FEDERAL COURT OF AUSTRALIA

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

ORDERS

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 Federal Court 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 Federal Court 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)

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:

(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. 

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’).

(5)    For the purposes of this order,

PROVISION OF INFORMATION

(6)    Subject to paragraph 7, you must:

(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:

EXCEPTIONS TO THIS ORDER

(8)    This order does not prohibit you from:

(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:

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)

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:

(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.

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:

(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)

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:

(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.

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:

(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)

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:

(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’).

(5)    For the purposes of this order,

PROVISION OF INFORMATION

(6)    Subject to paragraph 7, you must:

(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:

EXCEPTIONS TO THIS ORDER

(8)    This order does not prohibit you from you from:

(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:

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

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:

(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.

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:

(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

1    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).

2    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.

3    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.

4    The Respondents each oppose the entirety of the relief sought in the Application.

5    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

6    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.

7    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.

8    In addition, the Trustees read affidavits which demonstrated that service had been effected on each of the Bankrupts.

9    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.

10    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

11    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

12    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.

13    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.

14    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.

15    The Respondents submitted the Trustees’ ongoing failure to properly articulate the claim is fatal to the present Application: T40.14-17, 26 August 2024.

16    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.

17    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.

18    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.

19    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.

20    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

21    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:

PROCEDURAL HISTORY

The Haiye Proceeding

22    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.

23    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.

24    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.

25    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].

26    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.

27    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.

28    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.

29    The Haiye judgment debt appears to have precipitated each of the Bankrupts taking steps to enter voluntary bankruptcy.

30    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.

31    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.

32    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.

33    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.

34    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.

35    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).

36    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

37    Ms Liu and Mr Kwok voluntarily applied for bankruptcy by way of debtor’s petition on 7 November 2022 and 9 November 2022 respectively.

38    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.

39    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.

40    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.

41    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.

42    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

43    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.

44    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.

45    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.

46    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.

47    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.

48    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

49    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.

50    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.

51    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.

52    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

53    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).

54    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.

55    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.

56    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.

57    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.

58    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

59    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

60    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.

61    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.

62    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.

63    The Trustees contend that the Bankrupts were (and appear still to be) in the business of property acquisition and development.

64    In her bankruptcy questionnaire, Ms Liu completed her occupation as “Education Advisers and Reviewers” in an industry described as “Higher Education”. She also stated that she was not currently employed and was last employed on 1 January 2020, but did not complete the details of her employer.

65    During her examination on 20 May 2024, Ms Liu explained that she was the owner and the CEO of a registered training organisation for international students which went into liquidation as a result of the COVID-19 pandemic. Ms Liu said she then worked as a consultant on international student recruitment for other registered training organisations. She gave evidence that she was employed by Mr Xiaofeng (Eric) Cui as an international marketing officer for the finance company Ostone Financial Group Pty Ltd. Mr Cui is the sole director of Ostone – his position description is managing director. Mr Cui is the sole director of other companies referred to in the evidence in this proceeding, including Lendmark Investments Pty Ltd and V1 International Pty Ltd. Mr Cui has sponsored Ms Liu's overseas trips to Vietnam in December 2023 and to Japan in April 2024 on behalf of Lendmark and Ostone respectively. During her examination, Ms Liu could not explain why her consultancy fees or wages were being paid by Mr Cui’s other company, V1 International, rather than Ostone: T70.24-T72.24, 20 May 2024. In her examination in May 2024, Ms Liu repeatedly described her employment with Ostone as current but she also referred to having “already” lost her job.

66    Mr Kwok said in his examination that he has been a house husband for several years and has not been a developer since his involvement with Haiye Developments, which was before 2017. When Mr Kwok completed his bankruptcy questionnaire in November 2022, he listed his usual occupation as ‘Driver’ on the basis that he had been working as an Uber driver for almost three years.

E & B Business

67    The Trustees submitted that the starting point is E & B Business.

68    E & B Business was incorporated on 21 October 2016.

69    E & B Business has been closely held and controlled by only three individuals since its incorporation:

(1)    Ms Liu, as sole director for the period from 21 October 2016 to 5 March 2020;

(2)    Ms Yuan, as director for the period 5 March 2020 to 22 February 2021; and

(3)    Mr Cheung, as director for the period 12 August 2020 to 30 September 2020 and as the current sole director since 22 February 2021.

70    Ms Yuan and Mr Cheung are recorded on the company searches as living at the same address.

71    E & B Business has predominantly operated with a sole director and sole shareholder, with the exception of a brief period of overlap of less than two months, between Ms Yuan and Mr Cheung as directors. The current sole shareholder is Mr Cheung. The former shareholders are Ms Liu and Ms Yuan. The evidence does not disclose the dates on which the shareholding in E & B Business changed.

72    The relationship between the relevant individuals is unclear on the evidence. Ms Liu gave evidence during her examination that Mr Cheung was a social friend but not someone that she had a business relationship with and that she did not think she knew Ms Yuan. The Trustees dispute the veracity of this evidence based on the whole of the surrounding circumstances.

73    The current registered office and principal place of business of E & B Business is the Cliff Road Property, of which Mr Cheung is the registered owner. The Cliff Road Property is addressed further below. The former registered offices and principal places of business of E & B Business include the former residential address of Ms Liu and Mr Kwok and the address of Mr Cheung and Ms Yuan.

74    Ms Liu was asked about E & B Business during her examination. Ms Liu gave evidence that she could not recall being a director and shareholder of E & B Business, why it was incorporated, why she had resigned as a director and sold her shares in E & B Business nor what E & B Business currently does.

75    Ms Liu was asked about Mr Cheung in her examination. The evidence she gave was confusing and opaque. I was left with the impression that she was resistant to exposing the extent of her relationship with Mr Cheung. She suggested that any messages, whether by text or using the WeChat application, that she may have with Mr Cheung were irrelevant to her bankruptcy. She then suggested that she had deleted such messages.

