Trafford-Jones v Liu, in the matter of the bankrupt estate of Liu - [2024] FCA 998

FEDERAL COURT OF AUSTRALIA
Trafford-Jones v Liu, in the matter of the bankrupt estate of Liu [2024] FCA 998

File number(s): NSD 1437 of 2023

Judgment of: CHEESEMAN J

Date of judgment: 2 September 2024

Date of publication of reasons: 6 September 2024

Catchwords: PRACTICE AND PROCEDURE – application for freezing and ancillary orders against third parties pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and r 7.32 of the Federal Court Rules 2011 (Cth) – where bankrupts’ major creditors are judgment creditors – where trustees’ investigations are ongoing – where bankrupts’ disclosure of property dealings incomplete – where trustees gave undertakings to the Court as to damages and to commence proceedings within two months – whether orders ought be made for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied – Held: application granted

Legislation:
Bankruptcy Act 1966 (Cth) s 58(1)

Federal Court of Australia Act 1976 (Cth) s 23

Federal Court Rules 2011 (Cth) rr 7.32, 7.33, 7.34, 7.35, 7.36

Cases cited:
BCI Finances Pty Ltd (in liq) v Binetter (No 3) [2015] FCA 1336

BGC Australia Pty Ltd v Minspec Pty Ltd [2015] WASC 134

Blatch v Archer (1774) 1 Cowp 63; 98 ER 969

Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961

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

Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334

Curtis v NID Pty Ltd [2010] FCA 1072

Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429

Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273ALR 194

El-Debel v Micheletto (Trustee) [2021] FCAFC 117

Frigger v Trenfield (No 7) [2020] FCA 1740

Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2022] NSWSC 937

Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2020] NSWSC 732

Jackson v Sterling Industries Ltd [1987] HCA 23; 162 CLR 612

Jones v Dunkel [1959] HCA 9; 101 CLR 298

JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139; 2 All ER (Comm) 816

Lewis v Condon [2013] NSWCA 204

Matson v Attorney-General (Cth) [2021] FCA 161

Mercantile Group (Europe) AG v Aiyela [1994] QB 366

Ninemia Maritime Corp v Trave Schiffahrtsgesselschaft mbH & Co KG (The Niedersachsen) [1983] Com LR 234

Parbery v QNI Metals Pty Ltd [2018] QSC 107; 358 ALR 88

Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319

Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188

PT Bayan Resources v BCBC Singapore [2015] HCA 36; 258 CLR 1

Royal Express Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v Huang, in the matter of Royal Express Pty Ltd [2021] FCA 585

Shercliffe v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729

Skyworks NSW Pty Ltd v 32 Drummoyne Pty Ltd [2017] NSWSC 343

Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; 311 ALR 632

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: General and Personal Insolvency

Number of paragraphs: 211

Date of hearing: 26, 29 August 2024

Counsel for the Applicants: Mr R Notley

Solicitor for the Applicants: ERA Legal

Counsel for the Third to Seventh Respondents: Mr C Bova SC with Ms E Phelan

Solicitor for the Third to Seventh Respondents: AHD Lawyers

ORDERS

NSD 1437 of 2023

IN THE MATTER OF THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK

Applicant

GAVIN KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK

Applicant

HUA (ALYSHA) LIU

First Respondent

KEI (DENNIS) KWOK

Second Respondent

E & B HOLDINGS PTY LTD (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

CHEESEMAN J

DATE OF ORDER:

2 SEPTEMBER 2024

THE COURT NOTES THAT:
A.The Applicants, by their Counsel, give the undertakings to the Court as set out in Schedule A of each of the penal orders annexed to these orders.

THE COURT ORDERS THAT:
1.Upon entry of orders 2 to 8 below, the orders made by the Court on 26 June 2024 (as most recently extended by orders made on 26 August 2024) be discharged.
2.Pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act 1976 (Cth)) and rule 7.32 of the FederalCourt Rules 2011 (Cth), and upon the Applicants giving the undertakings to the Court in Schedule A of Penal Notice A, the Court makes orders in accordance with Penal Notice A (as annexed and marked Annexure A) in respect of the Third Respondent, E & B Holdings Pty Limited (ACN 615 481 251), such orders to expire at 6.00pm on 1 November 2024 unless further extended by the Court.
3.Pursuant to section 23 of the Federal Court Act 1976 (Cth) and rule 7.32 of the Federal Court Rules 2011 (Cth), and upon the Applicants giving the undertakings to the Court in Schedule A of Penal Notice B, the Court makes orders in accordance with Penal Notice B (as annexed and marked Annexure B) in respect of the Fourth Respondent, Hanoi Landmark Investment Pty Ltd (ACN 638 222 161), such orders to expire at 6.00pm on 1 November 2024 unless further extended by the Court.
4.Pursuant to section 23 of the Federal Court Act 1976 (Cth) and rule 7.32 of the Federal Court Rules 2011 (Cth), and upon the Applicants giving the undertakings to the Court in Schedule A of Penal Notice C, the Court makes orders in accordance with Penal Notice C (as annexed and marked Annexure C) in respect of the Fifth Respondent, Landmark Everest Pty Ltd (ACN 652 198 082), such orders to expire at 6.00pm on 1 November 2024 unless further extended by the Court.
5.Pursuant to section 23 of the Federal Court Act 1976 (Cth) and rule 7.32 of the Federal Court Rules 2011 (Cth), and upon the Applicants giving the undertakings to the Court in Schedule A of Penal Notice D, the Court makes orders in accordance with Penal Notice D (as annexed and marked Annexure D) in respect of the Sixth Respondent, E & B Business Pty Ltd (ACN 615 482 329), such orders to expire at 6.00pm on 1 November 2024 unless further extended by the Court.
6.Pursuant to section 23 of the Federal Court Act 1976 (Cth) and rule 7.32 of the FederalCourt Rules 2011 (Cth), and upon the Applicants giving the undertakings to the Court in Schedule A of Penal Notice E, the Court makes orders in accordance with Penal Notice E (as annexed and marked Annexure E) in respect of the Seventh Respondent, Chi Yuen Cheung, such orders to expire at 6.00pm on 1 November 2024 unless further extended by the Court.
7.Liberty to apply on 3 days’ notice.
8.These orders be entered forthwith.

Note:
Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A
IN THE FEDERAL COURT OF AUSTRALIA No.NSD1437/2023
DISTRICT REGISTRY: NEW SOUTH WALES
DIVISION: GENERAL

IN THE MATTER OF: THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
First Applicant
GAVIN DAVID KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
Second Applicant
HUA (ALYSHA) LIU
First Respondent
KEI (DENNIS) KWOK
Second Respondent
PENAL NOTICE

TO: E & B Holdings Pty Ltd (ACN 615 481 251)

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:E & B Holdings Pty Ltd (ACN 615 481 251)

This is a ‘freezing order’ made against you on 2 September 2024 by Justice Cheeseman following the hearing on 26 and 29 August 2024 and after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS:
INTRODUCTION
(1)Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
(2)In this order:
(a)‘applicant’, if there is more than one applicant, includes all the applicants;
(b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;
(c)‘Net Proceeds’ means the proceeds from the sale of real property identified in these orders less:
(i)     any amount properly owing to any person holding security over the property;
(ii)     all amounts properly payable with respect to real estate agents’ commissions and expenses in relation to the sale of the property;
(iii)    any adjustments required to be made on completion of the sale of the property; and
(iv)    any reasonable legal fees payable with respect to the sale of the property;
(d)‘Properties’ means the following real property situated at and known as:
(i)     703/280 Jones Street, Pyrmont NSW 2009 being the whole of the land contained in folio identifier 95/SP92496; and
(ii)     309/30 Cliff Road, Epping NSW 2121 being the whole of the land contained in folio identifier 80/SP101810;
(e)‘Return Date’ means 9 September 2024;
(f)‘third party’ means a person other than you and the applicant;
(g)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(3)(a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS
(4)(a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian assets’) up to the unencumbered value of AUD $10,000,000.00 (‘the Relevant Amount’).
(b) If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(5)For the purposes of this order,
(1)     your assets include:
(i)     all your assets, whether held in your own capacity or as trustee for a trust, whether or not they are in your name and whether they are solely or co-owned;
(ii)     any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and
(iii)    the following assets in particular:
(A)the Properties or, if any one or both of the Properties has been sold, the net proceeds of the sale(s);
(B)the assets of the business known as E & B Holdings Pty Ltd (ACN 615 481 251) or, if any or all of the assets have been sold, the net proceeds of the sale; and

(2) the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION
(6)Subject to paragraph 7, you must:
(a)at or before the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;
(b)within 10 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

(7)(a)         This paragraph (7) applies if you are not a corporation and you wish to object to complying with paragraph 6 on the grounds that some or all of the information required to be disclosed may tend to prove that you:
(i)     have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii)     are liable to a civil penalty.
(b) This paragraph (7) also applies if you are a corporation and all of the persons who are able to comply with paragraph 7 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:
(i)     have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii)     are liable to a civil penalty.

(c)     You must:
(i)     disclose so much of the information required to be disclosed to which no objection is taken; and
(ii)     prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and
(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER
(8)This order does not prohibit you from:
(a)paying your reasonable legal expenses in connection with these proceedings;
(b)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;
(c)in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation; and
(d)selling any one or both of the real Properties in the ordinary course of business, subject to the following conditions:
(i)the applicable Property be sold for fair value; and
(ii)the Net Proceeds for the sale of the applicable Property be paid into Court.

(9)You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.
(10)(a)         This order will cease to have effect if you:
(i)     pay the sum of AUD$10,000,000.00 into Court; or
(ii)     pay that sum into a joint bank account in the name of your lawyer and the lawyer for the applicant as agreed in writing between them; or
(iii)    provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.
(b) Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.
(c) If this order ceases to have effect pursuant 10(a) above, you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS
(11)The costs of this application are reserved to the Court hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT
(12)Set off by banks
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before the date of this order.
(13)Bank withdrawals by you
No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

SCHEDULE A
UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANTS
(1)The applicants undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
(2)As soon as practicable, the applicants will cause anyone notified of this order to be given a copy of it.
(3)If this order ceases to have effect the applicants will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
(4)The applicants will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.
(5)The applicants undertake to commence any proceedings against the third to seventh respondents by 1 November 2024.
(6)The applicants will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding and any proceeding commenced in accordance with paragraph 5 of this undertaking.

