FEDERAL COURT OF AUSTRALIA

Wei v Robba (Trustee), in the matter of Zhu (Bankrupt) [2026] FCA 802

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s interim application filed on 4 June 2026 is dismissed.

2.    The applicant pay the respondent’s costs of the interim application filed on 4 June 2026.

3.    By 10 July 2026, the parties advise the Associate to Justice Meagher of their availability to attend a case management hearing on or after 13 July 2026.

4.    The proceeding be listed for a case management hearing on or after 13 July 2026 on a date to be advised.

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

REASONS FOR JUDGMENT

MEAGHER J

INTRODUCTION

1    This is an application by the applicant (Applicant) in this proceeding, Ms Qiaoying Wei, for freezing orders against the respondent, the trustees (Trustees) for the bankrupt estate (Estate) of the Applicant’s daughter, Ms Beibei Zhu (Bankrupt). By an interim application filed on 4 June 2026 (Freezing Orders Application), the Applicant seeks, inter alia, orders that until the determination of this proceeding or further order:

a.     The Respondents be restrained from disposing of or dissipating any part of the Wei Kun Loan Distribution (as defined in the Concise Statement filed 10 April 2026).

b.     Further or alternatively, the Respondents be restrained from disposing of or dissipating assets up to an unencumbered value of $2,952,364.

c.     Further or alternatively, the Respondents pay the sum of $2,952,364 into Court.

2    The Freezing Orders Application was heard on an urgent basis on 12 June 2026. The claimed urgency is set out at [57] below. For the following reasons, it is dismissed with costs.

BACKGROUND

3    The substantive proceeding concerns, at its heart, a dispute between the Applicant and the Trustees as to the source of funds (Funds) advanced to Wei Kun Pty Ltd, the corporate trustee for the Zhu Family Trust, which was deregistered on 8 June 2025. The dispute arises out of the Trustees’ decision, on 22 April 2025, to reject the Applicant’s proof of debt in the amount of $6,472,815.03 submitted on 14 November 2022 in the Bankrupt’s bankruptcy pursuant to s 102(1) of the Bankruptcy Act 1966 (Cth) (Applicant’s Proof of Debt to the Trustees), for money allegedly owed to her in accordance with various personal loan agreements between the Applicant and the Bankrupt. This is the subject of the Application – Form B2 filed on 13 May 2025 (Application) by which the Applicant commenced this proceeding, which seeks that:

The Respondent’s decision to reject the Applicant’s Proof of Debt dated 22 April 2025 be reversed or varied, pursuant to sections 104(1) and 104(2) of the Bankruptcy Act 1966 (Cth).

4    The Applicant contends, relatedly, that on 28 October 2019 she submitted a proof of debt to Mr Derrick Vickers, in his capacity as the liquidator (Liquidator) of Wei Kun in the amount of $6,008,080.53 (Applicant’s Proof of Debt to the Liquidator) which the Liquidator rejected on 4 November 2022. It emerges from the Trustees’ affidavit evidence that on 10 December 2021, the Trustees on behalf of the Estate submitted a proof of debt to the Liquidator in the amount of $6,159,766.00 (Trustees’ Proof of Debt to the Liquidator) in the place of a proof of debt previously submitted by the Trustees to the Liquidator. The Liquidator accepted the Trustees’ Proof of Debt to the Liquidator on 26 April 2023 for the amount of $5,917,487.86. The Liquidator subsequently paid to the Trustees a dividend of $2,952,364 (Wei Kun Loan Distribution).

5    The Trustees’ reason for rejecting the Applicant’s Proof of Debt to the Trustees, stated in the rejection notice dated 22 April 2025, was that, in relation to an amount claimed of $6,208,080.00, there was no evidence that the Bankrupt was the recipient of, or had had available for her personal use, the loan proceeds under the personal loan agreements, which the Trustees stated had been variously received by Wei Kun, Yi Kun Pty Ltd and Yi Wei Australia Pty Ltd directly. Therefore, the Bankrupt had no liability in respect of the $6,208,080.00. In relation to an amount claimed of $264,734.50, which the Applicant claimed was owing to her under an oral agreement, the Trustees stated that the evidence indicated this amount had been discharged in full.

6    The Applicant contends that the Trustees have adopted inconsistent positions by:

(a)    In submitting the Trustees’ Proof of Debt to the Liquidator, relying on the position that (i) the Applicant had loaned the Bankrupt the Funds, and (ii) the Bankrupt had on-lent the Funds to Wei Kun.

(b)    In rejecting the Applicant’s Proof of Debt to the Trustees, asserting that the Funds were not loans to the Bankrupt, but were loans from the Applicant to Wei Kun directly.

7    As will be seen from the below, over the course of this proceeding the bases for the relief sought by the Applicant have evolved quite substantially. To understand the evolution of the Applicant’s case I now set out a brief procedural history of the matter. Many of these steps will be referred to more fully later in the judgment.

PROCEDURAL HISTORY

8    On 10 July 2025, orders were made by consent as to the production of documents by the Trustees for inspection by the Applicant, and for the filing of affidavits by each of the parties. Further orders were made by consent on 8 September 2025 extending the time for the filing of some of the affidavit materials, and setting down a case management hearing on 16 October 2025. At that case management hearing, the matter was referred to mediation and, accounting for the prospect that the matter might not resolve at mediation, orders were made, including for the filing of submissions, which programmed it to a final hearing on 15 and 16 April 2026.

9    At the pre-trial case management hearing on 26 March 2026 the trial dates were vacated as the Applicant foreshadowed making an application to join the Australian Securities and Investments Commission (ASIC) (First Joinder Application). The First Joinder Application was timetabled to be heard on 15 April 2026, the day previously reserved for the first day of the trial.

