In the matter of Vaucluse 29 Pty Ltd; Bayview 66 Pty Ltd; One Lake Macquarie Pty Ltd; Point Piper One Pty Ltd

On 1 December 2022, Ms Meihong Yang commenced these proceedings against:

Ms Yang and Mr Li are estranged husband and wife. The seventh defendant, Ms Li, is the daughter of Mr Li and his former wife, Ms Changren Cheng. Ms Yang discontinued the proceedings against Ms Li on 27 April 2023.

By way of final relief, Ms Yang seeks declarations to the effect that certain dealings with shares in each of V29, B66, One Lake and PP One are void and of no effect. Ms Yang also seeks orders winding up V29, B66 and One Lake pursuant to s 461(1)(e), (f) and/or (k) of the Corporations Act 2001 (Cth).

On 12 December 2022, I made orders on the application of Ms Yang appointing Mr Bradley Tonks and Mr Mark Roufeil as provisional liquidators of V29, B66 and One Lake. There was evidence before the Court on that occasion to the effect that all of the shares in V29, B66 and One Lake had been issued to Ms Yang when each of those companies was incorporated. Ms Yang and Mr Li separated in about late June or early July 2022. By that time, Mr Li was the sole director of each of V29 and B66 and a director of One Lake. There was evidence that Ms Yang’s shares in each of those three companies and the rights attached to those shares had been transferred or diluted in July 2022 as a result of dealings initiated or procured by Mr Li, acting unilaterally, without Ms Yang’s consent and without the authority of any resolution of the relevant company in general meeting. Those are the dealings in respect of which Ms Yang seeks the declaratory relief referred to above.

As recorded in my reasons for judgment dated 12 December 2022, there was also evidence before the Court to the effect that B66 had sold a property in Bayview in about December 2021 for $15,000,000 and V29 had sold a property at Vaucluse in about June 2022 for $26,290,000. Ms Yang gave evidence that she did not know what had happened to the proceeds of sale of those properties. Mr Li gave evidence that he had provided the monies used to purchase those properties. At the same time, Mr Li’s evidence identified Ms Cheng as the source of the funds that had been used by B66 and V29 to purchase those properties. Mr Li’s evidence referred to bank statements showing the transfer of funds between Ms Cheng’s bank account and the accounts of B66 and V29 at about the time the properties were purchased. Whilst the evidence given by Mr Li on that occasion may appear to be internally inconsistent, I understood the substance of his evidence to be that Ms Yang had made no financial contribution to facilitate the acquisition of the Bayview and Vaucluse properties by B66 and V29, and that he had arranged for all of the necessary funding to be provided by Ms Cheng. As I observed in my reasons for judgment, Mr Li’s evidence did not disclose what had happened to the sale proceeds of the properties, including whether or not any of the sale proceeds had been applied to reimbursing Ms Cheng for the funds that Mr Li said she had provided for the purchase of each property.

The proceedings, including Ms Yang’s application to wind up V29, B66 and One Lake, are listed for final hearing on 8 June 2023.

V29 presently owns property at in Wolsley Road, Point Piper, which is subject to registered mortgage AS643226 in favour of Athena Rose Capital Pty Ltd (AR Capital). Ms Cheng is the sole director and shareholder of AR Capital. On 11 May 2023, AR Capital entered into a contract for sale of the Point Piper property as mortgagee in possession.

The provisional liquidators filed an interlocutory process on 17 May 2023 in the name of and on behalf of V29 and B66, seeking:

The interlocutory process was heard on 29 May 2023.