I haven’t kept the message with Mr Cheung because when his wife arrived here, his wife has been very, very strict with him. All the lady and women talk to him. He force – he told us delete all the messages. I didn’t have any messages in my phone.

…

– as I mentioned to you, when his wife arrived, he request all the girls delete all the message. I only make the phone call. But I haven’t called him for a very long time. …

76    Later in her examination although it is not clear, she appeared to locate some messages between herself and Mr Cheung and it appears that a production notice was issued. The Trustees did not take me in evidence to any messages or record of communications between Mr Cheung and Ms Liu. The evidence does not reveal whether Ms Liu’s reference to Mr Cheung's wife is a reference to Ms Yuan. Mr Kwok has never been a director or shareholder of E & B Business.

77    When asked about E & B Business during his examination, Mr Kwok said he did not know of the existence of E & B Business, E & B Holdings, the E & B Trust or the E & B Business Account, until they were drawn to his attention.

78    E & B Business was established prior to the commencement of the Haiye Proceeding but after the occurrence of the impugned March 2016 transactions.

E & B Business Account

79    The Trustees have not identified any real property held by E & B Business. Relevantly, the only asset they have identified is one bank account in the name of E & B Business ending in 8411 as the last four digits of the account number with a balance of $1,634.11 as at 29 May 2024 (E & B Business Account). The account name is not styled as a trust account. The E & B Business Account is held with Westpac. Account statements for the E & B Business Account have been produced by Westpac in response to an order for production issued in these proceedings. The earliest statement in evidence is for the period 15 October 2020 to 15 January 2021. The latest statement in evidence is for the period 15 April 2024 to 29 May 2024. The account opening documents are not in evidence.

80    The Trustees seek to freeze the E & B Business Account. Ms Liu is a former signatory of the E & B Business Account.

81    The Trustees contend that Ms Liu and Mr Kwok have used the E & B Business Account as their own personal account with frequent deposits and withdrawals consistent with the account being controlled by them and used to meet the daily living expenses of their family. The Trustees point to the following aspects of the account history.

82    Between 12 January 2021 and 15 January 2024, 31 payments totalling approximately $592,710 were paid by Mr Kwok and Ms Liu into the E & B Business Account. Prior to their respective bankruptcies, the Bankrupts were a major source of funds deposited into the account. The other material sources of funds include cash deposits typically in suburbs in close proximity to the Bankrupts’ address and deposits from individuals associated with the Bankrupts, including Mr Cheung and Mr Cui.

83    Large cash deposits of $571,181, $95,586 and $268,734.15 were also made in Gordon, Chatswood and the Sydney CBD into the E & B Business Account on 15 July 2022 and 8 August 2022. Although the Trustees have been unable to ascertain the source of these cash deposits, they were made shortly after Kunc J delivered judgment in the Haiye Proceeding and about three to four months before Mr Kwok and Ms Liu applied for bankruptcy.

84    After the Bankrupts became bankrupt, the primary sources of funds being deposited into the E & B Business Account were:

(1)    cash deposits (including a $170,000 deposit in Chatswood);

(2)    “loans” or “loan returns” from third parties, including Mr Cui (Ms Liu’s employer) and his company V1 International (which Ms Liu said she could not recall during her examination, Mr Cheung (the director of E & B Business), Ms Yi Gao (described by Ms Liu as a friend and creditor of the Bankrupts);

(3)    payments for the transfer of shares in Sunrise Australia Developments Pty Limited pursuant to a deed of agreement between the Bankrupts, Sunrise (and its wholly owned subsidiary Wau 88 Pty Ltd) and Quanfang Ling discussed at [200] below;

(4)    payments from educational institutions including Royal Global Education Group Pty Ltd (which is a former employer of Ms Liu, with Mr Cheung as the sole director since incorporation on 29 June 2020) and the Australian Institute of Business Management and Aspen Higher Education (which are former employers of Ms Liu where she worked as a “education advisor and reviewer”); and

(5)    continued regular deposits including rent payments.

85    In evidence before me was an Excel spreadsheet prepared by or for the Trustees which sets out these payments from the E&B Business Account. Between 31 December 2020 and 13 May 2024, at least $396,551.42 was paid to Mr Kwok, Ms Liu, Huan Liu, or their sons, Ethan and Beldon Kwok, from the E & B Business Account. The evidence does not disclose who Huan Liu is or whether these entries in fact record payments to Ms Liu. Of the $396,551.42 identified, $103,439.42 is recorded as paid to ‘Huan Liu’. The individual transactions are often for nominal amounts up to $1,000 and on occasion occur on the same day.

86    Regular payments to Barker College were made throughout 2021, 2022 and 2023 from the E & B Business Account. Ms Liu confirmed in her examination these payments were for school fees of the Bankrupts’ sons.

87    From about January 2023, shortly after Ms Liu and Mr Kwok became bankrupt, and up until 29 May 2024, there were a large number of purchases using a debit card linked to the E & B Business Account. These included:

(1)    Everyday purchases for items such as Uber and Uber Eats, Flexischools, Fitness First, Amazon, Bunnings, cinemas, convenience stores, clothing stores and restaurants and cafes, many of which are located in suburbs in close proximity to where Ms Liu and Mr Kwok reside;

(2)    Between 17 April 2023 and 1 May 2023, several transactions in the United States of America using the debit card, being at a time when Ms Liu travelled to the United States of America; and

(3)    Between 20 December 2023 and 28 December 2023, several transactions in Vietnam using the debit card, being at a time when Ms Liu travelled to Vietnam.

88    The Trustees submitted that based on the Bankrupts’ use of the debit card linked to the E & B Business Account for numerous purchases for the benefit of the Bankrupts or their children, an inference should be drawn that the payments were made for and on behalf of the Bankrupts: T10.47-T11.15, T54.16-20, 26 August 2024. I draw that inference.

