Federal Court of Australia

Ningbo Weisheng Dingxuan Equity Investment Fund Partnership Enterprise (Limited Partnership) v Zhong [2025] FCA 1053

ORDERS

THE COURT ORDERS THAT:

1.    Mr Alexander Man Chun Siu of Hall Chadwick, Level 40, 2 Park Street, Sydney NSW 2000 be appointed as receiver (the Receiver) of the property addressed as “Unit 11, 33 East Crescent Street, McMahons Point NSW 2060”, with folio identifier 11/SP21014 (the McMahons Point Property), to take possession of, and sell the McMahons Point Property, and from the proceeds of sale thereof, to discharge any statutory charges thereon, and to pay expenses of sale thereof, and such remuneration of the Receiver as the Court shall hereafter approve, and otherwise to hold and apply the said proceeds in accordance with these orders.

2.    The Receiver sell the McMahons Point Property with reasonable diligence and reasonable promptness.

3.    The Receiver have the following further powers:

(a)    To perform such cosmetic repairs and renewal to the fabric of the McMahons Point Property as the Receiver may think appropriate for the purpose of sale;

(b)    To negotiate the termination of any residential tenancy agreement;

(c)    To obtain professional advice;

(d)    To obtain, if thought fit, any clearance certificate or other documents for the purpose of complying with any taxation legislation; and

(e)    To engage sales agents, builders, and other service providers for the purpose of performing the appointment made by these orders.

4.    The Receiver distribute the sales proceeds of the McMahons Point Property in the following order:

(a)    First, to discharge any statutory charges subsisting against the McMahons Point Property;

(b)    Second, to pay any reasonable costs associated with the sale of the property, including any cosmetic renovation, agent’s fees or commissions, advertising fees, conveyancing fees;

(c)    Third, to pay the Receiver’s renumeration subject to approval of the Court;

(d)    Fourth, any remaining sales proceeds:

(i)    Half – to the applicant, as the applicant’s solicitor may direct, by way of equitable execution of the judgment made against the first respondent in these proceedings on 2 February 2023;

(ii)    The other half – to be paid as the solicitor of the applicant and the solicitor of the second respondent may jointly direct, or, in the absence of such joint direction, to be paid into court.

5.    Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth), the requirement in r 14.21 for the filing of a guarantee by the Receiver be dispensed with.

6.    The Receiver have liberty to apply on reasonable notice.

7.    The first respondent pay the applicant’s costs of this interlocutory application.

THE COURT NOTES THAT THE APPLICANT AND THE SECOND RESPONDENT have ADVISED THE COURT THAT THEY HAVE REACHED THE FOLLOWING AGREEMENT:

A.    Subject to the following, the second respondent (as one of the two joint tenants of the McMahons Point Property) supports the appointment of the Receiver for the purpose of selling the McMahons Point Property.

B.    Subject to the AU$30,000 referred to below, the half of the net sales proceeds attributable to the second respondent is to be invested in a controlled monies account in the joint names of the solicitor on record for the applicant and the solicitor on record for the second respondent, and shall not be released or paid unless the two solicitors otherwise give any joint direction, or unless the Court orders otherwise.

C.    Out of the half of the net sales proceeds attributable to the second respondent, an amount of AU$30,000 is to be paid to the solicitor of the second respondent for the purpose of paying the second respondent’s past and future reasonable legal fees for this proceeding, upon the solicitor of the second respondent providing a copy of the costs agreement with the second respondent to the applicant’s solicitor, subject to the redaction of information relating to the second respondent’s special circumstances.

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)

STEWART J:

Introduction

1    On 2 February 2023, I entered judgment in favour of the applicant against the first respondent in the enforcement of a foreign arbitral award pursuant to s 8(3) of the International Arbitration Act 1974 (Cth). The judgment sounded in various sums in Chinese Renminbi (RMB) which currently amount to approximately $176 million. Since then, the applicant has been trying to execute on the judgment but, thus far, with little success.

2    On 31 January 2023, the applicant’s Chinese lawyers commenced proceedings in that jurisdiction to obtain judgment against the second respondent in respect of a common spousal debt arising from the underlying award debt against the first respondent.

3    Pursuant to directions of the Court following entry of judgment, the applicant’s solicitor has regularly filed affidavits reporting on progress on recovery of the judgment debt. Those affidavits illustrate the difficulties the applicant has encountered in that course.

4    The applicant has contacted a number of different banks operating in Australia to ascertain if there are assets held by the first respondent. Garnishee orders have been obtained by way of the Supreme Court of New South Wales in relation to bank accounts held by the first respondent against each of Westpac, HSBC and Bank of China. Save for a property in McMahons Point, which forms the subject of application before me and which I will come to discuss, the applicant to its knowledge is unaware of other assets capable of satisfying the judgment debt.

5    As at the time of this hearing, the first respondent is out of the jurisdiction, serving a long prison sentence in a Chinese jail. The first respondent is presently pursuing an appeal in his criminal case, which the applicant’s Chinese lawyer believes may take at least months, if not years, to resolve. Hence, it is more likely than not that the first respondent will remain incarcerated for the foreseeable future.

