Federal Court of Australia

Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (No 11) [2025] FCA 905

ORDERS

IN THIS ORDER:

Net Proceeds     means the net proceeds of sale of the property located at 16 Orange Street, Eastwood NSW 2122 (Folio Identifier 19/245273) which were paid into an interest-bearing controlled moneys account established by the plaintiffs’ solicitors pursuant to Order 1 made on 30 August 2024.

Stay Order    means Order 1 of the orders made by Justice Thawley in appeal proceedings NSD1324/2024 which stayed the operation and enforcement of orders 1, 2, 5, 6, 8, 11, 12, 13 and 14 made by Jackman J on 23 August 2024 in these proceedings, to the extent they affect the Second Defendant, Hai Zhong Cai.

THE COURT ORDERS THAT:

In relation to first respondent’s points of claim filed 19 June 2025

The Court notes the agreement of the Plaintiffs and the First Respondent that the claims in the Points of Claim filed by the First Respondent on 19 June 2025 are discontinued with no order as to costs.

In relation to plaintiffs' points of claim filed 2 July 2025

1.    The amount of $69,169.82, comprising $63,512.50 in principal and $5,657.32 in interest, be immediately paid to the Plaintiffs from the Net Proceeds.

2.    The balance of the Net Proceeds be paid to the Plaintiffs immediately in the event that the Stay Order terminates as a result of the dismissal of the Second Defendant’s appeal or upon any prior discharge of the Stay Order.

3.    Liberty to apply on 24 hours' notice.

4.    Hai Zhong Cai pay the costs of and incidental to the plaintiffs’ points of claim filed on 2 July 2025.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

JACKMAN J:

1    The present aspect of this proceeding concerns an interlocutory process dated 27 August 2024 filed by the plaintiffs in relation to the respective claims previously made by Haiming Cai (the first respondent to the interlocutory process) (Haiming) and Jia Liu (the second respondent to the interlocutory process) (Jia Liu) that they are entitled to be paid an amount of the net proceeds of sale (Net Proceeds) of the property located at 16 Orange Street, Eastwood NSW 2122 (Eastwood Property) which was previously owned by the second defendant in the proceeding, Mr Hai Zhong Cai (Mr Cai).

2    On 18 January 2022, the plaintiffs commenced these proceedings against Mr Cai and others, seeking various relief, including damages and equitable compensation. The hearing occurred before me between 3 and 21 June 2024. On 15 July 2024, I delivered reasons for judgment: Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766 (Judgment).

3    On 23 August 2024, I made Orders, including Orders that Mr Cai pay to each of the plaintiffs:

(a)    the amount of $3,100,386.79, together with compound interest;

(b)    the amount of $196,659.70, together with compound interest; and

(c)    the plaintiffs’ costs of the proceedings.

4    On 20 September 2024, Mr Cai appealed the judgment (Appeal). On 20 December 2024, Thawley J ordered that the Orders of 23 August 2024 relevantly be stayed pending the determination of the Appeal.

5    No payment has yet been made to the plaintiffs in accordance with the terms of the Orders of 23 August 2024.

6    As to the Eastwood Property, on 28 June 2024, Haiming lodged a caveat claiming an estate in fee simple in the Eastwood Property by virtue of an alleged loan agreement with Mr Cai dated on or about 25 January 2014 (Haiming Loan Agreement). As at 19 June 2025, the total amount claimed to be owing under the Haiming Loan Agreement was $3,082,210.56 inclusive of interest.

7    Also on 28 June 2024, Haiming's solicitors (Zhang Shijing Lawyers) issued a letter of demand to Mr Cai seeking repayment of the amounts alleged to be owing under the Haiming Loan Agreement.

8    On or about 7 July 2024, Mr Cai entered into a contract to sell the Eastwood Property for $3,102,000.

9    On 22 July 2024, Jia Liu lodged a caveat claiming an estate in fee simple in the Eastwood Property by virtue of an alleged loan agreement with Mr Cai dated on or about 21 April 2023 (Liu Loan Agreement). As at 31 July 2024, the total amount alleged to be owing under the Liu Loan Agreement was $894,038.80 inclusive of interest and other charges.

10    On 24 July 2024, Haiming commenced proceedings against Mr Cai in the New South Wales Supreme Court seeking to recover the amounts alleged to be owing under the Haiming Loan Agreement (Supreme Court Proceedings). On 1 August 2024, Haiming and Mr Cai executed consent orders in the Supreme Court Proceedings which, among other matters, required Mr Cai to pay Haiming $3,105,534.10 from the proceeds of sale of the Eastwood Property.