89    In reaching this conclusion, I have had regard to the Respondents’ submission that an inference based on the proximity of the location of the withdrawals and the suburb where the Bankrupts reside should not be drawn as Mr Cheung, the relevant director of E & B Business at the time, also lives near those suburbs and could have made the various transactions: T42.5-22, 26 August 2024. Further, the Respondents rely on evidence given by Ms Liu during her examination that Mr Cheung provided access to E & B Business Account to Ms Liu for the purpose of withdrawing money for daily living expenses as ‘short-term loans’: T31.38-45, T43.1-T44.42, 26 August 2024.

90    This is a matter on which E & B Holdings, E & B Business and Mr Cheung did not adduce any evidence. I infer that any evidence that they may have adduced would not have assisted them. In the absence of evidence from E & B Business and Mr Cheung, I do not draw the competing inference for which the Respondents contend, namely that these payments reflect loans from Mr Cheung. The amounts, timings and recipients of these transactions are inconsistent with each payment being in substance a series of loans. The more ready inference, which I draw, is that these payments reflect the Bankrupts using the E & B Business Account as their own for daily living expenses.

91    Despite the various transactions referred to above, Ms Liu and Mr Kwok gave evidence that they had little to no knowledge of the E & B Business Account.

92    During her examination on 20 May 2024, Ms Liu could not remember why she was a signatory to the E & B Business Account and gave evidence that she was no longer a signatory, although could not remember when she ceased to be a signatory. When Ms Liu was asked whether she was transferring monies to herself from the E & B Business Account, given she was a signatory to the E & B Business Account, Ms Liu denied this and gave evidence that, prior to each and every transfer, Ms Liu would call Mr Cheung and he would transfer the monies to her. During Mr Kwok’s examination, he gave evidence that he did not know of the existence of the E & B Business Account, prior to it being drawn to his attention, and that, other than the creditors listed in his debtors’ petition, Ms Liu was the only person he would ever ask for money.

93    I accept the submission made by the Trustees that the information provided by the Bankrupts to the Trustees, including the evidence given by the Bankrupts in the examinations, is another indicia of the Bankrupts’ obfuscation and is designed to frustrate the Trustees’ attempts to identify the Bankrupts’ property for the benefit of their creditors, including the judgment creditor in the Haiye Proceeding.

94    The evidence also indicates that the E & B Business Account appears to have been used in order to make mortgage and loan repayments for the Loftus Street Property. Between 12 July 2021 and 28 June 2022, payments totalling $139,403,36 from the E & B Business Account appear to have been used to make repayments on the loan from the National Australia Bank (NAB) for the Loftus Street Property (see paragraph 131 below). Between 22 August 2022 and 12 March 2024, payments totalling $253,590.91 from the E & B Business Account which, together with funds from other sources, were used to make repayments on the loan from St George Bank for the Loftus Street Property.

95    Similarly, the evidence indicates the E & B Business Account appears to have been used to purchase and make mortgage repayments for the Orinoco Street Property. On 21 June 2021, being the date that the Orinoco Street Property was "sold", debits totalling $346,000 were made from the E & B Business Account in the form of a cash withdrawal and a payment to Orr & Co real estate agents. Between 15 July 2022 and 1 May 2024, payments totalling $160,500 were made from the E & B Business Account to Landmark and Ms Chen. The Trustees believe these payments may have been made as contributions towards the repayment of the loan to RAMS Financial Group Pty Ltd and for the payment of land tax for the Orinoco Street Property. Relatedly, on 15 December 2021, E & B Business Account made a payment to CBD Designer Homes with the description "Orinoco design 19 orinoco design".

96    Following a review of the E & B Ledger, the Trustees identified 28 payments between 30 October 2020 and 29 February 2024 made with respect to rent received for the Jones Street Property to the E & B Business Account which correspond with transactions recorded in the E & B Business Account statements already in evidence.

97    In drawing the inference that the E & B Business Account appears to have been used in order to make mortgage and loan repayments on the trust properties, I note that the Respondents did not adduce any evidence (including by way of documentary tender) in relation to the affairs of the corporate respondents or the trusts. These are matters on which the Respondents in the ordinary course would be expected to call evidence. The fact that they have not done so, leads me to infer that any evidence they could have led would not have assisted them on this issue and fortifies the inference I have drawn based on the evidence led by the Trustees.

E & B Holdings

98    E & B Holdings was incorporated on 21 October 2016. As above, E & B Holdings has been closely held by only three individuals since its incorporation:

(1)    Ms Liu, as sole director for the period from 21 October 2016 to 5 March 2020;

(2)    Ms Yuan, as director for the period 5 March 2020 to 26 April 2021; and

(3)    Mr Cheung, as director for the period 12 August 2020 and 30 September 2020 and as the current sole director since 22 February 2021.

99    The current sole shareholder is Mr Cheung. The former shareholders are Ms Liu and Ms Yuan.

100    The current registered office and principal place of business of E & B Holdings is the Cliff Road Property, of which Mr Cheung is the registered owner. The former registered offices and principal places of business of E & B Holdings include the former residential addresses of Ms Liu, Mr Kwok and Mr Cheung and Ms Yuan.

101    During Ms Liu’s examination, she was first asked about her knowledge of “B & E Holdings Limited”, being an inverted version of the letters in the company name, and Ms Liu answered that she did not know B & E Holdings, had never heard of it and had no documents in her possession in relation to it. In the context of subsequent references which make plain that the correct company name is “E & B Holdings Limited” and Ms Liu being shown a copy of a company search for E & B Holdings, Ms Liu continued to be evasive and gave evidence that she could not remember the extent of her association with E & B Holdings, including when she was a director and shareholder of E & B Holdings. Ms Liu denied E & B Holdings was named after her sons and gave evidence that “it doesn’t mean anything”. Ms Liu could not remember why E & B Holdings was incorporated, what type of business E & B Holdings intended to operate nor why she resigned as a director of E & B Holdings.