6    I had previously, on 22 November 2022, made freezing orders against the first respondent in anticipation of the above-mentioned judgment. I also made freezing orders against the second respondent in anticipation of a judgment being made against her by a Chinese court, as referred to above. That proceeding is still on foot. Both sets of freezing orders remain in place.

Procedural background

7    It appears that in May 2013 the respondents purchased a property as joint tenants, being the apartment at 11/33 East Crescent Street, McMahons Point, NSW. The property is registered as Lot 11 in Strata Plan 21014. A recent title search shows that there is no mortgage or other charge registered on the property.

8    The property has an estimated value of approximately $7 million. It is currently let, achieving a rental income of approximately $100,000 per annum. However, the foreign landowner land tax and surcharge payable on the property is approximately $256,000 per annum. The property is therefore fairly described as a wasting asset.

9    The applicant now by interlocutory application dated 25 July 2025 seeks orders appointing a receiver to the property to take possession of it and to sell it. The orders propose that the sale proceeds be distributed by the receiver as follows:

(1)    First, to discharge any statutory charges subsisting against the property;

(2)    Second, to pay any reasonable costs associated with the sale of the property, including any costs of cosmetic renovation, agent’s fees or commissions, advertising fees and conveyancing fees;

(3)    Third, to pay the receiver’s remuneration subject to approval of the Court; and

(4)    Fourth, any remaining sale proceeds to be halved with half to be paid to the applicant by way of equitable execution of the judgment against the first respondent and the other half to be paid into Court and preserved under the existing freezing orders against the second respondent.

10    By orders dated 11 August 2025, in light of the first respondent still being incarcerated in China, I directed the applicant to serve the application and accompanying materials on the first respondent in a substituted manner pursuant to r 10.24 of the Federal Court Rules 2011 (Cth) (FCR). This involved mail to the first respondent in prison in Jiangsu Province, China and email to a Chinese legal representative. The applicant filed an affidavit of service to this effect on 21 August 2025. There has been no response from the first respondent.

11    The second respondent has appeared and consents to the orders subject to a payment to her solicitor of a sum of $30,000 to which the applicant has agreed. The now agreed orders as between the applicant and the second respondent provide for the second respondent’s half share to be paid as their solicitors may jointly direct; for the present, that is to a controlled monies account in the joint names of the solicitor on record for the applicant and the solicitor on record for the second respondent.

Principles

12    The Court has power under s 57 of the Federal Court of Australia Act 1976 (Cth) to appoint a receiver by interlocutory order “in any case in which it appears to the Court to be just or convenient to do so”. Such an appointment can be made at any stage of the proceeding on such terms and conditions as the Court thinks fit.

13    That statutory power to appoint a receiver has its origins as an equitable remedy. The class of circumstances in which the power may be exercised is not closed. Nor are the purposes for which a receiver may be appointed and the powers and conditions attaching to such an appointment. See University of Western Australia v Gray (No 6) [2006] FCA 1825 at [71] per French J.

14    The Court has an inherent equitable jurisdiction to enforce its judgments which is often referred to as equitable execution: Hall v Foster [2012] NSWSC 974 at [16] per Ball J. That is an available circumstance in which the power under s 57 of the FCA Act can be used, although the Court also has the inherent power to order equitable remedies including equitable execution under s 23 of the FCA Act: Gray at [71]. The power to make orders in support of equitable execution includes the appointment of a receiver: Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar (No 5) [2024] FCA 37 at [35] per Markovic J; Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547 at 552 per Waddell J.

15    As explained by Kunc J in Khattar v Hills Shoppingtown Pty Ltd (subject to a deed of company arrangement) [2024] NSWSC 1552 at [22], the focus of attention in cases such as this is usually on the requirement that the available legal remedies are inadequate before a court will grant equitable execution. However, it is not necessary for execution at law to be impossible before equitable execution by way of the appointment of a receiver may be ordered, the decision to appoint ultimately being the exercise of a discretion: Riva NSW Pty Ltd v Key Nominees Pty Ltd [2023] NSWSC 711 at [269] per Meek J.

16    Division 14.3 in Ch 2 of the FCR deals further with the appointment of receivers.

17    It is proposed to appoint Alexander Man Chun Siu, a registered liquidator and partner of Hall Chadwick, an accounting firm, as receiver. As is customary in circumstances of the appointment of a professional in that capacity as a receiver, I am satisfied to dispense with the requirement of r 14.21(b) that the receiver file a guarantee.

Consideration

18    The principal difficulty faced by the applicant in pursuing legal remedies of execution against the property is that the respondents own it as joint tenants but the applicant has judgment against only one of the respondents. Also, there may be a significant time, even a few years, before the applicant gets a judgment against the other respondent and in the meantime the equity in the property is being eroded by the accruing land taxes. The affidavit evidence of the applicant’s Chinese lawyer is that, as at 10 July 2025, it is unclear whether judgment will be forthcoming before the year is out, and that in any event the second respondent is yet to exhaust her appeal processes, which are of equally indeterminate timing. Indeed, it cannot be ruled out that the applicant may never get such a judgment against the second respondent as the claim may be successfully defended.