ANNEXURE B
IN THE FEDERAL COURT OF AUSTRALIA No.NSD1437/2023
DISTRICT REGISTRY: NEW SOUTH WALES
DIVISION: GENERAL

IN THE MATTER OF: THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
First Applicant
GAVIN DAVID KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
Second Applicant
HUA (ALYSHA) LIU
First Respondent
KEI (DENNIS) KWOK
Second Respondent
PENAL NOTICE

TO: Hanoi Landmark Investment Pty Ltd (ACN 638 222 161)

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:Hanoi Landmark Investment Pty Ltd (ACN 638 222 161)

This is a ‘freezing order’ made against you on 2 September 2024 by Justice Cheeseman following the hearing on 26 and 29 August 2024 and after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS:
INTRODUCTION
(1)Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

(2)In this order:
(a)‘applicant’, if there is more than one applicant, includes all the applicants;
(b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;
(c)‘Net Proceeds’ means the proceeds from the sale of real property identified in these orders less:
(i)any amount properly owing to any person holding security over the property;

(ii)     all amounts properly payable with respect to real estate agents’ commissions and expenses in relation to the sale of the property;
(iii)    any adjustments required to be made on completion of the sale of the property; and
(iv)    any reasonable legal fees payable with respect to the sale of the property;
(d)‘Property’ means the real property situated at and known as 1001/18 Loftus Street, Sydney NSW 2000 being the whole of the land contained in folio identifier 34/SP102355;
(e)‘third party’ means a person other than you and the applicant;
(f)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(3)(a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS
(4)You must not in any way dispose of, deal with or diminish the value of the Property.

EXCEPTIONS TO THIS ORDER
(5)This order does not prohibit you from:
(a)paying your reasonable legal expenses in connection with these proceedings;
(b)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;
(c)in relation to matters not falling within (a) and (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation; and
(d)selling the real Property in the ordinary course of business, subject to the following conditions:
(i)the Property be sold for fair value; and
(ii)the Net Proceeds for the sale of the Property, be paid into Court.

(6)You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

COSTS
(7)The costs of this application are reserved to the Court hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT
(8)Set off by banks
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before the date of this order.

SCHEDULE A
UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANTS
(1)The applicants undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
(2)As soon as practicable, the applicants will cause anyone notified of this order to be given a copy of it.
(3)If this order ceases to have effect the applicants will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
(4)The applicants will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.
(5)The applicants undertake to commence any proceedings against the third to seventh respondents by 1 November 2024.
(6)The applicants will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding and any proceeding commenced in accordance with paragraph 5 of this undertaking.

ANNEXURE C
IN THE FEDERAL COURT OF AUSTRALIA No.NSD1437/2023
DISTRICT REGISTRY: NEW SOUTH WALES
DIVISION: GENERAL

IN THE MATTER OF: THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
First Applicant
GAVIN DAVID KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
Second Applicant
HUA (ALYSHA) LIU
First Respondent
KEI (DENNIS) KWOK
Second Respondent
PENAL NOTICE

TO: Landmark Everest Pty Ltd (ACN 652 198 082)

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:Landmark Everest Pty Ltd (ACN 652 198 082)

This is a ‘freezing order’ made against you on 2 September 2024 by Justice Cheeseman following the hearing on 26 and 29 August 2024 and after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS:
INTRODUCTION
(1)Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
(2)In this order:
(a)‘applicant’, if there is more than one applicant, includes all the applicants;
(b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;
(c)‘Net Proceeds’ means the proceeds from the sale of real property identified in these orders less:
(i)any amount properly owing to any person holding security over the property;

(ii)     all amounts properly payable with respect to real estate agents’ commissions and expenses in relation to the sale of the property;
(iii)    any adjustments required to be made on completion of the sale of the property; and
(iv)    any reasonable legal fees payable with respect to the sale of the property;
(d)‘Property’ means the real property situated at and known as 19 Orinoco Street, Pymble NSW 2073 being the whole of the land contained in folio identifier C/337975;
(e)‘third party’ means a person other than you and the applicant;
(f)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(3)(a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS
(4)You must not in any way dispose of, deal with or diminish the value of the Property.

EXCEPTIONS TO THIS ORDER
(5)This order does not prohibit you from:
(a)paying your reasonable legal expenses in connection with these proceedings;
(b)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;
(c)in relation to matters not falling within (a) and (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation; and
(d)selling the real Property in the ordinary course of business, subject to the following conditions:
(i)the Property be sold for fair value; and
(ii)the Net Proceeds for the sale of the Property, be paid into Court.

(6)You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

COSTS
(7)The costs of this application are reserved to the Court hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT
(8)Set off by banks
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before the date of this order.

SCHEDULE A
UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANTS
(1)The applicants undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
(2)As soon as practicable, the applicants will cause anyone notified of this order to be given a copy of it.
(3)If this order ceases to have effect the applicants will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
(4)The applicants will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.
(5)The applicants undertake to commence any proceedings against the third to seventh respondents by 1 November 2024.
(6)The applicants will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding and any proceeding commenced in accordance with paragraph 5 of this undertaking.

ANNEXURE D
IN THE FEDERAL COURT OF AUSTRALIA No.NSD1437/2023
DISTRICT REGISTRY: NEW SOUTH WALES
DIVISION: GENERAL

IN THE MATTER OF: THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
First Applicant
GAVIN DAVID KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
Second Applicant
HUA (ALYSHA) LIU
First Respondent
KEI (DENNIS) KWOK
Second Respondent
PENAL NOTICE

TO: E & B Business Pty Ltd (ACN 615 482 329)

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:E & B Business Pty Ltd (ACN 615 482 329)

This is a ‘freezing order’ made against you on 2 September 2024 by Justice Cheeseman following the hearing on 26 and 29 August 2024 and after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS:
INTRODUCTION
(1)Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
(2)In this order:
(a)‘applicant’, if there is more than one applicant, includes all the applicants;
(b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;
(c)‘Return Date’ means 9 September 2024;
(d)‘third party’ means a person other than you and the applicant;
(e)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(3)(a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS
(4)(a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian assets’) up to the unencumbered value of AUD $10,000,000.00 (‘the Relevant Amount’).
(b) If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(5)For the purposes of this order,
(1)     your assets include:
(i)     all your assets, whether held in your own capacity or in the capacity as trustee of a trust, whether or not they are in your name and whether they are solely or co-owned;
(ii)     any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and
(iii)    the following assets in particular:
(A)the assets of the business known as E & B Business Pty Ltd (ACN 615 482 329) or, if any or all of the assets have been sold, the net proceeds of the sale; and
(B)any money in the bank account with BSB and account number 032 029 288411 in the name of E & B Business Pty Ltd at National Australia Bank;

(2) the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION
(6)Subject to paragraph 7, you must:
(a)at or before the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;
(b)within 14 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

(7)(a) This paragraph (7) applies if you are not a corporation and you wish to object to complying with paragraph 6 on the grounds that some or all of the information required to be disclosed may tend to prove that you:
(i)have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii)are liable to a civil penalty.

(b) This paragraph (7) also applies if you are a corporation and all of the persons who are able to comply with paragraph 7 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 7 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

(i)have committed an offence against or arising under an Australian law or a law of a foreign country; or
(ii) are liable to a civil penalty.

(c)     You must:
(i)disclose so much of the information required to be disclosed to which no objection is taken; and
(ii)     prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and
(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER
(8)This order does not prohibit you from you from:
(a) paying your reasonable legal expenses in connection with these proceedings;
(b)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;
(c)in relation to matters not falling within (a) or (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation; and

(9)You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.
(10)(a)     This order will cease to have effect if you:
(i)     pay the sum of AUD$10,000,000.00 into Court; or
(ii)     pay that sum into a joint bank account in the name of your lawyer and the lawyer for the applicant as agreed in writing between them; or
(iii)    provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.
(b) Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.
(c) If this order ceases to have effect pursuant 10(a) above, you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS
(11)The costs of this application are reserved to the Court hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT
(12)Set off by banks
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before the date of this order.
(13)Bank withdrawals by you
No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

SCHEDULE A
UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANTS
(1)The applicants undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

(2)As soon as practicable, the applicants will cause anyone notified of this order to be given a copy of it.
(3)If this order ceases to have effect the applicants will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
(4)The applicants will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.
(5)The applicants undertake to commence any proceedings against the third to seventh respondents by 1 November 2024.
(6)The applicants will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding and any proceeding commenced in accordance with paragraph 5 of this undertaking.

ANNEXURE E
IN THE FEDERAL COURT OF AUSTRALIA No.NSD1437/2023
DISTRICT REGISTRY: NEW SOUTH WALES
DIVISION: GENERAL

IN THE MATTER OF: THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK

THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
First Applicant
GAVIN DAVID KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK
Second Applicant
HUA (ALYSHA) LIU
First Respondent
KEI (DENNIS) KWOK
Second Respondent
PENAL NOTICE

TO: Chi Yuen Cheung

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:Chi Yuen Cheung

This is a ‘freezing order’ made against you on 2 September 2024 by Justice Cheeseman following the hearing on 26 and 29 August 2024 and after the Court was given the undertakings set out in Schedule A to this order.
THE COURT ORDERS:
INTRODUCTION
(1)Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
(2)In this order:
(a)‘applicant’, if there is more than one applicant, includes all the applicants;
(b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;
(c)‘Net Proceeds’ means the proceeds from the sale of real property identified in these orders less:
(i)any amount properly owing to any person holding security over the property;

(ii)     all amounts properly payable with respect to real estate agents’ commissions and expenses in relation to the sale of the property;
(iii)    any adjustments required to be made on completion of the sale of the property; and
(iv)    any reasonable legal fees payable with respect to the sale of the property;
(d)‘Property’ means the real property situated at and known as 309/30 Cliff Road, Epping NSW 2121 being the whole of the land contained in folio identifier 80/SP101810;
(e)‘third party’ means a person other than you and the applicant;
(f)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(3)(a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.
(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS
(4)You must not in any way dispose of, deal with or diminish the value of the Property.