102    Mr Kwok has never been a director or shareholder of E & B Holdings.

103    E & B Holdings was established prior to the commencement of the Haiye Proceeding but after the occurrence of the impugned March 2016 transactions.

E & B Trust

104    E & B Holdings is the trustee of the E & B Property Investments Trust (E & B Trust), a discretionary trust established by trust deed on 21 October 2016. The appointor is Ms Liu. The named beneficiaries are Ms Liu and her two sons Ethan and Beldon Kwok. Broadly, the other classes of beneficiaries are defined by reference to their connection through familial (including by marriage) or corporate relationships to Ms Liu and her two sons and also include companies, trusts, charities and associations and trustees.

105    The E & B Trust was created to purchase and hold properties for Ms Liu, including the Jones Street Property, for tax minimisation purposes. The Commonwealth Bank of Australia (CBA) is the registered mortgagee of the Jones Street Property. An internal CBA document dated 27 January 2017 includes the following:

Purpose: Trust application. Client is applying $879600.00 to settle an investment property at Pyrmont NSW. Client is married with 2 dependents. She lives at her own property at West Pymble, mortgage with Westpac.

This Trust is only set up for purchasing and holding properties in order to generate long-term rental income. Accountant advised client to purchase under this Trust in order to have tax benefits. Purchase property is going to hold for long term purpose and will not sell.

106    The reference to the investment property at Pyrmont, NSW is to the Jones Street Property. The reference to the residential property at West Pymble is to the Orinoco Street Property.

107    The E & B Trust was established prior to the commencement of the Haiye Proceeding but after the occurrence of the impugned March 2016 transactions.

The Jones Street Property

108    E & B Holdings is the registered proprietor of the Jones Street Property.

109    The Jones Street Property was initially to be purchased by Ms Liu, pursuant to an executed contract for sale for the purchase of the Jones Street Property in her name and payment of the deposit on 16 December 2017. Prior to completion, a new contract for sale was entered into on 9 February 2017 with E & B Holdings as trustee for the E & B Trust. A deed of mutual rescission of contract between the vendor and Ms Liu dated 9 February 2017 states that the deposit paid by Ms Liu was treated as having been paid by E & B Holdings. Ms Liu corresponded with and gave instructions to Mr Cao, the solicitor acting for E & B Holdings with respect to the purchase of the Jones Street Property, to rescind the initial sale contract, simultaneously exchange a contract on the same terms with E & B Holdings as trustee for E & B Trust as the purchaser and arrange for the funds necessary for E & B Holdings to complete the purchase of the Jones Street Property. The purchase of the Jones Street Property ultimately settled on 24 February 2017.

110    As mentioned, a recent title search of the Jones Street Property confirms that there is a registered mortgage in favour of the CBA. Loan account statements have been produced by CBA for the period 24 February 2017 to 3 March 2024 for an account in the name of the E & B Trust. The loan account statement records the borrower as E & B Holdings as trustee for the E & B Trust and the security address as the Jones Street Property. Each of the repayments recorded in the loan statements from at least December 2020 to March 2024 were made from the E & B Business Account.

111    The Jones Street Property was purchased on 9 February 2017, prior to the commencement of the Haiye Proceedings on 3 March 2017 but after the occurrence of the impugned March 2016 transactions.

112    Ms Liu was previously a director and shareholder of E & B Holdings. At the time of acquisition of the Jones Street Property, Ms Liu was the sole director of E & B Holdings. During her examination, Ms Liu gave evidence that she could not remember E & B Holdings being the owner of the Jones Street Property or purchasing the Jones Street Property.

113    Mr Cheung is the current sole director of E & B Holdings. He was first appointed as a director of E & B Holdings on 12 August 2020 and ceased to be a director on 30 September 2020. He was next appointed as a director on 22 February 2021. He is also the current sole shareholder.

The Cliff Road Property, the Cliff Road Trust Deed and Mr Cheung

114    Mr Cheung is also the registered proprietor of the Cliff Road Property.

115    An undated trust deed styled as a “TRUST DEED For Purchase of Property” between Mr Cheung and E & B Holdings as trustee for the E & B Trust was put in evidence by the Trustees. I will refer to this as the Cliff Road Trust Deed.

116    The Cliff Road Trust Deed appears to have been signed by Mr Cheung in his individual capacity as trustee and also in his capacity as director of the beneficiary, E & B Holdings. I infer that the Cliff Road Trust Deed was signed sometime between 24 September 2020 (the date the sale contract for the Cliff Road Property was exchanged) and 30 September 2020, when Mr Chung resigned from his first stint as a director of E & B Holdings. The purchase of the Cliff Road Property completed on 11 November 2020. At that time, the sole director of E & B Holdings was Ms Yuan.

117    The Cliff Road Trust Deed recites that the Cliff Road Property was purchased by Mr Cheung on 24 September 2020 at the request of the beneficiary which is E & B Holdings as trustee for the E & B Trust and that the Cliff Road Property is held on trust for E & B Holdings as trustee for the E & B Trust. The Cliff Road Trust Deed does not name any settlor or appointor. The Cliff Road Trust Deed recites that:

(1)    the Cliff Road Property was purchased by Mr Cheung (the trustee) on 24 September 2020 at the request of E & B Holdings as trustee for the E & B Trust (the beneficiary) and that the property is held on trust for the E & B Trust;

(2)    prior to the completion of the contract for sale of land (the contract), Mr Cheung, at the request of E & B Holdings, obtained a loan of about $718,000 from RAMS secured by the Cliff Road Property (the mortgage);

(3)    upon completion of the contract on 11 November 2020, Mr Cheung “will” become the registered proprietor of the Cliff Road Property;

(4)    E & B Holdings as trustee for the E & B Trust has provided or will provide the deposit, stamp duty, balance of purchase money (except the amount advanced for the mortgage) and all other costs and expenses associated with the acquisition of the Cliff Road Property; and

(5)    following completion, E & B Holdings as trustee for the E & B Trust will be paying for all mortgage repayment and maintenance and costs of the Cliff Road Property, including but not limited to council rates, water rates and strata levies.