11    On 30 August 2024, I made Orders in respect of the interlocutory process concerning the Eastwood Property, including that:

(a)    the Net Proceeds were to be paid into a controlled moneys account established by the plaintiffs’ solicitors (the CMA) and held subject to written agreement or further order of the Court; and

(b)    each respondent to the interlocutory process concerning the Eastwood Property (including Haiming, Jia Liu and Mr Cai) claiming an entitlement to be paid an amount of the Net Proceeds pursuant to an obligation of Mr Cai bona fide and properly incurred under a contract entered into before 15 July 2024, was to file and serve by 13 September 2024, or such other date as set by the Court, any documents relied upon to establish their respective claims and any additional evidence relied upon to establish those claims.

12    On 13 September 2024, the sale of the Eastwood Property by Mr Cai was completed.

13    On or about that date, pursuant to the Orders of 30 August 2024, the Net Proceeds were paid into the CMA. As at 28 July 2025, the amount of $2,569,484.68 was held in the CMA.

14    In the period from 16 September 2024 to 28 March 2025, each of Haiming, Jia Liu and Mr Cai filed affidavit material in accordance with the orders of 30 August 2024, setting out their purported entitlements to be paid an amount of the Net Proceeds pursuant to a bona fide and properly incurred obligation entered into before 15 July 2024.

15    On 4 June 2025, the proceedings were listed for a case management hearing. During that hearing, counsel for Haiming appeared and requested that the matter be listed for directions to deal with Haiming's purported claims to the Net Proceeds.

16    On 10 June 2025, the plaintiffs received notice that the proceedings had been listed for case management at 9.30 am on 11 June 2025. Notice of the listing and the plaintiffs' proposed short minutes of order were notified to the other parties by email on 10 June 2025.

17    On 11 June 2025, at the case management hearing, Haiming appeared by way of senior counsel instructed by Mr Terry Zhang of Zhang Shijing Lawyers, and Zhang Zhau of Juris Cor Legal appeared for Mr Cai. I made orders that by 4.00 pm on 18 June 2025, Haiming, Jia Liu and Mr Cai were to file and serve points of claim in respect of any claimed entitlement to be paid an amount of the Net Proceeds, and I also made orders dealing with the production of documents by Haiming and Jia Liu and the filing and service of affidavits by the parties to the interlocutory process. I listed the respective claims to the Net Proceeds for hearing on 5 August 2025 with an estimate of three days.

18    In accordance with the orders of 11 June 2025, Haiming filed points of claim on 19 June 2025.

19    On 2 July 2025, the plaintiffs filed a defence to Haiming's points of claim in which the plaintiffs alleged that the Haiming Loan Agreement was a sham and was created for the purposes of frustrating the judgment obtained by the plaintiffs in the proceedings, and that Haiming has no proprietary interest in the Net Proceeds and is not a creditor of Mr Cai in the amounts alleged.

20    No other party other than the plaintiffs filed any points of claim in accordance with the orders of 11 June 2025.

21    On 11 July 2025, the plaintiffs’ solicitors sent a letter to Zhang Shijing Lawyers noting Haiming's failure to comply with the Orders of 11 June 2025, among other matters. They did not receive a response to that letter.

22    On 18 July 2025, Haiming and the plaintiffs agreed that Haiming would discontinue his points of claim and that there would be no order as to costs.

23    Haiming's lawyers subsequently notified the plaintiffs’ solicitors on 24 July 2025 that they had ceased to act for Haiming and that the plaintiffs’ solicitors should contact Haiming directly.

24    On 25 July 2025, the plaintiffs’ solicitors sent the plaintiffs’ proposed orders to Zhang Shijing Lawyers, Jia Liu and Mr Cai's lawyers (Juris Cor Legal). Those orders gave effect to the settlement agreed between Haiming and the plaintiffs and further provided for the relief sought in the plaintiffs' points of claim. No response to that email has been received by the plaintiffs' solicitors. The plaintiffs' solicitors also tried unsuccessfully to contact Mr Terry Zhang at Zhang Shijing Lawyers by telephone.

25    Jia Liu was previously represented by Ren Zhou Lawyers.

26    On 1 May 2025, Ren Zhou Lawyers filed a notice of ceasing to act for Jia Liu. Jia Liu has not complied with the orders of 11 June 2025 in relation to the production of documents and the filing of points of claim and affidavits.

27    In the period from 10 June 2025 to 14 July 2025, the plaintiffs' solicitors attempted to communicate with Jia Liu on five separate occasions in relation to the case management hearing listed on 11 June 2025, the Orders made on that date, and compliance by Jia Liu with those orders. The plaintiffs' solicitors have not received any response from Jia Liu to those communications.

28    On 4 July 2025, the plaintiffs' solicitors sent an email to Jia Liu's former lawyers, noting that the notice of ceasing to act filed and served by them failed to disclose Jia Liu's last known residential or business address and only provided an email address, and accordingly requested those and other contact details. On 4 July 2025, Ren Zhou Lawyers sent a response to the plaintiffs' solicitors, stating that they had never been aware of Jia Liu's residential address or telephone number, as she lives in China, and stating that they had contacted her by way of the email address provided in the notice of ceasing to act. They also expressed the understanding that Jia Liu had engaged Westlink Legal Pty Ltd in May 2025, and accordingly had transferred the relevant files to them on 19 May 2025. The email included the contact details of the solicitor at that firm.