10    On 27 March 2026, submissions dated 12 February 2026 (12 February 2026 Submissions) were filed. In the affidavit of Mr Richmond, the Applicant’s solicitor, on 25 March 2026 (First Richmond Affidavit), Mr Richmond explains that the 12 February 2026 Submissions were sent to the Trustees’ solicitor on 12 February 2026, pursuant to the orders made on 16 October 2025 which required the Applicant to file and serve written submissions on which she intended to rely at the final hearing. By an email of 20 February 2026, the Applicant followed up whether the Trustees’ solicitors had received instructions from their client, and whether the Trustees would “be agreeable to resume the mediation”. At the case management hearing held on 25 March 2026, the Court was informed that these were submissions sent to the Trustees after the mediation in the hope of progressing the matter to settlement. They were also annexed to the First Richmond Affidavit.

11    On 9 April 2026, and in the absence of any orders requiring it to do so, the Applicant filed a concise statement (Concise Statement). The First Joinder Application (i.e., to join ASIC) was heard on 15 April 2026. Before the Court handed down judgment in relation to the First Joinder Application, the Applicant, on 17 April 2026, wrote to the Court seeking that the Commonwealth also be joined (Second Joinder Application), on the same basis as that which had been argued in relation to ASIC.

12    As a consequence of that indication, following a case management hearing the following orders were made on 6 May 2026:

1.     The applicant write to the Commonwealth seeking its views on its joinder as the third respondent in this proceeding by 15 May 2026.

2.     The applicant inform the Associate to Justice Meagher of the Commonwealth’s response to the correspondence referred to in Order 1 above, within five days of receiving a response.

FREEZING ORDERS APPLICATION

13    On 29 May 2026, the Applicant wrote to the Court indicating her intention to bring an urgent interim application, and timetabling orders were made in that regard, including that it be heard on 12 June 2026. That application is the Freezing Orders Application.

14    In the Freezing Orders Application, the Applicant relies on:

(1)    The Freezing Orders Application.

(2)    The First Richmond Affidavit.

(3)    The Concise Statement.

(4)    An affidavit of Mr Richmond filed on 15 April 2026 (Second Richmond Affidavit).

(5)    Written submissions filed on 15 April 2026.

(6)    Written submissions filed on 4 June 2026.

(7)    An affidavit of Mr Hsieh filed on 5 June 2026 (First Hsieh Affidavit).

(8)    An affidavit of Mr Hsieh filed on 11 June 2026 (Second Hsieh Affidavit).

(9)    Written submissions in reply filed on 12 June 2026.

15    The Trustees rely on:

(1)    An affidavit of Mr Robba filed on 22 September 2025.

(2)    Written submissions filed on 11 June 2026.

PRINCIPLES

16    Rules 7.32 and 7.35 of the Federal Court Rules 2011 (Cth) provide as follows:

7.32 Freezing order

(1)     The Court may make an order (a freezing order), with or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.

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

Note: Without notice is defined in the Dictionary.

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

(1) This rule applies if:

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

(i)     the Court; or

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

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

(i)     the Court; or

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

…

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

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

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

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

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

17    In Basi v Namitha Nakul Pty Ltd [2019] FCA 743, Wigney J stated as follows at [7] – [9]:

The purpose of a freezing order is to prevent an abuse or a frustration of the Court’s process by depriving an applicant of the fruits of any judgment obtained in the action. It is “no light matter” to freeze a party’s assets and there is, accordingly, a need for the Court to exercise caution. A freezing order is a “drastic remedy” which should not be lightly granted.

An applicant has a good arguable case if they have “a reasonably arguable case on legal as well as factual matters”. It has also been said that a “good arguable case” is one “which is more than barely capable of serious argument, and yet not necessarily one the judge considers would have better than a fifty per cent chance of success”.

Where a freezing order is sought on the basis of a danger of the dissipation of assets, it is not necessary for the Court to be satisfied that the risk of dissipation is more probable than not. Nor is it necessary for the applicant to adduce evidence of an intention on the part of the respondent to dissipate assets. The making of a freezing order involves a discretionary exercise of power. The Court retains a discretion to refuse relief even if the requirements in r 7.35 of the Rules are satisfied.

(Footnotes omitted.)

18    Whether there is a good arguable case only requires a “claim barely capable of serious argument, it need not have a better than even chance of success”: First Class Securities Ltd v Global Future Holdings Pty Ltd (Freezing Orders) [2026] FCA 48 at [35], citing Ninemia Maritime Corp v Trave GmbH & Corp KG (The Niedersachsen) [1984] 1 All ER 398 at 404.

19    As to dissipation, the evidence must establish “facts from which a ‘prudent, sensible commercial’ person would properly infer a danger of default if assets were removed from the jurisdiction or dissipated within the jurisdiction”: Simmons v Giezekamp [2024] FCA 649 at [21], referring to Third Chandris Shipping Corp v Unimarine SA [1979] 1 QB 645 at 671 – 672; Hua Wang Bank Berhad v Deputy Commissioner of Taxation [2010] FCAFC 140; 81 ATR 66 at [21]; UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 at [13]. The “danger” must be “real or substantial as opposed to a remote or speculative or theoretical possibility” and the applicant must prove “facts from which the Court can infer the existence of a real or substantial risk on the balance of probabilities”: UFC Enterprise Morley at [13].

20    The applicant in an application for freezing orders must give appropriate undertakings to the Court, which will almost always include an undertaking to pay any damages which the respondent may sustain: see TJ & P Pty Ltd as trustee for the Post Family Trust v Agrinova Pty Ltd (No 2) [2024] FCA 1496 at [26]; Cardile v LED Builders Pty Limited [1999] HCA 18; 198 CLR 380 at [43]; Frigo v Culhaci [1998] NSWCA 88 at 7 – 8. This is reflected in the Court’s Freezing Orders Practice Note (GPN-FRZG) at [2.16], which states:

As a condition of the making of a freezing order, the Court will normally require appropriate undertakings by the applicant to the Court, including the usual undertaking as to damages (see Schedule A of Annexure A of this practice note).