EXCEPTIONS TO THIS ORDER
(5)This order does not prohibit you from:
(a)paying your reasonable legal expenses in connection with these proceedings;
(b)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred;
(c)in relation to matters not falling within (a) and (b), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation; and
(d)selling the real Property in the ordinary course of business, subject to the following conditions:
(i)the Property be sold for fair value; and
(ii)the Net Proceeds for the sale of the Property be paid into Court.

(6)You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

COSTS
(7)The costs of this application are reserved to the Court hearing the application.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT
(8)Set off by banks
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before the date of this order.

SCHEDULE A
UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANTS
(1)The applicants undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.
(2)As soon as practicable, the applicants will cause anyone notified of this order to be given a copy of it.
(3)If this order ceases to have effect the applicants will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.
(4)The applicants will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.
(5)The applicants undertake to commence any proceedings against the third to seventh respondents by 1 November 2024.
(6)The applicants will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding and any proceeding commenced in accordance with paragraph 5 of this undertaking.

REASONS FOR JUDGMENT
CHEESEMAN J:
INTRODUCTION

The applicants, Thyge Trafford-Jones and Gavin David King, are the joint and several Trustees in bankruptcy of the estates of the first respondent, Hua (Alysha) Liu, and the second respondent, Kei (Dennis) Kwok, (together, the Bankrupts).
By their Amended Interlocutory Application dated 14 August 2024, the Trustees seek freezing orders pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and rule 7.32 of the Federal Court Rules 2011 (Cth) (the Rules) in respect of the following respondents that the Trustees believe are holding assets, including real property, on trust for the Bankrupts:
(1)E & B Holdings Pty Ltd, the third respondent;
(2)Hanoi Landmark Investment Pty Ltd, the fourth respondent;
(3)Landmark Everest Pty Ltd, the fifth respondent;
(4)E & B Business Pty Ltd, the sixth respondent; and
(5)Chi Yuen Cheung, the seventh respondent.
These five respondents were the only active respondents on the Application. I will refer to them as the Respondents. The Bankrupts are the first and second respondents. The Bankrupts, having been served, did not appear when the matter was called on for hearing.
The Respondents each oppose the entirety of the relief sought in the Application.
The Application came before me in my capacity as Commercial and Corporations Duty Judge on 26 August 2024 and again on 29 August 2024.
EVIDENCE
In support of their Application, the Trustees relied on the following evidence:
(1)an affidavit of Thyge Trafford-Jones affirmed 17 June 2024 and Exhibit TTJ-3 thereto;
(2)an affidavit of Alexander Dennis Blackie, a solicitor for the Trustees, affirmed 25 June 2024 and Exhibit ADB-1 thereto;
(3)an affidavit of Blake Joel O’Neill affirmed 8 August 2024 and Exhibit BJON-1 thereto;
(4)an affidavit of Mr Trafford-Jones affirmed 22 November 2023 and Exhibit TTJ-1 thereto; and
(5)an affidavit of Mr O’Neill affirmed 28 August 2024 and Exhibit BJON-2 thereto.
On 27 August 2024, the Court was informed of an error in Mr Trafford‑Jones’ affidavit affirmed 17 June 2024. The correction made was to confirm that an email from Ms Liu dated 23 September 2021, referred to in paragraph 68(h) of Mr Trafford-Jones’ affidavit, does not include the specific words “my property” and that the assertion in Mr Trafford-Jones’ affidavit to the contrary is incorrect.
In addition, the Trustees read affidavits which demonstrated that service had been effected on each of the Bankrupts.
The Respondents tendered a letter, described as a letter of complaint, from Ms Lou, AHD Lawyers, solicitor for the respondents to Mr O'Neill, ERA Legal, solicitor for the trustees dated 14 August 2024. The Respondents did not otherwise rely on any other evidence.
On 28 August 2024, the Trustees applied for leave to reopen their case to adduce further evidence. The reopening application was opposed. I granted leave to reopen and the Trustees read the final affidavit of Mr O’Neill and tender the exhibit thereto (see paragraph [6(5)] above). The reopening application is addressed at paragraph [58] below.
CONCLUSION IN SUMMARY FORM
On 2 September 2024, I made freezing and ancillary orders against the Respondents. At that time, I did not deliver reasons. These are my reasons for making the orders that I made on Monday.
PRELIMINARY OBSERVATION
The evidence relating to: (1) the establishment and operation of the corporate respondents; (2) the operation of the trust arrangements associated with Ms Liu and the Respondents; and (3) the relationships existing between the relevant companies, trusts and individuals, is complex. These complexities and interrelationships are exposed in the voluminous evidence relied on by the Trustees. Regrettably, notwithstanding the time between the bulk of the evidence being finalised and the hearing, the evidence was not addressed in a detailed and systematic way in the written and oral submissions advanced on behalf of the Trustees.
The Trustees’ investigations into the affairs of each of the Bankrupts are continuing. The provision of information to the Trustees has been, at best, sporadic and has required the Trustees to have recourse to the compulsory processes of the Court, with those processes being directed to the Bankrupts and an array of third parties. The disclosures made by the Bankrupts in their bankruptcy questionnaires are incomplete and, in the Trustees’ view, materially misleading. The Trustees’ present understanding of the corporate and trust arrangements and property interests of the Bankrupts, as revealed in the affidavits of Mr Trafford-Jones, has evolved as their investigations have progressed but is still necessarily incomplete. The investigations undertaken by the Trustees have extended to the issue of examination notices and production notices. The Trustees are still in the process of conducting examinations and reviewing documents produced by various third parties. The information asymmetry that often besets the investigations of external administrators is manifestly in play here, and has clearly, affected the extent to which the Trustees are able at this stage of their investigations to lead evidence that would provide a complete picture of the relationships and dealings between the Bankrupts and the Respondents. Even so, the Trustees have adduced a large amount of evidence on this Application, that it was necessary to thoroughly review after the initial hearing.
As mentioned, the Respondents did not adduce any evidence other than the letter of complaint. By this letter, the Respondents, amongst other things, communicated their opposition to the freezing orders and requested a proper articulation of the relief to be sought against the Respondents and the legal basis for such relief: T28.44-47, 26 August 2024. No response was provided by the Trustees’ solicitors.
The Respondents submitted the Trustees’ ongoing failure to properly articulate the claim is fatal to the present Application: T40.14-17, 26 August 2024.
The Trustees submitted that in accordance with the rule in Jones v Dunkel [1959] HCA 9; 101 CLR 298 the Court should more readily draw the inferences for which the Trustees contend, based on the Trustees’ evidence filed to date and the Respondents’ failure to adduce any evidence to contradict those inferences being drawn: T10.19-23, 26 August 2024. The Trustees’ submission, expressed in this way, somewhat conflates the rule in Jones v Dunkel — that the evidence that the Respondents may have adduced would not have assisted them — and principle in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 — that evidence is to be weighed according to the capacity of a party to adduce it.
The Respondents submitted that a Jones v Dunkel inference should not be drawn in light of the limited objective evidence proffered by the Trustees in support of the Application: T41.21-24, 26 August 2024. The Respondents submitted that the Trustees’ failure to respond to the letter of complaint coupled with the scant exposure of the Trustees’ case on the matters on which the Trustees bore the onus gives rise to a conclusion that there was no need for the Respondents to adduce any evidence. Further, and in the alternative, that a Jones v Dunkel inference cannot be used to fill a hole in the Trustees’ case.
I have some sympathy for the Respondents’ submission as to the scant exposure of the Trustees’ case given the Delphic way in which the Trustees advanced their submissions, both in writing and orally. However, having regard to the detailed evidence relied upon by the Trustees in relation to the establishment and operation of the corporate respondents, the trusts associated with them and the relationships existing between the companies, the trusts and the relevant individuals, and taking into account the principle in Blatch v Archer, I have concluded that the absence of any substantive evidence from the Respondents is not so readily explained.
I do not accept that the letter of complaint should be treated as having the prophylactic effect for which the Respondents contend. Rather, I am satisfied that the proper inference to be drawn is that such evidence as each of the Respondents may have adduced would not have assisted them on this Application. That said, I accept that the Jones v Dunkel inference cannot be used to fill a hole in the Trustees’ case.
I am satisfied that each of the Respondents was in a position to call evidence likely to be relevant to the determination of the present Application. I do not accept that the lack of response to the letter of complaint supplies an adequate explanation for the Respondents not calling any substantive evidence. Accordingly, in reaching my findings below, I have drawn the inference that such evidence as any of the Respondents may have called would not have assisted them in relation to the matters in issue on this Application.
THE PROPERTY SPECIFICALLY NAMED IN THE FREEZING ORDERS
It is convenient to first provide details in respect of the real property that is specifically referred to in the freezing orders sought by the Trustees. The Trustees submit that the following real property is held on trust for the Bankrupts:

Defined as Owner Address Folio Identifier

Jones Street Property E & B Holdings 703/280 Jones Street, Pyrmont NSW 2009 95/SP92496

Loftus Street Property Hanoi 1001/18 Loftus Street, Sydney NSW 2000 34/SP102355

Orinoco Street Property Landmark 19 Orinoco Street,
Pymble NSW 2073 C/337975

Cliff Road Property Mr Cheung 309/30 Cliff Road, Epping NSW 2121 80/SP101810
PROCEDURAL HISTORY
The Haiye Proceeding