The applicants submitted that there were strong prospects of V29 being wound up following the final hearing on 8 June 2023, and identified a claim that any liquidators appointed to V29 might bring on behalf of V29 to recover the sale proceeds of the Point Piper property from AR Capital as the traceable proceeds of money allegedly paid by Mr Li to Ms Cheng in breach of his fiduciary duties as a director of V29 and held by Ms Cheng on constructive trust for V29 as a knowing recipient under the first limb of Barnes v Addy. [1] The applicants submitted that this possible future claim raised a serious question to be tried and that the balance of convenience favoured the grant of the interlocutory injunction restraining AR Capital from dealing with the sale proceeds, notwithstanding that no proceedings have been commenced against AR Capital, because there is a risk of the sale proceeds being dissipated or removed from Australia. Although they relied on this alleged risk, the applicants did not frame their claim as one for a freezing order and did not rely on rr 25.11 and 25.14 of the Uniform Civil Procedure Rules 2005 (NSW). The applicants further submitted that the mandatory interlocutory injunction requiring the sale proceeds to be paid into court was necessary to “secure” those funds, so as to preserve what they described as the status quo.

AR Capital is the first respondent to the interlocutory process but is not otherwise a party to these proceedings. AR Capital opposed the orders sought by the applicants.

The second and third respondents to the interlocutory process, Perpetual Corporate Trust Ltd (Perpetual) and MSQUARED Capital Pty Ltd (MSQUARED), were joined as respondents to the interlocutory process on the basis that they had lodged caveats against the title to the Point Piper property and may therefore be affected by the relief sought by the applicants in respect of the sale proceeds of that property. They consented to the orders sought by the applicants and, save for reading an affidavit describing the interests they claim in the property and the modest amounts that they claim to be owed, did not seek to be heard. Their claimed interests rank lower in priority than AR Capital’s registered mortgage. Counsel appearing for Perpetual and MSQUARED at the hearing on 29 May 2023 was excused at a very early stage at his request.

The interlocutory process was served on the Deputy Commissioner of Taxation, who is neither a party to the proceedings nor a respondent to the interlocutory process, pursuant to orders made by Black J on 17 May 2023. The Deputy Commissioner did not seek to be heard.

For the reasons that follow, the applicants have failed to establish that the possible future claim by V29 raises a serious question to be tried.

At the hearing of the interlocutory process on 29 May 2023:

There was no cross-examination of any witness.

Mr Hyde of counsel, who appeared for AR Capital, informed the Court that AR Capital had offered to arrange for Ms Cheng, together with an interpreter, to be available for cross-examination. The applicants’ solicitors had advised AR Capital’s solicitors that Ms Cheng was not required for cross-examination.

What follows is a summary of the evidence adduced by the parties at the hearing of the interlocutory process. The summary should not be read as incorporating or conveying any findings of fact.

It is convenient to set out the following evidence given Ms Cheng in her affidavit affirmed on 23 May 2023:

V29 was incorporated on 29 May 2020.

V29 purchased a property at 29 Carrara Road in Vaucluse, New South Wales for $10,900,000 on or about 5 August 2020 (the Vaucluse property).

Mr Li became the sole director of V29 on 19 November 2020.

Ms Cheng has given evidence that she entered into a loan agreement with V29 on or about 25 November 2020 that formalised her earlier verbal agreement with Mr Li described at [19] above (the V29 loan agreement). [2]

The parties to the loan agreement are Ms Cheng (as lender), V29 (as borrower), and Mr Li as guarantor. The agreement contained a preamble stating that:

Clause 1 of the loan agreement provided that the total amount of the loan would not exceed $30,000,000, to be released in tranches. Clause 2 provided that the loan was for a term of 10 years. Clause 3 stipulated a low interest rate of 15 per cent (applicable when there are no disputes between the borrower and lender or any third party in relation to any credit or debt or any legal issue), a high interest rate of 25 per cent (applicable in the event of such disputes) and a penalty interest rate of 35 per cent, which was described as “the punitive interest rate” that applied if it became necessary for the lender to commence legal proceedings against the borrower.

Clause 4 provided that Mr Li, as the director of the borrower, “guarantees without limit the loan obligations”.

Clause 5 contained an agreement by the borrower that the lender is entitled to assign or transfer the loan without prior notice to the borrower.