21    The usual undertaking as to damages must be given unless there are special circumstances: McCann, in the matter of Walton Construction (Qld) Pty Ltd (in liq) v QHT Investments Pty Ltd [2016] FCA 1092 at [20]. See also Weribone on behalf of the Mandandanji People v Queensland [2013] FCA 255 at [81]. Further, the Court should be wary of an undertaking that may prove to be illusory, and must be satisfied that the undertaking is “not a mere form”: First Class Securities at [73] and ENRC Marketing AG v OJSC “Magnitogorsk Metallurgical Kombinat” [2011] FCA 1371; 285 ALR 444 at [12], referring to Myring v Beale [1899] NSWLawRp 21; 20 LR (NSW) Eq 6 at 7. This is important where a party is outside the jurisdiction and there is no evidence of their having assets in the jurisdiction. There is also a suggestion in the authorities that a foreign applicant must produce specific evidence as to his or her capacity to meet an undertaking as to damages if called on to do so: see Vapormatic Co Ltd v Sparex Ltd [1976] 1 WLR 939 and Lock International plc v Beswick [1989] 3 All ER 373, cited in Hotline Communications Ltd v Hinkley [1999] VSC 74; 44 IPR 445 at [38], in turn cited in ENRC Marketing at [12]. The Court may consider the existence or extent of any assets in determining the sufficiency of an undertaking: see Organic Marketing Australia Pty Ltd v Woolworths Ltd [2011] FCA 279 at [69].

22    This position is reflected at [2.17] of the Freezing Orders Practice Note, which is as follows:

If it is demonstrated that the applicant has or may have insufficient assets within the jurisdiction of the Court to provide substance for the usual undertaking as to damages, the applicant may be required to support the undertaking by providing security. There is provision for such security in the example form of freezing order.

23    When weighing the balance of convenience, factors that may be considered include the absence or inadequacy of any undertaking as to damages: Zuckerman AAS, Wilkins S, Adamopoulos J, Higgins A, Hooper S, Vial A, Zuckerman on Australian Civil Procedure 2018 (LexisNexis Butterworths, 2018) at 399 [10.116].

24    When a Court considers whether to make a freezing order, the Court must be satisfied “that it is in the interests of justice, in all the circumstances of the case, for the freezing order to be made”: Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at [4] – [5]. The question is ultimately one of discretion. As Feutrill J stated in UFC Enterprise Morley at [13]:

Ultimately, it is a question for evaluation by the Court as to whether the degree of the danger or risk is sufficient to justify an order in the terms made. In making that evaluative assessment, the Court will bear in mind that a freezing order is a drastic remedy which imposes a severe restriction on a respondent’s right to deal with its assets, and that the purpose of the order is not to provide security for a judgment which the applicant hopes to obtain and fears might not be satisfied

GOOD ARGUABLE CASE

The Applicant’s evolving case

25    The bases for relief relied upon by the Applicant in this proceeding have evolved significantly over the course of the matter such that it is, as the Trustees submit in the Freezing Orders Application, difficult to discern what is the Applicant’s case. This is heightened by the fact that the matter has not (yet) proceeded by way of pleadings. The Applicant appears to rely on at least the following as bases for relief against the Trustees in the substantive proceeding.

The Trustees’ inconsistent positions

26    As already articulated above, the Applicant points to the Trustees’ allegedly inconsistent positions in submitting the Trustees’ Proof of Debt to the Liquidator, and rejecting the Applicant’s Proof of Debt to the Trustees. The Trustees’ position in response to this characterisation emerges, inter alia, from a letter dated 24 March 2026 to the Applicant, annexed to the First Richmond Affidavit, and is that (a) the Applicant’s Proof of Debt to the Trustees was rightly rejected because the documentary evidence fell short of establishing that the Funds were personal loans to the Bankrupt, (b) the contemporaneous material suggested the Funds were loans to the entities associated with the Zhu Family Trust, including Wei Kun, and (c) the Applicant and the Bankrupt had “adopted different characterisations of the alleged loans over time”.

The Funds were advanced to the Bankrupt personally

27    The Applicant in the 12 February 2026 Submissions asserts that the evidence admits of only one conclusion, namely that the Funds “were advanced to Ms Zhu personally pursuant to personal loan agreements, and were subsequently applied at her direction, by way of on-lending to Wei Kun”. On this basis, the Trustees must revoke their decision to reject the Applicant’s Proof of Debt to the Trustees and admit the amount claimed in full. In particular:

(1)    The Trustees’ rejection of the Applicant’s Proof of Debt to the Trustees is contrary to the evidence, as their stated basis for rejection is contradicted by the Applicant’s and the Bankrupt’s unchallenged affidavit evidence, contemporaneous documentation, and the Trustees’ prior investigations.

(2)    The Applicant’s position is consistent with the Liquidator’s findings that the funds were loaned by the Applicant to the Bankrupt personally before being on-lent to Wei Kun.

Approbation and reprobation

28    The Applicant asserts in the 12 February 2026 Submissions that, in adopting the allegedly inconsistent positions referred to above, the Trustees have approbated their previous characterisation that the Funds were loaned to the Bankrupt personally, and are precluded from asserting the opposite due to the prohibition on approbation and reprobation. The Applicant relies on the statements in Creak v James Moore & Sons Pty Ltd [1912] HCA 67; 15 CLR 426 at 441 and Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; 59 CLR 641 at 675. By contrast, the Trustees’ position, derived from their letter of 24 March 2026 to the Applicant, annexed to the First Richmond Affidavit, is that the doctrine of approbation and reprobation is not engaged.

Breach of Trustees’ duties

29    Relying on Re David Hurt; Ex parte David Hurt [1988] FCA 85 at 8 – 9 [17] and r 42-10 of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth), the Applicant also submits, by the 12 February 2026 Submissions, that the Trustees have a duty, as officers of the Court, to inform the Liquidator that the Wei Kun Loan Distribution was made on a false premise, namely that the funds were loaned to the Bankrupt personally, and then on-lent to Wei Kun, if the Trustees now view this position to be incorrect.