In 2017, Haiye Developments Pty Limited, Janzong He and Haiqiang He commenced proceedings in the Supreme Court of New South Wales against, amongst others, Ms Liu, Mr Kwok and Pionnier Pty Ltd, a company of which Mr Kwok was the sole director and shareholder (the Haiye Proceeding). The list of active defendants ultimately reduced to three in number being Ms Liu, Mr Kwok and Pionnier. While Ms Liu and Mr Kwok were represented in, and defended, the proceedings, neither of them gave evidence in the proceeding.
The plaintiffs were successful in obtaining a judgment against the Ms Liu, Mr Kwok and Pionnier: Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2022] NSWSC 937; with orders made on 9 September 2022.
The Haiye Proceeding concerned claims by the plaintiffs that Ms Liu, Mr Kwok and Pionnier were involved in a fraudulent enterprise in respect of certain transactions that caused, or played a part in causing, substantial damage to the plaintiffs. The events giving rise to the Haiye Proceeding commenced in about 2015. Kunc J described the claim against Ms Liu, Mr Kwok and Pionnier as follows (at [4]):
The facts of the underlying dispute the subject of these proceedings are complex. That is often the case when allegations of fraud are involved. The primary allegation advanced against [Ms Liu, Mr Kwok and Pionnier] is that by their involvement in a fraudulent enterprise, they have caused, or played a part in causing, substantial damage to the Plaintiffs. The primary architect of the fraudulent enterprise, it is alleged, is a former Federal Parliamentarian, Mr Nickolas Varvaris; the Second Defendant in these proceedings. Although Mr Varvaris’ involvement in the enterprise is undeniably central to the Plaintiffs’ case, the Plaintiffs have abandoned their claims against him on account of his bankruptcy subsequent to the commencement of these proceedings.
The false representations in which Ms Liu, Mr Kwok and Pionnier were involved concerned the feasibility and achievability of proposed developments, willingness and capability to purchase property, true market valuations of properties and remaining silent in the face of representations made by Mr Varvaris. It is sufficient for present purposes to note that Kunc J found that Ms Liu, Mr Kwok and Pionnier had engaged in misleading and deceptive conduct and deceit: Haiye at [420] (Ms Liu), [421] (Mr Kwok), [479], [493]. His Honour was satisfied that Ms Liu, Mr Kwok and Pionnier were all part of the ruse of which Mr Varvaris was the principal architect and that they were principals in the impugned transactions and not mere intermediaries or mouthpieces for Mr Varvaris: Haiye [433], [435]. The Court was satisfied that Ms Liu, Mr Kwok and Pionnier were “inside the tent with Mr Varvaris” and not outside of it: Haiye at [439]. They each aided and abetted the other and were directly or indirectly knowingly concerned in or a party to the contravening conduct of the others: Haiye at [441].