118    The Cliff Road Trust Deed provides that upon completion, Mr Cheung has no interest or rights over the Cliff Road Property save for the legal title. E & B Holdings has an unfettered right to call for Mr Cheung to transfer, deal with or dispose of the Cliff Road Property, including to allow any charge, lien or mortgage over the Cliff Road Property. Mr Cheung irrevocably appoints E & B Holdings as his attorney to execute any such transfers, discharge of mortgage or other instruments or documents as required to carry out the terms of the deed. Further, Mr Cheung irrevocably assigns to E & B Holdings the right to receive any and all benefit from the Cliff Road Property, including all rights to income and rights to capital.

119    On the face of the Cliff Road Trust Deed, if it establishes a trust, it appears to be a bare trust over the Cliff Road Property whereby Mr Cheung has been imposed as a bare trustee with legal title to, and appearing on the title as the registered owner of, the Cliff Road Property. Mr Cheung is required to act completely at the behest of the beneficiary, E & B Holdings. As mentioned, E & B Holding is itself a trustee of the E & B Trust and the named beneficiaries of the E & B Trust are Ms Liu and her two sons Ethan and Beldon Kwok. The relationship between the Cliff Road Property arrangement and the E & B Trust is reminiscent of Matryoshka dolls.

Hanoi

120    Hanoi was incorporated on 29 December 2019. Ms Yuan was sole director from 29 December 2019 to 17 February 2021. Mr Cheung has been the sole director since 17 February 2021. The current sole shareholder is Mr Cheung. The only former shareholder is Ms Yuan. Neither Ms Liu nor Mr Kwok has ever been a director or shareholder of Hanoi.

121    The current registered office and principal place of business of Hanoi is the Cliff Road Property. A former registered office and principal place of business of Hanoi was the residence of Mr Cheung.

122    Hanoi was established well after the commencement of the Haiye Proceeding and after the payment into court in that proceeding.

Hanoi Trust

123    Hanoi is the trustee of the Hanoi Landmark Investment Trust (Hanoi Trust). A trust deed dated 29 December 2019 executed by Ms Yuan on behalf of Hanoi established the Hanoi Trust as a discretionary trust, with Ms Liu and Ms Yuan as appointors and Ms Liu as the sole named beneficiary. Broadly, the other classes of beneficiaries are defined by reference to their connection through familial (including by marriage) or corporate relationships to Ms Liu.

124    A Deed of Amendment was executed on 15 April 2021 (Hanoi Amendment Deed). The effect of the amendment was relevantly that Mr Cheung became the sole appointor and beneficiary of the Hanoi Trust. Ms Yuan and “The Legal Personal Representative of Hua Liu (Deceased)” were retired as appointors of the Hanoi Trust and replaced with Mr Cheung. Additionally, “The Legal Personal Representative of Hua Liu (Deceased)” was retired as a beneficiary of the Hanoi Trust and replaced with Mr Cheung. It is unclear what is meant by the reference to “(Deceased)” in circumstances where Ms Liu is still alive. The trustee remained as Hanoi.

125    Neither of the Bankrupts are presently beneficiaries under the Hanoi Trust.

126    The Hanoi Trust was established after the commencement of the Haiye Proceeding. The Hanoi Amendment Deed was made proximate to the hearing of the Haiye Proceeding in April and May 2021. Hanoi and the Hanoi Trust were both established prior to judgment in the Haiye Proceeding, which was delivered on 13 July 2022.

The Loftus Street Property

127    Hanoi is the registered proprietor of the Loftus Street Property.

128    Hanoi entered into contract for the sale for the purchase of the Loftus Street Property off the plan on 17 December 2020. Settlement of the sale did not occur until 14 June 2021.

129    The Loftus Street Property was initially to be purchased in the name of Ms Liu, as Ms Liu exchanged a contract for sale for the purchase of the Loftus Street Property with the vendor’s solicitors on 27 June 2017 in her name and paid the deposit.

130    On 12 January 2020, Ms Liu gave instructions to Mr Cao to “nominate my current offplan property to trust”. A deed of recission and release between the vendor and Ms Liu and a new contract for sale for the Loftus Street Property, which defined the new purchaser as Hanoi as trustee for the Hanoi Trust, were exchanged on 17 December 2020.

131    The Loftus Street Property was purchased by Hanoi as trustee for Hanoi Trust with a loan from the NAB in the amount of $5,355,000. This loan was subsequently refinanced by St George on 12 July 2022. The evidence indicates that repayments on the loans for the Loftus Street Property were made by the E & B Business Account and Mr Kwok, together with funds from other sources.

132    During her examination on 20 May 2024, Ms Liu gave evidence that she could not recall Hanoi or the Hanoi Trust and did not know the Loftus Street Property. Mr Kwok gave evidence during his examination that he did not know of the existence of Hanoi, prior to it being drawn to his attention.

133    The Loftus Street Property was purchased after the commencement of the Haiye Proceeding and after the payment into court in that proceeding but prior to judgment in the Haiye Proceeding. The purchase settled shortly after the Haiye Proceeding was reserved for judgment.

The Bankrupts’ relationship with Ms Yuan

134    The Bankrupts each gave evidence during their examinations that they did not know Ms Yuan, however Ms Yuan has been a director and shareholder of a number of companies to which Ms Liu has been connected, including E & B Business (between 5 March 2020 and 22 February 2021) and Hanoi (between 29 December 2019 and 17 February 2021).

135    Relevantly, Ms Yuan was the sole director of Hanoi at the time that Ms Liu directed that Hanoi become the purchaser of the Loftus Street Property. Ms Yuan has also had roles in relation to the Hanoi Trust, which is addressed at paragraph [123] above, and with which Ms Liu is also connected, including as being an appointor of the Hanoi Trust at the same time as Ms Liu was an appointor.