19    It would appear that the issue of a writ of execution including a property (seizure and sale) order or its registration against the title of the property, does not sever the joint tenancy unless there are statutory provisions that bring about that effect: Gemini Energy and Minerals Pty Ltd v Luff [No 2] [2018] WASC 341 at [18] per Le Miere J.

20    However, taking a joint tenant’s interest in land in execution of a judgment will sever a joint tenancy: Director of Public Prosecutions (Vic) v Le [2007] HCA 52; 232 CLR 562 at [100] per Kirby and Crennan JJ citing Guthrie v Australia & New Zealand Banking Group Ltd (1991) 23 NSWLR 672 at 680 per Meagher JA and Mitrovic v Koren [1971] VR 479 at 481 per Gowans J (where I understand their Honours in each case to be referring to sale in execution and transfer and not merely the issue of a writ).

21    Further, the applicant submits, and I accept, that the appointment of a receiver with power and direction to sell the property and to pay the first respondent’s share of the net proceeds to the applicant would ultimately sever the joint tenancy in equity. This is for the reason that the appointment of a receiver for facilitation of the sale of a property by order of the court, even if that appointment were to be made with the consent of only one of the parties to the joint tenancy, would by necessary implication be inconsistent with the continuance of a joint tenancy.

22    Although it is axiomatic that the legal interests of co-tenants do not change until the appropriate registrations have occurred under Torrens title, “equity does not permit the court order to be frustrated, and holds a severance of the beneficial interest to have occurred if that is necessary to ensure that the order is perfected”: see Boyd v Thorn [2016] NSWSC 588; 18 BPR 35,941 at [24] per White J quoting Butt P, Butt’s Land Law (6th ed, Lawbook Co, 2010) at [1487] (the passages relevantly remain the same in Edgeworth B, Butt’s Land Law (7th ed, Lawbook Co, 2017) at [6.650]).

23    In Boyd v Thorn, his Honour considered correct the proposition that this severance occurred when the Court made a declaration of equitable charge over the interest held by a joint tenant over their interest. This view was later considered but not disturbed by the Court of Appeal in an appeal from a different judgment: see Boyd v Thorn [2017] NSWCA 210; 96 NSWLR 390 at [9]-[10] per Macfarlan JA and [90] per Leeming JA. The 7th edition of Butt’s Land Law also refers to the example of “where the property has been sold and the court orders the proceeds to be distributed between the co-owners” as severing the joint tenancy: at [6.650] citing Christie v Christie (unreported, Sup Ct, NSW, Jenkyn J, 14 November 1973).

24    There is no doubt that the sale of the property by the receiver in the present case would both formally and in practice require a severance of the joint tenancy. Similarities may be noted to the judicial sale of a property. As stated by Lucas J in the matrimonial settlement context, “there is no reason in principle why a severance, in certain circumstances, should not be effected by an order of the court, if that is necessary in order to ensure that the order may be perfected”: Re Johnstone [1973] Qd R 347 at 351. There may be a temporal debate on when a severance in equity would actually occur, but that does not matter in the circumstances of the case, when that would at the latest occur at the point of sale and conveyance.

25    The severance of the joint tenancy one way or another notwithstanding, the appointment of a receiver to the property in this case is appropriate because of the consequence of putting the entire property in the hands of a receiver. If the applicant proceeds to register a writ and requests the sheriff to sell the property, all that the sheriff would be able to sell would be the first respondent’s aliquot interest in the property: see Wright v Gibbons [1949] HCA 3; 78 CLR 313 at 330-331 per Dixon J; cf Guthrie at 680, although “severance” there may have been used in a different sense of dealing with the aliquot share. The difficulties in finding a reasonable commercial market for the sale of the share of only one co-tenant in a joint estate are obvious. I therefore accept that there is a very substantial risk that there would be no market at all for the sale of the first respondent’s share as co-tenant of the estate. In contrast, the procedural regime for receivership proposed by the applicant and acceded to by the second respondent would enable the marketing and possible sale of the property on much more favourable terms.

26    For that reason, and also because of the applicant’s unsuccessful attempts thus far to satisfy the judgment in pursuit of legal remedies, briefly surveyed above, I accept that the legal execution remedies that are available are presently “inadequate” in the relevant sense.

27    Moreover, it is plainly undesirable that the property be allowed to remain in joint tenancy, and it is proper that the Court should seek to achieve a severance of the joint tenancy in order to preserve the efficacy of the judgment against the first respondent.

28    Clearly, the ongoing delay in the sale of the property is undesirable because of the continuing accrual of the foreign landowner land tax and surcharge. For those reasons I am satisfied the Court should exercise its power and discretion to appoint a receiver to the property in the terms of the orders that have now been agreed between the applicant and the second respondent. I will make orders as slightly amended in the course of discussion with counsel in the hearing.

Associate:

Dated:    1 September 2025