in joint names (account number ending 7862) was established on advice of a mortgage broker to enable the borrowers to demonstrate that they had sufficient funds to cover 20% of the purchase price. Kanha Kim has also deposed that some of the funds she paid into the first defendant's CBA account (number ending 5917) and the funds she paid into the joint account, constituted a loan to the second defendant. So far as concerns the $43,500 that she paid into the joint Westpac account, the claim that this was a loan to the second defendant may be accepted.

39. With respect to funds deposited to the first defendant's CBA account (number ending 5917), I do not accept the evidence. There is no reason why any payment that was genuinely an advance to the second defendant should not have been paid into an account in his name from which payment of the deposit could have been made. Kanha Kim and the second defendant have both produced a purported loan agreement between them. It recites that the supposed loan from Kanha Kim of $150,000 had been received by the second defendant on the date that the loan agreement bears, namely, 21 June 2020. That does not accord with any of the banking records and cannot be relied upon.

40. The total of what I take to be prima facie the first defendant's contributions to the purchase price, in the sum of $572,500, represents a 56.25% contribution to the purchase of the property.

41. The final determination of whether the presumption of a resulting trust for that proportion of the title holds good, or whether it is rebutted by other evidence of the parties' actual intentions, or by operation of the presumption in favour of advancement, must await a more rigorous examination than can be conducted on the hearing of a notice of motion in the present circumstances. That final determination will likely have to await enforcement proceedings, perhaps involving a trustee in bankruptcy of the estate of the first defendant. Such enforcement proceedings and/or the appointment of a trustee in bankruptcy are matters dependent upon the contingency of the plaintiffs obtaining judgment against the first defendant; specifically, a judgment that cannot be satisfied other than by recourse to the proceeds of sale of the Cabramatta West property.

42. The result of these conclusions is that 56.25% of the funds presently in Court must be retained pursuant to McNaughton J's original freezing order. That is the sum of $307,837.57. The balance of $239,429.22 represents what appears on the evidence presently before the Court to have been the second defendant's interest in the remaining proceeds. The plaintiffs have not shown, even to a prime facie level, that the second defendant’s interest in the funds is amenable to enforcement of any judgment for which a good arguable case has been shown. Accordingly, that sum should be paid out to the defendants.

43. The following order will be entered:

1. Order that of the proceeds of sale of lot 2 in deposited plan 1265740, known as 81 High Street, Cabramatta West, paid into court pursuant to order 2 made by McNaughton J in these proceedings on 20 November 2024, there be released to the defendants forthwith the sum of $239,429.22.

Further orders: plaintiffs’ application for a stay and argument on costs

44. The plaintiffs apply for a stay of the order for release of funds to enable them to seek the leave of the Court of Appeal to appeal my decision on the notice of motion. Whether or not there should be a stay pending determination of a leave application is a question for the Court of Appeal. I will grant a stay for a sufficient period to unable the Court of Appeal to consider any application that the defendants may make in that Court. The following additional order will be entered:

1. Stay the operation of the order for release up to and including 28 May 2025.

   45. Having heard the parties as to costs of the notice of motion seeking the release of the funds held in court, I make the following order:

2. Costs of the application for release of funds are reserved to determination at the conclusion of the substantive hearing.

   46. The defendants’ earlier application for an interim release of funds of $167,710 to cover living and legal expenses was heard by me on 26 March 2025 and was resolved on 27 March with a consent order that that sum be paid out. Order 2 made on 27 March 2025 was that the costs of that application for living and legal expenses be reserved. I am now asked to determine those reserved costs. The defendants seek an order that their costs of bringing that application be paid by the plaintiffs.

   47. When the plaintiffs applied ex parte to McNaughton J on 20 November 2024, they did not follow Practice Note SC Gen No 14 concerning ex parte freezing orders. They departed from the Practice Note in a number of respects. One aspect of the departure, which is the subject of disagreement between counsel now before me, need not be resolved. It is asserted by the defendants’ counsel that there was a failure to make full and frank disclosure to the Court concerning defences that the defendants might have to any claim for freezing the proceeds of sale of the Cabramatta West property. If there was such nondisclosure, the significance of it would lie in supporting an application for discharge of the ex parte orders. However, there has not been any such application and there is presently no other reason why the Court should be drawn into an argument about whether disclosure to McNaughton J was full or not.

   48. Another aspect of departure from normal procedure with respect to the ex parte application, as alleged by the defendants, is that there was a failure to have the order made subject to an exclusion of reasonable living and legal expenses of the defendants. The defendants contend that they should have been made aware that they could have such an exclusion and that this should have been brought to their attention when the ex parte order was first returnable before Chen J on 25 November 2024. I do not attach significance to the alleged nondisclosure of that matter at that time because it may equally be said that the defendants’ legal representative, who was present before Chen J, would have known that an exception to a restraining order could be made and could have made an application in that behalf at the time. That probably would have required the preparation of affidavits to substantiate what the reasonable living and legal expenses of the defendants would be.

   49. On 14 March 2025 the defendants filed their notice of motion seeking release of all the funds paid into Court. No doubt by the time that course of action was resolved upon, it was determined that they had a basis for seeking complete release and that that should be pursued in preference to merely claiming a release of living expenses. When that notice of motion came before the registrar on 20 March 2025, the plaintiff said that due to the absence of a solicitor on holiday, they would not be able to attend the hearing of the notice of motion until 2 May 2025. That date was fixed for the hearing. The registrar suggested that if there was urgency about obtaining living or legal expenses, then a separate application should be brought on an urgent basis before the duty judge.