136    As mentioned, Ms Yuan’s residential address on the company searches for two of the companies is the same as that for Mr Cheung.

Landmark

137    Landmark was incorporated on 22 July 2021. The current sole director and shareholder of Landmark is Ms Chen Chen. Ms Chen has been the sole director and shareholder of Landmark since incorporation. Neither Ms Liu nor Mr Kwok has ever been a director or shareholder of Landmark. Mr Kwok gave evidence during his examination that he did not know of the existence of Landmark, prior to it being drawn to his attention.

138    As mentioned, between 15 July 2022 and 1 May 2024, there were payments totalling $160,500 from the E & B Business Account to Landmark and Ms Chen.

139    Landmark was established shortly after the hearing of the Haiye Proceeding completed, and prior to judgment being delivered.

Landmark Trust

140    Landmark may be the trustee of the Landmark Everest Trust (Landmark Trust). There is in evidence a trust deed for the Landmark Trust described as a discretionary trust.

141    The only version of the trust deed in evidence in undated and unsigned. A version of the trust deed appears to have been attached to an email dated 3 September 2021 from Ms Liu to Mr Cao, solicitor. The email was in connection with the purchase of the Orinoco Street Property.

142    Landmark has not sought to lead any evidence at all, including on this issue. The appointor of the Landmark Trust is Ms Liu. The designated beneficiary of the Landmark Trust is Ms Chen. Broadly, the other classes of beneficiaries are defined by reference to their connection through familial (including by marriage) relationship to Ms Chen.

143    Ms Liu was a signatory of a bank account held by Westpac in the name of Landmark as trustee for the Landmark Trust, although it appears Ms Liu is no longer a signatory.

144    The Landmark Trust, if the deed was in fact signed, appears to have been established shortly after the hearing of the Haiye Proceeding completed, and prior to judgment being delivered.

The Orinoco Street Property

145    Landmark is the registered proprietor of the Orinoco Street Property.

146    The Orinoco Street Property was initially to be purchased by E & B Holdings as trustee for the E & B Trust. On or around 19 June 2021, Ms Liu instructed Mr Cao to use the same entity as “the current Pyrmont property owner”, being E & B Holdings as the registered proprietor of the Jones Street Property, and arranged for the payment of the deposit of $346,000 from the E & B Business Account. The vendor and E & B Holdings entered into a contract for sale on 21 June 2021.

147    On 3 September 2021, Ms Liu instructed Mr Cao to request a mutual rescission of the contract for sale of the Orinoco Street Property and to enter into a new contract between the vendor and Landmark as trustee for the Landmark Trust. A deed of rescission of contract was executed on around 9 September 2021, which recognised that the deposit was taken to be paid under the new contract with Landmark as trustee for the Landmark Trust.

148    Relevantly, Ms Chen was the director of Landmark at the time that Ms Liu directed that the contract for the Orinoco Street Property be novated with the result that Landmark replaced E & B Holdings as the registered proprietor.

149    Ms Liu gave evidence during her examination that Ms Chen is her friend (who she refers to by the name “Cici”) and that she has known Ms Chen for at least seven or eight years. Ms Liu says that Ms Chen is the landlord of the Orinoco Street Property, where Ms Liu and Mr Kwok and their sons live. The Bankrupts do not have a rental agreement for the Orinoco Street Property. Ms Liu gave evidence that the Bankrupts have not been able to meet rental payments since they became bankrupt, except for where financial support has been provided by Ms Liu’s friends. Mr Kwok gave evidence in his examination that he did not know of Ms Chen or Landmark. Mr Kwok gave further evidence that he did not know how much rent was paid for the Orinoco Street Property or whether rent was still being paid.

150    There is a registered mortgage on the Orinoco Street Property in favour of Westpac. The mortgage appears to be securing a loan from RAMS, a subsidiary of Westpac.

151    The Orinoco Street Property was purchased by E & B Holdings after judgment was reserved in the Haiye Proceeding. The contract was novated on 9 September 2021 to stipulate Landmark as trustee for the Landmark Trust as purchaser and settled prior to judgment being delivered. The Orinoco Street Property settled on 21 September 2021, after the conclusion of the hearing of the Haiye Proceeding and partial release of the freezing orders but prior to judgment in the Haiye Proceeding.

Summary of interests in real property

152    On the basis of the analysis set out above, the interests in the specific real properties the subject of the freezing orders based may be summarised as follows:

APPLICABLE PRINCIPLES

153    The Trustees rely on the Court’s power to make freezing orders under s 23 of the Federal Court Act and r 7.32 of the Rules. A freezing order operates in personam and not as an attachment to property: Cardile v LED Builders Pty Ltd [1999] HCA 18; 198 CLR 380 at [50].

154    Section 23 is a wide power. That said, orders must be framed so as to come within the limits set by the purpose which the order can properly be intended to serve: Jackson v Sterling Industries Ltd [1987] HCA 23; 162 CLR 612 at 625. Rule 7.32 explicitly states this requirement:

7.32     Freezing order

(1)     The Court may make an order (a freezing order), with or without notice to a respondent, 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.

(2)     A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.

155    Under r 7.33, the Court may make an ancillary order to a freezing order or a prospective freezing order, for the purpose of determining whether the freezing order should be made. A prospective freezing order is one which is “in prospect” in the sense that it is within the bounds of expectation that it will be made in the future: Royal Express Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) v Huang, in the matter of Royal Express Pty Ltd [2021] FCA 585 at [39] citing Parbery v QNI Metals Pty Ltd [2018] QSC 107; 358 ALR 88 at [68]. Whilst not made in relation to r 7.33, Bond J’s summary of the authorities is nevertheless apposite: see Parbery at [70] citing Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188 at [151], [210]-[214]; BGC Australia Pty Ltd v Minspec Pty Ltd [2015] WASC 134 at [11]; JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139; 2 All ER (Comm) 816 at [50]-[52].

156    Rule 7.34 provides that the Court may make a freezing order against a person even if the person is not a party in a proceeding in which substantive relief is sought against the respondent.