Several freezing orders were made during the Haiye Proceeding, including as against Ms Liu, Mr Kwok and Pionnier on 9 March 2017: Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2020] NSWSC 732 at [88]. In order to discharge these freezing orders, $3,564,000 was paid by Ms Liu, Mr Kwok and Pionnier, through their solicitors Sunlit Legal, into the court on 14 March 2017. On 23 April 2021, Kunc J made orders releasing part of the freezing order funds, reducing the total amount held by the court to $2,997,750.
The Haiye Proceeding was heard on 12-16, 19, 20, 22, 23, 27 April 2021 with further written submissions being filed on 7, 17 and 28 May 2021.
On 13 July 2022, Kunc J delivered reasons for judgment in favour of Haiye and subsequently on 9 September 2022 made orders including, amongst others, judgment against Ms Liu, Mr Kwok and Pionnier for $5,871,607.38 plus interest and costs. No appeal from this judgment has been lodged.
The Haiye judgment debt appears to have precipitated each of the Bankrupts taking steps to enter voluntary bankruptcy.
When questioned in her examination about the judgment, Ms Liu said that she recalled that reasons for judgment in the Haiye Proceeding were delivered and orders were made giving judgment against Ms Liu, Mr Kwok and Pionnier in September 2022 – before she became bankrupt. Ms Liu gave evidence that she applied to appeal the judgment as she did not think it was fair and sought to vindicate her reputation, but was not capable of pursuing the appeal because she did not have the funds to pay for legal fees. Ms Liu explained that the first defendant in the Haiye Proceeding, The Commercial Business Centre Pty Ltd, “took all the money”: T86.46-47, 20 May 2024.
Ms Liu gave evidence that she did not think Kunc J’s findings in Haiye Proceeding as to certain misleading and deceptive representations made by Ms Liu and Mr Kwok to Haiye were relevant to her bankruptcy. She gave evidence that she explained everything to her trustee and thought her trustee “would deal with Haiye”: T86.5-6, 20 May 2024.
When questioned in his examination about the judgment, Mr Kwok similarly acknowledged that the judgment was entered against Ms Liu, Mr Kwok and Pionnier for a substantial sum and that findings were made that they had engaged in misleading and deceptive conduct: T190.23-T191.6, 21 May 2024. Mr Kwok also said that there was no appeal of the judgment because Ms Liu and Mr Kwok did not have the funds: T191.21-29, 21 May 2024. Mr Kwok gave evidence that he started to experience financial difficulties as a result of the Haiye Proceeding and the large amount of legal fees incurred defending that case: T113.5-18, 21 May 2024.
Both Ms Liu and Mr Kwok did not accept Kunc J’s factual findings against them. They each maintained the position that they sought to advance in the Haiye Proceeding — that they were in effect just caught in the middle of the impugned arrangements: T191.35-43, 21 May 2024. That proposition was comprehensively rejected by Kunc J.
The Trustees relied on the decision in Haiye. They did not however provide submissions which meaningfully contextualised the relevant events in this proceeding by reference to the facts found in the detailed reasons for judgment given in Haiye. The Trustees submitted that the Haiye Proceeding was commenced in March 2017 which was about seven months after E & B Business and E & B Holdings were incorporated and about a month before the purchase of the Jones Street Property completed. The other real properties were acquired while the Haiye Proceeding was on foot. At its height, the submission advanced for the Trustees was as follows (T57.23-34, 26 August 2024):
HER HONOUR: And what are you asking me to infer from that in this proceeding?
MR NOTLEY: That the course of the commencement of these various transactions to purchase these properties were either entered into shortly before the proceedings were commenced or after they were commenced. That’s an important background matter. And bearing in mind the steps or the evidence that the bankrupts have gone to to indicate they know nothing about these various properties in these various companies, your Honour would infer from that that all of these properties were purchased with the intention of putting them into the names of third parties or third entities or individuals for the purposes of putting them out of the reach of creditors of the bankrupts in the event ultimately that judgment was successfully obtained against the bankrupts in those proceedings.
The purpose of the Court’s power in an application such as this is directed to protecting the processes of the Court. Those processes extend to the processes engaged by the Court’s jurisdiction under the Bankruptcy Act 1966 (Cth), which informs the Trustees’ proceeding in this Court. As mentioned above, the Haiye judgment debt appears to have precipitated each of the Bankrupts taking steps to enter voluntary bankruptcy. Notwithstanding the generalised submissions advanced by the Trustees, what emerges from the detailed reasons for judgment in Haiye that is presently of some contextual relevance in this Application is that in about March 2016 substantial payments were obtained from the Haiye Proceeding plaintiffs and applied under the cover of misleading and deceptive conduct and deceit to the benefit of Ms Liu, Mr Kwok and Pionnier. In March 2017, after freezing orders were made against them, Ms Liu, Mr Kwok and Pionnier paid $3,564,000 into court in the Haiye Proceeding. In their opening written submissions in the Haiye Proceeding, which I infer would have been made proximate to the start of the hearing in April 2021, Ms Liu, Mr Kwok and Pionnier accepted that (Haiye at [293]):
a. Of the $3,564,000 paid by the Plaintiffs into the trust account of Varvaris & Co in respect of the Second Kogarah Property, $2,231,762.83 of that money was applied towards the purchase price of the First Kogarah Property. The Plaintiffs are entitled to ownership of the First Kogarah Property, subject to an allowance for the $233,750 contribution to the purchase of the First Kogarah Property made on behalf of [Pionnier].
b. In respect of two amounts of $400,000 that were ultimately transferred into bank accounts in [Ms Liu’s] name, the Plaintiffs are entitled to a payment of $800,000 (which can be paid from the moneys paid into Court by [Ms Liu] in March 2017).
The misappropriation that was in issue in the Haiye Proceeding, and that was conceded (without admissions) at the outset of the Haiye hearing, was found to have occurred in March 2016, which was about seven months before both E & B Business and E & B Holdings were incorporated on 21 October 2016 and about a year before the commencement of the Haiye Proceeding. The Bankrupts did not seek to be heard on this application and no evidence was led on this issue. I will refer to these transactions as the impugned March 2016 transactions.
The bankrupt estates
Ms Liu and Mr Kwok voluntarily applied for bankruptcy by way of debtor’s petition on 7 November 2022 and 9 November 2022 respectively.
In November 2022, Mr Trafford-Jones was appointed as trustee in bankruptcy of the estate of Ms Liu and Mr Kwok. Mr King was subsequently appointed as co-trustee in bankruptcy of the estates of both Ms Liu and Mr Kwok on 24 August 2023.
On 24 August 2023, Kunc J made orders that the funds held in court after judgment in the Haiye Proceeding, together with any accrued interest on those funds, be distributed in three equal payments of $1,127,264.85 to:
(1)the trustee in bankruptcy of the estate of Ms Liu (being at that time Mr Trafford-Jones);
(2)the trustee in bankruptcy of the estate of Mr Kwok (being at that time Mr Trafford‑Jones); and
(3)Haiye.
The Trustees have not yet called for final proofs of debt in either bankrupt estate. The Trustees’ investigations to date indicate that the unsecured creditors of Ms Liu’s bankrupt estate include in total approximately $9,815,727.10, comprised of:
(1)$7,907,776.53 owing to Haiye, being the total amount of the judgment debt plus costs and interest (pursuant to the orders made by Kunc J on 9 September 2022 referred to at paragraph [28] above) less the payment of $1,127,264.85 (pursuant to the orders made by Kunc J on 24 August 2023 referred to at paragraph [39] above) ;
(2)$45,000 owing in legal fees;
(3)$65,878 owing in what appear to be business expenses to an asset finance company and office equipment supplier;
(4)$47,072.57 owing in credit cards with American Express, Commonwealth Bank Australia and Westpac Banking Corporation; and
(5)$1,750,000 owing in personal loans to various individual creditors, some of whom the Trustees think are related parties to Ms Liu.
A proof of debt of $5,436,000 lodged by Tao Sun on behalf of Fantastic World Investments Limited, a company incorporated in the British Virgin Islands, which includes $3,564,000 recorded as “Loan to Hua Liu for money paid into Court for security for costs”, has been rejected by the Trustees.
The Trustees’ investigations to date indicate that the unsecured creditors of Mr Kwok’s bankrupt estate include in total approximately $9,466,000, comprised of:
(1)$7,791,043.50 owing to Haiye, being the total amount of the judgment debt plus costs and interest (pursuant to the orders made by Kunc J on 9 September 2022 referred to at paragraph [28] above) less the payment of $1,127,264.85 (pursuant to the orders made by Kunc J on 24 August 2023 referred to at paragraph [39] above);
(2)$325,000 owing to APR Legal in legal fees; and
(3)$223,000 to six other creditors.
The present proceeding
On 30 November 2023, this proceeding was commenced by way of an originating application seeking the issue of summonses to examine each of the Bankrupts and Jack Jacovou, a solicitor engaged by one or both of the Bankrupts and/or their related entities. The public examinations of the Bankrupts and Mr Jacovou took place on 20 and 21 May 2024.
During the course of the public examinations, the Trustees obtained information that led them to form the view that the Bankrupts have concealed, and are continuing to conceal, information regarding their financial affairs which is relevant to the administration of their respective estates.
As a result, on 27 May 2024, the Trustees filed an interlocutory application in this proceeding seeking the issue of further summonses for examination in relation to a number of individuals associated with the Bankrupts and the issue of orders for production to a number of individuals and entities. Those examinations were scheduled to take place on 29 August 2024 and were in train when the matter came back before me as Duty Judge on the reopening application. The remaining examinations are scheduled to continue on 3 and 4 October 2024.
The documents that the Trustees obtained after the examinations of the Bankrupts led them on 18 June 2024 to file the first iteration of the present Application and also seek orders for the issue of further examination summonses.
On 26 June 2024, freezing orders were made by Halley J, by consent and without admissions, against E & B Holdings, Hanoi and Landmark, which orders were originally due to expire at 6pm on 23 August 2024. On 14 August 2024, the orders against E & B Holdings, Hanoi and Landmark were subsequently extended, by consent and without admissions, by Markovic J to 6pm on 26 August 2024, subject to the continuation of the Trustees’ undertakings to the Court. On 26 August 2024, I made orders further extending, by consent and without admissions, the existing freezing orders until determination of this Application.
The Application as amended that was argued before me was the first interparties contest in relation to the freezing orders. As such, the Trustees bore the onus of justifying that the orders they sought should be made.
Relief sought
The relief sought by the Trustees in their Application, as refined by the proposed short minutes of order, is in the following terms:
(1)As against E & B Holdings:
(a)The Trustees seek to freeze the whole of the assets of E & B Holdings up to an unencumbered value of $10,000,000. Relevantly, the only assets identified by the Trustees are the Jones Street Property and Cliff Road Property.
(b)The Trustees also seek ancillary orders for the provision of asset disclosure affidavits.
(2)As against Hanoi, the Trustees seek to freeze only the Loftus Street Property, or the net proceeds of sale of the Loftus Street Property.
(3)As against Landmark, the Trustees seek to freeze only the Orinoco Street Property, or the net proceeds of sale of the Orinoco Street Property.
(4)As against E & B Business:
(a)The Trustees seek to freeze the whole of the assets of E & B Business up to an unencumbered value of $10,000,000.
(b)The Trustees also seek ancillary orders against E & B Business for the provision of asset disclosure affidavits.
(5)As against Mr Cheung, the Trustees seek to freeze only the Cliff Road Property, or the net proceeds of sale of the Cliff Road Property.
The Trustees seek to have each of the above freezing orders made on the continuation of the Trustees’ undertaking as to damages and on the basis that unless further extended by the Court, the orders will expire at 6pm on 1 November 2024.
In the course of argument, the Trustees proffered an additional undertaking to the Court in support of the orders sought. They indicated through counsel a willingness to provide an additional undertaking in one of two alternate forms (confirmed by email from the solicitors as to the form of the undertaking):
(1)The Trustees undertake to commence any proceedings against the third to seventh respondents by 1 November 2024; or
(2)The Trustees undertake to commence proceedings against the third to seventh respondents by 1 November 2024.
On Monday when I made the orders, I did so on the basis that the Trustees had undertaken to the Court to commence proceedings against the Respondents by 1 November 2024 as well as providing the usual undertaking as to damages.
Application to reopen
On 28 August 2024, the Trustees applied for leave to reopen their case to adduce further evidence. The respondents opposed the reopening application. The documents sought to be adduced were produced to the Trustees in response to an order for production issued on 11 July 2024 to the real estate agency Zip Realty and included, amongst other things:
(1)an “Ownership Ledger” for E & B Holdings (E & B Ledger); and
(2)an “Ownership Ledger” for Hanoi (Hanoi Ledger).
The Trustees submit that the E & B Ledger, when read in conjunction with bank statements already in evidence, demonstrates a series of payments made between 9 September 2019 and 29 February 2024 with respect to rent received for the Jones Street Property being made into accounts in the name of Ms Liu and Mr Kwok, then subsequently transferred into the E & B Business Account (including the period after Ms Liu had ceased to be a director of E & B Business). Similarly, the Hanoi Ledger demonstrates a series of rental payments between 28 February 2022 and 27 March 2024 for the Loftus Street Property being made initially to an account in Ms Liu’s name, then subsequently transferred into accounts in the name of Hanoi (noting that Ms Liu is not a director of Hanoi). The Trustees emphasise that some of these payments were made during the period 1 June 2020 and 30 September 2020, which was after the date that Ms Liu resigned as director of E & B Holdings.
The heart of the reopening application was that the additional evidence supports the Trustees’ case. The Trustees’ contention is that it is reasonably arguable that E & B Business and the E & B Business Account are, in truth, controlled and owned by the Bankrupts – the Trustees submitted that “it’s their money, it’s their account, they use [it]”: T4.39-45, 29 August 2024. The Jones Street Property and Loftus Street Property were purchased using the E & B Business Account. The Trustees submit that the additional documents demonstrate that the rental income generated by the Jones Street Property and Loftus Street Property was similarly at the disposal of the Bankrupts. Further, that the mortgages on these properties were serviced using funds over which the Bankrupts had control. The Trustees contend that this is further evidence that the properties are held on a “bare trust” for the Bankrupts. When pressed to identify the nature of the trust allegation that they make the Trustees gave the example of a resulting trust. On this basis the Trustees submitted that the assets should vest in the Trustees. The Trustees’ present formulation of the basis of a claim they may bring against the Respondents is addressed further below.
The Trustees submitted that the application to reopen was unlikely to cause any prejudice to the Respondents given the narrow scope of the additional evidence and the Respondents’ choice not to serve any evidence in the proceeding to date in response to the evidence originally filed by the Trustees.
Pursuant to rule 1.32 of the Rules, the Court may make any order that the Court considers appropriate in the interests of justice. The principles relating to granting leave to a party to reopen are well established: see Frigger v Trenfield (No 7) [2020] FCA 1740 at [22]-[24] and Matson v Attorney-General (Cth) [2021] FCA 161 at [178]-[181]. In short, the power is discretionary. Prejudice to the party resisting the application is relevant. The probability that the additional evidence will affect the result is also relevant. The ultimate question is where the interests of justice lie. Broadly speaking, there are four recognised classes of cases where leave to reopen may be given, although the classes are not closed: (1) fresh evidence; (2) inadvertent error; (3) mistaken apprehension of the facts; and (4) mistaken apprehension of the law.
The Trustees’ application falls somewhere between fresh evidence and inadvertent error. It is in respect of fairly confined additional evidence. Notwithstanding that the reopening application was opposed by the Respondents, Senior Counsel for the Respondents was in a position to make submissions on the additional evidence promptly in response to the submissions made by the Trustees. In these circumstances, being satisfied that the documents were relevant in adding to the patina of factual materials relied upon by the Trustees and would not result in undue delay, trouble and expenditure, I was satisfied that it was in the interests of justice to allow the Trustees to reopen to read a further affidavit of Mr O’Neill affirmed 28 August 2024 and tender Exhibit BJON-2. Accordingly, I was satisfied it was appropriate to exercise the discretion to make orders as sought by the Trustees.
FACTUAL BACKGROUND
I now turn to consider the evidence in relation to the Bankrupts, the establishment and operation of the corporate respondents, the trusts associated with them and the relationships existing between the companies, the trusts and the relevant individuals.
The Bankrupts
The Bankrupts have each been examined pursuant to orders made in this proceeding at the instigation of the Trustees. The transcripts of each of their examinations are in evidence on this Application. The examinations of Ms Liu and Mr Kwok are ongoing and will conclude in around October 2024. In the examinations to date, the evidence given by Ms Liu and Mr Kwok has largely been evasive, ambiguous and inconsistent with documentary evidence subsequently obtained by the Trustees.
Ms Liu and Mr Kwok are, or were, married. They share two sons, Ethan and Beldon Kwok. The inclusion of “E & B” in the names of two of the corporate respondents seemingly reflects the initials of the Bankrupts’ children.
In the bankruptcy questionnaires completed by Ms Liu and Mr Kwok on 4 November 2022 and 8 November 2022 respectively, Ms Liu and Mr Kwok each responded to a question about their marital status as being “Separated / divorced / widowed”. Mr Kwok said in his examination in late May 2024 that he had been separated from Ms Liu for about six or seven years, although they continue to live under the same roof. Ms Liu confirmed in her examination that she had been separated from Mr Kwok for several years, that they still lived together and had not applied for divorce.

