Federal Court of Australia

CIP Group Pty Ltd v So (No 9) [2025] FCA 694

ORDERS

UPON THE UNDERTAKING OF THE NINETEENTH RESPONDENT to take all steps necessary to ensure that the mortgages granted over the properties known as Flat J on 14th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong and Flat B on 9th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong, in favour of the applicants and the second to thirteenth respondents (Mortgages), are registered (including by addressing any requisition notices issued by the Hong Kong land registry to the best of her ability),

THE COURT ORDERS THAT:

1.    Paragraph 1 of the orders of Justice Derrington of 9 December 2024 be varied as follows:

“Subject to the Mortgages being registered, paragraph 1 of the Orders made by Justice Derrington on 24 May 2023 be varied such that the first and fourteenth to twentieth respondents are not prevented from using the Stage 7 to 11 proceeds up to an amount of $3,500,000.”

UPON THE UNDERTAKING OF THE SOLICITORS FOR THE APPLICANTS AND SECOND TO THIRTEENTH RESPONDENTS to expeditiously file any application for leave to appeal from paragraph 1 of this order above,

THE COURT ORDERS THAT:

1.    Paragraph 1 of this Order is not to take effect until 7 days after the date of this Order.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    In the course of a hearing in this matter, being one that has taken many twists and turns: see, eg, Yang v Wong, in the matter of Axis North Pty Ltd (receiver and manager appointed) (in liq) (No 2) [2025] FCA 693 [6]: an application was made to vary the terms of an injunction that had been (a) granted on 24 May 2023 (the Injunction); (b) relaxed some 18 months later on 9 December 2024; and (c) conditionally dissolved on 15 May 2025. As granted, the Injunction provided:

Upon the usual undertaking as to damages given by Mr Marc Andrew Clancy:

1.    The first and fourteenth to eighteenth respondents:

(a)    notify the applicants in writing no later than 7 business days prior to the proposed settlement of any sale of any real property in Stages 7 to 11 of the development (such properties being identified in Annexure A);

(b)    not assign or otherwise deal with any rights, entitlements or interests to any or all proceeds from the sale of any real property in Stages 7 to 11 (Stage 7 to 11 proceeds) under any instrument;

(c)    hold in a trust account maintained by their solicitors, any or all of the Stage 7 to 11 proceeds purportedly payable to the seventeenth or eighteenth respondents pursuant to any asserted right, entitlement, or interest under any instrument;

(d)    save for making any payment into a solicitors’ trust account in order to comply with Order 1(c) above, not dispose of or otherwise deal with or diminish the value of the Stage 7 to 11 proceeds.

…

2    The variation to the Injunction on 9 December 2024 (see CIP Group Pty Ltd v So (No 5) [2024] FCA 1373 (CIP No 5)) was cast in the following terms:

UPON THE UNDERTAKING BY THE NINETEENTH RESPONDENT to repay any amount paid out of the funds pursuant to paragraph 1 below, that are the subject of paragraph 1 of the orders made by Justice Derrington on 24 May 2023 (the Stage 7 to 11 proceeds), and any interest accruing thereon, if the applicants and second to thirteenth respondents are successful in establishing a claim to those funds,

AND UPON THE UNDERTAKING BY THE NINETEENTH RESPONDENT to grant mortgages over the properties referred to in these proceedings as Flat J on 14th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong and Flat B on 9th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong, in favour of the applicants and the second to thirteenth respondents in a form acceptable to the Queensland District Registrar (Mortgages), to secure the above undertaking and to be enforced only if the above undertaking is not satisfied within 60 days of the delivery of final judgment in this proceeding,

AND UPON THE FIRST AND FOURTEENTH TO TWENTIETH RESPONDENTS HAVING UNDERTAKEN BY THEIR COUNSEL that if the claims of the second to thirteenth respondents in these proceedings are successful, to the extent that it has not been repaid pursuant to the two undertakings given above, the amount paid out of the Stage 7 to 11 proceeds will be deducted from any amount payable to the fourteenth to eighteenth respondents (whether by way of loan repayment or by way of dividend or other distribution to shareholders),

THE COURT ORDERS THAT:

1.    Subject to the Mortgages being registered, paragraph 1 of the Orders made by Justice Derrington on 24 May 2023 be varied such that the first and fourteenth to twentieth respondents are not prevented from using the Stage 7 to 11 proceeds up to an amount of $3,500,000.

(Emphasis added).