Clause 6 contained an agreement by the borrower that it had a duty and obligation to cooperate fully with the lender to facilitate the registration of the borrower’s assets as security for the loan.

Clause 7 provided that the lender was entitled to appoint a receiver to the borrower company if certain events occurred, including if the borrower failed to diligently assist the lender to register its security interest over the borrower’s assets or if “the lender comes to the belief that the borrower’s circumstances at the specific time will lead to the lender being unable to fully recover the loan and its interest”.

Clause 8 of the loan agreement provided:

Ms Cheng exhibited to her affidavit the following statement of account prepared by Mr Li at her request itemising the funds that Ms Cheng advanced to V29 on the terms referred to above, and the funds repaid by V29 to Ms Cheng (the V29 loan statement):

V29 sold the Vaucluse property to a third party for $26,290,000. According to the V29 loan statement, the total principal sum advanced by Ms Cheng to V29 prior to the completion of that sale on 3 June 2022 was $11,899,306. Interest had accrued on that principal sum at the rate of 15 per cent per annum. V29 had made one repayment of $1,000,000 on 4 May 2022, which had been applied to reduce the interest component of the amount owing.

The V29 loan statement records that V29 made further repayments to Ms Cheng totalling $10,000,000 during the period from 3 June 2022 to 6 June 2022, reducing the balance of principal and interest to $4,214,200 as at 7 June 2022. V29 made further payments totalling $9,600,000 on 7 June 2022, which exceeded the amount owing by V29 by $5,385,799. The V29 loan statement records that the amount of $5,385,799 was deducted from the debt owed by One Lake, returning the balance of the V29 account to zero. V29 then made a further payment of $5,000,000 to Ms Cheng on 17 June 2022, which is also recorded as having been deducted from One Lake’s debts.

Ms Cheng (as lender), One Lake (as borrower), and Mr Li (as guarantor) had entered into a loan agreement on 18 October 2021 pursuant to which Ms Cheng had agreed to advance up to $30,000,000 to One Lake for the purpose of its purchase of a property in Foreshore Street, Eraring, and reconstruction expenses in respect of that property (the Eraring property). The terms of that loan agreement were substantially the same as the terms of the V29 loan agreement. According to the provisional liquidators’ report dated 24 February 2023, which is referred to in more detail later in these reasons, One Lake did purchase the Eraring property for $6,000,000, and spent in excess of $5,000,000 on construction of a grand home on that site during the period from July 2021 to November 2022. The provisional liquidators’ report describes One Lake as having been incorporated for the purpose of acquiring and holding real property. The report does not refer to any source of funding independent of Ms Cheng for One Lake’s acquisition and development of the Eraring property. [3] Ms Cheng has given evidence that One Lake is indebted to her personally, but did not give evidence about the amount of that debt, which was not the subject of the provisional liquidators’ interlocutory process.

Ms Cheng’s affidavit exhibited transaction records in respect of each transaction recorded in the V29 loan statement. Those records are consistent with the V29 loan statement.

The total amount of the payments made by V29 to Ms Cheng during the period from 3 to 17 June 2022, as recorded in the V29 loan statement, is $24,600,000. Ms Cheng gave evidence that it is her understanding that V29 made all of those repayments out of the sale proceeds of the Vaucluse property that V29 received on 3 June 2022. Ms Cheng has not given any evidence about the source, or her understanding about the source, of the $1,000,000 paid to her by V29 on 4 May 2022, but nothing turns on that.

AR Capital was incorporated on 8 June 2022. Ms Cheng has given evidence describing AR Capital as an investment vehicle into which she transfers her personal funds that are then used to make investments. According to Ms Cheng’s evidence, she caused her daughter, Ms Li, to be appointed as the sole director and secretary of AR Capital to give her experience in the operation and management of a company.