With respect, acknowledging the skill with which the submission was advanced, I do not accept the Respondents’ submission that there must be a “vested or accrued cause of action” before a freezing order will be made against a third party. The plurality at [47] accurately and precisely summarised the application of the principles in the context of the orders ultimately made in Cardile. As recognised in Cardile at [25]-[26], the expression “as the Court thinks appropriate” in s 23 of the Federal Court Act points to the requirement to develop principles governing the exercise of the Court’s power to ensure the power is exercised to serve the purpose for which it is given, namely to prevent the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied. The Respondents’ proposed limitation is not necessary to facilitate or support the need identified by the plurality in Cardile as the touchstone for the development of principles applicable to the exercise of the jurisdiction in s 23 of the Federal Court Act.
I also regard the limitation for which the Respondents contend as inconsistent with the express acknowledgement by the plurality in Cardile that a freezing order may lie in at least two scenarios that do not necessarily entail the applicant establishing a vested or accrued cause of action. First, the plurality recognised that a freezing order may be granted in support of a proprietary remedy that may otherwise be available. Secondly, that a freezing order may be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which 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 (at [57]). In BCI Finances Pty Ltd (in liq) v Binetter (No 3) [2015] FCA 1336 at [31], Gleeson J noted that:
Several cases have accepted the proposition that a freezing order may be made against a third party company where there was a judgment debtor or prospective judgment debtor who might be bankrupted with the consequence that his or her trustee in bankruptcy would be likely to obtain access to the assets of the third party company: Caboche v Southern Equities Corporation Ltd [2001] SASC 55 at [23] (prospective judgment debtor), Davis v Turning Properties Pt Ltd [2005] NSWSC 742; (2005) 222 ALR 656 at [42] (prospective judgment debtor), Apostolidis v Kalenik [2011] VSCA 307; (2011) 35 VR 563 at [99] (judgment debtor), footnote 80, and Rafferty v Time 2000 West Pt Ltd (No 7) [2011] FCA 405 at [58] and [72] (judgment debtor).
To accept the limitation urged by the Respondents would also be inconsistent with the recognition that the power extends to a "prospective" cause of action: see Huang at [21], extracted at paragraph [161] above.
The making of a freezing order involves a discretionary exercise of power. The Court retains a discretion to refuse relief: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-322 (Gleeson CJ).
CONSIDERATION
The Trustees conducted this Application on the basis that, in respect of each of the freezing orders they bore the onus of showing:
(1)a good arguable case;
(2)that there is a danger that the prospective judgment will be wholly or partly unsatisfied because the assets of the prospective judgment debtor or another person will be removed from Australia or the assets will be disposed of, dealt with or diminished in value; and
(3)the balance of convenience favours granting the order.
Good arguable case
A good arguable case is one which is more than barely capable of serious argument, and yet not necessarily one the Court considers would have more than a fifty percent change of success: Curtis v NID Pty Ltd [2010] FCA 1072 at [6] (Edmonds J) citing Ninemia Maritime Corp v Trave Schiffahrtsgesselschaft mbH & Co KG (The Niedersachsen) [1983] Com LR 234 at 235 (affirmed on appeal: [1983] 1 WLR 1412); Deputy Commissioner of Taxation v Greenfield Electrical Services Pty Ltd [2016] FCA 653 at [7] (Flick J). The criterion of a good arguable case is a lesser standard than a prima facie cause of action: Patterson at 325 (Gleeson CJ) and 327-330 (Rogers AJA).
The way in which the Trustees put their case on this issue was, unfortunately, somewhat mercurial. As far as I understood the Trustees’ position as it evolved in argument, the Trustees’ case is that the relevant property ostensibly held by the Respondents is “in truth” controlled and beneficially owned by the Bankrupts, or one or other of them, notwithstanding that the property is held legally in the name of one or other of the Respondents and is ostensibly subject to beneficial interests that do not directly include either of the Bankrupts. On the basis of this contention, the Trustees submit that pursuant to s 58(1) of the Bankruptcy Act, upon Ms Liu and Mr Kwok becoming bankrupt, their interest in the relevant property vested in the Trustees.
When pressed to explain the legal basis upon which they contend that the relevant property held by each of the Respondents is “in truth” controlled and beneficially owned by the Bankrupts, or one or other of them, the Trustees submitted that (T9-10, 29 August 2024):
Firstly, your Honour, can I say this by way of a background. Firstly, obviously as the application was made and then subsequently progressed in the evidence, further and further documents have come to the attention of the trustee, which means that it follows that the application has, in some sense, evolved over time as the trustee has learned more about what has occurred. In the written submissions – I will go back a step, your Honour. In the evidence, we made it very plain that what the trustee’s contention was was that assets of the bankrupts were held in the names of other individuals and/or entities.
And in the written submissions, we said the assets were held on trust, and that the bankrupts were beneficially entitled to them. That is as opposed to the bankrupts being beneficiaries under a discretionary trust. In other words, the only way that the bankrupts could be beneficially entitled to the properties is if it was on effectively some form of bare trust, which is what I put to your Honour during the course of the submissions. And a resulting trust is a form of bare trust. And in particular, what the most recent affidavit that we relied upon, being the affidavit of [2]8 August of Mr O’Neill demonstrated, is that in respect of several of the properties, being Jones Street, Loftus Street and Orinoco – deposits for those properties were paid either by Ms Liu herself or were paid by E&B Business which, we contend, is effectively Ms Liu and Mr Kwok’s money. That is the reason why we said, in respect of those properties in particular, they would be held on a resulting trust, or certainly there is an arguable case that they are held on a resulting trust - - -
HER HONOUR: As a purchase monies trust?
MR NOTLEY: Yes, but what I’m – yes, because they’ve – they’ve provided the purchase monies for the property, is the first thing. And secondly, the mortgages on those properties have continued to be met by E&B Business. In respect of E&B Business, again, we say, when your Honour looks at the facts that we’ve put forward, the evidence that we’ve put forward, being the fact that the bankrupts have treated E&B Business’ bank account like their own, that that bank account and the assets of that company are effectively held by that company on their trust for the bankrupts – in other words, they have an immediate entitlement. If they say, “Give me the money,” they will be given the money.
But a resulting trust can also apply because the evidence shows that the bankrupts have put in, I think the evidence was, at least 500, 600 thousand dollars had been put into that bank account over time by the bankrupts, and they had taken the money back out again, because the resulting trust won’t simply arise in respect of a piece of real property, but it would also arise in respect of any asset such as money in a bank account.
The Trustees’ position as to whether there was an overarching bare trust that spanned all of the documented trusts or whether the documented trusts were from inception “in truth” bare trusts or became so as a result of the way in which they were operated was left opaque.
The Trustees did not ultimately allege that the trust arrangements constituted a sham in the legal sense, after briefly flirting with the idea, they submitted that while they may seek to run a case based on sham that it was not necessary to the Trustees’ case that the trusts be a sham: T11, 29 August 2024. The Trustees’ reticence to argue, even at this stage, that the trust arrangements are a sham in the legal sense, is understandable. In my view, the contemporaneous notation in the CBA file note as to the tax minimisation purpose for setting up the trust which seemed to be put forward at one point in the argument as evidencing a sham would suggest the opposite — that the trust was intended to take effect according to its terms and is not a sham in the legal sense: Lewis v Condon [2013] NSWCA 204; 85 NSWLR 99 at [59]-[60] (Leeming JA with whom McColl JA and Sackville AJA agreed).
The Respondents submitted that that the evidence does not support a prima facie case of sham because (T15.12-25, 29 August 2024):
It’s a very serious allegation to make, and a responsible trustee would think twice, with respect, before alleging a sham in light of the objective material before the court. But in our respectful submission, the evidence before the court doesn’t even come close to a prima facie case of there being a sham. And one of the reasons for that is, take the very first acquisition through E&B Holdings. There’s just simply no need for it to be a sham. If the bankrupt wanted to be a beneficiary of the value of this property, her and her family are effectively beneficiaries under the trust. So the trust structure provides effectively the same benefit to the bankrupt with the added protection of the trust structure in place … And the tax advantages and the like
The difficulty with that submission is that it is pregnant with an assumption that E & B Holdings (through Mr Cheung) will necessarily act in accordance with the direction of the Bankrupts in exercising the powers vested in it under the trust in deciding whether to accumulate or distribute, and in choosing to whom distributions will be made, noting that there is a broad class of beneficiaries beyond the named beneficiaries. If that unspoken assumption is correct, then it tends to support the Trustees’ position that there is an arguable case that the E & B Trust in fact functions as, or as part of, a bare trust in favour of the Bankrupts. If this be so, then it may be arguable that the Bankrupts’ interest in the relevant property vested in the Trustees pursuant to s 58(1) of the Bankruptcy Act upon Ms Liu and Mr Kwok becoming bankrupt.
When pressed to explain the basis upon which an order might be made against the Respondents as third parties such that it was arguable in the requisite sense that they are amenable in some way ultimately to some coercive process requiring them to disgorge, or in some other way to contribute to the estate of each of the Bankrupts, the Trustees sought to rely in their oral submissions in reply on Micheletto (Trustee), in the matter of the El-Debel (Bankrupt) v El‑Debel [2020] FCA 1031 (appeal allowed in part, but statement of principles by Gleeson J at [78] approved: El-Debel v Micheletto (Trustee) [2021] FCAFC 117 at [7] (Markovic, Derrington and Colvin JJ)).
In Micheletto, Gleeson J found that a rebuttable presumption of a resulting trust arises in circumstances where one person provides the purchase price of a property which is conveyed into the name of another person. Further, that there is a further presumption that if part of the purchase price is provided by way of mortgage, the mortgage monies are treated as a contribution by the person who is liable to repay the mortgage. This presumption is rebuttable by evidence that the parties’ intention at the time the property was acquired was that a resulting trust not arise: Micheletto at [78(7)] (and the authorities cited therein).
The Respondents submit that Micheletto is readily distinguished from the present circumstances on the basis that: first, Micheletto was a fact-specific judgment, which concerned extraordinary evidence of a deliberate plan by the bankrupt to conceal assets in the lead-up to bankruptcy, followed by an attempt to reverse the concealed position. The Respondents highlight that the bulk of the Trustees’ evidence as to actual intention has focused on events post-dating the acquisition of the properties, rather than the bankrupts’ purpose as at the date of acquisition, which is limited to a reference in the CBA file note (referred to in paragraph 105 above) recording that Ms Liu intends to purchase the Jones Street Property under a trust in order to take tax benefits. Secondly, the presumption of a resulting trust does not arise as the deposits for the purchase price of each of the properties, although originally paid by cheques in the name of Ms Liu, were ultimately treated as payments by the corporate trustee pursuant to contracts of rescission and new contracts of sale entered into between the vendors and the various corporate trustees. The Respondents submit that the effect is that each of the deposits are to be treated effectively as trust property. Thirdly, the deposits only constituted 10 percent of the purchase price, with the remainder being borrowed on mortgage in order to acquire the properties. The Respondents submit that to the extent that a resulting trust arises, it arises in respect of the borrower, not in respect of either of the Bankrupts. The objective material before the Court on this issue is bank statements and contracts for sale in respect of each of the properties providing for loans held in the names of the corporate trustees.
I accept the Respondents’ submissions to the effect that the circumstances disclosed by the evidence in this Application are not on all fours with the circumstances considered in Micheletto. However, taking into account the relatively low threshold required to establish a good arguable case, I am nevertheless satisfied that the Trustees have met that threshold in relation to a claim based on bare trust, including potentially a resulting trust, on the basis of the evidence they have led on this Application when it is assessed in accordance with the principles in Blatch v Archer and Jones v Dunkel.
I am similarly satisfied that the Trustees have established that they may be able to establish that the assets of the Respondents that they seek to freeze are assets of the Bankrupts to which the Trustees will have access pursuant to the Bankruptcy Act. In this regard, I note that although the Trustees did not initially proffer an undertaking in relation to the commencement of proceedings against the Respondents, they yielded after the conclusion of the submissions made by Senior Counsel for the Respondents. The submission made on behalf of the Respondents was that it would be an extremely rare case where a freezing order would be made against a third party in the absence of an undertaking to commence proceedings. The undertakings offered by the Trustees as to the commencement of proceedings are extracted at paragraph [51] above. The critical feature is that the Trustees have now given an undertaking to commence any proceedings against the Respondents by 1 November 2024.
The evidence demonstrates that in the long shadow of the Haiye Proceeding, commencing with the impugned transaction in March 2016, the Bankrupts have arranged their affairs in a way that obscures the precise legal relationships which exist between each of them and the Respondents and the property held by the Respondents. The provision of information to the Trustees by each of the Bankrupts, both in their bankruptcy questionnaires and through their examinations, demonstrates persistent deflection and evasion directed to concealing their respective property interests. The same objective may inform the repeated process of novating contracts for the purchase of real property to remove or obscure Ms Liu’s involvement. There are also the anomalies in the trust documents. The Landmark Trust deed is not signed. The Cliff Road Trust Deed on its face appears to be a bare trust which serves the purpose of distancing the interest of E & B Holdings in the Cliff Road Property on the public record. That serves to obscure the potential significance of the fact that Ms Liu is a named beneficiary of the E & B Trust even though it is ostensibly a discretionary trust. The intermingling of the Bankrupts’ affairs with those of the Respondents before and after the Bankrupts became bankrupt is illustrated by the use of the E & B Business Account which appears to be used for the Bankrupts’ daily living expenses and also to service mortgages on some of the trust properties including in circumstances where neither Ms Liu nor Mr Kwok were relevantly directors at the relevant time. The Respondents have not led any evidence to explain or rebut the evidence led by the Trustees. That is their right. But having regard to the extent of the evidence led by the Trustees I am satisfied that it is appropriate to draw a Jones v Dunkel inference against them that any evidence they may have led would not have assisted them.
In an application such as this, the Court is not required to finally determine the rights of the parties. I am conscious that it is neither possible nor appropriate to conduct a trial of the underlying case or to determine contested questions of fact: Shercliffe v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 734 (Mahoney JA (with whom Glass and Samuels JJA agreed) cited with approval by the Full Court in Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; 311 ALR 632 at 647 [72] (Allsop CJ, Jagot and Nicholas JJ). Rather, what is required is a “qualitative evaluation” of the evidence: Skyworks NSW Pty Ltd v 32 Drummoyne Pty Ltd [2017] NSWSC 343 at [24] (McDougall J).
Given the nature of this Application and allowing for the difficulty that the Trustees face as external administrators I am satisfied they have made out a good arguable case. In reaching this conclusion I am conscious that it is necessarily made by reference to evidence which is at present untested and in circumstances where any claim the Trustees may have against the Respondents has not been subject to the rigour of preparing a pleading. If the Trustees seek to obtain freezing orders that persist beyond 1 November 2024, the issue as to the existence of a good arguable case will fall to be examined in the context of the proceeding, if any, that the Trustees commence against the Respondents, or any of them. The evidence available at that time will have to be weighed with care and caution before reaching the necessary conclusion of intentional deception that appears likely to inform the Trustees’ claim against the Respondents, or any of them.
Reasonable apprehension that assets will be dissipated
The risk of dissipation of assets to avoid a judgment may be established by inference: Patterson at 325-326 (Gleeson CJ). Whether an inference may be drawn will depend on the circumstances of a particular case: see Victoria University of Technology v Wilson [2003] VSC 299 at [36] (Redlich J) and Lifetime Investments Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2005] FCA 226at [9] (Kiefel J). There is no requirement that there must be direct evidence on the risk of dissipation: Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961 at [80] (Kunc J).