3    The Injunction, as varied in December 2024, is referred to forthwith as the Relaxed Injunction.

Some short context: Rationale for the grant, and variation, of the Injunction

4    The Injunction arose in the context of a dispute as between, on the one hand, a Mr Marc Clancy and his corporate interests (the Clancy Interests) and, on the other, a Mr Shan Ngai So and his corporate interests (the So Interests). In short, and as was noted in CIP Group Pty Ltd v So (No 3) [2023] FCA 518 (at [4]) (CIP No 3), the Clancy Interests:

[4]    … sought injunctive relief to prevent the dissipation by Ultimate [being a member of the So Interests] of the proceeds of any further sale of the Carver’s Estate land, which Ultimate is able to realise pursuant to the mortgages it holds over that land. Similar relief is sought against UIP [being another member of the So Interests] in respect of the loan, mortgages and securities that it received by way of assignment from another company, IJ Financial Services Ltd …

5    By way of context, the relevant parties, of which there are too many to enumerate here, hold claims vis-à-vis the proceeds of sale of land known as the “Carver’s Reach Estate”, derivative upon their claims to a proprietary interest in that land. That sale occurred in circumstances where certain corporate entities, through which finance flowed for the purposes of developing the Carver’s Reach Estate, purported to exercise their rights under existing loan facilities and associated securities: CIP Group Pty Ltd v So (2022) 164 ACSR 566, 570 – 571 [17]. That led to the appointment of receivers, who then sold certain “stages” of the Carver’s Reach Estate land: see CIP No 3 [13] and CIP No 5 [1]: and held both the proceeds of sale and any yet-to-be sold property (namely, “Stages 7 to 11” of the development) at the time the Injunction was granted. That is of no small moment, as it was, in my opinion, the status quo anti. On the transaction documents that exist – although there are challenges to them – loans were made and securities given such that the receivers, on behalf of the lending companies, have a prima facie right to the funds.

6    There is no utility, at least at this stage, in traversing the array of claims made in relation to the veracity of those transactions. It suffices to observe that the Clancy Interests assert, inter alia, that neither the loan agreements nor the securities are enforceable, or, to the extent they are, the monies are held by the receivers in trust for them: see, eg, CIP No 3 [3] – [5]. The merits of those allegations are yet to be determined, though they plainly disclose a serious question to be tried: see CIP No 3 [93]; CIP Group Pty Ltd v So (No 8) [2025] FCA 482 [38] (CIP No 8).

7    At the time the Injunction was granted, some evidence existed as to the value of the undertaking as to damages offered by Mr Clancy: CIP No 8 [5]: that being commonly accepted as the price of an injunction: CIP No 8 [24]. At that time, the evidence of the value of the undertaking was relatively unchallenged, and the Injunction was granted. Subsequently, and that which led to the variation of the Injunction on 9 December 2024, was an apparent reduction in the assets which might be available to Mr Clancy were his undertaking to be called upon: CIP No 5 [51]; CIP No 8 [6]. Indeed, at that later date, the evidence disclosed that there existed a real question as to the nature and extent of any property to which Mr Clancy might have recourse to satisfy his undertaking: CIP No 5 [46], [48]. Some discussion occurred as to what property did exist: CIP No 5 [41] – [45], [47]. It was ultimately found to be “clear” that the value of the relevant undertaking “ha[d] been diminished significantly” and, therefore, the “necessary conclusion” was that “the circumstances surrounding the value of Mr Clancy’s undertaking as to damages ha[d] markedly changed since the granting of the injunction on 24 May 2023”: CIP No 5 [49], [51]. Accordingly, a partial release of the Injunction was ordered in the terms excerpted above.

8    Two observations should be made as to that Order. First, the Court acted upon an undertaking provided by a Ms Lai Wah Wong (the mother of Mr So, the titular head of the So Interests). That undertaking, which is, for all intents and purposes, a cross-undertaking, was to repay any monies received as a consequence of the proposed variation to the Injunction (being an amount up to $3,500,000 released by the receivers) if the Clancy Interests’ claims in relation to the proceeds of sale were ultimately successful. The undertaking was secured by the grant of mortgages over two properties, owned jointly by Ms Wong and her husband in Hong Kong, that were to be drafted both in (a) favour of the Clancy Interests; and (b) a form acceptable to a Queensland District Registrar (as defined by the Orders of Judicial Registrar Schmidt on 18 March 2025). Second, though only a partial release of the Injunction was ordered, it was open to the Court, within the scope of the interlocutory application then before it, to have ordered the dissolution of the Injunction in toto. The Court did not do so for the reasons given in CIP No 5, and I will not repeat them here for fear that I might be taken to have elaborated on them.

9    The matter returned before the Court on 4 April 2025, following the filing, by the So Interests, of a further interlocutory application that sought the dissolution of the Relaxed Injunction. That application had some success, with orders being made on 15 May 2025 that the Injunction was to be dissolved if certain security was not advanced to support Mr Clancy’s undertaking within a period of four weeks: see CIP No 8. That being said, and with the benefit of hindsight, the Relaxed Injunction remains on foot as at the time of the publication of these reasons.