Ms Cheng has given evidence that Mr Li told her in a telephone conversation on 13 October 2022 that he needed funds to purchase the Point Piper property. Ms Cheng understood from the conversation that the property would be purchased by V29. Ms Cheng’s affidavit gives an account of an initial advance made by Ms Cheng personally to Mr Li on 13 October 2022 for the purpose of V29’s purchase of the Point Piper property. Ms Cheng has deposed that she then decided that the loan should be made by AR Capital rather than by her personally, because she considered that this would improve her status as an investor under her Business Innovation and Investment (Provisional) visa “because it would be more attractive to the immigration department if I lent the funds from a company”. Ms Cheng then transferred $2,000,000 from her personal account to AR Capital and asked Mr Li to transfer to AR Capital the sum of $6,080,000 out of the $10,000,000 that Ms Cheng had lent him on 13 October 2022. These two transactions put AR Capital in funds to make the loan of $8,080,000 to V29 which, according to Ms Cheng’s evidence, was made on 14 October 2022 by transfer from AR Capital to the account of Sydney Sotheby’s International Realty. On 15 October 2022, Ms Cheng caused AR Capital to transfer a sum of $503,800 to Property Exchange Australia Ltd (PEXA) for the settlement of V29’s purchase of the Point Piper property, and requested Mr Li to transfer the equivalent sum to AR Capital out of the remaining balance of the $10,000,000 that Ms Cheng had advanced to him on 13 October 2022. Transaction records in relation to these payments were exhibited to Ms Cheng’s affidavit.

V29’s purchase of the Point Piper property was settled on 18 October 2022. The purchase price was $8,080,000.

A loan statement dated 1 February 2023 that was provided by AR Capital’s solicitors to the provisional liquidators’ solicitors on or about 8 February 2023 is consistent with Ms Cheng’s evidence referred to at [38] above. The loan statement records that AR Capital advanced a total sum of $8,602,000 to V29 during the period from 14 October 2022 to 25 November 2022, in the following instalments:

The applicants tendered a signed telegraphic transfer form for the $8,080,000 payment, and electronic banking records for the remaining payments. The applicants emphasise that those records include a transfer of $5,000 from AR Capital’s account that was submitted and approved by Mr Li.

Ms Cheng has given evidence that she became aware on or about 28 October 2022 that Ms Yang had made allegations of impropriety against Mr Li in relation to the administration of some of his companies, including V29, B66, PP One, and One Lake. Ms Cheng has given evidence that she was not aware at that time that Ms Yang was Mr Li’s wife, and she had understood that their relationship was a business relationship only. Ms Cheng has described her decision to remove Ms Li and to appoint herself as the sole director and secretary of AR Capital on 1 November 2022 as motivated by a desire to “protect” her daughter in the context of Ms Yang’s allegations against Mr Li.

Ms Cheng has given evidence that the following documents were executed on 7 and 8 November 2022:

Clause 13 of the Point Piper loan deed provides that specified events of default cause the whole of the principal and interest owing under to become immediately due and payable and entitle AR Capital to enforce its security. Those events of default include the appointment of a provisional liquidator to the borrower or guarantor. Clause 4 of the Point Piper mortgage provides that all secured monies shall become repayable and AR Capital may exercise all or any of its rights upon the occurrence of an event of default, which is defined as including an event that entitles AR Capital to demand payment of the secured monies from V29 under the Point Piper loan deed.

Ms Yang commenced these proceedings on 1 December 2022.

On 8 December 2022, V29 entered into a contract for sale of the Point Piper property to Hua Chen for the price of $8,600,000. The contract provided for settlement on 16 December 2022, being a period of only eight days. However, the contract did not proceed to settlement. According to Mr Tonks’ evidence, the contract was terminated by the purchaser.

Ms Cheng has given evidence that she became aware on or about 12 December 2022 that the provisional liquidators had been appointed to V29. As this was an event of default under the Point Piper mortgage, AR Capital engaged Clayton Utz to act as its solicitors in enforcing its rights under the mortgage. On 24 January 2023, Clayton Utz wrote to the provisional liquidators advising that they acted for AR Capital, the registered mortgagee of the Point Piper property. The letter stated that the provisional liquidators’ appointment was an event of default under the mortgage and that AR Capital intended to take possession of the Point Piper property and exercise its power of sale in accordance with the mortgage. The letter stated that any surplus funds would be distributed to V29 after payment of the debt secured by the mortgage to AR Capital.