As summarised at paragraph [189] above, the elaborate arrangements in relation to the corporate respondents, the trusts associated with them and the relationships existing between the companies, the trusts and the relevant individuals were all created proximate to the Haiye Proceeding, which culminated in findings that Ms Liu and Mr Kwok were engaged with others in a fraudulent enterprise. It has been recognised that the nature of the underlying cause of action, at least where it involves fraudulently misappropriated assets or serious dishonesty, may provide a basis for apprehending a relevant risk: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325 (Gleeson CJ) and 326 (Meagher JA). The following observations made Gleeson CJ are apposite in the circumstances of this case:
[T]he evidence as to the nature of the scheme in which the appellant was allegedly involved, which established a prima facie case against him, was such as to justify the conclusion that there was a danger that the appellant would dispose of assets in order to defeat any judgment that might be obtained against him and that such danger was sufficiently substantial to warrant the injunction. There is no reason in principle why the evidence which is relevant to the first of the issues earlier referred to might not also have a bearing on the second, and this will especially be so where the prima facie case that is made out against a defendant is one of serious dishonesty involving diversion of money from its proper channels. The present is not a case in which a plaintiff who claims simply to be an unsecured creditor seeks to prevent a dissipation of assets which have no particular connection with the claim in question. This is a case in which the plaintiff claims that the defendant, making use of a corporation controlled by him, fraudulently misappropriated a large sum of money which, if it is still under the control of the appellant, would be quite likely to constitute, directly or indirectly, the bulk of his assets.
The evidence on this Application demonstrates that the Bankrupts appear to have organised their affairs with a view to defending against the claims brought against them in the Haiye Proceeding which stemmed, in part, from the impugned March 2016 transactions. The evidence also demonstrates a continuing pattern of evasion and deflection in the Bankrupts’ dealings with their Trustees. I am satisfied that the evidence gives rise to an inference that unless the asset preservation orders sought by the Trustees are made, any assets in the hands of the Respondents, which may ultimately prove to be assets in which the Bankrupts have an interest, will not be preserved to ensure that they are available to the Trustees for the benefit of the Bankrupts’ creditors.
In addition, I accept the Trustees’ submission that the evidence indicates that the Bankrupts have taken steps which would have the effect of putting assets beyond the reach of their creditors, including through the sale of properties and transfer of shares, and denying or expressing uncertainty as to their connection to assets in circumstances where the Bankrupts each owe a duty to be full and frank with their the Trustees. The Trustees point to the fact that a property located at Pretoria Parade, Hornsby, owned by Ms Gao on trust for E & B Holdings as trustee of the E & B Trust, was sold in September 2024. The Loftus Street Property is presently advertised for sale.
Each of the property transactions referred to above occurred around the time, or shortly after, the Haiye Proceeding had commenced. Perhaps more importantly all the property transactions occurred after the Bankrupts took the benefit of the impugned transactions that gave rise to the Haiye Proceeding, and which they ultimately conceded at the beginning of the hearing in the Haiye Proceeding. The restructuring of the property purchases from Ms Liu’s name to the corporate trustees occurred at a time when the Bankrupts were being pursued by the plaintiffs in the Haiye Proceeding for substantial sums of money.
Similar obfuscation appears to have occurred in respect of the Bankrupts’ investment in Sunrise. Sunrise was incorporated on 29 April 2016. The current directors are Xian Shi and Quanfang Ling. Mr Kwok is a former director of Sunrise, for the period 29 April 2016 to 3 March 2021. During his examination, Mr Kwok confirmed that he was previously a director of Sunrise, but gave evidence that he did not know Quanfan Ling. Ms Liu has never been a director of Sunrise. A former registered office and principal place of business of Sunrise is the Bankrupts’ former residential address from around March 2018 to February 2021. The account statements in evidence indicate that Mr Kwok made several payments to Sunrise between May and June 2021, after he had resigned as director. During his examination, Mr Kwok could not explain why he made these payments.
Mr Kwok was also a director of Sunrise’s wholly owned subsidiary, Wau 88, for the period 20 May 2016 to 3 March 2021. Wau 88 was incorporated on 2 October 2015. The current directors of Wau 88 are Mr Shi and Ms Ling. It appears that Wau 88 is the registered proprietor of a property located at 5 Derowie Avenue, Homebush, which appears to be adjacent to the properties owned by Sunrise.
Mr Kwok was the sole director of Sunrise at the time of the property purchases for 1 Derowie Avenue, Homebush and 3 Derowie Avenue, Homebush. The Trustees’ evidence includes realestate.com searches indicating that the 1 Derowie Avenue property was last sold on 6 May 2016 and the 3 Derowie Avenue property was last sold on 5 May 2017, relevantly proximate to the impugned March 2016 transactions and the commencement of the Haiye Proceeding respectively. Ms Liu gave evidence that she had not heard of Sunrise and that she was not aware if it owned any properties in New South Wales.
Included in the Trustees’ evidence is a copy of a Deed of Agreement and Settlement dated 8 February 2024 between the Bankrupts, Sunrise, Wau 88 and Ms Ling (the Sunrise Deed). The Sunrise Deed includes a clause imposing confidentiality obligations on the parties to the deed. It is not apparent to me whether the parties to the Sunrise Deed other than the bankrupts were notified by the Trustees of the intention to adduce a copy of this deed into evidence on this application. For that reason and given that I have already reached a state of satisfaction in relation to there being the requisite risk of dissipation I will not detail in these reasons the dealings involving the Bankrupts which postdate their entry into bankruptcy that are revealed in the Sunrise Deed. It suffices to observe that based on my review of the Sunrise Deed, I am satisfied that the Trustees have established that the risk that the Bankrupts may dissipate property properly forming part of their estates is further supported by conduct that persisted into 2024.
Neither Ms Liu nor Mr Kwok disclosed to the Trustees that they held any beneficial interest in Sunrise, nor that they had entered into the Sunrise Deed. During the course of examinations, which took place only a few months after entry into the Sunrise Deed, Ms Liu gave evidence that she had not heard of Sunrise and did not know any of the properties owned by Sunrise.
The evidence to which I have referred in reaching my factual findings given by the Bankrupts during the examination is replete with inconsistencies, deflection and a preparedness to only answer questions when confronted with documents. The Bankrupts’ purported inability to recall various fundamental matters is not credible. While I accept that there may be a myriad of motivations which cause a person not to tell the truth, in the context of a bankrupt being examined at the insistence of his or her trustee in bankruptcy, a likely motive is that the bankrupt wishes to conceal the entirety of their assets from their trustee. Having read the examination transcripts of each of Miss Liu and Mr Kwok, I am satisfied that in their examinations, the Bankrupts have sought to avoid disclosing information that would assist the Trustees in identifying and or recovering the whole of the Bankrupts’ property. I am satisfied that the Trustees have established the requisite risk of dissipation on the evidence on this application.
Balance of convenience
The Trustees must show the balance of convenience favours the making of the orders: Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at 198 [13] (Kenny J).
In favour of making the orders is the risk that assets will be dissipated. Having regard to the nature and purpose of the dishonesty alleged as the foundation of the Haiye Proceeding and the relatively recent episodes of obfuscation during the examination of the Bankrupts, I regard the risk of dissipation to be real and in favour of granting the order.
Against the making of the orders is the recognition that freezing orders by their very nature are an extraordinary remedy which inevitably cause prejudice to those against whom they are made.
In the present case, the prejudice occasioned by the making of the freezing orders is ameliorated by the fact that the order is temporally confined. The proposed freezing orders are made for a limited duration until 1 November 2024. This is supplemented by an undertaking as to damages in the customary form and a further undertaking by the Trustees that they will commence proceedings against the Respondents by 1 November 2024. The timeframe of 1 November 2024 is appropriately confined by reference to the status of the examination program in which the Trustees are presently involved. After 1 November 2024, the issue of whether the freezing orders should be continued or renewed will fall to be assessed within the confines of any proceedings that the Trustees commence against the Respondents. If the Trustees do not commence proceedings against the Respondents within this time, then the Respondents will have a claim against the Trustees under the existing undertaking as to damages. I am conscious that it is well recognised that there can be difficulties associated with the quantification and recovery of damages pursuant to the undertakings if it should turn out the freezing order should not have been granted however in the circumstances of this Application and having regard to the limited duration of the freezing orders I do not regard that factor as swaying the balance of convenience in favour of the Respondents.
The absence of any evidence or submissions by the Respondents as to the inconvenience or prejudice occasioned by the continuation of the freezing orders for the confined period contemplated by the proposed orders is also relevant. The Respondents have not pointed to any specific prejudice. In making that observation I do not intend to gainsay the general prejudice which I would readily infer, given the serious interference with the individual Respondent’s enjoyment of their property rights which is necessarily occasioned by the orders that I have made.
The prejudice that is necessarily occasioned by the freezing orders in the present circumstance is reduced to some extent by the fact that the orders are crafted to permit an arm’s length sale of the properties, including the Loftus Street Property which is presently listed for sale, provided the properties are sold for fair value and the net proceeds are paid into Court. The evidence suggests that only limited funds are currently held in the E & B Business Account and no evidence of any other assets of E & B Business has been provided. In the absence of a freezing order, these assets may be dissipated. To grant and preserve the status quo in circumstances where the Court’s bankruptcy processes are presently engaged and appear to have been obstructed by the Bankrupts is consistent with the purpose for which the power under s 23 and r 7.32 is conferred. On the same basis, I was satisfied that it is appropriate to grant the ancillary relief requiring asset disclosure statements as sought by the Trustees.
The Respondents submit, and I accept, that the strength of the Trustees’ good arguable case is relatively weak and that the legal framework supporting the existence of a good arguable case is expressed at a high level of generality. I regard that as reflecting the stage that the Trustees’ investigations have reached in circumstances where the Bankrupts have not been forthcoming. I am satisfied that in the circumstances of this case the appropriate balance between the relative strength of the good arguable case is appropriately offset by the temporal limitation on the freezing orders and the undertaking as to damages which will be in place for the limited period in which the freezing orders are in place. The Trustees’ investigations are in an active stage that is likely to conclude towards the end of October 2024. The Trustees have given an undertaking that they will commence any proceedings by 1 November 2024 and in the absence of further order, the orders will expire on 1 November 2024.
In light of the matters set out above, I am satisfied that the balance of convenience presently favours making the freezing orders in the proposed form until 1 November 2024.
CONCLUSION
For these reasons, I made orders substantially in accordance with those sought by the Trustees. I was satisfied that to make the orders was in accordance with the purposes recognised by s 23 of the Federal Court Act and r 7.32 of the Rules and having regard to the whole of the evidence it was an appropriate exercise of discretion to make the orders substantially as sought.