29    On 8 July 2025, the plaintiffs' solicitors sent a letter to Westlink Legal setting out various matters and the communications which had been sent by them to Jia Liu, and stated that the plaintiffs were proceeding on the basis that Jia Liu no longer contended that she had an entitlement to the Net Proceeds of the sale of the Eastwood Property, being the subject of the interlocutory process.

30    On 14 July 2025, Westlink Legal sent a response, stating that they were not representing Jia Liu in this matter. On 22 July 2025, the plaintiffs’ solicitors sent an email to Jia Liu, noting that she had not filed any points of claim or any further evidence in respect of her claimed entitlement to the Net Proceeds. That email indicated that the plaintiffs therefore took the position that Jia Liu had abandoned her claim.

31    The email of 25 July 2025 and proposed orders referred to above were also sent to Jia Liu. No response to that email was received.

32    Mr Cai has not filed any points of claim in accordance with the Orders of 11 June 2025. The plaintiffs' solicitors have corresponded with Juris Cor Legal, the solicitors for Mr Cai, on:

(a)    19 June 2025, noting that no points of claim had been filed by their client;

(b)    25 June 2025, noting again that no points of claim had been filed, and inquiring whether their client proposed to participate in the hearing listed to commence on 5 June 2025; and

(c)    9 July 2025, serving a Notice to Produce on Mr Cai, seeking documents in relation to the Haiming Loan Agreement.

33    On 16 July 2025, the plaintiffs' solicitors received a response from Juris Cor Legal to their 9 July 2025 email enclosing the Notice to Produce, indicating that Mr Cai advised that he is not in possession of the categories of documents sought by way of the Notice to Produce.

34    Further emails by the plaintiffs' solicitors to Juris Cor Legal of 22, 23, 25 and 30 July 2025, and attempts by the plaintiffs' solicitors to speak to the relevant solicitor by telephone on 25 and 29 July 2023, have not been responded to by Juris Cor Legal.

35    On or about 9 July 2024, GMCS No 1 Pty Ltd issued a letter of offer to Australian Sydney Realty Pty Ltd (of which Mr Cai was a director) and to Mr Cai for the grant of finance by GMCS No 1 Pty Ltd or its nominated entity (Letter of Offer). The limit of the facility offered was $2,326,500 and Mr Cai was to be guarantor on any facility which was extended.

36    On or about 10 July 2024, Mr Cai executed a facility agreement with Secured Lending 2 Pty Ltd (Secured Lending) (Facility Agreement), with a limit of $2,326,500. The facility agreement was:

(a)    subject to the terms and conditions set out in the facility document dated 9 July 2024 and the Parsons Facility terms and conditions; and

(b)    secured by a mortgage executed by Mr Cai in favour of Secured Lending over the Eastwood Property, with the mortgage incorporating the facility document and the terms and conditions.

37    On 6 September 2024, Secured Lending assigned to the plaintiffs all of its rights, title and interest in and pursuant to the Letter of Offer, the Facility Agreement and the mortgage. On or about 19 September 2024, the plaintiffs' solicitors caused a copy of the notice of assignment to be served on Australian Sydney Realty Pty Ltd and Mr Cai.

38    No amounts have been received referable to the following amounts which remain unpaid under the Letter of Offer and Facility Agreement (exclusive of interest):

(a)    loan processing fee of $58,162.50;

(b)    research fee of $950; and

(c)    loan documentation fee of $4,400.

39    The interlocutory process has been duly served, and Haiming, Jia Liu and Mr Cai have been notified of the Orders of 11 June 2025 on numerous occasions, fixing the hearing of the interlocutory process for today and making various orders to prepare the matter for hearing. In those circumstances, it is appropriate to hear and determine the matters raised by the plaintiffs' points of claim filed on 2 July 2025 notwithstanding the absence of other parties, pursuant to r 17.04 of the Federal Court Rules 2011 (Cth).

40    There is no evidence before me substantiating the claim previously foreshadowed by Jia Liu for an entitlement to some of the Net Proceeds from the sale of the Eastwood Property. The claim previously foreshadowed by Haiming has been discontinued by agreement with the plaintiffs with no order as to cost.

41    The plaintiffs are entitled to be paid immediately the sum of $69,169.82, comprising $63,512.50 by way of principal and $5,657.32 in interest. That entitlement arises by reason of the assignment from Secured Lending to the plaintiffs of 6 September 2024. That is not affected by the stay of the Orders of 23 August 2024 pending the Appeal.

42    As to the balance of the Net Proceeds, in the event that the stay terminates as a result of the dismissal of Mr Cai's Appeal or upon any prior discharge of the stay, the plaintiffs will be entitled to payment of the balance of the Net Proceeds.

Associate:

Dated:    6 August 2025

SCHEDULE OF PARTIES