Ms Sokolov has given evidence that she was first approached with a request for R&H Avalon to act as the vendor’s agent on the sale of the Point Piper property by the mortgagee in possession on or about 27 January 2023. R&H Avalon subsequently entered into an exclusive agency agreement with AR Capital on or about 7 February 2023 for the marketing and sale of the Point Piper property by private treaty, with expressions of interest to be received during the period from 7 February to 8 March 2023. At that time, Ms Sokolov’s estimate of the selling price was between $9,500,000 and $10,450,000, as recorded in the agency agreement.

On 1 February 2023, the provisional liquidators’ solicitors Piper Alderman wrote to Clayton Utz, apparently in response to Clayton Utz’s letter dated 24 January 2023. Piper Alderman stated that the provisional liquidators have duties to V29 and are required to ascertain whether the mortgage is valid and the extent of the monies it secures. They advised that the provisional liquidators already had a copy of the Point Piper loan deed, and requested that AR Capital provide a copy of the mortgage, a statement of account recording all drawdowns and repayments for the facility secured by the mortgage and an indication of the current payout figure, including a breakdown of amounts of principal and interest.

Piper Alderman’s letter also stated that the provisional liquidators had submitted a caveat for registration on the title to the Point Piper property consistently with their obligation to safeguard V29’s assets from improper dealings, but that they would be willing to withdraw the caveat to facilitate settlement of any future contract for sale of the Point Piper property, subject to verification of AR Capital’s mortgage and the amount said to be secured by it and on the condition that any surplus funds be paid to the provisional liquidators.

Mr Tonks has given evidence in his affidavit sworn on 17 May 2023 that the caveat referred to in Piper Alderman’s letter was registered on the title to the Point Piper property, but was later withdrawn on 4 May 2023 after the provisional liquidators caused another caveat to be registered on 2 May 2023. That second caveat is as referred to at [66] below.

AR Capital took possession of the Point Piper property on 2 February 2023.

On 8 February 2023, Clayton Utz wrote to Piper Alderman in response to their letter dated 1 February 2023, enclosing copies of the Point Piper mortgage and statement of loan account referred to at [40] above, together with copies of the transfer authorisations for payment referred to at [4141] above. The letter advised that the total amount owing by V29 to AR Capital under the Point Piper mortgage was $9,060,313, being the principal sum of $8,602,000 plus interest calculated at the rate of 15 per cent up to 11 December 2022 at the rate of 25 per cent from 11 December 2022. The letter stated that interest continues to accrue at the 25 per cent rate in the sum of $5,973 per day.

The period for expressions of interest for the Point Piper property closed on 8 March 2023.

On 13 March 2023, Ms Sokolov received a copy of a valuation report dated 7 March 2023 that had been prepared by certified practising valuers on the instructions of AR Capital. The report estimated the market value of the Point Piper property as $8,000,000, or $7,200,000 in a forced sale scenario.

Ms Sokolov has given evidence that, based on market responses and offers presented for the Point Piper property during the expressions of interest period, it was apparent to her by mid to late March 2023 that her original estimated selling price of $9,500,000 would not be achieved. On 21 March 2023, Ms Sokolov issued a notice of revised selling price to AR Capital revising her estimate down to between $8,600,000 and $9,000,000.

On 31 March 2023, Clayton Utz wrote to Piper Alderman confirming that AR Capital was exercising its power of sale under and in accordance with the Point Piper mortgage and selling the Point Piper property at auction in its capacity as mortgagee in possession. Clayton Utz’s letter appears to have been prompted by a communication sent by Piper Alderman to solicitors acting for other parties on 30 March 2023, alleging that Clayton Utz “have not responded to the provisional liquidators’ enquiries about the security and underlying loan”. That communication is not in evidence, but Clayton Utz’s letter stated that they had responded comprehensively on 8 February 2023 to all requests made in Piper Alderman’s letter dated 1 February 2023. Clayton Utz demanded that Piper Alderman immediately issue a further communication correcting the incorrect statement made in their 30 March 2023 communication.