Section 601AD(2) of the Corporations Act 2001 (Cth)

30    In reliance on s 601AD(2) of the Corporations Act 2001 (Cth), and on the footing that the Funds were found to have been loaned by the Applicant directly to Wei Kun, the Applicant next, at the case management hearing on 26 March 2026 referred to above, contends that the Wei Kun Loan Distribution should be paid to ASIC on the basis that any property of Wei Kun would vest in ASIC on deregistration. On this basis, on 27 March 2026, the Applicant filed the First Joinder Application seeking, inter alia, that ASIC be joined as the second respondent in this proceeding, and that the Applicant be granted leave to file an Amended Application seeking further or alternative relief to the effect that:

(1)    Declarations that:

(a)    The Funds were loaned from the Applicant to Wei Kun, not from the Applicant to the Bankrupt.

(b)    The Funds are not property divisible among the Bankrupt’s creditors pursuant to s 116 of the Act and therefore did not vest in the Trustees.

(c)    The Trustees’ Proof of Debt to the Liquidators was invalid entirely, or in the alternative, to the extent it related to the Funds.

(d)    The Wei Kun Loan Distribution is property vested in ASIC pursuant to s 601AD of the Corporations Act.

(2)    An order that, under s 90-15(1) of Sch 2 to the Act, or alternatively s 90-15(1) of Sch 2 to the Corporations Act, the Trustees pay the amount of the Wei Kun Loan Distribution (or an amount determined by the Court “to be related to” the funds advanced to Wei Kun) to ASIC.

(3)    An order that, under r 14.11 of the Rules, the Trustees pay the amount of the Wei Kun Loan Distribution (or an amount determined by the Court “to be related to” the funds advanced to Wei Kun) to ASIC.

31    The Trustees initially opposed the First Joinder Application, stating in their letter of 24 March 2026 to the Applicant, annexed to the First Richmond Affidavit, that rather than joining ASIC or seeking orders relating to the “proof of debt in the liquidation of Wei Kun”, the Court should determine to whom the Funds were advanced, and if the Trustees’ position were successful, it might be appropriate for the Applicant to apply to reinstate Wei Kun and reappoint the Liquidator, who could take steps to recover payments made to the Trustees, if appropriate. However, they considered that this was not a matter to be agitated in this proceeding.

32    At the case management hearing on 26 March 2026, the First Joinder Application was underpinned by a submission by the Applicant that if Wei Kun were reinstated and the Funds were repaid, they would simply need to be released to her, without the need to reappoint the Liquidator. In that context the Applicant stated that the mechanism for the Wei Kun Loan Distribution to be repaid to her would be a declaration that the Wei Kun Loan Distribution vested in ASIC on deregistration of Wei Kun, and an order directing ASIC to pay the Wei Kun Loan Distribution to the Applicant.

33    The Applicant also contended at the case management hearing that the Trustees’ suggestions that this proceeding be discontinued, the Liquidator be reinstated and any claims by the Applicant be pursued in the liquidation of Wei Kun, were not necessarily the appropriate course on the basis that (1) the Applicant was entitled to pursue alternative claims, (2) the Liquidator never expressed any interest in pursuing this claim on the Applicant’s behalf, because the Liquidator formed the view that the funds were loaned by the Applicant to the Bankrupt personally, and (3) if the Court finds that the funds were loaned to Wei Kun, the Court may make orders, subject to the joinder of ASIC, which finally resolve the issue. These contentions were also later advanced in the Concise Statement.

34    The Trustees at that case management hearing submitted that the effect of a finding that the Applicant loaned the funds to Wei Kun would not necessarily be that they would be repaid to the Applicant; rather, ASIC or the Liquidator would most likely seek to have them “placed back in their care”. Further, they submitted that the issues were matters to take up in a reconstituted liquidation of Wei Kun.

35    ASIC’s position, conveyed by letters to the Applicant on 25 March and 15 April 2026, annexed to the Second Richmond Affidavit, was that on the strict understanding that no orders were sought against, or directly affecting, ASIC, it did not wish to be heard or to be joined, and did “not intend taking any steps on behalf of [Wei Kun] to assert, exercise, enforce or waive any rights [Wei Kun] may have. If [Wei Kun] itself wishe[d] to do so, then the former liquidators must firstly reinstate [Wei Kun].”.

36    At the hearing of the First Joinder Application on 15 April 2026 the parties proposed orders which were agreed in all respects, other than as to the joinder of ASIC, in relation to which the Trustees took no position. The draft orders were in substantially the same form as those sought in the First Joinder Application, but also provided that the Trustees file a concise statement in response by 29 April 2026. In the end, however, given the circumstances set out below, no orders have yet been made arising out of the First Joinder Application.

37    The Applicant’s position at that hearing was that:

(a)    If the Court made the declarations she sought, ASIC would be required under s 601AF of the Corporations Act “to do what the liquidator ought to have done, namely, to pay [the Wei Kun Loan Distribution] … to the applicant rather than those funds remaining with the respondents”.

(b)    ASIC needed to be bound by the Court’s finding about the correct creditor of the Funds, so that they could simply “pass to ASIC and then [the Wei Kun Loan Distribution] should pass to the applicant”.

(c)    It was unnecessary to join the Liquidator as the Court could simply declare that the Wei Kun Loan Distribution vested in ASIC, and ASIC would be bound to on-pay it to the Applicant.

38    Although at the hearing, I indicated that I would deliver judgment in the First Joinder Application within approximately a one-week timeframe, that has not yet occurred, as on 17 April 2026 the Applicant wrote to the Court indicating that she thought that the Commonwealth might also need to be joined, relying on the same arguments as she had made in relation to the joinder of ASIC. I took the view that the Commonwealth should be put on notice as to any proposed joinder application, and therefore convened a further case management hearing on 6 May 2026, as referred to above and discussed more fully below.

39    For completeness I note that by letter dated 10 June 2026, annexed to the Second Hsieh Affidavit, ASIC restated its preference that it not be joined, and reiterated that it did “not intend on taking any steps to assert, exercise, enforce or waive any rights that [Wei Kun] may have”, and that if Wei Kun wished to do so, the former liquidators should reinstate the company. ASIC further stated that it would not agree to be bound by any potential future findings in this proceeding.