The application to vary the Relaxed Injunction

10    The application before the Court concerns the operation (or lack thereof) of the Relaxed Injunction. In short, it has transpired that the So Interests have encountered some difficulty in registering the mortgages envisaged by the order of 9 December 2024 in Hong Kong. It is not doubted, on the evidence before the Court, that the steps taken by the So Interests to do so have been made bona fides; instead, it appears that the relevant registration process has been delayed as a consequence of requisitions being placed upon the mortgages by the Hong Kong Land Registry (the Hong Kong Registry). The details and nature of the requisitions are not before the Court; that is concerning, albeit not fatal to the success of the present application.

11    In that context, it was said by Mr Couper KC for the So Interests that:

Your Honour will recall your Honour made the order for the release of the $3,500,000 from the injunction once [Ms Wong’s] mortgage was registered. … We have proposed to seek a variation of your Honour’s order, so that – on an undertaking that [Ms Wong] will take all steps necessary to meet the requisition – the money be released now, because it seems to be going on interminably …

12    The relief sought is opposed by the Clancy Interests, and perhaps understandably so. Indeed, it was said by Mr Pomerenke KC, albeit with some degree of generalisation, that (a) there was no compelling reason why the So Interests should be afforded access to the funds contemplated by the Relaxed Injunction prior to satisfaction of the defined undertakings (noting, in particular, the financial standing of Ms Wong); and (b) to vary the Relaxed Injunction in the manner sought without proof that the relevant mortgages had been registered in favour of the Clancy Interests (being the asserted quid pro quo) would be to “radically alter[]” the status quo. With respect to the former submission, it was said that any suggestion that the So Interests needed “immediate” funding (for example, to advance the carriage of the litigation: see, eg, CIP No 5 [23] – [38]) did “not take account of the ability of Ms Wong to pay” (she being a respondent to these proceedings and a client of the solicitors for the So Interests). No doubt, Ms Wong is likely meeting some of the legal costs herself, and has recently sold real estate in Hong Kong for some $1.3m AUD (though there is no evidence as to how that money is being, or is intended to be, used). However, it must be kept steadily in mind that Ms Wong is not obliged to meet the costs of her co-respondents, though whether she does or does not is strictly a matter for her.

13    Indeed, the submission does little to answer the core issue at hand: has the Relaxed Injunction been frustrated? On any objective view, the intention of the order of 9 December 2024 was to release the Injunction to some limited extent: CIP No 5 [66]. As it stands, that intention has been, and continues to be, frustrated as a consequence of the necessity to meet any requisition of the Hong Kong Registry. To that, it may be observed that some unfortunate delay has also occurred as a result of other disputations between the parties, and it is now some very long time since the order varying the Injunction was made, the effect of which is yet to be realised.

14    There is, of course, the other significant point, that if the orders sought are made, there is a risk that the security offered and accepted in December 2024 will not come to fruition. That is not to be doubted; however, if it had been put at that earlier time that it would take several months for any such security to be provided, I have great reservations as to whether it would then have been required. The reason is that, ultimately, the position in the present circumstances is that an injunction exists restraining parties from exercising their prima facie contractual rights, in circumstances where there is a real question as to whether there was any valuable undertaking as to damages. With respect, it should be repeated, that a valuable undertaking as to damages is the price one usually pays for obtaining an injunction: see, eg, Kluck v Carpendale Agri Pty Ltd [2025] FCA 705 [98]: and the effect of its absence, I think, cannot be understated.

15    As such, despite the presence of some risk that the relevant mortgages might not be registered, that should not prevent further variation to the Relaxed Injunction. In broad terms, one has to consider the position of both parties prior to the grant of the initial injunction. It is that position of which I am most concerned, and not those scenarios which have emanated as a result of the making of the various orders.

16    Accordingly, an order should be made to vary the order of 9 December 2024 in the manner that is sought by the So Interests. However, in keeping with the suggestion outlined by Mr Couper KC, and to assuage some of the legitimate concerns raised by the Clancy Interests, Ms Wong must give an undertaking to take all steps necessary to ensure that the relevant mortgages are granted over the properties in Hong Kong (in accordance with the order of 9 December 2024).

17    As an aside, I am prepared to stay the orders that have been made in order to afford the parties time to consider their respective positions.

Note

18    These are the amended and revised reasons for judgment given on 15 May 2025. Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said on 15 May has not been changed nor has any other material change been made.

Associate:    

Dated:    15 July 2025

SCHEDULE OF PARTIES