The Point Piper property was auctioned on 1 April 2023. The property was passed in, as bids did not exceed the reserve price of $8,800,000. A report issued by R&H Avalon to AR Capital following the unsuccessful auction listed the offers that had been received and contracts that had been issued, including during the expressions of interest period. The report recorded that there had been one offer of $7,500,000, two offers of $8,600,000, one offer of $8,900,000 that was subject to a long settlement period or vendor finance, and one offer of $9,000,000 that was either subject to finance with settlement deferred until December 2023 or alternatively subject to vendor finance. The report recorded that all of those offers had been rejected.

On 5 April 2023, Piper Alderman wrote to Clayton Utz. In relation to the Point Piper property, the letter stated:

The letter went on to allege that banking records for the advances totalling $8,602,000 made by AR Capital to V29 during the period from 14 October 2022 to 25 November 2022 indicated that “Mr Li appears to control your client’s bank account(s)”.

Although paragraph 14 of Piper Alderman’s letter referred to Ms Yang’s evidence, it did not refer to Mr Li’s evidence adduced at the hearing on 12 December 2022 to the effect that he had arranged for the purchase of the Vaucluse and Bayview properties using funds that Ms Cheng permitted him to withdraw from her bank account pursuant to a longstanding arrangement between them.

Piper Alderman’s letter then stated that the provisional liquidators wished to ensure, before any money is released to AR Capital, that it is in fact owed to AR Capital and that the funds advanced by AR Capital to V29 and applied to the purchase of the Point Piper property were AR Capital’s funds “and not simply the recycled proceeds of sale of Vaucluse 29 Pty Ltd’s own property at 29 Carrara Road, a few months earlier”.

The letter then requested that AR Capital give the following undertakings to the provisional liquidators and to the Court:

Piper Alderman requested a response by 12 April 2023 and stated that, if the requested undertakings were not forthcoming, the provisional liquidators were likely to make an application in the proceedings seeking an injunction to the effect of the requested undertakings, or to request Ms Yang to make such an application.

Save for communicating to Piper Alderman that they were seeking instructions, Clayton Utz did not respond to the 5 April 2023 letter until 12 May 2023, as referred to at [71] and [76] below.

On 2 May 2023, the provisional liquidators caused V29 to lodge a caveat against the title to the Point Piper property prohibiting the recording of any dealing affecting the Registrar General from taking actions affecting V29’s estate as registered proprietor (caveat AT54020). The caveat records the following details supporting the claim:

Mr Tonks has given evidence that, caveat AT54020 was lodged “due to concerns over the legitimacy of any exercise of power of sale” by AR Capital. Mr Tonks has referred to “apprehended improper dealings which were anticipated, particularly in relation to [AR Capital]” at the time the caveat was lodged. As referred to at [109] below, the applicants’ submissions in support of their application for interlocutory injunctive relief did not challenge AR Capital’s entitlement to exercise the power of sale under the Point Piper mortgage and the applicants did not seek to restrain completion of the sale.

Ms Sokolov has given evidence that she received a message on 10 May 2023 from the prospective buyer whose previous offer of $7,500,000 for the Point Piper property had been rejected by AR Capital. [4] The message stated that the buyer would sign an unconditional contract to purchase the property for $8,600,000 with 10 per cent deposit payable on completion and the balance payable on settlement, which was to occur on 18 May 2023. The message stated that the buyer’s solicitor was in the process of preparing a certificate under s 66W of the Conveyancing Act 1919 (NSW) and requested confirmation that the vendor would be available to sign contracts at 9:00am the following day. Ms Cheng and Ms Sokolov have given evidence that Ms Sokolov communicated the offer to Ms Cheng, who gave instructions on behalf of AR Capital to accept that offer on 10 May 2023.