157    The moulding of an interlocutory injunction must depend upon the circumstances of each case. As Brennan J observed in Jackson v Sterling Industries Ltd at 621:

A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order.

158    The High Court recognised in Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429 that rule 7.32, in Div 7.4 of the Rules, supplements s 23 of the Federal Court Act and the Federal Court's implied power as a superior court, each of which confers power upon the Court to make such orders as are appropriate for the proper exercise of its statutorily conferred jurisdiction and powers. That relationship is emphasised by r 7.36, which provides that nothing in Div 7.4 diminishes the inherent, implied or statutory jurisdiction of the Court to make a freezing order or ancillary order: Huang at [16] (Gageler, Keane, Gordon and Gleeson JJ) and [36] (Edelman J).

159    In Huang, the relevant freezing order was made against the defendant in the proceeding pursuant to r 7.32. The principal issue before the Court was whether the Federal Court’s power to make freezing orders over assets outside of Australia was conditioned on or required proof that there be a realistic possibility of enforcement of a judgment debt in each foreign jurisdiction to which the freezing order related. Although Huang did not concern freezing orders against third parties, the following observation of the plurality is of broader relevance (at [17]-[18], footnotes incorporated):

The power conferred by r 7.32(1) is expressly subject to two limitations: first, the purpose of the order must be "the purpose of preventing the frustration or inhibition of the Court's process"; and secondly, the order must address that purpose "by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied". The first limitation corresponds with the established scope of the Federal Court's general powers to grant a freezing order, being the power to make such orders as the Court may determine to be appropriate to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. [Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 32-33 [35]; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 399-401 [41]; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 243 [94]; PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1 at 18 [43]]. Rule 7.32 states explicitly the requirement, stated by this Court in relation to the Federal Court's general powers to grant a freezing order, that the power must be exercised for the purpose for which it is conferred [Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 32-33 [35]; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 399-401 [41]]. Where the order is made in proceedings in which substantive relief is sought against the defendant, that purpose is "to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action" [Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 625]. More broadly, a freezing order is directed to dispositions "which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject" [Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 at 276].

The second limitation, that an order made under r 7.32 must serve the specified purpose "by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied", also corresponds with the scope of the Federal Court's general powers to make a freezing order. Since Jackson v Sterling Industries Ltd, it has been accepted in Australia, as a general proposition, that a freezing order could be granted if the circumstances are such that there is a danger of the defendant absconding, or a danger of the assets being removed from the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if successful in obtaining a judgment, will not be able to get it satisfied. [Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623. See, eg, Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-322]]. The danger must be sufficiently substantial to warrant the freezing order. [Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325]]. The need to identify a relevant danger was first articulated in Mareva Compania Naviera SA v International Bulkcarriers SA [[1975] 2 Lloyd's Rep 509 at 510], where Lord Denning MR stated:

"If it appears that the debt is due and owing – and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment – the Court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets."

160    The plurality in Huang rejected an argument to the effect that r 7.32 is to be read as subject to r 7.35, which provides:

7.35    Order against judgment debtor or prospective judgment debtor or third party

(1)    This rule applies if:

(a)    judgment has been given in favour of an applicant by:

(i)    the Court; or

(ii)    for a judgment to which subrule (2) applies—another court; or

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

(i)    the Court; or

(ii)    for a cause of action to which subrule (3) applies—another court.

(2)    This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court.

(3)    This subrule applies to a cause of action if:

(a)    there is a sufficient prospect that the other court will give judgment in favour of the applicant; and

(b)    there is a sufficient prospect that the judgment will be registered in or enforced by the Court.

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

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

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

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

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

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

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

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

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

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

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

161    The plurality said (at [21]):

Rule 7.35 is not expressed to affect the operation of r 7.32 and, contrary to Mr Huang's submission, there is no reason to read r 7.32 as subject to r 7.35. Both r 7.35(6) and r 7.36 are expressly to the contrary. Rather, r 7.35 extends the scope of r 7.32, including by confirming the rule's application to cases that may have otherwise been in doubt, namely where there is a "prospective" cause of action and in relation to processes of a foreign court. Where r 7.35 applies, r 7.35(4) supplements the power in r 7.32 by identifying reasons why the Court may be satisfied, having regard to all the circumstances, that a danger of the kind specified in both r 7.32 and r 7.35(4) exists.

162    The Trustees do not rely on r 7.35 in this Application. Nonetheless, as the plurality recognised at [22]:

As a practical matter, in most cases the danger required by r 7.32 will be proved because of one or more of the circumstances set out in r 7.35(4). However, r 7.35(4) does not cover the field. As already noted, both r 7.35(6) and r 7.36 explicitly contemplate that a freezing order may be made even though the applicant is unable to satisfy r 7.35(4). By way of example, r 7.32 may apply where a defendant deliberately and openly moves from Australia, leaving insufficient assets to satisfy a prospective judgment debt and stating an intention not to comply with the prospective judgment.

163    The practical interaction between the two rules is similarly reflected in the Court’s Freezing Orders Practice Note (GPN-FRZG) which applies to any proceeding involving an application made in this Court for a freezing order. GPN-FRZG supplements Div 7.4 of the Rules. GPN-FRZG requires that an affidavit relied on in support of an application for a freezing or ancillary order should, if possible, address amongst other things, the matters referred to in r 7.35 (at para 2.20):

(a)    information about the judgment that has been obtained, or, if no judgment has been obtained, the following information about the cause of action:

(i)    the basis of the claim for substantive relief;

(ii)    the amount of the claim; and

(iii)    if the application is made without notice to the respondent, the applicant's knowledge of any possible defence;

(b)    the nature and value of the respondent's assets, so far as they are known to the applicant, within and outside Australia;

(c)    the matters referred to in r 7.35 of the Federal Court Rules; and

(d)    the identity of any person, other than the respondent, who, the applicant believes, may be affected by the order, and how that person may be affected by it.