I certify that the preceding two hundred and eleven (211) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.
Associate:
Dated: 6 September 2024
SCHEDULE OF PARTIES

NSD 1437 of 2023

Respondents

Fourth Respondent:

HANOI LANDMARK INVESTMENT PTY LTD

Fifth Respondent:

LANDMARK EVEREST PTY LTD

Sixth Respondent:

E & B BUSINESS PTY LTD (ACN 615 482 329)

Seventh Respondent:

MR CHI YUEN CHEUNG

File number(s):	NSD 1437 of 2023
Judgment of:	CHEESEMAN J
Date of judgment:	2 September 2024
Date of publication of reasons:	6 September 2024
Catchwords:	PRACTICE AND PROCEDURE – application for freezing and ancillary orders against third parties pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and r 7.32 of the Federal Court Rules 2011 (Cth) – where bankrupts’ major creditors are judgment creditors – where trustees’ investigations are ongoing – where bankrupts’ disclosure of property dealings incomplete – where trustees gave undertakings to the Court as to damages and to commence proceedings within two months – whether orders ought be made for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied – Held: application granted
Legislation:	Bankruptcy Act 1966 (Cth) s 58(1) Federal Court of Australia Act 1976 (Cth) s 23 Federal Court Rules 2011 (Cth) rr 7.32, 7.33, 7.34, 7.35, 7.36
Cases cited:	BCI Finances Pty Ltd (in liq) v Binetter (No 3) [2015] FCA 1336 BGC Australia Pty Ltd v Minspec Pty Ltd [2015] WASC 134 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961 Cardile v LED Builders Pty Ltd [1999] HCA 18; 198 CLR 380 Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 Curtis v NID Pty Ltd [2010] FCA 1072 Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429 Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273ALR 194 El-Debel v Micheletto (Trustee) [2021] FCAFC 117 Frigger v Trenfield (No 7) [2020] FCA 1740 Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2022] NSWSC 937 Haiye Developments Pty Ltd v The Commercial Business Centre Pty Ltd [2020] NSWSC 732 Jackson v Sterling Industries Ltd [1987] HCA 23; 162 CLR 612 Jones v Dunkel [1959] HCA 9; 101 CLR 298 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139; 2 All ER (Comm) 816 Lewis v Condon [2013] NSWCA 204 Matson v Attorney-General (Cth) [2021] FCA 161 Mercantile Group (Europe) AG v Aiyela [1994] QB 366 Ninemia Maritime Corp v Trave Schiffahrtsgesselschaft mbH & Co KG (The Niedersachsen) [1983] Com LR 234 Parbery v QNI Metals Pty Ltd [2018] QSC 107; 358 ALR 88 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188 PT Bayan Resources v BCBC Singapore [2015] HCA 36; 258 CLR 1 Royal Express Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v Huang, in the matter of Royal Express Pty Ltd [2021] FCA 585 Shercliffe v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 Skyworks NSW Pty Ltd v 32 Drummoyne Pty Ltd [2017] NSWSC 343 Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59; 311 ALR 632
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Number of paragraphs:	211
Date of hearing:	26, 29 August 2024
Counsel for the Applicants:	Mr R Notley
Solicitor for the Applicants:	ERA Legal
Counsel for the Third to Seventh Respondents:	Mr C Bova SC with Ms E Phelan
Solicitor for the Third to Seventh Respondents:	AHD Lawyers

NSD 1437 of 2023
IN THE MATTER OF THE BANKRUPT ESTATES OF HUA (ALYSHA) LIU AND KEI (DENNIS) KWOK
THYGE TRAFFORD-JONES IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK Applicant GAVIN KING IN HIS CAPACITY AS JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF HUA (ALYSHA) LIU AND JOINT AND SEVERAL TRUSTEE IN BANKRUPTCY OF THE ESTATE OF KEI (DENNIS) KWOK Applicant
HUA (ALYSHA) LIU First Respondent KEI (DENNIS) KWOK Second Respondent E & B HOLDINGS PTY LTD (and others named in the Schedule) Third Respondent

ORDER MADE BY:	CHEESEMAN J
DATE OF ORDER:	2 SEPTEMBER 2024

Defined as	Owner	Address	Folio Identifier
Jones Street Property	E & B Holdings	703/280 Jones Street, Pyrmont NSW 2009	95/SP92496
Loftus Street Property	Hanoi	1001/18 Loftus Street, Sydney NSW 2000	34/SP102355
Orinoco Street Property	Landmark	19 Orinoco Street, Pymble NSW 2073	C/337975
Cliff Road Property	Mr Cheung	309/30 Cliff Road, Epping NSW 2121	80/SP101810

NSD 1437 of 2023
Respondents
Fourth Respondent:	HANOI LANDMARK INVESTMENT PTY LTD
Fifth Respondent:	LANDMARK EVEREST PTY LTD
Sixth Respondent:	E & B BUSINESS PTY LTD (ACN 615 482 329)
Seventh Respondent:	MR CHI YUEN CHEUNG