Contracts were signed and exchanged on 11 May 2023 between AR Capital, as vendor (as mortgagee in possession), and Tiger RMA Pty Ltd as purchaser. Consistently with the message referred to immediately above, the contract stipulated a price of $8,600,000 and provided for completion on 18 May 2023. The purchaser paid the deposit of $860,000.

The provisional liquidators became aware of the contract for sale on 11 May 2023. Piper Alderman immediately wrote to Clayton Utz requesting a copy of the contracts that had been exchanged and pressing for a response to their letter dated 5 April 2023.

On Friday, 12 May 2023, Clayton Utz sent a copy of the contract to Piper Alderman by email. The email stated that Clayton Utz had now obtained instructions in relation to the 5 April 2023 letter from Ms Cheng, who had been overseas from late March 2023, and that a full response to the 5 April 2023 letter would be forwarded on Monday, 15 May 2023. The email stated that the response would deny any suggestion that the secured loan advance was made by AR Capital to V29 “from monies somehow re-routed by Mr Li through sales of either the Carrara Road property or the Minkara Road property.” The email also advised that AR Capital would not be giving the undertakings sought by the provisional liquidators in their 5 April 2023 letter, or any undertakings to similar effect.

On 16 May 2023, Clayton Utz wrote to the provisional liquidators’ solicitors responding to the substance of their letter dated 5 April 2023, as had been foreshadowed in their email sent on 12 May 2023. The response denied that Mr Li controlled the bank accounts of AR Capital and stated that Ms Cheng had a poor command of English and relied on Mr Li to administer AR Capital’s bank accounts in accordance with her instructions.

The response also stated that AR Capital was not a party to the proceedings and its only connection to the proceedings that was the Point Piper mortgage entered into and registered prior to the appointment of the provisional liquidators to V29. The response stated that, as V29 was in provisional liquidation, AR Capital was entitled to enforce its rights under the mortgage to recover the amount owing to it which exceeded the amount likely to be realised from the proposed sale of the Point Piper property.

The response vigorously denied the suggestion that AR Capital was not owed the funds that it claimed to be owed under the Point Piper mortgage or that monies advanced to V29 for the purchase of the Point Piper property totalling $8,602,000 were not funds of AR Capital. The response gave an account of a series of transactions whereby Ms Cheng had initially advanced $10,000,000 from her personal account to Mr Li on 13 October 2022 for the purpose of enabling him to fund V29’s purchase of the Point Piper property, but had then decided that the loan should be made by AR Capital rather than by Ms Cheng personally. Ms Cheng had then put AR Capital in funds of $2,000,000 and had requested Mr Li to transfer to AR Capital some of the $10,000,000 sum that Ms Cheng had transferred to him on 13 October 2022, for the purpose of AR Capital then making the loan. Clayton Utz’s letter attached banking records in respect of these transactions, supplementing the transactions records that had been provided on 8 February 2023 in respect of the advances made by AR Capital to V29 totalling $8,602,000 referred to at [40]-[41] above. I note that Clayton Utz’s letter is consistent with Ms Cheng’s evidence about these transactions in her affidavit affirmed on 23 May 2023, which I have referred to at [38] above.

The response described Ms Cheng as “an independently wealthy woman in her own right” and summarised the effect of the transactions referred to above as Ms Cheng personally putting AR Capital in funds to make the loan of $8,602,000 to V29.

The response concluded by declining to provide the undertakings requested by the provisional liquidators in their solicitors’ letter dated 5 April 2023, and stating that any application for an injunction would be opposed and that AR Capital would seek security in respect of the undertaking as to damages.

The provisional liquidators caused V29 and B66 to file the interlocutory process on 17 May 2023. In his affidavit sworn on that date in support of the interlocutory process, Mr Tonks referred to the 16 May 2023 letter and deposed:

Ms Cheng and Ms Sokolov have given evidence that completion of the sale of the Point Piper property has been postponed pending the determination of the interlocutory process.