Trustees’ unreasonable conduct

40    As already referred to, the Applicant on 9 April 2026 filed a Concise Statement by which she also asserted that:

(a)    The Trustees had acted unreasonably in retaining the Wei Kun Loan Distribution, not returning it, maintaining that the Wei Kun Loan Distribution was property divisible among the Bankrupt’s creditors, and determining that the Applicant directly loaned the funds to Wei Kun, rather than via a loan to the Bankrupt which was on-lent to Wei Kun.

(b)    Further or in the alternative, the Applicant’s Proof of Debt to the Trustees, insofar as it related to amounts advanced to Wei Kun, ought to have been admitted on the basis that the funds were loaned to the Bankrupt and then on-lent to Wei Kun.

(c)    The Trustees had acted unreasonably in rejecting the Applicant’s Proof of Debt to the Trustees, and inconsistently with their own conduct.

(d)    To the extent that the Trustees considered there to be ambiguity as to the correct creditor of the amounts lent to Wei Kun, they acted unreasonably in simultaneously:

(a)    Retaining the Wei Kun Loan Distribution.

(b)    Rejecting the Applicant’s Proof of Debt to the Trustees.

(c)    Not taking steps to resolve the ambiguity since receiving the Wei Kun Loan Distribution.

41    The Applicant also made several assertions in respect of other debts identified in the Applicant’s Proof of Debt to the Trustees and referred to in the Applicant’s affidavit filed on 13 May 2025, contending that the Trustees ought to admit these debts.

Section 601AD(1A) of the Corporations Act 2001 (Cth)

42    As referred to above, two days after the hearing of the First Joinder Application, the Applicant made the Second Joinder Application, seeking the joinder of the Commonwealth as the third respondent on the basis that the Funds may have been loaned to Wei Kun as trustee, and therefore vested in the Commonwealth under s 601AD(1A) of the Corporations Act. The Applicant sent to my Associate an amended interim application, now seeking, inter alia, leave to file an amended application seeking further or alternative relief to the following effect:

(1)    In the alternative to the Wei Kun Loan Distribution being property vested in ASIC under s 601AD(2) of the Corporations Act, the Wei Kun Loan Distribution was property vested in the Commonwealth under s 601AD(1A) of the Corporations Act.

(2)    In the alternative to an order that, under s 90-15(1) of Sch 2 to the Act, or alternatively s 90-15(1) of Sch 2 to the Corporations Act, the Trustees pay the amount of the Wei Kun Loan Distribution (or an amount determined by the Court “to be related to” the funds advanced to Wei Kun) to ASIC, the Trustees pay that amount to the Commonwealth.

(3)    In the alternative to an order that, under r 14.11 of the Rules, the Trustees pay the amount of the Wei Kun Loan Distribution (or an amount determined by the Court “to be related to” the funds advanced to Wei Kun) to ASIC, the Trustees pay that amount to the Commonwealth.

43    The Applicant sought to rely on submissions she had made in support of the First Joinder Application, as her submissions in support of the Second Joinder Application.

44    At a case management hearing on 6 May 2026 the Applicant repeated that it was not necessary for Wei Kun to be reinstated or the Liquidator reappointed, given that the Wei Kun Loan Distribution was one amount effectively moving from the Trustees to the Applicant, and both ASIC and the Commonwealth, as applicable, had the power to effect the transfer. The Trustees indicated that (1) they neither consented to nor opposed the joinder of ASIC, (2) they held a concern that the Commonwealth’s position was unknown, and (3) the matter should be dealt with by reinstating Wei Kun and reappointing the Liquidator, on the basis that at least ASIC had indicated that it did not intend to exercise its discretion under s 601AF of the Corporations Act.

45    By letter dated 4 June 2026 from the Commonwealth to the Applicant, which the Applicant forwarded to my Associate, the Commonwealth indicated that (1) there was a threshold issue of whether Wei Kun held any relevant property at the time of its winding up, which directly bore on whether any property in dispute was capable of vesting in the Commonwealth or ASIC, and on whether the Commonwealth should be involved, and (2) the Court should determine the threshold question of the identity of the relevant debtor, and the nature of the relevant property, before taking any step to join the Commonwealth.

46    By letter dated 10 June 2026 from the Commonwealth to the Applicant, annexed to the Second Hsieh Affidavit, the Commonwealth articulated its position that:

(1)    In response to a suggestion by the Applicant in her letter dated 8 June 2026 to the Commonwealth, also annexed to the Second Hsieh Affidavit, that actions under s 601AD of the Corporations Act could be judicially reviewed, s 601AD “does not operate as a mechanism to review the actions or ‘distributions’ made by a liquidator”.

(2)    Section 601AD also “does not operate as a means to funnel funds that were distributed as part of a liquidation process (through a company, that no longer exists) back to the Commonwealth, or ASIC, for the purposes of resolving a dispute about who held or owed money prior to a winding up process”.

(3)    If there were concerns about the conduct of the liquidation of Wei Kun, the Applicant could consider redress pursuant to Div 90, Sch 2 to the Corporations Act, or determine whether a basis existed to seek reinstatement of Wei Kun.

(4)    It was not necessary for the Commonwealth to be joined to a private dispute such as this, but that if the Court were minded to make orders that the Commonwealth was “bound by the vesting provisions contained in the Corporations Act 2001”, the Commonwealth would “acknowledge those orders and act accordingly”.

Claim for money had and received

47    By letter dated 26 May 2026 from the Applicant to the Trustees, annexed to the First Hsieh Affidavit, the Applicant stated, inter alia, that the Wei Kun Loan Distribution was money had and received for the use of the Applicant by the Trustees, and must be repaid to her. The Applicant maintained this position in a letter dated 3 June 2026 from the Applicant to the Trustees, annexed to the First Hsieh Affidavit, in the alternative to her position that the Wei Kun Loan Distribution vested in the Commonwealth or ASIC. On 9 June 2026, the Applicant emailed the Trustees referring to her position that if the Court determined that the correct creditor of the Funds advanced to Wei Kun was the Applicant, rather than the Bankrupt, then the Applicant would be entitled to recover the Wei Kun Loan Distribution as money had and received for the use of the Applicant. Based on such a claim, the Court could simply order the Trustees to pay the Wei Kun Loan Distribution to her directly, without the funds needing to pass through another entity such as the Commonwealth. This email was annexed to the Second Hsieh Affidavit. The Applicant asserted her entitlement to an order for restitution on the basis of money had and received in her written submissions in the Freezing Orders Application filed on 12 June 2026.

Constructive trust

48    In her reply submissions in the Freezing Orders Application, the Applicant contended, among other things, that the Wei Kun Loan Distribution was not property vested in the Trustees or divisible among creditors of the Bankrupt under ss 58 and 116 of the Act, and therefore the Trustees could not assert that they were lawfully possessed of it. Further, she submitted that there was a serious question to be tried in relation to whether the Wei Kun Loan Distribution vested in the Trustees, and that in any event she had other available remedies, which she said, in a further development of her case, now included a declaration of trust in the Applicant’s favour in relation to the Wei Kun Loan Distribution, relying on the authorities collected in Game Meats Co of Australia Pty Ltd v Farm Transparency International Ltd [2025] FCAFC 104; 312 FCR 272 at [41].

49    This submission appeared to proceed in response to the Trustees’ characterisation of her submission that the Wei Kun Loan Distribution is not property vested in the Trustees or divisible among the Bankrupt’s creditors. Their characterisation of the Applicant’s submission was that the Wei Kun Loan Distribution is not property divisible among the Bankrupt’s creditors “where there is a question mark over whether the payment was made by mistake” because a “mistake does not create a trust or other equitable obligation”, relying on Australia and New Zealand Banking Group Ltd v Westpac Banking Corp [1988] HCA 17; 164 CLR 662 at 673.

Submissions on good arguable case

50    In her submissions-in-chief, the Applicant reiterated the Trustees’ allegedly inconsistent position and the procedural history relating to the joinder of ASIC. She submitted that her claim was “irresistible on the merits” on the basis of the Trustees’ apparently contradictory positions in (1) submitting the Trustees’ Proof of Debt to the Liquidator and thereby putting themselves “in the Applicant’s shoes”, and (2) denying the Applicant’s Proof of Debt to the Trustees. The Applicant contended that the resolution of this proceeding simply involved the Trustees paying to the Applicant the Wei Kun Loan Distribution.

51    The Trustees took as their starting point in the Freezing Orders Application that they have a right of indemnity against the Estate. As noted above, they characterised the Applicant’s submissions as being that “the payment received by the [Trustees] ceases to be property divisible among creditors where there is a question mark over whether the payment was made by mistake”, and denied that any trust or equitable obligation arose from a mistake, submitting instead that the relevant claim was a common law action for the recovery of the value of money had and received. Further, they denied any potential personal liability, as they were defending the proceeding in a representative capacity, and said the Applicant had not demonstrated any disentitling conduct on their part which would lead to personal liability.

52    The Trustees asserted that “[t]he Applicant’s prima facie case is difficult to discern” and, to the extent that it was premised on the Applicant’s present right to the funds held by the Trustees, this was incorrect. They submitted that the Applicant lacked standing to make a claim to the Wei Kun Loan Distribution against the Trustees, and could not demonstrate a good arguable case of an entitlement thereto, contending that the right to recover any mistaken payment was likely to be best dealt with by reinstating Wei Kun and reappointing the Liquidator who, in the circumstance of ASIC and the Commonwealth not wishing to be joined or take steps to assert any right to any mistaken payment, was the only entity possessed of such a cause of action. In these circumstances, the Trustees submitted that the Applicant only had rights of review against the Trustees’ rejection of the Applicant’s Proof of Debt to the Trustees, and no standing to seek orders for payment from the Trustees.

53    At the hearing of the Freezing Orders Application, the Applicant largely reiterated her position that the Trustees had adopted inconsistent positions, and that it could be inferred from the documentary evidence and the Trustees’ subsequent conduct, that they held doubt as to the legitimacy of the Trustees’ Proof of Debt to the Liquidator. She stated that she sought, in this proceeding, to pursue her alternative position, namely to prove a debt in the Bankrupt’s bankruptcy. The Applicant conceded that the Application, in its original form, was only an application for review under s 104(1) and (2) of the Act, but submitted that (1) this was prepared in a rushed way before the relevant time limits expired, (2) the Applicant intended to approach the matter non-adversarially, and (3) when this process did not “bear fruit”, the Applicant rushed to amend the Application prior to trial. She further contended that it had always been her primary position that she was entitled to the Wei Kun Loan Distribution from Wei Kun, and she only sought to prove the debt in the Bankrupt’s bankruptcy once the Wei Kun Loan Distribution was actually distributed.

54    The Applicant’s counsel acknowledged that, in advancing the various cases summarised above, including that (1) the Wei Kun Loan Distribution had vested in the Trustees when it should not have, (2) that the Wei Kun Loan Distribution vested in either ASIC or the Commonwealth, (3) that the Wei Kun Loan Distribution was money had and received, and (4) that the Wei Kun Loan Distribution was subject to a constructive trust, the subject matter of the proceeding had changed significantly since the Application and the subsequent Concise Statement were filed, but stated that the proceeding essentially comprised several cases, all in the alternative. He submitted, however, that as to the issue of whether the Wei Kun Loan Distribution was an asset of the Estate, the answer was “no”, and the Trustees therefore had no right of remuneration out of the Estate.

55    In relation to the issue of a good arguable case, the Trustees submitted that their rejection of the Applicant’s Proof of Debt to the Trustees was a live issue. They submitted that if the rejection was found to be correct, because the Funds were loaned by the Applicant to Wei Kun, then the Liquidator may have paid the Wei Kun Loan Distribution to the Trustees by mistake, in which case the Liquidator would have an in personam right against the Trustees. Importantly, that right would vest in Wei Kun, not the Applicant, who might, at the most, be able to seek leave to proceed in the name of Wei Kun. Further, they opposed the Applicant’s arguments premised on, in the Trustees’ characterisation, the Applicant’s asserted status as a beneficiary of a trust, on the basis that any rights in the Wei Kun Loan Distribution were held by ASIC or the Commonwealth. Finally, the Trustees maintained their submission that the Liquidator should be joined to the proceeding so that it is fully constituted.

RISK OF DISSIPATION

56    In support of a risk of dissipation, the Applicant relied on the Trustees’ advice to creditors dated 6 May 2026 (Advice to Creditors), annexed to the First Hsieh Affidavit, which contains, among other things, the following:

(1)    A statement that payment of the previously declared dividend was on hold due to the Applicant’s application “seeking a review of the trustees’ decision to reject her proof of debt in the bankrupt estate for $6,472,814 in its entirety”.

(2)    In the Applicant’s submission, the Trustees’ continued position that the Wei Kun Loan Distribution was a divisible asset in the Bankrupt’s bankruptcy, without raising any doubt or questions as to whether it actually is a divisible asset of the Estate, based on:

(a)    A “Financial Position Summary” table recording $2,952,364 as realised shareholdings.

(b)    A statement that the Estate had received $2,952,364 from the Liquidator after accepting the Trustees’ Proof of Debt to the Liquidator.

(c)    A reference to a claim by a non-priority secured creditor that “has been rejected in full”.

(d)    Guidance provided regarding a likely dividend to creditors.

57    The Advice to Creditors also included resolutions for the approval of remuneration for $7,779.23 (GST excl.) for work already done from 4 December 2025 and 5 May 2026, and $50,135.00 (GST excl.) for future work from 5 May 2026 until the completion of this proceeding, and identified amounts totalling $425,128.64 in distributions of funds already made under the heading “Summary of receipts and payments”. The last date to vote on the proposed resolutions is 24 June 2026, which gives rise to the asserted urgency of the Freezing Orders Application.

58    The Applicant submitted that the Advice to Creditors showed an intention to dissipate the Wei Kun Loan Distribution, which was in fact already occurring, in circumstances where (1) the proceeding involving a dispute as to the entitlement to those funds was ongoing, (2) there was a concern that the Trustees (a) had not sought judicial or legal advice as to the Wei Kun Loan Distribution and any disposal thereof while the proceeding was on foot, and (b) had not been transparent with the Bankrupt’s creditors as to the source or entitlement of the Wei Kun Loan Distribution, this dispute, or the effect of their request for approval to dissipate the Wei Kun Loan Distribution. The Applicant submitted orally that it would be perverse to continue to allow the Trustees to dissipate the Wei Kun Loan Distribution for their remuneration, in circumstances where the Trustees had only on one occasion (being the letter of 24 March 2026 referred to above at [26]) made a positive submission about their entitlement thereto, in which correspondence the Trustees had indicated that the Funds were loaned to Wei Kun.

59    The Trustees submitted that the authorities required “solid evidence” that there was a real risk of dissipation: Ninemia Maritime at 406; Frigo; Hua Wang Bank at [12]; Third Chandris Shipping. The Trustees contended that there was no evidence of a risk of dissipation, as the Trustees were administering the Estate according to law, and there was no suggestion that they or their firm were divesting themselves of their assets or that they would be unable to meet any judgment.

BALANCE OF CONVENIENCE

60    As to the balance of convenience, the Applicant asserted that the Trustees would suffer no significant prejudice if the Freezing Orders Application were granted but it was not ultimately found that the Applicant was the correct creditor of the Funds advanced to Wei Kun, as the Wei Kun Loan Distribution would simply be returned to the Trustees. She submitted that it was noteworthy that the current circumstances had been significantly caused by the Trustees’ conduct in precipitating the Wei Kun Loan Distribution and then failing to return it after effectively disavowing their entitlement to it.

61    Further, she contended that there was a serious question to be tried as to whether the Trustees were entitled to any remuneration, on the basis that the Trustees were required to exercise their powers as officers of the Court, in accordance with their statutory duties which included those set out in ss 19(1)(b), (j), (k) of the Act and rr 42-10(1), (2), 42-15(2) and 42-30(d) of the Insolvency Practice Rules. She also referred to a suggestion she had made by a letter dated 3 June 2026 from the Applicant to the Trustees, annexed to the First Hsieh Affidavit, that the Trustees may be in a position of “actual or apparent conflict” given that “the fact they have a personal interest in the determination as to the proper treatment of the” Wei Kun Loan Distribution, specifically in advancing propositions supporting a valid right to indemnity so as to avoid potential personal liability. Further, she stated that the Trustees were only entitled to remuneration as against the assets of the Estate.

62    The Applicant indicated her willingness to provide the usual undertaking as to damages in her written submissions-in-chief in the Freezing Orders Application; however, the Trustees submitted that there was no evidence of that undertaking, or any indication of its value. The Trustees also submitted that there was no explanation as to how the Applicant might secure it, given that she resided in China. They submitted that the lack of an undertaking was fatal to the Freezing Orders Application. In her reply submissions, the Applicant submitted that she had offered the usual undertaking as to damages, but that in any event it was at the Court’s discretion whether this was required. In this regard, she referred to Yoong v Director, Professional Services Review [2021] FCA 1445, where at [38] Collier J considered that the respondents would not suffer “‘damages’ for ‘loss’ … warranting an undertaking”. In her oral submissions in reply, the Applicant submitted that she had assets in Australia that were “tied up in the administration of” the Bankrupt’s bankruptcy and that, on her best case, she would be entitled to the Wei Kun Loan Distribution, and on her worst case would be entitled to approximately $700,000, on the basis that the likely dividend to creditors referred to in the Advice to Creditors was “between 11.9 to 17 cents in the dollar”.

63    The Trustees also submitted that the Applicant had not demonstrated why damages were not an adequate remedy if she was successful in the substantive proceeding. Conversely, they submitted that granting a freezing order or other injunction would prevent the Trustees from defending the proceeding, and would stifle the administration of the Estate. When asked at the hearing of the Freezing Orders Application why damages were not an adequate remedy, the Applicant submitted that:

(1)    The Trustees’ financial position was not known.

(2)    The Applicant did not know how much of the Wei Kun Loan Distribution had been dissipated.

(3)    There was a possibility that a constructive trust would be imposed over the Wei Kun Loan Distribution, on the basis that it was received by mistake, and dissipation would “effectively defeat that relief”.

CONSIDERATION

64    For the following reasons, I consider that the Freezing Orders Application should be dismissed. As to the issue of an arguable case, I accept that the Applicant’s case is difficult to discern owing to the fact that it has evolved over the course of this proceeding, which has not (yet) proceeded by way of pleadings, and the issues of the joinder of ASIC and the Commonwealth are not yet resolved. Whether or not the claims advanced are “barely capable of serious argument”, I consider that the other factors informing the exercise of the Court’s discretion do not support the grant of the Freezing Orders Application.

65    First, I am not persuaded that the Applicant has demonstrated that the Trustees have removed assets from the Court’s jurisdiction or dissipated them within the jurisdiction. While it does appear that the Trustees are taking, and have taken, steps to distribute funds which appear to comprise the Wei Kun Loan Distribution, there is no evidence that the Trustees would be unable to satisfy a judgment debt, were the Applicant to be successful in the final relief claimed against the Trustees. The concern to which r 7.35 of the Rules, and the authorities, are directed, is a danger that the judgment will be wholly or partially unsatisfied because the judgment debtor may abscond, remove or dispose of their assets, or diminish their value. As the Trustees submit, there is no evidence that they are divesting themselves of their assets, or that they will be unable to satisfy any eventual judgment debt. In these circumstances, I am not satisfied that there is a danger of default on the Trustees’ part, if the Trustees are ultimately ordered to pay funds to the Applicant.

66    Second, I am not satisfied that the balance of convenience favours the grant of the orders sought in the Freezing Orders Application for the reasons that (1) the Applicant’s undertaking as to damages is unsatisfactory, and (2) damages would plainly be an adequate remedy. As to the Applicant’s undertaking, the Applicant’s residence in China and her apparent lack of assets in Australia (which the Applicant appeared to accept in oral submissions, save for the assets referred to below) are relevant. The only assets to which the Applicant pointed in oral submissions in support of her undertaking were (a) on her best case in this proceeding, the Wei Kun Loan Distribution itself, and (b) on her worst case in this proceeding, an amount of approximately $700,000 to which the Applicant said she was entitled in the Bankrupt’s bankruptcy if the Applicant’s Proof of Debt to the Trustees were admitted, based on the estimated dividend set out in the Advice to Creditors.

67    As to the sufficiency of the Applicant’s undertaking as to damages, it would appear self-evident that the subject matter of this proceeding cannot support the Applicant’s undertaking as to damages because logically, if the Trustees who are subject to the freezing orders are, for example, wholly successful in the proceeding, then no funds will be available to compensate the Trustees for the harm they may have suffered as a result of being subject to the freezing orders. The position is the same whether the Applicant claims from the Trustees the amount of the Wei Kun Loan Distribution, or some other amount. On this basis, I am not satisfied on the evidence and submissions that were put before me (1) that the Applicant has assets in the jurisdiction which could support an undertaking, and (2) therefore, that the Applicant’s undertaking is “not a mere form”: First Class Securities at [73].

68    In relation to the necessity of an undertaking as to damages, the Applicant’s reliance on Yoong for what appears to be a proposition that the requirement of an undertaking as to damages can be dispensed with, does not assist her in this application. That case is authority for the proposition that in administrative law, it may not always be appropriate to require the usual undertaking as to damages if the applicant is entitled to interlocutory relief by way of an injunction: at [34]. However, the decision proceeds on the assumption that in litigation between private parties for their own private purposes, an undertaking as to damages is usually required: see at [28] – [29], [34]. As Rares J considered in Weribone, the Court will very cautiously exercise its discretion to “grant an interlocutory injunction or similar remedy” without requiring an undertaking as to damages: at [86]. As Perram J considered in McCann, “absent very obscure circumstances an undertaking will almost always be required”. I do not consider that the circumstances in the Freezing Orders Application, or in this proceeding more broadly, are such that it is appropriate for the Applicant not to be required to give any, or any sufficient, undertaking as to damages.

69    As to the adequacy of damages, I am not persuaded by the Applicant’s submissions. As already stated, there is no indication that the Trustees would be unable to satisfy a judgment debt, and further, assuming that a constructive trust in the Applicant’s favour is imposed over the Wei Kun Loan Distribution and the Trustees are found to have dissipated the Wei Kun Loan Distribution, then the Trustees may be liable “in the form of a judgment for an amount of money, and not in the form of specific restitution of the” Wei Kun Loan Distribution: see Quince v McLaughlan [2008] QSC 61 at [166] – [168]; Voyages Indigenous Tourism Australia Pty Ltd v Tristar Alliance Group Pty Ltd [2020] NSWSC 477 at [43] – [50]; Pain v Pain [2006] QSC 335 at [85]. As the Applicant has not demonstrated a risk of dissipation, there is no suggestion that such a judgment would be unsatisfied and it is unclear why the Applicant should need to contend that a constructive trust be imposed.

70    Third, it must be borne in mind that a freezing order is a drastic remedy which must be exercised with caution, and the Court must be satisfied that it is in the interests of justice in all the circumstances to grant it. I do not think that the degree of the danger or risk asserted by the Applicant is sufficient to justify the relief sought in the Freezing Orders Application.

CONCLUSION

71    For the above reasons, the Freezing Orders Application is dismissed. There is no reason that costs should not follow the event. Accordingly, the Applicant should pay the Trustees’ costs of the Freezing Orders Application.

NEXT STEPS

72    As noted above, the Applicant’s case is difficult to discern and, noting that the Applicant propounds various cases in the alternative, I consider that the proceeding could benefit from some rigour in order to define the issues in dispute. Furthermore, while my Chambers was provided with an amended interim application containing the Second Joinder Application, this has not yet been filed, and the parties have not been heard fully regarding the joinder of the Commonwealth since its correspondence of 4 and 10 June 2026. In these circumstances, I will order that the parties approach my Chambers with available dates to attend a case management hearing where these issues and any next steps can be clarified.

Associate:

Dated:    23 June 2026