   50. The way in which that suggestion was taken up was that the defendants’ solicitors notified the plaintiffs’ solicitors by email on 25 March 2025 at 1:00 pm that they were seeking the sum of $167,710, together with accumulated interest, to be released forthwith for such current expenses. There was no calculation or substantiation of this amount, nor even any explanation of how it was made up. The defendants’ solicitors advised the plaintiffs’ solicitors that if it was not agreed within the next two hours, by 3:00 pm the same afternoon, that this amount be paid out, then the defendants would apply to the duty registrar without further reference to the plaintiffs’ representatives, to have the matter decided by the Court.

   51. On 25 March 2025 the plaintiffs’ solicitors responded that they required time to consider the correspondence and to obtain instructions and that the two hour deadline was unreasonable in the circumstances. They said they would endeavour to provide a response by close of business on Friday of that week being 28 March 2025. That would seem a somewhat leisurely approach to responding but certainly it was reasonable for the plaintiffs’ solicitors to seek some time to communicate with their clients, one of whom does not speak English, or at least does not speak it fluently. The plaintiffs may well have considered it necessary to insist upon particularisation of the amount claimed.

   52. The defendants apparently treated the plaintiffs’ response as non-compliance with their deadline. They arranged through the registrar to have the matter listed before the duty judge the next day. The duty judge happened to be me.

   53. An estimated hearing time of 20 minutes was put to the registrar by the defendants’ representative. That was manifestly unrealistic. The defendants prepared an affidavit of the first defendant providing particulars of how their sum of $167,710 was made up. The defendants were referred to me in the duty list on Wednesday 26 March 2025. After the hearing had commenced the defendants provided an affidavit of the first defendant sworn 25 March 2025 setting out the quantum of the claim. The hearing proceeded through the balance of the morning.

   54. After the hearing was adjourned part heard on 26 March 2025, at 5.12 pm the plaintiffs’ solicitors offered to consent to payment out of the sum claimed by the defendants with an order that each party pay their own costs of the notice of motion. The latter was not agreed but the next morning, as earlier mentioned, the order for payment out of $167,710 was made by consent and costs were reserved.

   55. The defendants’ position is that they were driven to pursue their notice of motion for interim payment because their endeavour to have their application for release of the whole of the restrained funds expeditiously had been frustrated by the plaintiff’s unwillingness to attend an early hearing on account of a solicitor’s holiday. With due respect to the registrar, the solicitor’s role in defending such an application was not so fundamental or non-transferable as to warrant allowing that consideration to cause deferral of an application to vacate an interlocutory freezing order that had originally been made ex parte. The defendants’ present submission on costs is that they need never have made an application for release of an interim amount to cover legal and living expenses if the plaintiffs had been able to respond to their notice of motion for complete release at an earlier date than 2 May 2025.

   56. Nevertheless, it must be said that the way in which the defendants brought on the application for interim release of living and legal expenses was extremely rushed. The proposition that the defendants should respond within two hours to an unparticularised claim for $167,710 was unreasonable. There was no need for such a short time to have been fixed. If particulars of the make up of the claim had been provided it could have been expected that a reasonable timeframe for a response would have been no less than 48 hours. The way in which the matter proceeded forced the plaintiffs into court unnecessarily, without an opportunity for instructions to be taken or advice given. The result was that at least half a day was spent hearing argument on the matter on 26 March 2025, which may well have been averted if the defendants had not set an impossible time limit.

   57. Some costs would necessarily have been incurred by the defendants in substantiating the amount they sought to have paid out. Even if they had given more reasonable notice than that which in fact they gave, the costs of preparing the affidavit of the first defendant would have to have been incurred. The costs of preparation of the notice of motion and of corresponding with the registrar to arrange the listing may have been necessary in order to bring the plaintiffs to the recognition that they had to respond or else the Court would be engaged to intervene and disburse some of the money.

   58. The application was in some measure supported by affidavits of Kanha Kim and of the second defendant. However, those affidavits are directed rather to the defendants’ global resistance to the freezing order rather than to the release of funds for current expenses.

   59. This consideration of the matter leads me to make the following orders.

1. The plaintiffs are to pay the defendants’ costs of the preparation of the notice of motion that was heard on 26 March 2025 and preparation of the affidavit of the first defendant affirmed on 25 March 2025 and the costs of correspondence making demand for agreement to the release of funds out of court for legal and living expenses.

2. The parties are to bear their own costs of the hearing of 26 and 27 March 2025 and to bear their own costs of the notice of motion in all respects other than as provided in the previous order.

Further procedural directions

60. Procedural directions for further conduct of the plaintiffs’ substantive case are required, as follows:

1. Extend the time provided in my order of 9 May 2025 for the filing of the amended statement of claim to Friday 16 May 2025.

2. Direct that the first defendant file a defence to the amended statement of claim by 30 May 2025.

3. Grant leave to the second defendant to file an amended defence to address the amended statement of claim also by 30 May 2025.

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Decision last updated: 15 May 2025