Federal Court of Australia

Forever Winner International Development Australia Pty Ltd v Shenzhen Xinhe Hongshi Investment and Consultancy Co Ltd [2026] FCA 167

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal from the decision of Stewart J be dismissed.

2.    The applicant pay the respondent’s costs of and incidental to the application for leave to appeal.

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

REASONS FOR JUDGMENT

BEACH J:

1    Forever Winner International Development (Australia) Pty Ltd (FWIDA) applies for leave to appeal against the decision of Stewart J to grant a freezing order against it as a non–party to the proceeding below.

2    The plaintiff below, Shenzhen Xinhe Hongshi Investment and Consultancy Co Ltd, who is the respondent before me, is a Chinese corporation. So too is the defendant below, Shandong Ruyi Technology Group Co Ltd. The defendant is indebted to the plaintiff in a sum equivalent to more than $85 million. The debt arises from proceedings commenced by the plaintiff in the Shenzhen Municipal Intermediate People’s Court in which it obtained judgment against the defendant on 31 December 2021 for an amount equivalent to more than $44 million. The current quantum of the debt is a reflection of the accumulation of interest, but with some adjustment for modest recoveries.

3    In the principal proceeding before his Honour the plaintiff seeks orders recognising the foreign judgment and winding up the defendant under s 583 of the Corporations Act 2001 (Cth) given that the defendant is a Part 5.7 body that is unable to pay its debts (s 583(c)(i)). The principal proceeding is listed for final hearing this April before his Honour.

4    Let me say a little more about FWIDA who is, on the current evidence, a debtor of the defendant.

5    FWIDA is an Australian company, whose sole director and secretary since 18 November 2022 has been Ms Chenran Qiu. FWIDA’s sole shareholder had been the defendant in the proceeding below until 28 April 2022, when its shareholding was transferred to Dynamic Day Enterprises Ltd, a company incorporated in the British Virgin Islands. Ms Qiu is also the sole director and shareholder of Dynamic Day.

6    Some time ago, FWIDA became the registered proprietor of six parcels of land in regional Victoria, known as the Larundel Estate, from which it operated a farming business. The Larundel Estate was FWIDA’s main asset.

7    On 17 September 2025, FWIDA sold the Larundel Estate for a total purchase price of $17,500,000. Following the settlement of that sale, the payment of associated costs and the repayment of a debt to the National Australia Bank of approximately $5.17 million, FWIDA received net sale proceeds of at least $10,833,000; it has little in the way of other significant assets.

8    On 21 October 2025, the plaintiff applied for a freezing order against FWIDA seeking to restrain FWIDA from removing from Australia or in any way disposing of, dealing with or diminishing the value of its assets in Australia up to the unencumbered value of $10,832,620.

9    The amount of $10,832,620 represents an alleged loan debt, repayable on demand, which the plaintiff says is owed by FWIDA to the defendant, the prospective judgment debtor in the substantive proceeding.

10    His Honour was satisfied that a freezing order should be made against FWIDA but not that it should be joined as a party to the principal proceeding, and he made orders accordingly on 19 November 2025. Before his Honour, both FWIDA and the defendant opposed the making of the freezing order. But only FWIDA and the plaintiff, the current respondent, have appeared on the leave to appeal application before me.

11    On 20 February 2026, I refused FWIDA’s application for leave to appeal. These are my reasons for doing so.

12    Now a grant of leave to appeal is discretionary. And as is well established, it is usually necessary to take into consideration whether the relevant decision is attended with sufficient doubt to warrant its reconsideration on appeal and whether substantial injustice would result if leave were refused, supposing the decision to be wrong, although these criteria do not represent a hard and fast rule and each case must be considered on its merits. So, for example, leave to appeal may also be granted where the appeal raises a question of public importance but does not satisfy both limbs of the two-pronged test.

13    Moreover, I note that in Palmer v Australian Securities and Investments Commission (2025) 312 FCR 151; [2025] FCAFC 151, it was said by Beach, Banks–Smith and Owens JJ at [21] and [22]:

We have granted leave to appeal because we consider that there are points of principle concerning the interface between the civil and criminal proceedings that have been raised which have sufficient significance such that we should determine them even if only to inject further clarity, assuming that to be absent which is, of course, contestable.

Further, although the two-pronged test set out in Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 at [26] per Dowsett, Foster and Yates JJ is usually the appropriate test to apply, that is not definitively so in all circumstances, particularly where as here one is not dealing with just a matter of practice or procedure. Further, the outcome of her Honour’s order granting a temporary stay does have significant consequences as to the forum in which the applicants can pursue their challenge as to the lawfulness of the s 19 examination and in that sense has finally determined the priority question between the parties as to where that issue should be addressed. It may be said that a prima facie case for the grant of leave can be made out where the effect of the interlocutory order is to determine an important issue in the proceeding, as is the case here (see Samsung at [33], citing Ex parte Bucknell (1936) 56 CLR 221 at 225 to 227).

14    In summary I refused leave for the following reasons.

15    First, FWIDA has not established the sufficient doubt required to obtain such leave. His Honour made no error of legal principle. Further, his Honour in exercising the Court’s discretionary power surveyed the relevant factual material and drew appropriate inferences. FWIDA’s suggestion that there was no evidence for findings of risk and that such findings were incoherent arises from an unfair reading of his Honour’s reasons.

16    Second, even supposing his Honour’s decision to have been wrongly made, there is on the facts of this case no real prejudice identified by FWIDA let alone substantial injustice if I refused leave to appeal.

17    Now at one point FWIDA said that I should assess the asserted errors by reference to the correctness standard, where there was only one correct outcome or answer even if an evaluative process was involved, rather than by the standard applicable to discretionary decisions where it must be shown that his Honour acted upon a wrong principle, mistook the facts, failed to take into account a relevant consideration, took into account an irrelevant consideration or made a decision that overall was unreasonable or plainly unjust (even if specific error could not be identified). But I do not need to dwell on such matters. To the extent that the source of power is in a specific rule or statutory provision and the question arises as to whether the terms thereof or any pre-condition enshrined therein have been met, then clearly the correctness standard is to be applied. But if the question of power is not in doubt but the question of its exercise is being considered, clearly the House v The King standard is to be applied.

18    Let me address another matter. Given that the principal proceeding is to be heard by his Honour this April, I considered it necessary to both deal with this leave application expeditiously and to take a more robust approach than is usually taken by a single judge, albeit in the appellate jurisdiction, dealing with the grant of leave. The timing is such that it would have been unsatisfactory to refer the matter of leave to a Full Court, in terms of its disposition; further, on no reasonable view was this a clear case for the grant of leave. Further, I am satisfied that FWIDA has not been substantially prejudiced by the course that I have taken, nor indeed by the refusal of leave to appeal.

19    Let me begin by saying something concerning the relevant rules and statutory power referred to by his Honour.

The source of power

20    Section 23 of the Federal Court of Australia Act 1976 (Cth) provides that the Court has the power to make inter-alia such orders including interlocutory orders as the Court “thinks appropriate”. Division 7.4 of the Federal Court Rules 2011 (Cth) sets out specific provisions governing the making of freezing orders.

21    The Court may make a freezing order “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” (r 7.32(1)).

22    Rule 7.34 provides:

The Court may make a freezing order or an ancillary order against a person even if the person is not a party in a proceeding in which substantive relief is sought against the respondent.

23    Rule 7.35 sets out more specific requirements. As his Honour summarised, the rule applies if, relevantly to the case before his Honour: (a) judgment has been given in favour of the applicant by a court outside Australia if there is a sufficient prospect that the judgment will be registered in or enforced by the Court (r 7.35(1)(a)(ii) read with r 7.35(2) and the definition of “another court” in r 7.31); or (b) the applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court (r 7.35(1)(b)(i)).

24    It was common ground before his Honour that both those bases for the application of r 7.35 were met with respect to the registration or enforcement of a foreign judgment. FWIDA accepted that the plaintiff had made out a good arguable case that the Chinese judgment will be enforced by the making of a judgment in this Court. And FWIDA did not contest that this would also extend to the plaintiff’s case for the winding up of the defendant. The defendant also did not contest these matters.

25    Now as his Honour noted, r 7.35 does not “affect[] 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” (r 7.35(6)) and nothing in Div 7.4 diminishes the implied or statutory jurisdiction of the Court to make a freezing order (r 7.36).

26    Consequently, the more generally expressed powers given by s 23 and r 7.32 are not restricted by r 7.35. Further, where r 7.35 applies, r 7.35(5) 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(5) exists.

27    Now r 7.35(4) and r 7.35(5) contain specific requirements, the former in relation to freezing orders against judgment debtors or prospective judgment debtors and the latter in relation to freezing orders against third parties. Rule 7.35(4) may be put to one side for present purposes.

28    Rule 7.35(5) is in the following terms:

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.

29    Before his Honour the plaintiff principally relied on r 7.35(5)(b). As his Honour noted, the applicability of r 7.35(5)(b) (unlike rr 7.35(4) and (5)(a) picking up the language of r 7.32) is not expressly premised on the jurisdictional requirement of “a danger that a judgment or a prospective judgment will be wholly or partly unsatisfied”. Rather, it is the existence of a “process in the Court” which is the issue.

30    But I agree with his Honour that whether the existence of such a danger is a requisite element because of r 7.32 even when relying on r 7.35(5)(b) or whether it is in any event an important factor to consider in the exercise of the Court’s discretion does not really matter. In either event the question of danger must be considered.

31    That said, his Honour considered that although r 7.35 does not restrict r 7.32 but rather extends it in certain respects, the requirements expressed in r 7.32 govern the exercise of power under r 7.35. He said that it is inconceivable that a freezing order may be granted where there is no danger that a judgment or prospective judgment will be wholly or partly unsatisfied. He said that the presence of an express requirement in r 7.35(5)(a) of there being such a danger and not in r 7.35(5)(b) is explained by the causal nexus required by the use of “because” in the former which is absent from the latter. With respect, I agree with his Honour’s analysis.

32    Now before his Honour the plaintiff identified two alternative and possibly sequential processes in the Court each of which it contended was, within the meaning of that provision, “a process in the Court [that] … may ultimately be available to [it] 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”.

33    As his Honour noted, the first such process is the attachment of FWIDA’s debt to the defendant by way of a garnishee order under s 53 of the FCA Act or r 41.10 of the Rules. The second such process is the winding up of the defendant and the appointment of a liquidator who would then have the power and the obligation to get in, or at least consider getting in, the debt owed by FWIDA to the defendant.

34    Further, as his Honour noted, the plaintiff also relied on r 7.35(5)(a)(ii) in respect of which it asserted that FWIDA “is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies)” of the defendant being the prospective judgment debtor. More particularly, it submitted to his Honour that FWIDA is in a position to “influence” the debt that it owes to the defendant which is an asset, claim or expectancy of the defendant. I do not need to address that aspect further for present purposes.

35    So, as his Honour said, the plaintiff sought to advance different avenues to the same result in the form of r 7.35(5)(a)(ii), r 7.35(5)(b), possibly the general power in r 7.32, and all under the umbrella of s 23 of the FCA Act.

36    Let me turn now to his Honour’s factual findings.

The material facts

37    His Honour made the following findings of the material facts (at [22] to [39]), which it is convenient for me to draw from, but with some slight tinkering.

38    The defendant operates various businesses in China, including textile manufacturing, retail and wholesale, clothing retail businesses and project investment businesses.

39    Mr Yafu Qiu has been the chairman of the board of the defendant since 27 December 2017. He has also described himself as the “Legal Representative” of the defendant. Ms Qiu is Mr Qiu’s daughter. Now although never a director of the defendant, Ms Qiu has been reflected in the defendant’s documentation at various times as holding one or more of the following positions: vice chairman, vice president and executive president. But there is a dispute about whether she held those positions.

40    The defendant’s majority shareholder as to 79.48% is Shandong Ruyi Fashion Investment Holding Co Ltd, also known as Beijing Ruyi Fashion Investment Holding Co Ltd. Ms Qiu is one of a number of directors of that company, and Mr Qiu is its chairman and a 51% shareholder.

41    FWIDA, an Australian company, was incorporated on 17 August 2011 with the defendant as its sole shareholder. Since 18 November 2022 Ms Qiu has been and remains the sole director and secretary of FWIDA.

42    In September and November 2011, FWIDA acquired six parcels of land for the total price of approximately $15.2 million which, collectively, comprise what is known as the Larundel Estate in regional Victoria. It comprises approximately 942 hectares of land, on which a historic homestead, designer gardens, a flock of sheep and various crops are located. Apparently, FWIDA operated a farming business from the Larundel Estate.

43    On 28 April 2022, the defendant’s shareholding in FWIDA was transferred to Dynamic Day Enterprises Ltd, a British Virgin Islands company. The evidence before his Honour did not disclose whether any consideration was paid for that transaction by Dynamic Day. Ms Qiu has been, and remains, the sole director and shareholder of Dynamic Day since 27 July 2021.

44    The most recent financial report of FWIDA, being for the year that ended on 31 December 2022, records that FWIDA incurred a total comprehensive loss after tax of more than $4.5 million. It also records that the director was of the opinion that it was appropriate to prepare the report on a going concern basis because FWIDA’s parent entity, Dynamic Day, had confirmed that it would continue to provide financial support to meet FWIDA’s debts and financial obligations as and when they fell due.

45    Now on 23 December 2024 in the principal proceeding, Ms Qiu swore an affidavit in which she stated that the defendant had a shareholder loan account in FWIDA in credit to the defendant’s favour in the sum of $10,832,620. She stated that the loan “remains owing and is recorded in the financial accounts of FWIDA”.

46    Further, FWIDA’s accounts and financial report for the year ended 31 December 2022 record the debt owed to the defendant as a related party non-interest bearing loan payable on demand. The financial report was signed by Ms Qiu as director and by Ernst & Young as accountants on 30 April 2024. The financial report is not audited. It records that Ms Qiu was solely responsible for the information contained in the report. Moreover, there were no further up to date accounts of FWIDA put into evidence before his Honour by FWIDA.

47    Further, Mr Qiu swore an affidavit in the principal proceeding on 20 December 2024 in which he also stated that the balance of $10,832,620 remained owing by FWIDA to the defendant.

48    Subsequent to those affidavits and financial report, the plaintiff sought a freezing order before Stewart J in reliance on the debt owed by FWIDA to the defendant.

49    Now in opposition to that application, FWIDA served an affidavit of Mr Wayne Materne, who is the CEO of Lempriere (Australia) Pty Ltd, another company in the group. He assumed that position in January 2022. He was CFO of Lempriere from March 2019 to December 2021. Mr Materne stated that he was authorised to make his affidavit “on behalf of FWIDA”.

50    FWIDA itself has no employees and engages contractors, including Lempriere, to provide it with various services. Lempriere provides accounting, tax and treasury services to FWIDA, including the maintenance of its general ledger and other accounting records, the administration of its bank account and credit card, and its office serves as FWIDA’s registered office.

51    Mr Materne stated that Ms Qiu had informed him that when she deposed in her affidavit to the FWIDA debt to the defendant, she did so in reference to, and in reliance on, FWIDA’s financial accounts and not from personal knowledge. His Honour noted that Mr Materne did not deal in his affidavit with Mr Qiu’s evidence about the debt which is to the same effect as Ms Qiu’s.

52    Mr Materne then stated that he is “presently in the process, on behalf of FWIDA, of undertaking a detailed reconciliation of the purported loan from [the defendant] to FWIDA, components of which date back to 2012, with many individual transactions increasing and decreasing the loan balance since then”.

53    He stated that his “initial investigations indicate that a significant portion of the loan balance may have been provided by (and be repayable to) entities other than [the defendant]”.

54    Finally, Mr Materne stated that the “reconciliation process is very detailed and still ongoing” and that he expected it to take up to one further month to complete, that is, to about the end of the first week of December.

55    So, Mr Materne, in a rather suspect and opaque fashion if I might say (although his Honour did not so characterise it) sought to throw doubt on the existence of FWIDA’s indebtedness to the defendant; his evidence and the raising of doubts seems to have been provoked by the plaintiff making the freezing order application.

56    Let me deal with another topic. There was also evidence before his Honour, which no doubt his Honour considered although did not expressly refer to, that Ms Qiu had engaged in transactions calculated to protect the defendant’s assets from the claims of its creditors by transferring valuable assets out of the defendant and related entities and into her own ownership without any apparent legitimate commercial explanation.

57    On 28 April 2022, after the Chinese judgment had been given in December 2021 that I referred to at the outset of these reasons, the defendant transferred its shareholding in FWIDA to Dynamic Day, a company wholly owned by Ms Qiu, for no consideration on the basis that FWIDA was worthless.

58    The relevant share transfer form signed by Ms Qiu records no consideration for the transfer of the defendant’s shares to Dynamic Day in April 2022. Moreover, the third Materne affidavit says that FWIDA was worthless at the time because of an impairment recorded in the accounts, but Mr Materne’s explanation is inadequate given that he does not claim to have personal knowledge. Further, no account or explanation has been given as to why FWIDA purchased Villa Monza Private Limited (formerly known as Georgia Gullini Fashions Private Limited) (VMPL) for over $8 million or as to why VMPL’s business apparently declined so that it was worthless by 2022.

59    Further, on 15 September 2022 Ms Qiu transferred shares in Lempriere, that was described as a “wool operating subsidiary”, which were owned by the defendant’s indirect subsidiary, CS Agriculture Pty Ltd (CSAG), to Hengyi Group Pty Ltd. As to the transfer of shares in Lempriere from CSAG to Hengyi Group, there has been no consideration identified. Moreover, at the time of that transaction in September 2022, Ms Qiu was a director of CSAG. Further, Hengyi Group was owned by Hong Kong Hengyi Technology Development Company Ltd.

60    On 29 September 2022 Hong Kong Hengyi Technology transferred its 100% shareholding in Hengyi Group, which was then the holder of the shares in Lempriere, to three BVI companies including Summit Choice Management Ltd. Ms Qiu was the director of Hengyi Group and HK Hengyi Technology when she effected the transfer to the three BVI companies. And Ms Qiu is the sole director and shareholder of Summit Choice.

61    Further, on that day, CSAG transferred its interest in valuable loan receivables payable to CSAG by Lempriere to Hengyi Group and Summit Choice for no consideration. In this respect the Lempriere accounts for the year ended 31 December 2022 show that CSAG assigned $79.5 million in loan receivables: to Hengyi Group as to $57.9 million, and to Summit Choice as to $21.6 million. Further, no evidence was led to suggest that consideration has been paid for the transfer of the loan receivables. Further, the terms of the loan agreements provide that interest after 31 December 2022 (after the transfer) be paid to Hengyi Group, whilst no interest had been payable to CSAG.

62    It is not difficult to see how Ms Qiu was advantaged by these arrangements and re-structuring. Ms Qiu’s involvement in these transactions is suspect, but for present purposes I do not need to elaborate further, save to say that it is pertinent to the relevant risk of dissipation that his Honour had to consider.

The sale of Larundel Estate in September 2025

63    As I have already indicated, on 17 September 2025 the Larundel Estate was sold by FWIDA in an apparently arms-length transaction to Loch Ness Enterprises Pty Ltd for a total purchase consideration of $17,500,000. FWIDA’s various plant, equipment and livestock located at the Larundel Estate were also sold. The sale settled in early November. FWIDA has received net sale proceeds of at least $10,833,000.

64    On 22 October 2025, FWIDA undertook to the Court on an interim basis that it would not diminish the value of its assets in Australia up to the unencumbered value of $10,832,620, which undertaking was made to facilitate the determination of the freezing order application. The effect of that undertaking and now his Honour’s freezing order was to prevent the balance of the sale proceeds being dispersed.

65    Let me deal with one other matter by way of background that his Honour referred to.

Dynamic Day’s undertaking to the plaintiff

66    On 26 November 2024 the plaintiff filed an ex parte application seeking injunctive relief in the High Court of Justice in the BVI against, inter-alia, Dynamic Day. On 29 November 2024, the BVI Court granted, ex parte, an injunction in support of the relief in the principal proceeding. The injunction included restraining Dynamic Day from disposing of, dealing with or diminishing the value of its assets including its shares in FWIDA and the underlying property and assets of FWIDA.

67    On 20 February 2025, the BVI Court made consent orders in the injunction case with various undertakings given inter-alia by Dynamic Day. Dynamic Day then brought an application to set aside or discharge the injunction. That application was listed for hearing in January 2026. I am unclear as to its outcome. Further, in that proceeding, Dynamic Day had relevantly undertaken not to “in any way dispose of, deal with or diminish the value of any of its shares or ownership” in FWIDA.

68    Now Dynamic Day’s solicitors in the BVI litigation asserted in correspondence that it would not be inconsistent with the BVI undertaking for FWIDA to pay its creditors.

69    Further, as his Honour said, the BVI undertaking did not ameliorate the risk that unless restrained FWIDA would distribute the proceeds of sale. First, the BVI undertaking was interim only. Second, the BVI undertaking was given by Dynamic Day not FWIDA and it was not to this Court and cannot be enforced here.

70    Further, no one from the defendant or FWIDA sought to explain why the transfer of the shares to Dynamic Day took place. Whilst Mr Materne gave some tentative evidence about “why it may be” the shares had no value, he did not explain why the shares were transferred or on what terms, nor “why the defendant would transfer the share for no consideration while still being owed more than $10 million”. His Honour invoked the language of Blatch v Archer in finding that these “were matters peculiarly within the knowledge of FWIDA”.

71    Further, the risk that FWIDA may pay out the proceeds of sale was “exacerbated” by Mr Materne’s evidence that the debt may not exist. This carried with it the implication that Mr Materne may pay out the proceeds, potentially to offshore companies, and not true creditors in circumstances where the existence of such creditors is “likely to be highly contestable”.

72    Let me turn now to his Honour’s consideration of the central questions, which he discussed at [40] to [63] of his reasons.

His Honour’s consideration – central questions

73    Let me begin with the first question addressed.

Is there a danger that the prospective judgment will be partly or wholly unsatisfied?

74    His Honour said that the requirement that the plaintiff establish that there is a danger that the prospective judgment will be partly or wholly unsatisfied arises from r 7.32(1), and is also reflected in r 7.35(5)(a)(ii). Further, he said that if it is not a requirement that attaches to r 7.35(5)(b), it is in any event a matter that is highly relevant to the exercise of the Court’s discretion. With respect I agree with his Honour’s position on that aspect.

75    His Honour said that the requirement to show that there is a danger that the prospective judgment will be partly or wholly unsatisfied is not a requirement that the applicant for a freezing order establish an unjustifiable disposition of assets. He said that it was sufficient to reasonably infer that unless restrained FWIDA will distribute the proceeds of sale of the Larundel Estate.

76    Now FWIDA said that it cannot do so without Dynamic Day being in breach of its undertaking in the BVI proceeding. FWIDA said that because of the undertaking by Dynamic Day in the BVI proceeding, there is no relevant or appreciable, or sufficient, danger that FWIDA will distribute the proceeds of sale.

77    But his Honour said that there were a number of reasons why that submission failed.

78    First, Dynamic Day challenged the injunction in the BVI proceeding with the result that its undertaking may be short lived. That is to say, it was an interim undertaking. As noted, the outcome of that case is unknown.

79    Second, that undertaking is not to this Court and cannot be enforced in this Court. Also, if FWIDA independently, that is, other than on Dynamic Day’s instructions, distributes the proceeds of sale that will not be a breach of Dynamic Day’s undertaking. Further, it is not to the point that Ms Qiu is the sole director of both Dynamic Day and FWIDA. If Ms Qiu as director of FWIDA causes FWIDA to distribute the proceeds of sale, it is not clear that that would constitute a breach by Dynamic Day of its undertaking. Moreover, his Honour considered that if FWIDA’s daily affairs are dealt with by Mr Materne or others at Lempriere, conceivably Mr Materne could cause FWIDA to distribute the proceeds of sale.

80    Further, his Honour said that the concern that that may occur is exacerbated by Mr Materne’s evidence in relation to FWIDA’s debt to the defendant. Despite the evidence of Ms Qiu and Mr Qiu, which his Honour noted was not sought to be qualified in the way in which Mr Materne sought to qualify Ms Qiu’s evidence, and the existing financial records of FWIDA all supporting the debt, Mr Materne says that it may be that that is wrong and that the debt is owed to other entities. That carries with it the implication that if Mr Materne reaches that conclusion he will or at least might disperse the sale proceeds to those entities; certainly, neither he nor FWIDA have committed to not doing so.

81    His Honour said that part of the concern is that any debts identified by Mr Materne may be to offshore companies. Indeed, given that Mr Materne’s explanation is that his “initial investigations indicate that a significant portion of the loan balance may have been provided by (and be repayable to) entities other than [the defendant]”, the position seems to be that it is other entities in the same group of companies as the defendant that may be identified as being the relevant creditors. Those are likely to be offshore companies. If payments are made to them in respect of debts that ultimately turn out not to be true debts, the payments may not be able to be readily recovered in due course.

82    The risk of payments being made to entities that are not true creditors of FWIDA is the reason for his Honour’s satisfaction as to the need for and appropriateness of putting a $10,000 limit on the standard form exception to the freezing order that the enjoined party not be prevented from dealing with or disposing of any of its assets “in the ordinary and proper course” of its business, including by, relevantly, “repaying any loans”. On Mr Materne’s evidence, any conclusion by him that any part of the FWIDA debt to the defendant is really a debt to some other entity carries with it the implication that he might repay that debt and, in that way, disperse the sale proceeds. In circumstances where any such conclusion is likely highly contestable, that should not be able to be done without the opportunity for further scrutiny by the plaintiff and, if necessary, by the Court. If FWIDA can show that they are real debts that can and should be paid in the ordinary course of business then it can seek a variation of the freezing order.

83    Returning to the question of the danger that in the absence of the freezing order, the prospective judgment may be at least partially unsatisfied, FWIDA submitted to his Honour that the reference to “danger” is to a risk of that outcome and that the risk or danger must be real or substantial, as opposed to a remote or speculative possibility. His Honour was satisfied that the danger is real and is not a remote, speculative or theoretical possibility. That that is so is further evidenced by the defendant’s failure to pay the Chinese judgment and to the close relationship between the defendant and FWIDA.

84    In the latter regard, his Honour said that there are at least grounds for concern as to whether FWIDA is genuinely independent of the defendant. That need not be decided at this stage, but aside from the apparent overlap in roles and responsibilities of Ms Qiu between the two companies and the family connection with Mr Qiu, it is notable that neither the defendant nor FWIDA has put on any evidence of the circumstances in which the defendant’s shareholding in FWIDA was transferred to Dynamic Day. As noted earlier, Mr Materne has sought to explain why it may be that at the time of the transfer the shares in FWIDA had no value, but that does not explain why they were transferred or on what terms, or why the defendant would transfer the shares for no consideration while still being owed more than $10 million by FWIDA. These are all matters peculiarly within the knowledge of FWIDA and the defendant.

85    Further, as his Honour noted, the BVI solicitors for Dynamic Day in a letter dated 2 October 2025 to the plaintiff’s solicitors said that it would not be inconsistent with the undertakings given in the BVI proceeding for the proceeds of sale to be used to pay FWIDA’s creditors. That amounts to an acceptance that the undertakings will not protect the plaintiff’s position. In circumstances where there is reason to doubt that the creditors are genuine, his Honour said that there is the requisite danger.

86    Let me turn to the second question that his Honour considered.

What are the processes in the Court under which FWIDA may have to contribute?

87    His Honour said that if the defendant is wound up in the principal proceeding, then no garnishee process will be able to be pursued against FWIDA because any such process would be prevented or, if already on foot, stayed by the effect of s 471B of the Corporations Act. For that reason, FWIDA focused on the plaintiff’s contemplated winding up relief against the defendant. His Honour returned to consider that, but he considered that the garnishee relief cannot be so easily put to one side. That is because the plaintiff sought both judgment on the Chinese judgment against the defendant and that the defendant be wound up, and there is no certainty which of those forms of relief it will be granted, if either. It may be that it gets judgment, which would allow it under a garnishee order to prevent the payment of the sale proceeds by FWIDA other than to it, and that it does not get a winding up order. Indeed, the most debatable issue in the principal proceeding appears to be in relation to the winding up, in particular whether or not the defendant carries or carried on business in Australia, rather than in relation to the judgment. Or, the plaintiff may get judgment and only later a winding up order. So, the garnishee process had to be considered.

88    His Honour considered by reference to NSW legislation that all debts that are due or accruing from the garnishee to the judgment debtor can be the subject of a garnishee order. He said that a debt payable on demand, such as FWIDA’s debt to the defendant, is in the absence of a demand from the defendant not yet due and payable, but it is accruing. His Honour considered that a debt that is not yet due can be the subject of attachment under a garnishee order.

89    So, his Honour held that the process available to the plaintiff to attach the defendant’s chose in action against FWIDA for the repayment of the loan account debt is a process of the Court that may ultimately be available to the plaintiff as a result of its prospective judgment against the defendant. Under that process, FWIDA may be obliged to contribute toward satisfying the prospective judgment. So, his Honour said that the requirements of r 7.35(5)(b) are established with reference to the proposed garnishee order.

90    Turning then to the winding up of the defendant as an alternative process on which to base the freezing order, his Honour said that the Court has the requisite power to make, on the application of a creditor of a company, a freezing order that will preserve the claims that may be brought by a liquidator appointed to the company. He referred to Re HPack Investments Pty Ltd (2020) 149 ACSR 303 at [47] to [49] per Black J including the statement (at [48]) that such an order is “directed to preventing the frustration or inhibition of the Court’s winding up process by seeking to meet a danger that a prospective judgment that could be obtained by a liquidator consequent on that process will be wholly or partly unsatisfied”.

91    His Honour then restated that neither FWIDA nor the defendant disputed that the plaintiff has a good arguable case for the winding up of the defendant and thus for the appointment of a liquidator to the defendant. In that scenario, the liquidator would have the responsibility of investigating the merits of the defendant’s claim against FWIDA, and in their discretion to pursue it in the interests of the creditors of the defendant. The exercise of that discretion by the liquidator would be subject to the supervision of the Court on the application of a creditor, including the plaintiff.

92    Given the strength of the evidence in support of the defendant’s claim against FWIDA, and the speculative quality of Mr Materne’s evidence in seeking to throw doubt on the strength of the claim, his Honour was satisfied that a liquidator would likely choose to pursue the claim against FWIDA if funded to do so. His Honour said that the case before him is therefore similar to HPack Investments (at [49]) in that regard and dissimilar to Costagliola v Autore [2025] FCA 35 (at [178] and [179]), noting that in the latter case Wigney J accepted that the process of a trustee in bankruptcy in pursuing a debt against a third party is relevantly analogous to that of a liquidator in a winding up for the purposes of a freezing order against the third party (at [179]).

93    His Honour considered that HPack Investments and Costagliola supported the proposition that the process of winding up and the liquidator then pursuing the debt comes within the meaning of a process referred to in r 7.35(5)(b). His Honour rejected the submission to the contrary. His Honour said that there is no reason why such a two staged process is not a process “available to the applicant”. He said that certainly winding up the debtor is a process that is available to the applicant for the freezing order against a third party, and the pursuit by the liquidator under the supervision of the Court is a continuation of that process. Indeed, that continuation, representing, as it does, the fulfilment by the liquidator of their obligation to bring in the assets of the company, necessarily follows on from the winding up in the manner his Honour had identified.

94    He said that this is supported by the statement of principle in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [57] per the plurality from which the wording of r 7.35(5)(b) is derived.

95    His Honour then went on to note that the plaintiff also relied on FWIDA being in possession of, or in a position of control or influence concerning, an asset of the defendant such that the basis for a freezing order in r 7.35(5)(a)(ii) is established. But given his conclusion that the basis for the freezing order provided by r 7.35(5)(b) is established, including in respect to both processes on which the plaintiff relies, it was not necessary for him to consider this aspect.

96    Let me turn to the third aspect discussed by his Honour concerning the exercise of discretion.

How should the discretion be exercised?

97    Notwithstanding what has been said about the requirements for the exercise of the relevant powers as described above, whether under rr 7.32, 7.35(5)(a)(ii) or 7.35(5)(b), his Honour said that the actual exercise of those powers to grant a freezing order is ultimately discretionary. It is an intrusive remedy, especially upon a third party to a proceeding. His Honour said that a high degree of caution is necessary before making such an order: Cardile at [50]. In addition to the matters already mentioned, his Honour considered that the following matters support the exercise of the discretion in making a freezing order in the present case.

98    First, the balance of the sale proceeds appears to be FWIDA’s only remaining asset of any significance. His Honour inferred that from the fact that the Larundel Estate was FWIDA’s principal asset from which it conducted a farming business and all the assets associated with that business have, on Mr Materne’s account, been sold. He gave evidence that its only other asset, being shares in its Indian subsidiary, has no value. Although FWIDA said that this fact counts against the granting of a freezing order because such an order would stifle FWIDA from carrying on any business with its only remaining asset, his Honour considered that the reverse is true. No evidence has been adduced by FWIDA with regard to any intention in dealing with the sale proceeds – no other business plan or opportunity is identified. Nor is there evidence about what business activities FWIDA presently carries out after having sold its principal asset – it would appear to conduct no business. In the circumstances, his Honour said that the freezing order does not stifle FWIDA from continuing any business, but rather merely maintains the status quo and prevents the most obvious next course of dealing with the sale proceeds which would be to pay them to Dynamic Day in dividends.

99    Second, and relatedly, his Honour did not consider that FWIDA would suffer particular prejudice as a consequence of the freezing order pending the determination of the relief sought in the principal proceeding. Further in relation to that, on FWIDA’s case he said that there is no or insufficient risk that the sale proceeds will be paid out because to do so would be in breach of the undertakings given in the BVI proceeding. On that approach, his Honour said that there is no additional prejudice in making the freezing order.

100    Let me turn now to the proposed appeal grounds.

Proposed appeal ground 1

101    Proposed appeal ground 1 is in the following form:

The primary judge erred in misapplying, further or alternatively failing to consider the following factors weighing against the granting of the freezing order:

a.    the principle from Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, [54] that it is a “rare case” where a freezing order will be granted against a third party where it does not hold assets to which the judgment debtor or prospective judgment debtor is beneficially entitled;

b.    that this type of “rare” freezing order against third-parties should ordinarily be reserved for cases where there is evidence of an intention or propensity by the third party to frustrate the Court’s processes and defeat creditors;

c.    that there was no evidence or finding that the Appellant or its sole director intended or had a propensity to frustrate the Court’s processes and defeat creditors, in circumstances where a transfer of the Appellant’s assets overseas to frustrate or defeat creditors would constitute a voidable transaction and a breach of the director’s duties, including without limitation s 588GAB of the Corporations Act 2001 (Cth).

102    FWIDA said that third party freezing orders are a drastic remedy which are made in rare circumstances (Cardile at [50] and [51] per the plurality). And FWIDA emphasised that the plurality explained (at [54]) that, whilst not definitive, it will be rare for a third party freezing order to be made where the third party does not hold or is not about to hold or dissipate or further dissipate property beneficially owned by the defendant in the substantive proceedings.

103    Likewise, FWIDA referred to Viterra BV v Shandong Ruyi Technology Group Co Ltd (2022) 291 FCR 640 where Stewart J said (at [118]):

… a freezing order is an extraordinary remedy that requires a high degree of caution; it is a drastic remedy that should not lightly be granted. It is a rare case in which a freezing order will be granted against a third party where it does not hold assets to which the debtor or prospective debtor is beneficially entitled…

104    But in the present case FWIDA said that his Honour did not apply the principle articulated in Cardile and Viterra but instead relied on Deputy Commissioner of Taxation v Huang (2021) 273 CLR 429. It said that his Honour emphasised the broad and flexible power of the Court to make a freezing order to prevent the frustration or inhibition of the Court’s process in reliance on the majority judgment in Huang. But it said that the Court in Huang was not dealing with freezing orders against a third party. Mr Huang was the judgment debtor.

105    FWIDA said that his Honour erred in relying on Huang rather than applying the principle articulated in Cardile and Viterra. And it said that this was an error to be assessed under the correctness standard. Alternatively, FWIDA said that his Honour’s failure to consider the principle articulated in Cardile and Viterra was an error in the House v The King sense.

106    Further, FWIDA said that the type of “rare” case discussed in Cardile at [54] involving a freezing order against a third party, where it does not hold assets to which the debtor is beneficially entitled, should ordinarily be reserved for cases where there is evidence of an intention or propensity by the third party to frustrate the Court’s processes and to defeat creditors. It said that this is consistent with the purpose of a freezing order generally as set out in r 7.32, being to prevent the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment will be unsatisfied. FWIDA also said that it is consistent with the reluctance of equity, from which freezing orders were said to blossom, to interfere with the rights of third parties unless their conscience is affected; as an example, it said that both limbs of Barnes v Addy are engaged only where the third party has the requisite degree of knowledge of the breach of trust or fiduciary duty.

107    FWIDA said that his Honour did not engage with the issue of whether there was any risk of frustration or dissipation, or intention to do so, on the part of FWIDA.

108    Further, FWIDA said that the grant of a third party freezing order in respect of a debt owed by the third party to the defendant (the prospective judgment debtor) is novel. In substance it is pre-empting the procedure for attachment of debts (garnishment) in advance of any judgment. FWIDA said that to accede to such a third party freezing order may have far-ranging unintended consequences. Indeed, FWIDA posed the question: is any debtor, who owes a debt to a person who becomes a defendant to litigation, at risk of having their assets frozen?

109    Further, FWIDA said that such an order may also have the consequence of giving the plaintiff de-facto security over the defendant’s assets, that is, the chose in action being the debt owed to the defendant by the third party, contrary to the long-standing position that the purpose of a freezing order is not to provide security.

110    Further, and in any event, FWIDA said that there was no evidence or finding that FWIDA or its sole director intended or had a propensity to frustrate the Court’s processes or to defeat creditors. It said that one could not infer that FWIDA would improperly transfer its assets overseas in order to defeat creditors of the defendant. Moreover, it said that FWIDA had tried to sell the Larundel Estate in 2019, well before the judgment obtained by the plaintiff against the defendant in China in December 2021.

Analysis

111    I found each of these arguments to be underwhelming. Let me begin with some general points.

112    Now the present case involving a freezing order against a third party does not involve the usual scenario where the third party holds or is about to hold or dissipate property that is beneficially owned by the defendant. The third party in the present case, namely FWIDA, is only a debtor of the defendant, albeit that the defendant and FWIDA are associated with each other and have various links and cross-links through various individuals and entities. But for present purposes FWIDA and the defendant are to be treated as separate legal entities, and in a debtor/creditor relationship respectively.

113    Now factually the case is “rare” in the sense that we are not dealing with the usual scenario. But does that rareness also entail that some special test or threshold is to be applied to justify the granting of the freezing order? FWIDA suggested that an affirmative answer was to be given to that question. Moreover, it went so far as to suggest that if otherwise, a plaintiff could always obtain a freezing order against a third party whenever the third party was shown to be a debtor to the defendant.

114    In my view FWIDA’s position is over-stated. Let me begin with what was said in Cardile.

115    As was said in Cardile (at [50]) “[t]here are significant differences between an order protective of the court’s processes set in train against a party to an action [as compared with] 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.”

116    It was then said by the plurality in Cardile (at [54] and [57]):

We have indicated our acceptance of a negative proposition put by the appellants. However, we consider that the general proposition for which the appellants contend — that the grant of Mareva relief against the third party should be limited to cases in which the third party holds or is about to hold or 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.

…

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.

117    Now we are in category (ii). Moreover, although Cardile sets out where freezing orders against third parties may be appropriate, it did not expressly set out the exhaustive circumstances.

118    Further, in the Privy Council case of Convoy Collateral Ltd v Broad Idea International Ltd [2022] 2 WLR 703; [2023] AC 389, Lord Leggatt in giving the leading opinion for the Board discussed the enforcement principle at [84] to [89] being that (at [85]) “the essential purpose of a freezing injunction is to facilitate the enforcement of a judgment or order for the payment of a sum of money by preventing assets against which such a judgment could potentially be enforced from being dealt with in such a way that insufficient assets are available to meet the judgment.”

119    He then went on to say (at [88]):

The enforcement principle also explains the basis and scope of the jurisdiction to grant a freezing injunction against a third party against whom no claim for substantive relief lies (ie a “non-cause of action defendant”). The ordinary prerequisite for granting such an injunction (before taking account of discretionary factors) is that the third party is in possession or control of an asset against which a judgment could be executed. That test may be satisfied because there is good reason to suppose that the asset is beneficially owned by a defendant against whom the claimant has obtained or has a right to obtain a judgment, as in the Chabra case. But it may also be satisfied in other ways: for example, where the defendant would have a right of indemnity against the third party which could be enforced by a receiver; or where a transaction by which the defendant transferred an asset to the third party might be avoided under section 423 of the Insolvency Act 1986; or where enforcement of a judgment against the defendant might lead to its liquidation whereupon the liquidator would be able to pursue a claim against the third party. In each case the key question is whether the assets are or would be available to satisfy a judgment through some process of enforcement: see also Cardile v LED Builder Pty Ltd 198 CLR 380.                    
(most citations omitted)

120    Further, Gloster J in Parbulk II AS v PT Humpuss Intermoda Transportasi TBK [2012] 2 All ER 513 at [56] said:

In my judgment, the principle recognised in Cardile’s case, and applicable as a matter of English law, is a simple one. In circumstances where a defendant/judgment debtor (ie a cause of action defendant (CAD), against whom it is appropriate to make a freezing order at the suit of a claimant, has a debt, or other receivable owing to it by a third-party NCAD, or a claim, or potential claim, against a third-party NCAD, the English court has jurisdiction (or ‘legal power’ as Aikens J put it) to grant a freezing order against the third-party NCAD, in appropriate circumstances, to restrain the NCAD from dissipating its assets up to the amount of its debt to, or the claim by, the CAD or judgment debtor. Such an order is doing no more than protecting the right, or contingent right, of the claimant (whether by a third-party debt order, charging order, appointment of a receiver or liquidator etc) to obtain satisfaction of its judgment debt against the defendant by means of attachment, or other collection, of the proceeds of the latter’s receivable from, or claim against, the third party. Whether the court grants such an order against the third party will be a matter for the exercise of its discretion, depending on the particular circumstances of the case. Normally, if there is no reason to doubt the propriety of the third party, it may well be sufficient, for example, to injunct the defendant from collecting the receivable, otherwise than by instructing the third party to pay it into a designated account. In other circumstances, it may be appropriate, at an interlocutory stage, to appoint a receiver over the receivable/claim against the third party in order to enable the receiver to collect it and pay it into court, or an escrow account, or otherwise preserve the receivable/claim from dissipation by the defendant/judgment debtor. But if, for example, the circumstances show collusion, or impropriety, or some participation, on the part of the third party, in attempts by the defendant/judgment debtor to render itself judgment-proof, then it may be appropriate for a freezing order to be granted against the third party itself. (This rehearsal of circumstances which may give rise to the exercise of the court’s discretion is not meant to be in any way exhaustive.) Such an order does not involve any ‘piercing of the corporate veil’, nor, I venture to suggest, any major new development in English law. It is the type of order that has frequently been made in the years following the Yukong Line case.

121    In my view his Honour made no error of principle. His Honour referred to Cardile and Viterra. It is clear his Honour was aware of the relevant principles and the reference to “rare”.

122    Now FWIDA said that the admonition about “rare” cases in Cardile ought to operate so that freezing orders against third parties in such circumstances, that is, where a third party does not hold assets in which a defendant has a beneficial interest, are reserved for cases where there is “evidence of an intention or propensity by the third party to frustrate the Court’s processes and defeat creditors”. Now it would seem that this is a new gloss on the relevant wording. And if this is a gloss on the relevant wording and an additional requirement, it suffers from a few problems.

123    First, neither the word “rare” in Cardile, nor a label like “novel”, and nor an analogy to the reasoning in Barnes v Addy provide a sound basis for establishing some additional requirement.

124    Second, it would appear that this point was not put to his Honour. So it is unsurprising that his Honour does not engage with the argument.

125    Third, in any event, if FWIDA is ultimately referring to the risk a prospective judgment will be unsatisfied, that point was dealt with comprehensively. His Honour was well aware of and was keen to identify the risk that the Court’s processes may be frustrated. His Honour held in construing rule 7.35(5)(b) that it is inconceivable that a freezing order may be granted where there is no danger that a judgment or prospective judgment will be unsatisfied.

126    His Honour then made findings that there was such a risk. And as I have indicated and set out earlier, there was adequate evidence before his Honour to justify such findings. Further, his Honour held that it was reasonable to infer that unless restrained, FWIDA will distribute the proceeds of sale such that they will not be recoverable by a liquidator or creditor of the defendant, that is, potentially the plaintiff.

127    It follows that ground 1 lacks sufficient merit to establish the first limb of the leave to appeal test whether or not one applies the correctness standard or a plain vanilla House v The King type analysis.

Proposed appeal grounds 2 and 3

128    Proposed appeal grounds 2 and 3 are in the following form:

The primary judge erred at [49] of the reasons in finding that Ruyi Technology Group Co Ltd’s failure to pay the Chinese judgment debt evidenced a real or substantial risk that the prospective judgment would go unsatisfied.

The primary judge should not have found that there was a real or substantial risk.

129    His Honour said that the requirements expressed in r 7.32 govern the exercise of power under r 7.35, and that it is inconceivable that a freezing order may be granted where there is no danger that a judgment or prospective judgment will be wholly or partly unsatisfied.

130    But FWIDA said that his Honour proceeded wrongly to conclude that the defendant’s failure to pay a Chinese judgment debt evidenced that there was a real or substantial risk that the prospective judgment would be wholly or partly unsatisfied.

131    FWIDA referred to the fact that before his Honour, the plaintiff had advanced two arguments in support of its case on the risk of dissipation.

132    The plaintiff’s first contention was that there was an inferred danger because the proceeds of sale might be removed from Australia or disposed of or diminished in value because such proceeds are liquid and held by FWIDA, which does not conduct business and has no substantial creditors. His Honour found from Mr Materne’s evidence that if Mr Materne reaches the conclusion that the debt is owed by FWIDA to other entities (not the defendant) then he will or at least might disperse the sale proceeds to those entities. FWIDA said that in doing so his Honour erred.

133    First, FWIDA said that his Honour erred by reaching the finding based on the absence of a commitment from Mr Materne or FWIDA to not doing so. The absence of a commitment should not have led to an inference of a risk of dissipation, just as ordinarily the absence of an undertaking not to dispose of assets is not evidence of a risk of dissipation.

134    Second, FWIDA said that as to the risk of dissipation, there is a need to demonstrate a risk that is not remote or speculative.

135    Third, FWIDA said that although his Honour expressed the risk in stronger terms, viz, “it is reasonable to infer that unless restrained FWIDA will distribute the proceeds of sale of the Larundel Estate”, there was no evidentiary basis for that finding.

136    FWIDA said that the only evidence referred to and which was said to exacerbate (but not establish the risk) that FWIDA would distribute the sale proceeds was Mr Materne’s evidence that he was “in the process, on behalf of FWIDA, of undertaking a detailed reconciliation of the purported loan from [the defendant] to FWIDA” and that his “initial investigations indicate[d] that a significant portion of the loan balance may have been provided by (and be repayable to) entities other than [the defendant]”. Mr Materne’s evidence was relied on by his Honour to support an inference that there was a risk that FWIDA would dissipate the sale proceeds by repaying them to unidentified and unknown creditors, other than the defendant.

137    FWIDA said that the drawing of that inference, and the consequential finding that a real danger existed, was erroneous in that it was unsupported by the evidence. FWIDA said that the onus was on the applicant to prove facts from which the Court could infer the existence of a real or substantial risk on the balance of probabilities, but it did not do so. It said that there was no evidence that FWIDA would distribute the sale proceeds to any third party.

138    Further, FWIDA said that the inadequacy of the evidence is highlighted by the fact that his Honour found that FWIDA would not be prejudiced by the freezing order on the basis of there being no evidence of any other significant creditors of FWIDA, or the risk of payment to such creditors.

139    His Honour concluded at [62] that: “[n]o evidence has been adduced by FWIDA with regard to any intention in dealing with the sale proceeds…”. His Honour also found at [63] that:

I do not consider that FWIDA will suffer particular prejudice as a consequence of the freezing order pending the determination of the relief sought in the principal proceeding. Further in relation to that, on FWIDA’s case there is no or insufficient risk that the sale proceeds will be paid out because to do so would be in breach of the undertakings given in the BVI proceeding. On that approach, there is no additional prejudice in making the freezing order.

140    FWIDA said that those findings conflict with his Honour’s earlier finding that there is a danger that the prospective judgment will be unsatisfied because of a “real or substantial risk” of payment to third party creditors.

141    FWIDA said that his Honour could not have coherently found, on the one hand, that the danger existed because of a real risk of dissipating the sale proceeds to unidentified creditors and, on the other hand, that there was no evidence of any intention to deal with the sale proceeds.

142    The plaintiff’s second contention concerned the allegation that the defendant had taken steps to put its assets in Australia (including its shares in FWIDA) beyond the reach of creditors by putting them in ownership structures that were ultimately controlled by the daughter of its principal, Ms Qiu. His Honour accepted that contention and concluded that the danger was real because of the defendant’s failure to pay a Chinese judgment debt and the close relationship between the defendant and FWIDA.

143    FWIDA said that there is no elaboration in his Honour’s reasons on why, contrary to orthodox principles of company law, the defendant’s conduct in China bears upon FWIDA’s treatment of the sale proceeds in Australia notwithstanding any close relationship.

144    In the circumstances, FWIDA said that his Honour erred by finding that there was a real or substantial relevant risk.

Analysis

145    In my view, none of the points reach the level of sufficient doubt on a proper reading of his Honour’s reasons.

146    His Honour addressed many facets of the evidence which went to the question of risk, and it is a distortion to simply focus on one aspect as FWIDA has done in proposed ground 2.

147    Moreover, [49] of his Honour’s reasons is not just as FWIDA would have it. It reads:

Returning to the question of the danger that in the absence of the freezing order, the prospective judgment may be at least partially unsatisfied, FWIDA submitted that the reference to “danger” is to a risk of that outcome and that the “risk or danger must be real or substantial, as opposed to a remote, speculative or theoretical possibility”: Zirk-Sadowski v University of New South Wales [2025] FCAFC 64 at [46] per Snaden J, Wheelahan and McElwaine JJ agreeing. I am satisfied that the danger is real and is not a remote, speculative or theoretical possibility. That that is so is further evidenced by the defendant’s failure to pay the Chinese judgment and to the close relationship between the defendant and FWIDA.                        
(my emphasis)

148    Now a point is taken by FWIDA that his Honour could not coherently find that there was a risk of dissipation on the one hand, and on the other hand find no evidence of an intention to deal with the proceeds of sale. But that argument is based on a twisted reading of [62] and [63] of his Honour’s reasons.

149    At [62] his Honour was weighing in the balance of convenience the effect that the freezing order would have on FWIDA. His Honour concluded that given there was no evidence adduced of any other business plan or opportunity then the effect of the freezing order would not stifle the business but simply maintain the status quo. That reasoning was unremarkable.

150    At [63] his Honour was rejecting a further discretionary reason offered by FWIDA as to the existence of prejudice against FWIDA. His Honour was observing that FWIDA’s argument that there was no relevant risk because the proposed use of the funds “would be in breach of the undertakings given in the BVI proceedings” weighed against FWIDA when it came to prejudice. Now his Honour had rejected the BVI undertaking argument earlier. But at [63] his Honour’s words “on that approach” make clear it was an approach not adopted by him, but rather was dealt with arguendo, that is, assumed to be true for the sake of argument.

151    Let me deal with one other matter. As to whether there exists a relevant risk which rises to the level of danger was an evaluative question for his Honour.

152    It is not in doubt that the reference to danger is a reference to a risk that a judgment or prospective judgment will go wholly or partially unsatisfied. And the risk must be more than a remote or theoretical possibility. But it is not necessary to show that the relevant entity intends to frustrate a judgment or prospective judgment and is threatening to act to give effect to that intention, although showing this is of course not unhelpful to the applicant for the freezing order.

153    In my view, his Honour considered the relevant factors concerning risk as referred to earlier by me.

154    In summary, grounds 2 and 3 lack sufficient merit to meet the first limb of the leave test. Further, even if ground 2 could be made out, this would not avail FWIDA as there was more than adequate material before his Honour to justify finding the relevant risk or danger that would warrant making the freezing order.

Proposed appeal ground 4

155    Proposed appeal ground 4 is in the following form:

The primary judge erred at [58] of the reasons in holding that the process of winding up and the liquidator then pursuing the debt comes within the expression ‘a process in the Court’ in r 7.35(5)(b) of the Federal Court Rules 2011 (Cth).

156    FWIDA said that although a winding up is a process that may be brought in the Federal Court, the liquidator’s subsequent pursuit of a debt does not of itself invoke federal jurisdiction; it is a simple debt claim that does not of itself arise under federal law. Accordingly, it is not a “process in the Court”, nor can it be said that it is a process under which FWIDA may be obliged to disgorge assets or contribute toward satisfying the judgment.

157    FWIDA said that his Honour’s reliance on HPack Investments at [49], although that case is correct so far as it goes, was misplaced. It said that in a State court there is no requirement for a federal element, and accordingly the jurisdiction of a State court (unlike the Federal Court) can be invoked in both aspects of the two step process being, first, the winding up and, second, the liquidator’s subsequent debt claim.

158    Further, FWIDA said that as regards Costagliola at [79], to which his Honour also referred, it is apparent from the surrounding paragraphs that in that case Wigney J was considering r 7.32 and s 23 of the FCA Act as bases for a freezing order, rather than r 7.35, which Wigney J doubted was applicable. Contrastingly, in the present case the plaintiff relied particularly on r 7.35.

Analysis

159    Now this argument concerning federal jurisdiction was not raised before his Honour. But in any event the point goes nowhere.

160    Ground 4 does not take FWIDA very far because his Honour made findings as to the existence of another relevant “process in the Court”, that is, garnishment and attachment. That finding is not challenged.

161    Accordingly, even if ground 4 were assumed to be correct it is insufficient to cast doubt on his Honour’s conclusion as to an available “process in the Court” to justify the exercise of power under r 7.35(5)(b). There were two strands put by the plaintiff and relied upon by his Honour. FWIDA had to negate both strands to remove the head of power under r 7.35(5)(b), but ground 4 only deals with one strand.

162    But let me put to one side this futility conclusion and consider another angle.

163    As the plaintiff suggested, it may be necessary for a liquidator to bring a case in misleading and deceptive conduct under Commonwealth law against FWIDA or Ms Qiu associated with the assertion in the financial accounts that the debt for $10.8 million was owing to the defendant. It may be necessary to do so to guard against belated and spurious grounds for rejecting the existence of the debt. Such an allegation could be brought alongside any proceeding by the liquidator for the collection of the debt. But in that event, the debt claim would form part of the one matter that includes a claim under Commonwealth law and so would be in federal jurisdiction.

164    So, if this point had been put to his Honour, the likely retrospective hypothetical scenario would have been that his Honour would have conceived of such a scenario and so reached the same opinion concerning the non–garnishee aspect of the “process in the Court”, albeit with a dash more reasoning.

Substantial injustice

165    FWIDA made the following points concerning the second limb of the usual leave to appeal test.

166    It was said by reference to the Full Federal Court’s decision in Huang v Deputy Commissioner of Taxation (2020) 280 FCR 160 at [13] (the decision was overturned by the High Court, but not on this point), that it may necessarily be inferred from the nature of a freezing order that FWIDA will suffer substantial injustice in being unable to deal with any of its assets should the order, which is challenged, be wrong.

167    As his Honour found, the balance of the sale proceeds appears to be FWIDA’s only remaining asset of any significance. FWIDA said that the usual exceptions and exclusions to the freezing order of dealing and dispositions in the ordinary course of business, which in this case are capped at $10,000, do not alleviate the substantial injustice.

168    FWIDA said that it may be inferred that unless overturned on appeal, the freezing order and the associated findings made in relation to it would adversely affect the willingness of any persons to conduct business or deal with FWIDA in future, thereby hindering its ability to do so and to do so successfully. It is said that freezing orders can give rise to negative perceptions and stigma.

169    Further, FWIDA said that in the circumstances where the entirety of FWIDA’s asset pool is frozen, the freezing order has the practical effect of finally determining FWIDA’s rights.

170    FWIDA said that although the freezing order has effect until determination of the substantive proceeding below or further order, FWIDA is not a party to that substantive proceeding, and so it is in no position to influence the outcome of that proceeding.

171    Moreover, it was said that the freezing order, which is over all of FWIDA’s assets, has the practical effect of curtailing FWIDA’s substantive right to conduct business and manage its assets.

Analysis

172    Now although I accept that there is some level of prejudice attendant upon the imposition of a freezing order, such prejudice is insufficient to ground an application for leave to appeal in every case. Were it otherwise then every freezing order would be subject to a de facto appeal as of right. The applicant for leave bears an onus to establish substantial injustice, which must be assessed on the facts of each case, based on the evidence and arguments advanced by the applicant. And I do not take the Full Court in Huang to have suggested otherwise.

173    Further, FWIDA has not established substantial injustice.

174    As his Honour observed, FWIDA itself has no employees and engages contractors, including Lempriere, to provide it with various services. Further, FWIDA’s principal asset was the Larundel Estate that has now been sold. What now remains are the net proceeds of sale sitting in a bank account. Its only other assets, being shares in an Indian subsidiary, have no value.

175    Further, as his Honour said at [62]:

No evidence has been adduced by FWIDA with regard to any intention in dealing with the sale proceeds – no other business plan or opportunity is identified. Nor is there evidence about what business activities FWIDA presently carries out having sold its principal asset – it would appear to conduct no business

176    As the plaintiff points out, FWIDA made a forensic decision at the hearing of the freezing order application not to lead any evidence of any intention on its part to deploy the proceeds of sale in any particular way such that it would suffer prejudice if it were delayed in deploying them until the trial, which trial is now set down for a three day hearing commencing on 22 April 2026.

177    So FWIDA has not shown that it will be prejudiced at all by not being able to use the proceeds of sale until after the final hearing, let alone shown the “substantial injustice” required for leave to appeal.

178    Further, as to the suggestion that the freezing order has the practical effect of curtailing FWIDA’s substantive right to conduct business and manage its assets, substantial injustice is not established by pointing to an abstract right. Having sold the Larundel Estate, FWIDA has no business left. And it chose not to lead any evidence that it wished to invest the proceeds in a particular way or otherwise manage its assets, in a manner that might have been contrary to the freezing order.

179    Further, if FWIDA’s circumstances change, it is free to apply to vary or even discharge the order.

180    Further, the freezing order does not prevent FWIDA from converting one type of Australian asset into another type of Australian asset providing value is preserved and the relevant monetary threshold is maintained. What the order does prevent is the siphoning off of assets whether overseas or by paying dividends or by other types of dealings or “restructuring” that Ms Qiu seems to have had a propensity to engage in.

181    Further, FWIDA has the benefit of the usual undertaking as to damages given by the plaintiff which can ameliorate any particular prejudice that FWIDA is ultimately able to establish. If the plaintiff is unsuccessful in its claim for enforcement of the Chinese judgment or winding up of the defendant, FWIDA will be entitled to set aside the freezing order, make any claim it can upon the usual undertaking and deploy the presently frozen sale proceeds as it sees fit.

182    The second limb of the leave test is not made out. But in any event, and as I have indicated, even if it were made out I would refuse leave given the lack of sufficient merit of the arguments under the first limb.

Conclusion

183    For all these reasons, last Friday I refused FWIDA leave to appeal against his Honour’s orders.

Associate:

Dated:    26 February 2026