164    GPN-FRZG also relevantly states that:

(1)    the purpose of a freezing order is to prevent frustration or abuse of the process of the Court, not to provide security in respect of a judgment or order (para 2.5);

(2)    a freezing order should be viewed as an extraordinary interim remedy because it can restrict the right to deal with assets even before judgment, and is commonly granted without notice (para 2.6);

(3)    r 7.35(5) addresses the minimum requirements that must ordinarily be satisfied on an application for a freezing order against a third party, who will not necessarily be a party to the substantive proceeding, before the discretion is enlivened (para 2.7); and

(4)    the value of the assets covered by a freezing order should not exceed the likely maximum amount of the applicant's claim, including interest and costs, though sometimes it may not be possible to satisfy this principle if the amount is not known at the time of the discovery and at the time of the approach to the Court (para 2.11).

165    A freezing order may be made against a person who is not a party to proceedings where such an order is necessary to facilitate the administration of justice, subject to qualifications. Cardile concerned asset preservation orders against third parties in respect of the plaintiff's action against the defendant. The plurality in Cardile observed that in assessing whether relief is available against non-parties, the focus must be the administration of justice ([42]). The effective exercise of the jurisdiction may call for asset preservation orders against third parties who may hold or otherwise be interested in assets of the judgment debtor or potential judgment debtor or who may be obliged to contribute to the property of such a judgment debtor to help satisfy the judgment (plurality, at [44]). The plurality went on to describe the way in which a third party may relevantly “otherwise be interested in” the assets of the judgment debtor or potential judgment debtor. The plurality referred to a passage in the speech of Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 at 362, to which Hoffmann LJ referred in Mercantile Group (Europe) AG v Aiyela [1994] QB 366 at 375-376, where Lord Mustill said in respect of a third party (wife of a party) that the right to an interlocutory injunction which is incidental to, and dependent on, the enforcement of a substantive right usually, although not invariably, takes the shape of a cause of action (at [48]). In doing so, the plurality commented that (at [48]):

However, we do not think that his Lordship was suggesting that an order might be made against a non-party not amenable in some way ultimately to some coercive process requiring it to disgorge, or in some other way to participate in the satisfaction of, a judgment against a party.

166    The plurality cautioned that there is a temptation to use the term "flexible" to cloak a lack of analytical rigour and to escape the need to find a doctrinal and principled basis for orders that are made and concluded that the applicant for the freezing order against a third party had to establish a basis upon which recourse may be had to the third party to satisfy the applicant’s prospective money judgment against the defendant (at [49]-[50]). As the plurality make plain there are significant differences between an order protective of the court's process set in train against a party to an action, including the efficacy of execution available to a judgment creditor, and an order extending to the property of persons who are not parties and who cannot be shown to have frustrated, actually or prospectively, the administration of justice (at [50]).

167    The plurality observed that even if the Court is satisfied as to the availability of proceedings and the risk of dissipation, the Court would not, as a matter of discretion, grant a freezing order if there has been no undertaking by the applicant to commence proceedings within a very short period of time (at [53]). Relevantly, the plurality observed at [53]-[54]:

Discretionary considerations generally also should carefully be weighed before an order is made. Has the applicant proceeded diligently and expeditiously? Has a money judgment been recovered in the proceedings? Are proceedings (for example civil conspiracy proceedings) available against the third party? Why, if some proceedings are available, have they not been taken? Why, if proceedings are available against the third party and have not been taken and the court is still minded to make a Mareva order, should not the grant of the relief be conditioned upon an undertaking by the applicant to commence, and ensure so far as is possible the expedition of, such proceedings? It is difficult to conceive of cases where such an undertaking would not be required. ...

.. we consider that the general proposition for which the appellants contend, that the grant of Mareva relief against a third party should be limited to cases in which the third party holds or is about to hold, dissipate or further dissipate property beneficially owned by the defendant in the substantive proceedings, is too narrowly expressed. Nevertheless, it will be a rare case in which Mareva relief will be granted if such a situation does not exist.

168    The plurality said that the availability of a proprietary remedy may, in some cases, be sufficient to constitute a substantive right in aid of which asset preservation relief in personam might lie (at [55]).

169    The plurality concluded (at [57], footnotes omitted):

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

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

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

170    That the jurisdiction of the Court to make a freezing order is not limited to circumstances in which a substantive proceeding in the Court against a prospective judgment debtor has commenced or is imminent was reiterated by the High Court in PT Bayan Resources v BCBC Singapore [2015] HCA 36; 258 CLR 1 at [43] to [48] per French CJ, Kiefel, Bell, Gageler and Gordon JJ and at [64] per Keane and Nettle JJ. The Court emphasised that a freezing order is designed to protect “a prospective enforcement process”: PT Bayan Resources at [46]. Indeed, the Court repeated the description of freezing orders used in earlier authorities as the paradigm example of an order to prevent the frustration of a court’s process: PT Bayan Resources at [43] and the authorities cited therein. The plurality in PT Bayan Resources rejected a submission that the inherent jurisdiction of, in that case, the Supreme Court to make a freezing order is always limited to circumstances in which a substantive proceeding in that court has commenced or is imminent (at [44]). At [47] (footnotes omitted), the plurality said:

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

171    The Respondents submit that there must be a legal framework comprising an accrued cause of action against which action can be taken in order to recover property or assets from the third party and r 7.32 needs to be read in that context. The Respondents submit that the plurality’s summary at [47] in PT Bayan Resources elides the requirement that there be a “vested or accrued cause of action” before a freezing order will be made against the non-party. The Respondents point to the rejection by the plurality of a suggestion that freezing orders might be made against a third party who is not amenable to some coercive process requiring it to disgorge, or in some other way to participate in the satisfaction of, a judgment against a party: Cardile at [48]. The Respondents also draw attention to the observations of Kirby J, at [121], as to the grant of relief against a non-party as being preconditioned on having an entitlement to recourse to the non-party: