FEDERAL COURT OF AUSTRALIA

Zhao v LMIZ8 Investments Holdings Pty Ltd (in liq) [2026] FCA 1238

ORDERS

THE COURT ORDERS THAT:

1.    The name of the First Prospective Respondent be amended to ‘LMIZ8 INVESTMENTS HOLDINGS PTY LTD ACN 164 576 569 (IN LIQUIDATION)’.

2.    The application be dismissed with costs.

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

REASONS FOR JUDGMENT

OWENS J:

1    Mr Fei Zhao, the prospective applicant, has lost a lot of money. In October 2017, in order to fulfil the requirements of a Business Innovation and Investment (Provisional) (subclass 188) visa in the Significant Investor stream, he invested $3,000,000 in a financial product known as the QCAX Australian Property Income Fund II (Bensons Series) (I will just call it the QCAX Fund II). He received some (but not all) of the interest that was payable to him pursuant to that investment, but has lost the entirety of the principal amount.

2    Understandably, Mr Zhao would like to recover his losses if he could. It is submitted on his behalf that he believes that he may have a right to obtain relief in this Court from the prospective respondents, but that he does not presently have sufficient information to decide whether to commence proceedings.

3    The prospective respondents are, in Mr Zhao’s submission, “interconnected and/or related entities and individuals who may have been involved in and share responsibility” for his losses. They are:

(a)    Atlas Advisors Australia Pty Ltd (now known as LMIZ8 Investments Holdings Pty Ltd (in liquidation)), the first prospective respondent. Atlas Advisors was the trustee and manager of the QCAX Fund II at the time of Mr Zhao’s initial investment up until 8 July 2022.

(b)    Atlas Property Investment Management Pty Ltd, the second prospective respondent. APIM, as I will call it, became the trustee of the QCAX Fund II from 8 July 2022. Before that time (and after), APIM was the investment manager of the fund.

(c)    Stoic Asset Management Pty Ltd, the third prospective respondent. Stoic held an Australian financial services licence under which APIM was an authorised representative.

(d)    Bensons Funds Management Pty Ltd, the fourth prospective respondent. Bensons Funds Management was a wholly-owned subsidiary of Bensons Property Group Pty Ltd. It was also the trustee of six trusts. Units in one such trust (known as the Bensons Commercial and Property Unit Trust, or BCPUT) were acquired by the QCAX Fund II.

(e)    Mr Guy Hedley, the fifth prospective respondent, who was a shareholder and officer of Atlas Advisors, APIM, and Stoic.

(f)    Ms Wenyan Zhuang, the sixth prospective respondent, who was another shareholder and officer of each of Atlas Advisors, APIM, and Stoic.

4    I will describe in due course the way that Mr Zhao articulated the claims for relief that he believes he may have. It is enough for now to say that he contends that the prospective respondents may have engaged in misleading or deceptive conduct in relation to the promotion of the QCAX Fund II, and that such conduct induced him to invest in that fund. Further, Mr Zhao says that some of the prospective respondents may have dealt with his investment funds in breach of trust or fiduciary duty.

5    In order to obtain sufficient information to decide whether to bring proceedings, Mr Zhao has filed an application seeking preliminary discovery pursuant to rule 7.23 of the Federal Court Rules 2011 (Cth).

EVIDENCE

6    The parties rely upon the following evidence:

(a)    Mr Zhao relies upon five affidavits sworn by his solicitor, Milan Cakic, on 2 June 2025, 22 August 2025, 29 August 2025, 20 October 2025 and 23 December 2025.

(b)    Atlas Advisors relies upon an affidavit sworn by Alan John Hayes, one of the liquidators of that company, on 15 September 2025.

(c)    APIM, Stoic, Mr Hedley, and Ms Zhuang rely upon an affidavit affirmed by Mark Gerard Popplewell, their solicitor, on 15 September 2025.

(d)    Bensons Funds Management relies upon an affidavit sworn by Gregory John Wrobel, its solicitor, on 11 September 2025.

7    At the hearing, counsel for Bensons Funds Management cross-examined Mr Cakic in relation to his evidence, contained in his affidavit of 23 December 2025, that Mr Zhao held a subjective belief that he may have a right to obtain relief from Bensons Funds Management. There was otherwise no cross-examination.

8    I might, at this early point, make a general observation about the way in which Mr Zhao chose to lead evidence to support his application. As will be apparent from the list of affidavits recited above, Mr Zhao himself did not give evidence. All of the testamentary evidence in support of his application was provided by his solicitor, Mr Cakic. On an interlocutory application of this kind there is, at least to the extent that the evidence of Mr Zhao himself is given on information and belief by his solicitor, nothing inherently problematic with that. The evidence on this application, however, had several unorthodox features. One was that, to a considerable extent, Mr Cakic did not give evidence either from personal knowledge or on information and belief from Mr Zhao but, rather, simply asserted facts. Another was that several of Mr Cakic’s earlier affidavits appeared to have been prepared on the basis that the annexation of a letter of demand sent on Mr Zhao’s behalf constituted evidence of the truth of the assertions contained within it. A later affidavit appeared intended to adopt the contents of that letter as evidence of Mr Zhao’s instructions concerning factual matters, that Mr Cakic believed to be true. As a means of proving primary facts this was all highly unsatisfactory, although no objection was taken to it. It reflected, though, a more general characteristic of Mr Cakic’s evidence, which is that, on the whole, it tended to be pitched at a level of assertion or conclusion, without carefully attending to the need to provide (even if only on information and belief) evidence of the primary facts upon which its conclusions were based. Compounding the difficulties inherent in such an approach was the fact that, in certain respects, the submissions advanced on behalf of Mr Zhao raised factual matters for which there was not even implicit support in the evidence. All of this has led to considerable unnecessary difficulty in assessing the merits of Mr Zhao’s application.

APPLICABLE PRINCIPLES

9    Rule 7.23 provides:

Discovery from prospective respondent

(1)    A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

(a)    reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and

(b)    after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and

(c)    reasonably believes that:

(i)    the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)    inspection of the documents by the prospective applicant would assist in making the decision.

(2)    If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).

10    The following matters are relevant to the application of that rule:

(a)    Rule 7.23(1)(a) requires a prospective applicant to demonstrate both a subjective belief that a claim may exist against a prospective respondent, and that that belief is objectively reasonably based: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193; (2017) 257 FCR 62 at [107] (Perram J). A belief can be shown to be reasonably based “either by reference to material known to the person holding the belief or by other material subsequently placed before the Court”: Pfizer [2017] FCAFC 193 at [120(ii)] (Perram J).

(b)    As long as the prospective applicant’s belief is founded on considerations or views reasonably open (even if contested as incorrect by others, or reliant upon circumstantial evidence), it may well satisfy rule 7.23(1)(a): Pfizer [2017] FCAFC 193 at [69] (Allsop CJ), [124] (Perram J). However, a belief is unlikely to satisfy rule 7.23(1)(a) if it is based on considerations or views that are unreasonable, untenable, irrational or baseless: Pfizer [2017] FCAFC 193 at [69] (Allsop CJ). Reasonable belief requires more than mere assertion, suspicion or conjecture; the evidence must incline one to believe that relief may be available: St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; (2004) 211 ALR 147 at [26(d)] (Hely J); Pfizer [2017] FCAFC 193 at [113] (Perram J), [172] (Nicholas J).

(c)    Whether a prospective applicant has made reasonable inquiries, and whether there is sufficient information to commence proceedings, are both questions to be assessed objectively, and attention must be paid to the information already available to the prospective applicant: HQ Insurance Pty Ltd v Stonehatch Risk Solutions Ltd (No 2) [2020] FCA 1010; (2020) 146 ACSR 159 at [7], [51] (Thawley J); see also Allphones Retail Pty Ltd v Optus Networks Pty Ltd [2016] FCA 1233 at [22] (Jagot J). If the documents sought would merely reinforce a decision which had already been made, preliminary discovery will not be available: see, e.g., Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 3) [2021] FCA 1428; (2021) 165 IPR 30 at [95] (Burley J).

(d)    In assessing whether the prospective applicant has sufficient information to decide to bring proceedings, it is relevant whether there is sufficient information to consider whether the cost and risk of litigation is worthwhile: Poole v Australian Pacific Touring Pty Ltd [2017] FCA 424 at [38], [39(6)] (Bromwich J). To that end, a prospective applicant may be entitled to preliminary discovery in order to determine the existence and strength of any defences, or the extent of the prospective respondent’s breach and the likely quantum of damages: ObjectiVision Pty Ltd v Visionsearch Pty Ltd [2014] FCA 1087; (2014) 108 IPR 244 at [103] (Perry J), citing St George Bank at [26(f)] (Hely J).

(e)    However, a prospective applicant is not entitled to preliminary discovery of documents relating only to the question whether a judgment against a person is likely to be enforceable. That is, a prospective applicant does not satisfy rule 7.23(1)(b) merely because they lack information about the prospective respondent’s capacity to satisfy a judgment: Reeve v Aqualast Pty Ltd [2012] FCA 679 at [65(c)] (Yates J), quoted in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285 at [50] (Burley J). See also Wadren Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2023] VSC 348 at [98] and [108] (Barrett AsJ); Wadren Pty Ltd v AIG Australia Limited [2024] VSC 807 at [289] (Sloss J).

(f)    Rule 7.23 does not permit third-party discovery. That is, a prospective applicant may only obtain preliminary discovery from a person from whom the prospective applicant believes relief may be available: Reeve v Aqualast at [65(b)] (Yates J), quoted in Pfizer [2017] FCA 285 at [50] (Burley J). A prospective applicant cannot obtain preliminary discovery from some other person merely because the prospective applicant believes that that other person holds documents relevant to a possible claim against another. In other words, the prospective applicant bears the onus of establishing the preconditions in rule 7.23(1) as against each prospective respondent from whom preliminary discovery is sought.

(g)    The measure of preliminary discovery should be limited to those documents which are necessary to overcome the insufficiency of information already possessed by the prospective applicant relevant to the decision whether to commence proceedings, and which the prospective applicant reasonably believes are in the prospective respondent’s control and directly relevant to the availability of relief: Reeve v Aqualast at [65(d)] (Yates J); rule 7.23(2).

(h)    While the power to order preliminary discovery is discretionary, “[rule 7.23] is to be beneficially construed, [and] given the fullest scope that its language will reasonably allow”: Pfizer [2017] FCAFC 193 at [172] (Nicholas J), quoting St George Bank at [26] (Hely J).

BACKGROUND

Mr Zhao’s initial investment

11    Mr Zhao made his $3,000,000 investment in the QCAX Fund II in October 2017.

12    The evidence adduced on Mr Zhao’s behalf does not reveal clearly exactly how he came to make that investment and, in particular, what he was told about it, by whom, and when. That is somewhat surprising in circumstances where the foundation of the claim for relief that Mr Zhao believes he may have is that he relied on various misrepresentations that were made to him concerning the features of the QCAX Fund II in making his investment.

13    In any event, it is clear enough that Mr Zhao contends that he received misleading information in two ways.

14    First, he says that he was provided with a Chinese language copy of an Atlas Advisors product brochure titled “QCAX Australian Property Income Fund”. The evidence did not illuminate precisely how Mr Zhao came to be given that brochure, or what he was told about it. A letter dated 2 December 2024, from Mr Zhao’s solicitors to the solicitors for Atlas Advisors and APIM, stated that it was given to Mr Zhao by his migration agent on 8 October 2017. In any case, as to the brochure itself:

(a)    The fund it described (which I will refer to as the “QCAX Fund I”) was not the QCAX Fund II through which Mr Zhao’s investment came to be made.

(b)    Under the heading “Fund Investment Strategies”, the cover page stated that:

The Fund aims to provide investors with the expected return on investment through safe commercial real estate debt investments (“notes”). The Fund may also place short term holdings in interest-bearing bank accounts.

(c)    Under a box which read “6.00% ~ 8.00%”, the cover page also stated that “[f]ixed income is paid at the end of each quarter, i.e. interest is paid on 31 March, 30 June, 30 September and 31 December”.

(d)    A table under the heading “Fund Parameter Summary” set out the following features of the relevant fund:

(i)    There was both a “Steller Series” and “Bensons Series” of investments.

(ii)    The fund’s “Investment Strategy” was to “aim[] to provide investors with low-risk and stable returns, primarily by investing in real estate bond assets (notes) secured by real estate collateral, to achieve stable returns and the safety of the principal”.

(iii)    The fund was “[c]ompliant with the requirements for the balanced investment component of Australia’s Significant Investor Visa (SIV) 188/888”.

(iv)    As to the “Principal and Interest Guarantee” for the Bensons Series of the fund, “[t]he investment is guaranteed by Bensons Real Estate Group, as the owner of all commercial and residential development projects, ensuring timely interest payments (quarterly) and the repayment of the initial principal to investors”.

(v)    As to the “Investment Return”, “[t]he fund pays the designated return rate specified in the investment confirmation letter at the time of investment completion on a quarterly basis (the investment return is the net yield after deducting ordinary recoverable expenses)”.

(vi)    As to the “Distribution Frequency”, “[d]istributions are made quarterly on 31 March, 30 June, 30 September, and 31 December”.

(e)    As to the “Investment Strategies for Bensons”, the brochure further said that:

Investment funds will be loaned to Bensons Real Estate Development Group as development capital for its projects in Australia. The target assets consist of debt investments supported by fixed assets. The principal of Bensons investor series debt investments is guaranteed by Bensons Real Estate Management Company and Bensons Real Estate Development Group.

Bensons Real Estate Development Group is a leading developer in Melbourne’s real estate market …

15    Secondly, Mr Zhao says that on several occasions “prior to the investment and during the investment” his migration agent made oral representations to him that “investments in the Benson Fund” were low risk and very secure, that the principal and interest were guaranteed, and that the interest rate was fixed. There was no evidence, however, of precisely what was said, by whom, or at what point in time.

16    Mr Zhao says that he relied on the representations contained in the brochure, and conveyed to him by his migration agent, in making his investment.

17    Further facts, however, complicate the picture.

18    It is not in dispute that, prior to making his investment, Mr Zhao received a copy of an Atlas Advisors information memorandum, dated 31 March 2016, for the QCAX Fund II (being the fund in which Mr Zhao invested). Again, there was no evidence illuminating the precise circumstances in which Mr Zhao came to receive that information memorandum. At the hearing, however, counsel for Mr Zhao simply asserted that it “was provided to him by WeChat prior to him signing” his investment application. Furthermore, it was submitted (again, with no evidence to support the submission) that “it wasn’t in English. He didn’t read it, didn’t understand it and didn’t rely upon it”. A chronology prepared on Mr Zhao’s behalf said (without reference to evidence) that it was Mr Zhao’s “immigration agent/lawyer” who gave him that information memorandum. In any event, the information memorandum contained the following information:

(a)    Under the heading “Important information”, the first page read:

Atlas Advisors Australia Pty Ltd ABN 241 6457 6569 AFSL 443 264 (“AAA”) is the trustee of, and issuer of units in, the QCAX Australian Property Income Fund II (“Fund”), offered in this Information Memorandum (“IM”). Atlas Property Investment Management Pty Ltd ABN 606 1027 9582 (“APIM”) is a Corporate Authorised Representative of AAA … and is the investment manager of the Fund. Australian Executor Trustees Ltd ABN 84 007869 794 AFSL 240023 (“AET”) is the custodian for the assets of the Fund. AAA has prepared and is responsible for this IM.

…

AAA nor [sic.] any of its related associated companies, including APIM, guarantees the performance of the Fund, the return of investor’s capital or any specific rate of return.

…

This IM supersedes all preliminary information and other previous communications in connection with this offer and the Fund. All such preliminary information and previous communications should be disregarded. …

Eligibility

This IM can only be used by wholesale investors … [U]nits in the Fund offered in this IM will only be issued on receipt of an Application Form issued with this IM together with evidence that the investor qualifies as an Eligible Investor …

(b)    A table under the heading “The Fund at a Glance” set out the following features of the relevant fund, among others:

(i)    The name of the fund was the “QCAX Australian Property Income Fund II” and the relevant series was the “Bensons Series”, the trustee was Atlas Advisors, and the investment manager was APIM.

(ii)    In respect of the fund’s investment strategy, it was said:

The Fund aims to provide investors with the Preferred Investment Return Rate [which, it was said, would be determined at the time of investment through a supplementary information memorandum or investment confirmation issued to the investor] principally through exposure to commercial property securities (notes) and up to 10% of the Fund in residential debt securities. The Fund may also hold monies in an interest bearing bank account for short periods.

(iii)    The major asset classes and weight ranges were said to comprise:

(A)    up to 30% cash, with a target weight of 0%;

(B)    a minimum of 70% commercial property (up to 10% being residential), with a target weight of 100%; and

(C)    no equity and no other investment classes.

(iv)    The “Income distribution frequency” was said to be “[q]uarterly at 31 March, 30 June, 30 September and 31 December”. Further down in the document, it was stated that investors:

… have the right to receive any distribution made from the Fund (being the Preferred Investment Return Rate). Distributions will primarily take the form of interest income, but other types of income or gains may also be distributed.

(c)    Under the heading “What does the Fund invest in?”, the information memorandum said that:

The Fund subscribed for Preference Units in the Bensons Commercial and Property Unit Trust (ABN 13682337738). The terms and conditions under which the units were issued to the Fund include a Guarantee.

(d)    As to that guarantee, it was said that:

Bensons Funds Management Pty Ltd (ACN 121 715 937, AFSL 306326) as trustee for the Bensons Commercial and Property Unit Trust (BCPUT) guarantees to the Fund the due and punctual payment of the distributions and repayment of the Investment sum in accordance with the Subscription Deed.

Bensons Property Group Pty Ltd (ACN 063 470 833) guarantees to the Fund the due and punctual payment by BCPUT of moneys owing with respect to the Investment Sum and the due and punctual payment by the BCPUT of moneys owing with respect to the Units (Guaranteed Money). Bensons Property Group Pty Ltd indemnifies the Fund against all loss which the Fund may sustain as a result of any default by BCPUT in payment of the Guaranteed Money.

(e)    The information memorandum drew attention to several risks, including:

(i)    a “Fund risk”, including that the fund “could terminate (i.e. if its costs of operating become unreasonable) and the fees and expenses could change”.

(ii)    an “Individual investment risk”, namely that:

The Bensons Series will invest primarily in notes issued by Bensons Funds Management Pty Ltd as trustee for the Bensons Commercial Property Unit Trust, and as a result, the Bensons Series performance will be based on the performance of those assets. If the value of these underlying assets falls, the value of your investment in the Bensons Series may fall as well, subject to the Guarantees provided by Bensons Funds Management Pty Ltd as trustee for the Bensons Commercial Property Unit Trust and Bensons Property Group Pty Ltd.

(iii)    a “Credit Risk”, namely that:

The Bensons Series could lose money if Bensons Funds Management Pty Ltd as trustee for the Bensons Commercial Property Unit Trust is unable or unwilling to make timely principal and/or interest payments, or to otherwise honour its obligations to the Fund.

There is a risk that Bensons Property Group Pty Ltd may fail to make good on the guarantee.

…

(iv)    a “Diversification risk”, namely that the Bensons Series will hold a concentrated portfolio of assets issued by Bensons Funds Management as trustee for the BCPUT, and does not offer the same levels of diversification as some other funds.

(v)    a “Trustee risk”, namely that Atlas Advisors could be wound up or liquidated, could cease to manage the investments of the fund and be replaced, could change its investment methodology, or could manage risks poorly.

19    On 17 October 2017, Mr Zhao signed an investment application form bearing the name of Atlas Advisors, with English text and a line-by-line Chinese translation. In that form:

(a)    Mr Zhao agreed to a “Declaration and Acknowledgment”, which included, among other things, the following terms:

•    I/we request you to issue the units applied for and authorise you to register the applicant as the holder(s) of the units.

…

•    I/we understand each fund is currently an unregistered managed investment scheme. I/we agree to any future registration of the Funds with ASIC without the need for a unitholder meeting.

…

•    I/We have noted the withdrawal (redemption) provisions in the Information Memorandum.

…

•    I/we understand that neither the repayment of capital nor the performance of the Fund is guaranteed.

(b)    There was a section titled “Investment Choice and Amount”. In that section:

(i)    There were fields for the investor to allocate an investment amount of at least $500,000 into either or both of the “QCAX Australian Property Income Fund I (Bensons/Steller)” and the “QCAX Australian Property Income Fund II (Bensons/Steller)”.

(ii)    In the field titled “QCAX Australian Property Income Fund II (Bensons/Steller)”, Mr Zhao had typed “A$ 3,000,000”. The field titled “QCAX Australian Property Income Fund I (Bensons/Steller)” was left blank. (I will return to consider a submission put on behalf of Mr Zhao, which I did not understand to be seriously pressed, and which was in any event not supported by any evidence, that parts of the form were completed for Mr Zhao by someone else.)

(iii)    There was also an acknowledgment which read “This Application was detached from an information memorandum for the following funds”. Four funds were listed under that acknowledgment, together with the date of each fund’s information memorandum, as follows:

(A)    QCAX Australian Property Income Fund I (Bensons Investor Series) dated 16th February 2016.

(B)    QCAX Australian Property Income Fund I (Steller Investor Series) dated 1st July 2016.

(C)    QCAX Australian Property Income Fund II (Bensons Investor Series) dated 31st March 2016.

(D)    QCAX Australian Property Income Fund II (Steller Commercial Series) dated 1st February 2017.

(iv)    Next to each fund name there was a checkbox. Mr Zhao had ticked the checkbox next to the line which read “QCAX Australian Property Income Fund II (Bensons Investor Series) dated 31st March 2016”. That date matched the date printed on the front of the information memorandum for the QCAX Fund II that I have described above.

(v)    Following the four checkboxes, there were a further two bullet points, as follows:

    I/we read and understood that information memorandum.

    I/we agree to be bound by the terms of the information memorandum and the trust deed for each fund …

(Translations omitted.)

20    On 24 October 2017, Mr Zhao transferred $3,000,000 from an Australian bank account in his name to Atlas Advisors. A portfolio holding statement for Mr Zhao for the period from 30 October 2017 to 30 January 2024, bearing Atlas Advisors’ name, records that pursuant to his application and payment of $3,000,000, from 30 October 2017 Mr Zhao held 3,000,000 units in a fund referred to as “APIF2” (i.e., presumably, the “[QCAX] Australian Property Income Fund II”). That initial investment was said to be for a period of 4 years, with a maturity date of 30 October 2021.

Mr Zhao’s rollover investment

21    According to the chronology prepared on behalf of Mr Zhao, on 1 October 2020, Mr Zhao was given an updated information memorandum for the Bensons Investor Series of the QCAX Fund II, dated 1 October 2020. Once again, though, the evidence was silent as to the circumstances in which this was provided to him. The updated information memorandum was in relevantly identical terms to that dated 31 March 2016, including in respect of the fund’s investment strategy, the summary of the fund’s key features, the fact that the fund would subscribe in units in the BCPUT, the guarantee provided by Bensons Funds Management and Bensons Property Group, and the entities relevant to the fund (with the exception that there was now a new custodian).

22    On 29 October 2021, ahead of the maturity date for his initial investment in the QCAX Fund II, Mr Zhao signed an “Investment Extension Application Form”, again bearing Atlas Advisors’ name and with English text accompanied by a line-by-line Chinese translation. In that form:

(a)    A section titled “Funds and Investment” set out an “Extension Amount” of “3,000,000.0”, with an “Extension Term” of two years, and an “Expected Yield” of 3.0%. The relevant “Fund Name” was listed as the “QCAX Australian Property Income Fund II (Bensons) dated 01 October 2020”.

(b)    Mr Zhao agreed to a “Declaration” in similar terms to that of the initial application. That declaration included the following terms:

•    I/we request you to issue the units applied for and authorise you to register the applicant as the holder(s) of the units.

•    For each investment in a Fund, in respect of that Fund:

•    I/we read and understood the current information memorandum.

•    I/we agree to be bound by the terms of the information memorandum and the trust deed or partnership deed (as applicable) for each Fund …

…

•    I/we understand each fund is currently an unregistered managed investment scheme. I/we agree to any future registration of the Funds with ASIC without the need for a unitholder meeting

…

•    I/We have noted the withdrawal (redemption) provisions in the information memorandum.

…

•    I/we understand the risks of investing in the Funds.

23    A certificate signed by Mr Hedley on behalf of Atlas Advisors, and dated 1 November 2021, states that on 30 October 2021, Mr Zhao was issued 3,000,000 units by Atlas Advisors pursuant to an investment in the Bensons Series of the QCAX Fund II. The investment term was said to be two years, with an expected investment return of 3% per annum, and income distributions on 31 March, 30 June, 30 September and 31 December.

24    The documentation in respect of this “rollover” investment referred not only to Atlas Advisors but also to Stoic, which was registered on the Australian companies register on 14 October 2019 as “Leighton Asset Management Pty Ltd”, and which assumed the name of Stoic on 7 September 2020. In particular:

(a)    The investment extension application form refers to the payment of an “Advisor Performance Fee” to be paid to “the advisor (Stoic)” in certain circumstances.

(b)    The Australian Business Number listed after Atlas Advisors’ name on the certificate signed by Mr Hedley was in fact that of Stoic, as was the Australian financial services licence number.

(c)    The portfolio holding statement dated 30 January 2024, documenting both Mr Zhao’s initial investment and the rollover investment, described itself as a “Stoic Asset Management (Atlas Advisors Australia) Portfolio Holding Statement”. Additionally, the footer of the document included the website of, and an email address for, Stoic, along with its registered address (although, at the time, that address was shared with Atlas Advisors).

APIM becomes trustee of the QCAX Fund II

25    In an investor newsletter dated 22 May 2022, investors in the QCAX Fund II were given notice that Atlas Advisors intended to retire as the trustee and manager of that fund, and to appoint APIM in its place. That change was effected by a deed poll executed by APIM on 8 July 2022, which amended the trust deed for the QCAX Fund II to replace references to Atlas Advisors with references to APIM.

26    Since that time, APIM has remained the trustee and manager of the QCAX Fund II (and it has been the fund’s investment manager at all material times). Stoic remains the holder of an Australian financial services licence of which APIM is an authorised representative.

27    On 11 August 2022, the Australian Securities and Investments Commission revoked Atlas Advisors’ Australian financial services licence pursuant to section 915B(3)(d) of the Corporations Act 2001 (Cth). On 25 September 2023, the company’s name was changed to LMIZ8 Investments Holdings Pty Ltd, and on 13 June 2024, an application for voluntary deregistration of the company was filed (although evidently that application was unsuccessful).

Mr Zhao seeks repayment

28    On 30 October 2023, Mr Zhao’s investment, as extended in 2021, matured. Mr Zhao’s investment principal of $3,000,000 has not been repaid, nor has any interest been paid since 30 June 2023. Further, Mr Zhao chose not to reinvest any of his capital because the fund’s interest payments prior to maturity had been late.

29    Mr Zhao claims to have had various discussions regarding the return of his investment with Mr Hedley and Ms Zhuang, as well as with Mr Elias Jreissati, who was the director and Chief Executive Officer of Bensons Property Group (Mr Jreissati was also a director of Bensons Funds Management from 23 November 2006 to 29 August 2024). There is limited evidence about the precise representations that were made to Mr Zhao during such discussions, except that:

(a)    by solicitor correspondence, Mr Zhao asserted that on 19 December 2023, Ms Zhuang told Mr Zhao via WeChat that there had been no redemption of his investment at maturity because the Bensons funds were locked, and all client investment redemptions were deferred for one year; and

(b)    Mr Cakic deposed that during a videoconference between Mr Zhao, Mr Jreissati and Ms Zhuang, which was conducted via Microsoft Teams on 18 March 2024, Mr Jreissati said that Mr Zhao’s investment funds were safe, and that he would receive a repayment plan by late May or early June 2024, which did not occur. Mr Cakic further said that Mr Zhao intended to give evidence regarding what was said during such meetings (but that did not occur).

30    On 30 October 2024, Mr Zhao’s solicitors sent a letter of demand addressed to the prospective respondents other than APIM and Bensons Funds Management. That letter alleged that Mr Zhao had been induced to invest in the “Benson Fund” (i.e., the QCAX Fund II) in reliance upon misleading representations about the security of that investment made both by his migration agent and the brochure described above (which, it will be recalled, in fact related to the QCAX Fund I). Among other things, it accused Atlas Advisors of engaging in misleading or deceptive conduct, and said that “Atlas and its directors at the time of the disclosure are liable to [Mr Zhao] for any and all losses sustained by him because of [their conduct] in publishing and distributing misleading material offering investment in the Benson Fund”.

Administration and Liquidation of Atlas Advisors and Bensons Property Group

31    Subsequent to Mr Zhao attempting to recover his investment, Atlas Advisors and Bensons Property Group entered voluntary administration, and Atlas Advisors has undergone voluntary liquidation.

32    Mr Zhao relies on various matters arising out of the administration of those companies in support of his application. He says that documents produced in the course of the administrations show that his investment monies were dealt with inconsistently with what was represented to him about how the fund would operate, and/or in a manner which may give rise to a tracing remedy. He also says that those documents indicate that there was a relationship between APIM and other Bensons corporate group entities which may implicate those entities in wrongdoing.

33    Bensons Funds Management, on the other hand, says that the documents relating to the administration of Bensons Property Group in fact show that Mr Zhao’s investment monies were dealt with entirely consistently with the information memorandum provided to him in respect of the QCAX Fund II (which he selected in his investment application form).

Administration and liquidation of Atlas Advisors

34    On 17 January 2025, Mr Alan Hayes and Mr Wayne Marshall of Hayes Advisory were appointed as external administrators of Atlas Advisors. Over the next month or so, Hayes Advisory prepared reports on, and sent various communications to the creditors of Atlas Advisors, including:

(a)    A Circular to Creditors dated 21 January 2025.

(b)    A Supplementary Circular to Creditors dated 22 January 2025.

(c)    A Report on Company Activities and Property dated 31 January 2025.

(d)    An Administrators’ Report to Creditors dated 14 February 2025.

35    The circular dated 21 January 2025 notified creditors of the appointment of administrators, and explained that Atlas Advisors had been served a statutory demand in early January 2025 by an investor in one of the funds it previously managed. It set out the options available to creditors, including to attend two meetings of creditors scheduled to take place across January and February 2025. Creditors who wished to participate in the first meeting of creditors were advised to complete an “Informal Proof of Debt” form that was attached to the circular (and created for the purposes of regulation 5.6.47 of the Corporations Regulations 2001 (Cth)), and to submit the completed form to Hayes Advisory.

36    Hayes Advisory did not send the 21 January 2025 and 22 January 2025 circulars to Mr Zhao. Instead, Mr Cakic received notice of them through online ASIC Company Alerts. The 14 February 2025 report was not sent to Mr Zhao (or Mr Cakic) either. Mr Cakic’s evidence does not specifically address whether he received notice of that report through the online ASIC Company Alert feature. In circumstances where Mr Cakic said that he had such an alert set up in relation to Atlas Advisors, and that it was effective to bring the earlier circulars to his attention, I would infer that he also saw the 14 February 2025 report.

37    In any event, in his evidence, Mr Cakic drew attention to the following features of the reports dated 31 January 2025 and 14 February 2025 in his affidavit of 29 August 2025:

(a)    Mr Zhao was not included within a list of company creditors set out in the report of 31 January 2025.

(b)    The report dated 14 February 2025 did not treat Mr Zhao as a creditor of Atlas Advisors.

(c)    The report said the following about the position of investors in the BCPUT:

We are aware that some investors in QCAX Fund II also subscribed to preference units in the Bensons Commercial Property Unit Trust (“BCPUT”). The guarantor of the BCPUT is Bensons Property Group Pty Ltd (“BPG”), which was placed into voluntary administration on 27 December 2024. We are not the Administrators of BPG.

The Company acted solely as the manager and trustee of the QCAX Fund II and we understand is not responsible for the financial obligations or guarantees tied to investments in BCPUT, who was issuer of the units and BPG was the guarantor of both the investment sum and distributions associated with these units. Accordingly, we do not consider investors who subscribed to units in BCPUT to be creditors of the Company. We have not been made aware of any claim of the Company against BPG at this time.

A diagram of Atlas Advisors’ relationship via the QCAX Fund II with the BCPUT indicated that Atlas Advisors had been the trustee of the QCAX Fund II (with APIM as investment manager), that Atlas Advisors acquired preference units issued by the BCPUT, that Bensons Property Group was guarantor of that arrangement, and that Bensons Fund Management was the trustee (presumably, of the BCPUT).

38    On 19 February 2025, Mr Cakic sent an Informal Proof of Debt form to Hayes Advisory on behalf of Mr Zhao, attaching the letter of the demand dated 30 October 2024. The form claimed $3,512,573.61 as an unsecured debt. On 22 February 2025, Mr Marshall of Hayes Advisory rejected Mr Zhao’s claim. By email to Mr Cakic, he said:

[T]he Administrators reject the POD claim … on the following grounds:

The trustee of the QCAX Fund is no longer [Atlas Advisors] but is now [APIM] …

To the extent that the POD claim relates to any rights against [Atlas Advisors] not surviving its replacement as trustee, it is not maintainable.

To the extent that the POD claim relates to any rights against [Atlas Advisors] arguably surviving its replacement as trustee, the POD material discloses no such claim. Please note that the document at PDF page 10 of the POD material [i.e., the brochure relating to the QCAX Fund I] is not a document issued to investors such as Mr Zhao, but is a generic training document for Chinese migration agents. We note, for instance, that you have not provided the information memorandum referenced in Mr Zhao’s investment application.

…

Accordingly, we are informed that your client holds interests in the QCAX Fund of which APIM (which is not subject to external administration) is trustee and should look to that entity in respect of trustee/manager obligations.

If you and your client maintain it has an unsecured creditor claim against [Atlas Advisors], it may have an opportunity to lodge a formal proof of debt for dividend purposes in a subsequent Deed of Company Arrangement or liquidation of [Atlas Advisors].

39    In other words, the position being adopted by the administrators accorded with the arrangements I have described above. That is to say, by 2025 Atlas Advisors was no longer the trustee of the QCAX Fund II (having been replaced by APIM). Any claim in relation to the investment in the QCAX Fund II thus lay against APIM, not Atlas Advisors. To the extent it was alleged that Atlas Advisors had a liability to Mr Zhao arising from its conduct while it was trustee of the QCAX Fund II, the administrators denied that Mr Zhao had substantiated such a claim. Finally, to the extent that Mr Zhao’s claim related to losses suffered by reason of the investment in the BCPUT by the QCAX Fund II, such claims belonged to APIM (as trustee of the QCAX Fund II).

40    On 25 February 2025, Hayes Advisory issued a further Circular to Creditors which stated that the second creditors’ meeting, held the previous day, had resolved that Atlas Advisors would execute a Deed of Company Arrangement, and that a first and final dividend would be declared on 16 April 2025. This circular included instructions on how to complete a formal proof of debt form. That circular was sent by email to Mr Cakic on behalf of Mr Zhao. The fact that the circular was sent to a particular person did not involve any acceptance that the person was, in fact, a creditor of Atlas Advisors: it specifically stated that “[y]ou are or may be a creditor of the Company, however your debt or claim has not yet been admitted for dividend purposes”.

41    In the written statement filed by the administrators confirming the posting of that circular, the list of persons to whom it was sent included Mr Zhao. Mr Zhao was identified as a “non-related unsecured” creditor in the amount of $3,512,573.61. Next to his name, in a column headed “Excluded Creditors DoCA (Y or N)”, was written “N/A”. The plain inference from all of this is that the administrators acknowledged that Mr Zhao had claimed to be a creditor of Atlas Advisors but that that claim had not, to date, been recognised by the administrators. Mr Zhao was, in other words, being given the opportunity to submit a formal proof of debt, that would be adjudicated in due course.

42    As to the DOCA itself, clause 3, titled “Effect of arrangement on Claims of Creditors”, was as follows:

Effect of Deed on Claims

3.1    All Creditors having a Claim must accept their entitlements under this Deed in full satisfaction of any Claims which they have, or claim to have, against the Company as at the Appointment Date.

Release and extinguishment of Claims against the Company

3.2    All Creditors having a Claim must accept their entitlements under this Deed in full satisfaction of any Claims which they have or claim to have against the Company as at the Appointment Date. [sic.]

3.3    On the payment of the dividend referred to in clause 4.2(d) of this Deed:

(a)    the Company will be released from the Claims of all Creditors; and

(b)    the Claims of all Creditors will be extinguished as against the Company.

43    Relevantly:

(a)    The “Company” was Atlas Advisors.

(b)    The “Appointment Date” was 17 January 2025, being the date on which Messrs Hayes and Marshall were appointed as external administrators.

(c)    “Creditor” was defined to mean “any person who is or claims to be owed a debt by the Company, or who has a Claim against the Company, on the Appointment Date”.

(d)    “Claim” was defined comprehensively, as follows:

Claim means in relation to the Company any claim, cost (including legal costs on a solicitor and client basis), damages, debt, expense, environmental liability, liability, loss, obligation, allegation, suit, action, demand, cause of action, prayer for relief, proceeding or judgment of any kind however calculated or caused, whether direct or indirect, consequential, incidental or economic, known or unknown as at the Appointment Date, and whether liquidated or unliquidated, present, prospective, future or contingent, the circumstances giving rise to which occurred on or before the Appointment Date, including but not limited to Employee Entitlements.

(e)    Clause 4.2(d) provided that, once various other payments had been made, “Participating Creditors” would receive a pari passu distribution of any remaining portion of specified funds available to the Company (comprising the “Deed Fund”) in full and final settlement of their Claims.

(f)    “Participating Creditors” were defined as “those Creditors (other than Excluded Creditors) who prove their Claims against the Company to the satisfaction of [Messrs Hayes and Marshall]”.

(g)    “Excluded Creditors” were set out in schedule 1 to the DOCA. Mr Zhao is not listed in schedule 1.

44    In short, with few exceptions, the DOCA extinguished any claims arising against Atlas Advisors before 17 January 2025, of any person who was owed or claimed to be owed a debt by that company, in exchange for those persons having the opportunity to submit a proof of debt which, if admitted by Messrs Hayes and Marshall, would result in a payment of dividends.

45    Mr Zhao did not lodge a formal proof of debt. On 16 April 2025, the first and final dividend was declared and paid to creditors whose claims were admitted. The DOCA was wholly effectuated on 8 May 2025, and a notice to that effect was lodged with ASIC on 13 May 2025.

46    Clause 9.2 of the DOCA provided that once it was wholly effectuated, it was to be terminated, and Atlas Advisors was to be placed into voluntary liquidation. On 10 June 2025, a declaration of solvency for Atlas Advisors was lodged with ASIC, and on 11 June 2025, it entered voluntary liquidation, with Messrs Hayes and Marshall appointed as joint and several liquidators.

Administration of Bensons Property Group

47    Meanwhile, on 27 December 2024, Messrs Craig Shepard and Sebastian Hams of KordaMentha were appointed as voluntary administrators of Bensons Property Group. (It will be recalled that that company provided a guarantee to the QCAX Fund II in respect of the performance of the BCPUT’s obligations.) KordaMentha prepared a report, dated 31 January 2025, with the following features of relevance to these proceedings:

(a)    It described the relationship between Bensons Property Group and Bensons Funds Management, with the latter being “a wholly owned subsidiary of [Bensons Property Group, which] raises funds from both local and foreign investors (via the Significant Investor Visa (‘SIV’) programme) [and] invests these monies [in various ways, including] as a loan from the various funds that [it] acts as trustee for, or indirectly as equity or debt to [Bensons Property Group] …”. It further noted that Bensons Property Group “provides a centralised treasury function for [the Bensons group of companies]”.

(b)    It included a visual illustration of the source and application of funds from Bensons Funds Management to various of Bensons Property Group’s projects. That illustration included a separate column for each of the six funds for which Bensons Funds Management acted as trustee, setting out their features. Relevantly:

(i)    The column relating to the BCPUT (being the fund in which the QCAX Fund II subscribed for units) indicated that the fund had made loans to two companies (Yarra Valley Grape Sales Pty Ltd and Bywan Pty Ltd), which had in turn provided funds to Bensons Property Group (by way of loan, from Yarra Valley Grape Sales, and by way of equity, from Bywan). Mr Jreissati was a director of both Yarra Valley Grape Sales and Bensons Property Group, and the owner of all of the shares in Bywan.

(ii)    The column relating to the Bensons SIV Master Mortgage Fund, or “BSMMF” (to which, as I discuss below, the prospective applicant asserted that his investment should have been applied), indicated that one entity to which funds had been loaned was 10 Cecil Place Pty Ltd (the report elsewhere indicated that 10 Cecil Place had received loans from the BSMMF which it had on-loaned to Bensons Property Group), and also that funds were loaned directly to Bensons Property Group.

(c)    A section discussing the creditors of Bensons Property Group indicated that the various funds of which Bensons Funds Management was trustee were substantial creditors of Bensons Property Group (by reason of the loans made by them to the company), and noted that Bensons Property Group had also provided a range of guarantees in relation to those funds.

(d)    The report distinguished between the position of “Compromised Creditors” and “Compromised Noteholders” (concepts that were ultimately reflected, although not in precisely identical terms, in a Deed of Company Arrangement that was executed on 17 February 2025). Of particular relevance to Mr Zhao’s arguments was the concept of “Compromised Noteholders”, which the report defined as “[a]ny creditor whose claims arose in connection with notes or debentures issued by [Bensons Property Group] and which are compromised and/or released in connection with this DOCA” (in an apparent reference to the proposed DOCA). It will be recalled that the QCAX Fund II in which Mr Zhao did not subscribe for notes “issued by” Bensons Property Group; its only investment was in the BCPUT.

(e)    The report described a proposed “Co-Investment Secured Lending fund”, the purpose of which was said to be to provide an opportunity for Compromised Creditors to invest in future projects of Bensons Property Group with a view to receiving distributions potentially greater than those available under the DOCA. A flyer for that fund, included as an appendix to the report, described the various classes of units available in it, and stated that investors in the funds of which Bensons Funds Management was trustee would be able to acquire “C Class Units” in exchange for units currently held in existing Bensons Funds Management funds, with the opportunity to acquire “A Class Units” upon investment in a specific project. In addition to the lending fund, there was also to be a “Co-Investment Landholder Fund”, which was an opportunity to be made available to Compromised Creditors who held notes issued by Bensons Property Group.

48    In one of his affidavits, Mr Cakic deposed that Mr Zhao’s investment fell within the report’s definition of “Compromised Noteholders” (as I have just explained, that is not in fact correct, as the QCAX Fund II did not invest in notes “issued by” Bensons Property Group). He said that, on 12 February 2025, he called Mr Michael Italiano of KordaMentha to discuss the position of “Compromised Noteholders”. Mr Cakic deposed that Mr Italiano said words to the following effect:

The [QCAX Fund II] investors are the Compromised Noteholders referred to in the Administrator’s Report dated 31 January 2025. There was no security taken by the [QCAX Fund II] for money advanced to Bensons Property Group Pty Ltd, nor were we able to even find any documentation confirming the existence of a loan agreement between the [QCAX Fund II] and Bensons Property Group Pty Ltd.

49    It is difficult to know what to make of that. On no view were investors in the QCAX Fund II “Compromised Noteholders” within the meaning of the proposed DOCA. Equally, it is unsurprising that there is no evidence of any loan agreement between the QCAX Fund II and Bensons Property Group (let alone security in respect of such a loan), because it does not seem to be suggested anywhere that any loan of that kind was made. As I have indicated, the money invested in the QCAX Fund II was used to buy units in the BCPUT, and the BCPUT then loaned money to Yarra Valley Grape Sales and Bywan, and it was those entities that provided funds to Bensons Property Group. Ultimately, I am satisfied that one or both of Mr Italiano or Mr Cakic was confused, or that Mr Cakic has not properly understood what was being said to him.

50    On 23 May 2025, Mr Zhao received an email from APIM’s investor relations team, addressed to “Investors” generally (without indicating each individual recipient), which referred to a meeting on the same date with Bensons Property Group. The email set out “three options” said to be available to investors as follows:

1.    Do not complete a new application form, this will mean your investment will end and you will receive a payout from Korda Mentha. The payout amount will be approximately $0.001 per $1 invested.

2.    Complete a new application form to transfer your units into the new fund. You will receive Class C units which have no distributions. You will not participate in the Korda Mentha payout.

3.    Make an additional investment and received Class A units. This Class will have distributions and be ahead of Class C for payout at maturity. You will not participate in the Korda Mentha payout.

51    Attached to the email were an application form to apply for units in the co-investment lending fund I have described above in summarising the KordaMentha report, an information memorandum for that fund, and a slide deck for a presentation on that fund. Notably:

(a)    The slide deck and information memorandum stated that a “Compromised Eligible Unitholder, being an existing investor in BFM Funds, can subscribe for C Class Units based on the principal of their compromised liabilities in the DOCA”. The “BFM Funds” were defined as the six Bensons Funds Management funds described in the KordaMentha report, and a “Compromised Eligible Unitholder” was defined as:

(a)    a Compromised Creditor whose Claims arose in connection with guarantees given by BPG in relation to BFM Funds, but excludes any Compromised Eligible Noteholders; and

(b)    any other person as approved by [BFM] in its sole discretion.

A “Compromised Creditor” was in turn any person with a claim (as defined in the DOCA) against Bensons Property Group which is compromised and/or released by that DOCA, excluding any “associates” of Bensons Property Group, as defined under Division 2 of Part 1.2 of the Corporations Act. As for limb (b) of the definition of a “Compromised Eligible Unitholder”, there is no evidence that Bensons Funds Management approved Mr Zhao. In other words, these materials appeared to confirm the mechanism foreshadowed in the KordaMentha report, by which Compromised Creditors (including the BCPUT) would have an opportunity to participate in the co-investment lending fund.

(b)    The application form bore the name of Bensons Funds Management and did not contain any Atlas or Stoic branding. In a table titled “Existing BFM Fund Investment”, there were fields for the applicant to input the relevant “Investor Name”, “BFM Fund”, “Number and Class of Units”, and “Investment Sum”. In the copy of the form that was provided to Mr Zhao by APIM, someone had typed into the field for the relevant BFM Fund: “BCPUT via QCAX Australian Property Income Fund II”.

52    The reason why, and the basis upon which, APIM provided this communication to Mr Zhao is not immediately apparent. It may be on the basis that APIM, as a Compromised Creditor (on the basis that it was the beneficiary of a guarantee given by Bensons Property Group in relation to Bensons Funds Management’s obligations under the BCPUT), was entitled to facilitate the participation of persons that it nominated (i.e., as nominees of APIM’s entitlement). Otherwise, notwithstanding Mr Cakic’s understanding of what Mr Italiano said to him, the documents I have described above made clear that it was Compromised Creditors of Bensons Property Group who would be given the opportunity to participate in the co-investment lending fund, assuming that those creditors did not become “Compromised Participating Noteholders” (i.e., by participating in the separate opportunity presented by the co-investment landholder fund). It was, relevantly, the BCPUT and APIM, as trustee of the QCAX Fund II, that were Compromised Creditors of Bensons Property Group, not Mr Zhao himself. Moreover, the KordaMentha report of 31 January 2025 and the materials annexed thereto indicated that it would be the responsibility of Bensons Funds Management (i.e., not APIM) to provide the opportunity for Compromised Creditors to participate in the co-investment lending fund, and stated that all queries regarding that opportunity must be directed to it.

53    At the end of the day, despite Mr Zhao’s focus on these matters, I am not sure that anything ultimately turns on them.

ANALYSIS

54    For the reasons that follow, I have determined that Mr Zhao’s application should be dismissed.

Mr Zhao’s case for preliminary discovery from Atlas Advisors

55    Mr Zhao’s application for preliminary discovery against Atlas Advisors, in common with his applications against the other prospective respondents, was characterised by a lack of clarity and unnecessary complication. In the case of Atlas Advisors, even the fundamental purpose of or rationale for the application was obscured by the unusual way that the evidence in support of the application was framed and developed. That in turn led to difficulty in identifying the evidentiary support for the critical matters required to be proved by Mr Zhao. For example:

(a)    Mr Cakic’s first affidavit was concerned to demonstrate, on the basis of available material, that Mr Zhao did have a claim against Atlas Advisors. The purpose of the application was thus framed, not in terms of obtaining information relevant to the existence of a right to obtain relief, but rather to investigate the extent to which Atlas Advisors would be able to satisfy any judgment that Mr Zhao might obtain. That is, Mr Cakic deposed that Mr Zhao’s “prospects of recovery from any prospective proceedings are presently uncertain”, in that he “lacks sufficient information to be able to properly assess his recoverability prospects from a successful cause of action” against any of the prospective respondents. (While he did also say that “there remain unanswered questions of fact as to what happened between the various named Prospective Respondents and where legal liability is most likely to be found”, in the context of the affidavit as a whole, and the certainty with which it alleged a liability on the part of Atlas Advisors, it was clear that that statement related to other prospective respondents.) As a result, in the first affidavit, there was no express attention given to such matters as whether Mr Zhao subjectively believed that he may have a right to obtain relief against Atlas Advisors, whether he had insufficient information to decide whether to start proceedings, or whether Atlas Advisors has or is likely to have documents relevant to the question whether Mr Zhao has a right to obtain relief.

(b)    In his second affidavit, Mr Cakic gave evidence that he “consider[ed] that Mr Zhao may have a right to obtain relief” from Atlas Advisors, and set out the basis for that claim. This time, Mr Cakic did identify certain limitations in the evidence available to him in respect of that claim, although he did not suggest that those limitations meant that Mr Zhao was unable to decide whether to commence proceedings. He also said that he (i.e., Mr Cakic) “believe[d] there may be, if discovery establishes it” other causes of action which he identified at a very high level. He said that the documents sought by way of preliminary discovery would “assist Mr Zhao to make the decision to commence proceedings”, without stating in terms that Mr Zhao was presently unable to make that decision. There was still no express evidence to the effect that Mr Zhao subjectively believed that he may have a right to obtain relief against Atlas Advisors.

(c)    Mr Cakic’s fourth affidavit further elaborated on the basis of Mr Zhao’s claim against Atlas Advisors. Nowhere did Mr Cakic identify any particular gap in the information available to Mr Zhao that meant he was unable to decide whether to commence proceedings. Neither did Mr Cakic give any evidence that expressly dealt with the content of Mr Zhao’s subjective belief in relation to the matters specified in Rule 7.23.

56    The net effect of all of this is to dramatically increase the difficulty of determining what should have been simple questions (to take perhaps the most obvious example, whether Mr Zhao believes that he may have the right to obtain relief from Atlas Advisors). In those circumstances, rather than working my way through each and every issue raised on the application, I consider it to be preferable to explain why there is a fundamental, substantive, reason why Mr Zhao’s claim against Atlas Advisors must fail: any belief that he may have the right to obtain relief from Atlas Advisors could not be reasonably based.

57    The essence of the potential claim that Mr Zhao submits he may have against Atlas Advisors is that it was responsible for certain misleading and deceptive representations that he relied upon in deciding to make his investment. In particular, he says that he relied upon the contents of the brochure entitled “QCAX Australian Property Income Fund” that he was given by his migration agent, and various oral representations made to him by his migration agent. He says that Atlas Advisors is responsible for those representations because the brochure was its document, and because the migration agent may have been repeating things said by Atlas Advisors.

58    There are a number of issues that arise in relation to the reasonableness of any belief that Mr Zhao may have about the potential for a claim of that kind.

59    First, as the factual summary above demonstrates, the brochure that Mr Zhao contends contained misrepresentations in relation to the investment he made was not, in fact, about the QCAX Fund II at all. Rather, it concerned a different fund, the QCAX Fund I. When he completed his investment application form, he was given a choice as to which fund he wanted to invest in, and he selected the QCAX Fund II over the QCAX Fund I. As part of that application form, Mr Zhao acknowledged receiving an information memorandum concerning the QCAX Fund II. Indeed, it is not disputed that Mr Zhao did receive that information memorandum (although he submits, without evidence, that “he didn’t read it”, contrary to the signed declaration he gave). There is no suggestion that the information memorandum for the QCAX Fund II does not accurately and completely describe the characteristics of the investment that Mr Zhao in fact made (or that his invested funds were dealt with inconsistently with its terms). And to the extent that it was submitted that the application form had been “pre-filled” by someone else, there was simply no evidence to that effect (and if it was the case, then it would have been expected that evidence of it would have been led).

60    None of that is, of course, necessarily inconsistent with Mr Zhao having been told or otherwise led to believe that the brochure concerning the QCAX Fund I was somehow relevant to the investment that he did make. But if anything had been said or done that caused Mr Zhao to understand that the brochure related to the investment that he made (rather than to the different fund that was in fact described in the brochure), then Mr Zhao must know about it, and it would be expected that some evidence in that regard would have been adduced on this application (and it was not). It follows that, to the extent that Mr Zhao’s right to obtain relief from Atlas Advisors depends upon the QCAX Fund I brochure, I do not see how there could be a reasonable basis for it.

61    Secondly, to the extent that Mr Zhao’s potential claim relates to things said to him by his migration agent, it is not apparent that there is any basis beyond pure speculation for thinking that Atlas Advisors might have some responsibility for what was said. No evidence was adduced on this application from the migration agent, or from any other source, that might provide a basis for suspecting that Atlas Advisors may have provided some misleading information to the agent. To the contrary, as far as the evidence disclosed, Atlas Advisors had prepared accurate information memoranda in relation to its different investment funds, and had provided those documents to the migration agent. There is nothing in the circumstances that is capable of suggesting that Atlas Advisors somehow contributed to Mr Zhao’s migration agent making misleading representations.

62    Ultimately, Mr Zhao’s application was put on the basis simply that it was possible that Atlas Advisors had somehow contributed to his migration agent making misleading statements. In other words, that that might have happened. But, as the statement of principles set out earlier in these reasons makes clear, it is not enough that something might be possible. The evidence must incline one to believe that relief may be available. And Mr Zhao pointed to nothing that was capable of raising a reasonable possibility that Atlas Advisors might have engaged in conduct that would give rise to a right to obtain relief against it.

63    Thirdly, even if all else is assumed in Mr Zhao’s favour, any claim that he might have had has been extinguished by force of the DOCA into which Atlas Advisors entered. I have set out the critical terms of that DOCA above. Mr Zhao submitted that the DOCA did not constitute an insurmountable obstacle to his application for the following reasons:

(a)    An application for preliminary discovery is not a “claim” within the meaning of the DOCA, but a procedural mechanism for determining whether potential claims exist or would be worthwhile. The DOCA thus does not extinguish Mr Zhao’s right to obtain preliminary discovery.

(b)    Messrs Hayes and Marshall’s rejection of Mr Zhao’s informal proof of debt did not finally determine his underlying claim. Indeed, that rejection of his claim, along with the designation by the administrators of Mr Zhao’s status under the DOCA (i.e., whether he was an excluded creditor, or not) as “N/A”, meant that Mr Zhao’s claim fell outside the scope of the DOCA.

(c)    Atlas Advisors may be estopped from relying upon the DOCA because Mr Zhao was not sent the proposed form of agreement, and did not have the opportunity to vote on it.

(d)    Mr Zhao may have a claim against Atlas Advisors arising after the effective date of the DOCA (i.e., 17 January 2025), including on the basis of misleading or deceptive conduct by way of silence or by way of Atlas Advisors’ conduct in continuing to transfer its business operations to Stoic “on a formal basis” while at the same time “continuing to operate it in practice” via common directors with Stoic.

(e)    Mr Zhao may, at least, be entitled to declaratory relief, and such a claim would not have been extinguished by the DOCA.

(f)    Apart from claims for relief against Atlas Advisors itself, establishing liability on the part of Atlas Advisors may be relevant to establishing a right to relief against another party (for example by bringing a claim against another party that they were “involved in” Atlas Advisors’ contravention). Similarly, to the extent that claims that may be brought against Atlas Advisors may be apportionable, it is important for Mr Zhao to understand the proportion of liability that would be attributed to Atlas Advisors in order to determine whether to commence proceedings against other parties.

64    None of those submissions have any merit.

65    There is no doubt that Mr Zhao is a “Creditor” within the meaning of the DOCA, in that he is a “person who … claims to be owed a debt” by Atlas Advisors, or “who has a Claim against” Atlas Advisors. Equally, it is plain that the DOCA has extinguished any claim for relief from Atlas Advisors that Mr Zhao might wish to bring. It is difficult to see how any potential claim for relief that Mr Zhao may have would not be encompassed within the phrase “any claim, cost … , damages, debt, expense … liability, loss, obligation, allegation, suit, action, demand, cause of action, prayer for relief, proceeding or judgment of any kind”. It follows that, in accordance with clause 3.3 of the DOCA (i.e., that the “Claims” of all “Creditors” would be extinguished, and the company released from all such “Claims”, upon the payment of the first and final dividend that was ultimately declared on 16 April 2025), any potential claim for relief that may have been open to Mr Zhao has been extinguished.

66    Insofar as Mr Zhao’s submissions recorded above are concerned:

(a)    Even if an application for preliminary discovery did not fall within the DOCA’s definition of “Claim”, a necessary precondition to the making of an order for preliminary discovery is that there exists a reasonably based belief that the prospective applicant may have a right to obtain some other relief in the Court from a prospective respondent. The relevant question is thus whether the DOCA extinguishes those rights to obtain relief in aid of which preliminary discovery is sought.

(b)    No action (or inaction) of Messrs Marshall and Hayes as administrators of Atlas Advisors has had the effect of taking Mr Zhao’s claims against the company outside of the operation of the DOCA. The rejection of Mr Zhao’s informal proof of debt for voting purposes at a meeting of creditors has no bearing on whether there in fact existed a “Claim” for the purposes of the DOCA. If Mr Zhao contended that his claim ought to have been recognised for those, or other, purposes, then it was open to him to take such steps as may have been available to challenge the administrators’ decision (including by seeking the Court’s leave to commence proceedings to establish the existence and quantum of the claim, which would then have been binding on the administrators: see, e.g., Hill v Esplanade Wollongong Pty Ltd [2018] NSWSC 478 at [34]-[37] (Gleeson JA); Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158; (2006) 229 ALR 566 at [192] (White J); Josia Pty Ltd v Horvat Constructions Pty Ltd [2004] NSWSC 1252 at [8] (Campbell J)). But the rejection of his assertion that he had a claim against the company does not have the consequence that, if in fact he did have such a claim, it was not subject to the provisions of the DOCA. The same reasoning applies to the administrators’ use of the designation “N/A” in relation to Mr Zhao’s claim (which plainly conveyed that the asserted claim had not been established to the administrators’ satisfaction). The fact that the administrators considered that Mr Zhao had no claim against the company, does not mean that, to the extent he does in fact have a claim, it was not subject to the DOCA. Ultimately, of course, Mr Zhao chose not to submit a formal proof of debt for the purposes of receiving the dividend for which the DOCA provided. That was his choice; but it does not mean that he is freed of the consequences of the DOCA having been entered into.

(c)    Mr Zhao did not articulate any intelligible basis for any estoppel. Mr Zhao (through Mr Cakic) says that he was not provided with notice of the proposed form of agreement before the second meeting of creditors. As I have stated above, while I accept that the administrators did not send that notice to Mr Zhao (or Mr Cakic) directly, the evidence suggests that Mr Cakic would have learned of it through an ASIC Company Alert that he had established. In any event, it is unclear to me how that fact was said to give rise to an estoppel. The representation that Mr Zhao says he relied upon was that he would have the opportunity to lodge a formal proof of debt for dividend purposes in relation to any DOCA that was executed. But it is not in dispute that Mr Zhao (through Mr Cakic) was sent the 25 February 2025 circular to creditors, and that that circular stated that the DOCA had been executed, said that a first and final dividend would be declared on 16 April 2025, and provided instructions on how to complete a formal proof of debt. In those circumstances I cannot see how it could be said that Atlas Advisors could be estopped from relying on the DOCA in any claim brought by Mr Zhao.

(d)    Nor did I understand how Mr Zhao contended that he may have a claim against Atlas Advisors arising after the effective date of the DOCA (17 January 2025). As I have explained, the principal basis upon which the possible existence of a claim against Atlas Advisors was put was that it was somehow responsible for misleading statements that were made by Mr Zhao’s migration agent that induced him to make the investment in the QCAX Fund II in 2017. I do not see how subsequent developments, such as any transfer of business from Atlas or Stoic (to the extent that occurred), or associated conduct, could have caused loss to Mr Zhao. Nor can I see how any silence on the part of Atlas Advisors on and from 17 January 2025, assuming that to constitute misleading and deceptive conduct, could have done so. In short, Mr Zhao has done little more than merely assert that a claim arising after 17 January 2025 may exist.

(e)    Insofar as it was suggested that proceedings seeking declaratory relief would fall outside the definition of “Claim” in the DOCA, I reject that submission. If nothing else, such proceedings would be caught by the words “any … suit, action, … prayer for relief, proceeding or judgment of any kind”.

(f)    Finally, to the extent that the liability of Atlas Advisors may be an element of a claim to be brought against some other person, that does not provide a basis upon which preliminary discovery may be sought against Atlas Advisors. In such a case, no right to obtain relief from Atlas Advisors is being asserted. Preliminary discovery is not available in such circumstances.

67    It follows that I am not satisfied that Mr Zhao has established that any belief he holds that he may have the right to obtain relief in the Court from Atlas Advisors is reasonably based. That conclusion makes it unnecessary for me to consider the other criteria that Mr Zhao would have been required to satisfy in order to obtain preliminary discovery (and for the reasons I have already given, it is appropriate that I do not do so in light of the difficulties associated with the way in which Mr Zhao chose to present his case).

Mr Zhao’s case for preliminary discovery from APIM

68    Once again, Mr Zhao did not articulate his application for preliminary discovery from APIM with clarity, let alone in any way that paid regard to the individual requirements imposed by rule 7.23. Once again, in light of the unorthodox and unhelpful way that the application was presented, I consider it to be appropriate to deal with the question of the reasonableness of any belief as to Mr Zhao’s right to obtain relief from APIM as the dispositive issue.

69    Mr Zhao’s written submissions framed the prospective case against the second prospective respondent as follows:

[Whereas Atlas Advisors and/or Stoic were the entities upon the basis of whose representations Mr Zhao is likely to allege that he was most directly misled or treated unconscionably, t]he Second through Sixth Prospective Respondents are entities or individuals who the Applicant has reasonable cause to believe may have potential liability in connection with:

(a)    the development, research, and promotion of the Bensons Fund [by which was meant the QCAX Fund II];

(b)    commercial and/or financial and/or administrative relationships with Atlas Advisors and/or Stoic during the relevant period;

(c)    as a practical matter, their direction, control or influence in the conduct and/or operations of Atlas Advisors and/or Stoic during the relevant period (including any misleading or unconscionable conduct);

(d)    their knowledge, investigation (or lack thereof), and/or communication of the actual risk profile and security arrangements of the Bensons Fund; and/or

(e)    accessorial liability or knowing involvement in any misleading conduct.

70    It may be observed that the nature of the postulated potential liability, and the basis for it, were somewhat nebulous. Nevertheless, as I understood it, Mr Zhao relied on the following matters:

(a)    APIM, as “trustee, custodian or investment manager of funds secured by Atlas or Stoic” from at least 8 July 2022:

(i)    lent investment funds to developers such as Bensons Property Group, including through Bensons Funds Management;

(ii)    is a related company to Atlas and/or Stoic and works closely with them, including via common directors;

(iii)    is the main repository of documentation and account records with respect to lending and security arrangements; and

(iv)    holds assets for Atlas and/or Stoic.

(b)    APIM was an authorised representative (for financial services licensing purposes) of Atlas Advisors from 16 February 2016 to 2 June 2022, and of Stoic from 1 June 2022 onwards.

(c)    There was, it was submitted, a possibility that APIM lent investment monies to Bensons Funds Management, or Bensons Property Group, without appropriate loan documentation or security (although I was taken to no evidence to support that possibility). Mr Zhao’s submissions in this context emphasised that:

(i)    A loan agreement between APIM and Bensons Property Group dated 27 June 2024 showed that APIM was loaning money to Bensons Property Group even after the time when Mr Zhao was having difficulties recouping his investment. This was said to demonstrate the existence of a close association between APIM and Bensons Property Group.

(ii)    There was also an arrangement executed on or around 12 January 2024, pursuant to which Perpetual, as custodian for APIM, loaned $55.8 million in secured finance to Bensons Property Group. This was said to be suspicious, in that it indicated that some lines of funding advanced to the Bensons group of companies were secured, and others not.

Both of those loan agreements were referenced in the KordaMentha report dated 31 January 2025.

(d)    The email from APIM to Mr Zhao on 23 May 2025 indicated that APIM was working closely together with the Bensons group of companies, obtaining information from those companies, and was potentially capable of moving units from one fund to another.

71    Overall, it seemed to me that Mr Zhao’s submissions rose no higher than pointing to a number of matters that showed little more than that APIM was a company involved in the investment that Mr Zhao had made, and that had failed. In other words, APIM was a company that may have dealt with Mr Zhao’s investment funds in its capacity as trustee of the QCAX Fund II (or, before that, as investment manager). But without more, none of those matters, either individually or collectively, provided a reasonable basis for thinking that APIM may have done anything that would give rise to a right to claim relief by Mr Zhao. In particular, the fact that APIM may have advanced different investment monies to different Bensons entities on different terms, sometimes involving security, and other times not, is consistent with APIM being trustee for multiple investment funds and options (each with different characteristics and requirements). And there was no evidence that funds invested in the QCAX Fund II were dealt with other than consistently with the information memorandum relating to it (i.e., by purchasing units in the BCPUT, which in turn loaned money to Bensons Property Group, which provided a guarantee).

72    Mr Zhao emphasised that there was a manifest interconnectedness between all the prospective respondents, and that that interconnectedness “is relevant to Mr Zhao’s belief that he may have a right to obtain relief against each of them” and “gives rise to a proper basis” for that belief. But the mere “interconnectedness” of the prospective respondents does not, in itself, provide any rational basis for concluding that a right to relief may exist. The fundamental premise of Mr Zhao’s case against each prospective respondent is that his investment moneys were dealt with inconsistently with representations that were made to him about the character of the investment. I have already explained, in connection with the application against Atlas Advisors, why there is no reasonable basis for suspecting that Atlas Advisors was responsible for, or involved in, the misleading statements that Mr Zhao says his migration agent made to him. It follows that APIM’s association with Atlas Advisors (and other prospective respondents) cannot provide, without more, any support for a possible claim against APIM. In the absence of any link between APIM and the misleading representations Mr Zhao says he relied on, all that remains is the fact that Mr Zhao’s investment moneys were dealt with consistently with the QCAX Fund II information memorandum. In such circumstances there is not, contrary to Mr Zhao’s submission, any justification for preliminary discovery on the basis that it would “illuminate exactly what occurred”. Mr Zhao must point to something other than the fact that his investment failed; he must supply a reasonable basis for thinking that he may have the right to obtain relief against APIM.

73    I would thus dismiss Mr Zhao’s application as against the second prospective respondent.

Mr Zhao’s case for preliminary discovery from Stoic

74    Once more, I will deal with the application against Stoic by reference to the question whether Mr Zhao has established a reasonable basis for any belief that he has that he might have a right to obtain relief from Stoic. A particular challenge for Mr Zhao in light of the general case theory that he advanced (i.e., that he had relied on misleading and deceptive statements in making his investment) was that, while he made his investment in 2017, Stoic was not incorporated until 14 October 2019.

75    To overcome that hurdle, Mr Zhao submitted that Stoic may have repeated or adopted representations originally made to Mr Zhao by someone else, or may have engaged in misleading or deceptive conduct by way of silence, in circumstances where it would reasonably have been expected to disclose matters such as its sharing of directors with Atlas Advisors, or information about the safety or otherwise or Mr Zhao’s investment. Mr Zhao submitted that “Stoic appears to be, as a minimum, the corporate successor entity of Atlas Advisors’ business, and may have contemporaneously been a de facto controller or operator of Atlas Advisors”.

76    The circumstances said to provide a basis for such allegations were, again, the interconnectedness between the various prospective respondents (relevantly including Stoic’s sharing of officers, a registered office, and principal place of business with Atlas Advisors), and documents which referred interchangeably to Atlas Advisors and Stoic. In particular, the prospective applicant referred to the portfolio holding statement dated 30 January 2024 I described above (which contained Atlas Advisors’ insignia, but referred to the website, email address, and registered address of Stoic), the certificate signed by Mr Hedley (which erroneously linked Atlas Advisors with the ABN and AFSL number of Stoic), and the reference to the fee payable to “the advisor (Stoic)” in the investment extension application form. From those circumstances, Mr Zhao inferred that “[o]n a date before 30 January 2024, but unknown to [him] Atlas Advisors appears to have formally transferred its formal role as the trustee of, and issuer in, the Bensons Fund and its investment notes to Stoic …”.

77    How any of that was said to provide a rational basis for thinking that Stoic might have some liability to Mr Zhao was unclear to me. Plainly, Stoic could not have been involved in matters that occurred before it was brought into existence. As for the possibility that it might be liable for things it did (or did not do) later, the problem is that Mr Zhao simply did not articulate any coherent theory for how Stoic might be liable to him.

78    To the extent that the theory is that Stoic was somehow involved in dealing with Mr Zhao’s investment moneys in a way that was contrary to the representations made to him by his migration agent, Mr Zhao has failed to demonstrate a reasonable basis for the same reasons that apply in relation to Atlas Advisors and APIM. That is, because there is no rational basis for thinking that Atlas Advisors might have been responsible for anything that the migration agent said, the association between Atlas Advisors and Stoic (or any other prospective respondent) cannot supply a basis for attributing knowledge of or responsibility for those representations to Stoic.

79    To the extent that the theory is that Stoic would reasonably have been expected to disclose matters relating to Mr Zhao’s investment, or its relationship to other prospective respondents, the problem is that there is no evidence that anything done by Stoic was contrary to the terms of the QCAX Fund II investment. There is no evidence that any misleading representation was made to Mr Zhao at the time he rolled his investment over. In those circumstances, I cannot see why such an expectation would arise.

80    For all of those reasons, I would dismiss Mr Zhao’s application as against Stoic.

Mr Zhao’s case for preliminary discovery from Bensons Funds Management

81    Bensons Funds Management mounted a vigorous challenge to the proposition that it had been proven that Mr Zhao subjectively believed he may have a right to obtain relief from Bensons Funds Management. As with so many issues on these applications, the potential for genuine disputation on that issue was generated largely by the undesirable way in which the evidence adduced on behalf of Mr Zhao was framed and evolved. Once more, though, I would prefer to decide this application by reference to the substantive merits of the underlying claim. As such, because the question of the existence of a reasonable basis for any belief that a right to obtain relief may exist is dispositive, I will focus on that.

82    Before doing so, however, I should clear away one issue raised by Bensons Funds Management. In his application, Mr Zhao named “Bensons Funds Management Pty Ltd ACN 121 715 937 as trustee for Bensons SIV Master Mortgage Fund” as the fourth prospective respondent. I will try to explain in a moment the significance of the Bensons SIV Master Mortgage Fund (or BSMMF as it was often referred to) to Mr Zhao’s case. For the moment, though, it is enough to observe that Bensons Funds Management submitted with some force that there was no reasonable basis for thinking that that fund had anything to do with any potential claim that Mr Zhao may have. It followed, so Bensons Funds Management submitted, that Mr Zhao had sought preliminary discovery against what was, in effect, the wrong party (in that the capacity in which Bensons Funds Management had been joined to the application was not a capacity in connection with which any obligation to give preliminary discovery could be established).

83    The answer to that point is that a legal entity such as Bensons Funds Management is not a party to legal proceedings in any particular “capacity”. The incorporation in the description of the fourth prospective respondent of a particular capacity was at best superfluous and, in light of the issues that have arisen, generative of unnecessary disputation. The relevant question is only whether Mr Zhao has established a basis for an order for preliminary discovery against Bensons Funds Management: see, e.g., AMP Capital Investors Limited v Parsons Brinckerhoff Australia Pty Limited (2009/290489); Retail Employees Superannuation Pty Limited v AMP Capital Investors Limited (2013/252050) [2013] NSWSC 1633 at [16]-[18] (Pembroke J).

84    The bases upon which it was submitted that there was a reasonable basis for believing that Mr Zhao may have a right to obtain relief from Bensons Funds Management were expressed as follows:

(a)    BSMMF (as the Fund seeking to attract investment, and in which Mr Zhao’s $3 million appears to have been directed) may have been involved in the creation, marketing, or distribution of the information comprising the misrepresentations upon which Mr Zhao relied, or made misrepresentations to those parties who then conveyed such misrepresentations to Mr Zhao in their own marketing or informational material;

(b)    BSMMF may have received funds invested by Mr Zhao, possibly with the knowledge that misleading conduct materially contributed to them being invested by him, giving rise to potential claims for knowing receipt or constructive trust;

(c)    BSMMF may have been knowingly concerned in misleading conduct, statutory contraventions by the other Prospective Respondents, or otherwise involved in actionable statutory misleading conduct (noting that intention is not required to establish such a case); and

(d)    BSMMF may have owed fiduciary or contractual duties to investors in the broader Bensons fund structure, pursuant to which Mr Zhao may have a right to relief.

85    The reason for Mr Zhao’s focus on “BSMMF” (that is, the Bensons SIV Master Mortgage Fund) was a little hard to discern. As I understood the case being advanced, Mr Zhao contended that the effect of the representations that were made to him before he made his investment was that the fund into which he was investing would in turn invest in the BSMMF. Why that was so was not made clear. The product brochure for the QCAX Fund I that formed the cornerstone of Mr Zhao’s case did not mention the BSMMF (nor, in fact, any particular fund of which Bensons Funds Management was trustee; indeed, Bensons Funds Management was not mentioned in any way). Nor did the evidence about the oral representations made by Mr Zhao’s migration agent suggest that any mention was made of Bensons Funds Management, or the BSMMF.

86    Perhaps Mr Zhao’s theory is based upon the inclusion of the words “mortgage” and “SIV” in the name of the BSMMF, against the background of the alleged representations that his investment would be secured by real property and fulfil the requirements for his visa. Certainly, Mr Cakic deposed that “BFM, as handler of SIV related funds with mortgage features, is likely to have received funds from investors in the Bensons Fund via either Atlas, APIM or Stoic, including funds invested by Mr Zhao”.

87    In any event, to the extent that the case theory being advanced on Mr Zhao’s behalf was that his investment moneys had flowed (or may have flowed) into the BSMMF, that is plainly not correct. (Indeed, it is not even consistent with what I understood to be the fundamental premise of his case that his money should have been, but was not, invested in the BSMMF.) It is clear that the QCAX Fund II (in which Mr Zhao invested) acquired units in the BCPUT. I think, therefore, that what was really being put was that Mr Zhao’s money flowed to Bensons Funds Management, where it was invested in a fund that did not comply with representations that had been made to him (i.e., the BCPUT instead of the BSMMF). If that is right, then when Mr Zhao’s submissions referred to BSMMF, it was presumably intended simply as a reference to Bensons Funds Management.

88    On that understanding, I am not satisfied that Mr Zhao has a reasonable basis for believing that he may be able to obtain relief from Bensons Funds Management:

(a)    There is simply no basis beyond pure speculation for thinking that Bensons Funds Management made misrepresentations to Mr Zhao’s migration agent, that were then passed on to him. Nor is there any basis for thinking that Bensons Funds Management was involved in the preparation of the QCAX Fund I brochure that Mr Zhao says he relied upon; but even if there was, that fact would not provide a reasonable basis for believing that Mr Zhao could obtain relief against Bensons Funds Management for the same reasons that I have given in relation to the application against Atlas Advisors.

(b)    While I accept that Bensons Funds Management received funds that Mr Zhao had invested in the QCAX Fund II, there is no basis beyond speculation for thinking that Bensons Funds Management received those funds knowing that they had been invested in reliance on misleading and deceptive conduct, or with any other knowledge that might justify the imposition of a constructive trust.

(c)    The association between Bensons Funds Management and the other prospective respondents provides no basis for thinking that it may have been knowingly involved in some other contravention of another prospective respondent. Mr Zhao has identified neither a possible principal contravention, nor any basis for suspecting accessorial liability on the part of Bensons Funds Management.

(d)    Even if it is assumed that Bensons Funds Management owed fiduciary or contractual duties to persons other than investors in the trusts for which it was trustee, Mr Zhao has not identified what potential breach of any such duty might have occurred.

89    To the extent that Mr Zhao submitted that a reasonable basis for a right to obtain relief could be inferred from the various loan arrangements and intercompany transactions documented in the KordaMentha report prepared in connection with the administration of Bensons Property Group, I do not agree. The related party transactions noted in that report (including dealings with “Jreissati Related Interests”) appeared to involve Bensons Property Group as a counterparty, being the company the subject of the report, and not Bensons Funds Managament. Likewise, the loan agreement with APIM dated 27 June 2024, which Mr Zhao suggested was evidence of a close association between APIM and Bensons entities generally, was with Bensons Property Group, and not Bensons Funds Management.

90    Insofar as loan arrangements to which Bensons Funds Management appeared to be a counterparty are concerned (such as the “Yarra Valley Grape Sales loan” involving the BCPUT, or the on-loan from the BSMMF to Bensons Property Group through 10 Cecil Place) the KordaMentha report indicated that those were examples of arrangements by which a particular fund of which Bensons Funds Management was trustee would invest money with Bensons Property Group, but did not establish that there was any intermingling of investment monies across the various funds, or more generally. In other words, there appeared to be a defined investment structure for each Bensons fund and there is nothing to suggest that money invested by the QCAX Fund II was dealt with inconsistently with any relevant requirement or obligation.

91    To the extent that Bensons Property Group has defaulted on guarantees it provided (including with respect to the BCPUT), that may provide the basis for a claim by the person to whom the guarantee was given. But there is no suggestion that Mr Zhao was the beneficiary of any such guarantee, or that Bensons Property Group was obliged to give him one. Similarly, to the extent that Bensons Funds Management provided a guarantee to the QCAX Fund II, that guarantee existed for the benefit of that fund itself, not its individual investors.

92    For all of those reasons, I would dismiss the application as against Bensons Funds Management.

Mr Zhao’s case for preliminary discovery from Mr Hedley and Ms Zhuang

93    Mr Zhao’s application against Mr Hedley and Ms Zhuang must fail for essentially the same reasons as those I have given in relation to the other prospective respondents.

94    To the extent that Mr Zhao subjectively believes that relief may be available from Mr Hedley and Ms Zhuang, that belief was said to be objectively reasonable because:

(a)    they were shareholders and officeholders of Atlas Advisors and APIM at the time of Mr Zhao’s initial investment;

(b)    they were shareholders and officeholders of APIM and Stoic at the point when Stoic was involved in or otherwise took over the operations and investments originally held by Atlas Advisors;

(c)    as directors, there is a reasonable basis to believe that they may have been knowingly concerned and/or otherwise involved in any contraventions by the corporate entities; and

(d)    as the controlling minds of the entities, they may have received or directed the traceable proceeds of Mr Zhao’s invested monies, including to third parties.

95    To the extent those arguments depend on the existence of a reasonable belief that some right to relief from some other prospective respondent might exist, they necessarily fail for that reason alone. To the extent that they are capable of standing independently they do not involve anything beyond mere speculation.

96    Mr Zhao also relied on the content of statements that were made to him by Mr Hedley and Ms Zhuang during his attempts to retrieve his investment. On the whole, however, the content of those communications was not proved in evidence. Such evidence as there was about the communications was very high level. On the limited evidence before me, I simply cannot see how any statements that were made provide an objective basis for believing that relief may be available from Mr Hedley and Ms Zhuang (if nothing else, it is not at all clear how Mr Zhao contends that statements made to him after he attempted to recover his investment have caused him loss or damage).

97    For all those reasons I am not satisfied that Mr Zhao has established that any belief he may hold that he may have the right to obtain relief from Mr Hedley or Ms Zhuang is reasonably based.

98    Finally, in any event, the only categories of preliminary discovery sought from Mr Hedley and Ms Zhuang were as follows:

27.    Any document(s) recording your worldwide legal or economic ownership of shares, cars, boats, precious metals, real property, art or jewellery.

28.    Taxation returns for the financial years ending 30 June 2020, 30 June 2021, 30 June 2022, 30 June 2023 and 30 June 2024.

29.    Most recent Balance Sheets, Profit and Loss Statements, and Company Tax Returns for each company and trusts in which you held a shareholding or beneficial interest.

30.    All bank statements for the period 1 January 2020 to 1 June 2025.

99    Mr Zhao accepted that those documents are primarily relevant to Mr Hedley and Ms Zhuang’s financial position, that is, whether they would be capable of satisfying any judgment given against them. Mr Zhao submitted that this was a permissible purpose of preliminary discovery, because such an application may be brought to determine whether potential litigation is “worthwhile”: see ObjectiVision at [30] (Perry J); Poole at [39(6)] (Bromwich J). Mr Zhao argued that the question of whether litigation is “worthwhile” should be approached in a broad sense, but did not cite any case which expressly held that it encompassed the issue of recoverability. The prospective respondents, on the other hand, emphasised that rule 7.23 only confers a right to documents that are “directly relevant to the question whether the prospective applicant has a right to obtain relief”: rule 7.23(1)(c)(i). It follows, it was submitted, that questions of whether litigation is “worthwhile” must always be tied to the substance of the prospective claim: for example, whether it might be countered by any defence, and if so, how strong that defence is; or what the quantum of any relief might be.

100    The prospective respondents’ submissions are correct. As Yates J held in Reeve v Aqualast at [65(c)] (quoted with approval in Pfizer [2017] FCA 285 at [50] (Burley J)):

A document relating only to the question whether a judgment against a person is likely to be enforceable is not within the rule and such a document is therefore not discoverable. If the only reason why an applicant has not sufficient information to enable a decision to be made whether to commence a proceeding is that the applicant lacks sufficient information as to the respondent’s capacity to satisfy a judgment, preliminary discovery will not be available.

101    That conclusion is also supported by recent cases in the context of rule 32.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), which is relevantly analogous to rule 7.23. For example:

(a)    In Wadren v Probuild Constructions, Barrett AsJ said (at [98] and [108]):

… I do not read the decision [in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCAFC 133; (2008) 169 FCR 435 (on appeal from Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2007] FCA 2065; (2007) 247 ALD 199), in which the Full Court considered that a prospective applicant was entitled to information about the way in which a competitor obtained its software, which could provide a complete answer to any claim,] as expanding the class of documents that may be obtained by preliminary discovery beyond those relating to ‘whether [the applicant] has a right to obtain relief’ to include documents relating to the financial viability of a potential defendant, or the plaintiff’s ability ultimately to recover such relief as may be ordered. In my opinion the language of r 32.05 cannot sustain such an interpretation.

…

In my opinion, documents relating to the extent to which there are likely to be proceeds available to satisfy judgment debt do not fall within the scope of documents relating to ‘the right to obtain relief’ even on the broad interpretation in Optiver.

(b)    In Wadren v AIG Australia, Sloss J said (at [289]):

In my view, the primary judge did not err in holding that the Court’s power to order preliminary discovery under r 32.05 does not extend to ordering preliminary discovery of ‘recovery style documents’ of the kind sought, being documents relevant to the question whether, if the claim is successful, there will be proceeds available to satisfy any judgment debt. Rather, as will be seen below, when regard is had to the text, context and purpose of the rule it is clear that … it was directed to establishing a discovery procedure that would assist an applicant in circumstances where a prospective defendant had been identified but there was doubt about whether an arguable cause of action exists against the prospective defendant. In essence, the purpose underlying the adoption of r 32.05 was to enable such an applicant to seek information, by way of ‘preliminary discovery’, that would enable a proceeding to be commenced ‘alleging a cause of action in the proper way, that is, by alleging facts showing a cause of action, with the necessary particulars’.

(Footnotes omitted.)

102    In the alternative, Mr Zhao suggested that categories 27 to 30 were relevant to the availability of relief through tracing. That is:

Where money has been invested by Mr Zhao and that money has been dealt with improperly (whether by breach of trust, breach of fiduciary duty, or knowing receipt), documents showing the receipt and flow of funds and the acquisition of assets by related parties are directly relevant to the question of whether Mr Zhao may have a right to obtain relief against them by way of tracing or constructive trust … and whether they are proper parties to be joined to potential proceedings.

103    Whether or not the categories of documents sought would in fact be capable of showing those matters, for the reasons I have given above, I am not persuaded that the evidence provides a reasonable basis for believing that a tracing remedy may be available. There is no basis beyond speculation for thinking that Mr Hedley or Ms Zhuang might have received Mr Zhao’s investment monies in circumstances involving any unlawful conduct, let alone conduct in circumstances giving rise to a tracing remedy.

104    For those reasons, I would dismiss Mr Zhao’s application as against Mr Hedley and Ms Zhuang.

CONCLUSION

105    For the foregoing reasons, Mr Zhao’s application should be dismissed with costs.

Associate:

Dated:    28 August 2026

SCHEDULE OF PARTIES