A statement of account for the Point Piper loan exhibited to Ms Cheng’s affidavit records that V29 has not repaid any of the sum of $8,602,000 advanced by AR Capital, that the total amount of principal and interest owing under the loan as at 15 May 2023 was $9,910,536 and that interest is continuing to accrue in the amount of $5,973 per day (applying the default interest rate of 25 per cent per annum). Ms Cheng has given evidence that there is therefore unlikely to be any surplus proceeds from the net sale proceeds of the sale of the Point Piper property. I note that the sale price payable under the contract entered into on 11 May 2023 is less than the amount owing as recorded in the statement of account.

Ms Cheng has given evidence that AR Capital intends to loan part of the funds it expects to recover from the exercise of its power of sale under the Point Piper mortgage to a trust that is yet to be established, of which her daughter Ms Li will be the sole beneficiary. Ms Cheng intends that the trust will use that loan to fund part of the $40,500,000 purchase price of a commercial property in Queensland that the trust intends to acquire.

On 24 February 2023, the provisional liquidators provided a report to the Court identifying the information that they had gathered since their appointment, summarising their knowledge of the facts and circumstances concerning V29, B66, and One Lake.

The report recorded the following points as “common facts and observations which pertain to all three Companies”:

The report provided the following summary of the provisional liquidators’ estimate of the assets and liabilities of V29:

In relation to the Point Piper property, the report stated:

In relation to the Vaucluse property, the report stated:

In relation to the complaints recorded in the report that the statement of account in relation to the Point Piper property did not cover the period in which other properties had been purchased and sold (which I assume refers to the Vaucluse Property, being the only other property purchased and sold by V29), that the provisional liquidators had not been provided with records disclosing who had funded V29’s purchase of the Vaucluse property, and that no account of the disbursement of the sale proceeds of the Vaucluse property had been provided to the provisional liquidators, I note that Mr Tonks has given evidence in his affidavit sworn on 25 May 2023 that, prior to being served with the exhibit to Ms Cheng’s affidavit affirmed on 23 May 2023, the provisional liquidators had not been provided with a copy of the V29 loan agreement referred to at [23]-[30] above and the V29 loan statement referred to at [31]-[33] above.

According to Mr Tonks’ affidavit sworn on 17 May 2023, V29 is not known to have any current assets other than minor cash at bank and the Point Piper property, and its financial position is “largely unchanged” since the provisional liquidators’ report dated 24 February 2023

The provisional liquidators sent their report dated 24 February 2023 to the ATO on 28 March 2023. On 17 May 2023, the provisional liquidators’ solicitors served the interlocutory process and Mr Tonks’ affidavit on the ATO in accordance with the orders made by the Court earlier that day. The subject line of the email read: “The matter of Vaucluse 29 Pty Ltd, Bayview 66 Pty Ltd and One Lake Macquarie Pty Ltd”. An employee of the ATO replied by email later that day, stating:

B66 was incorporated on the same day as V29 on 29 May 2020.

B66 purchased a property at Minkara Road, Bayview in New South Wales for $10,900,000 on or about 3 August 2020 (the Bayview property).

Mr Li became the sole director of B66 on 19 November 2020.

On 25 November 2020, Ms Cheng (as lender) and B66 (as borrower) entered into a loan agreement pursuant to which Ms Cheng agreed to advance up to $30,000,000 to B66 for the purpose of its purchase of the Bayview property and for other expenses following the acquisition of that property on terms that were otherwise substantially the same as the terms of the V29 loan agreement (the first B66 loan agreement). Ms Cheng gave evidence that the B66 loan agreement formalised the verbal agreement she had earlier made with Mr Li as described in paragraph 19 of her affidavit, which is set out at [19] above.

On or about 10 December 2021, B66 completed a sale of the Bayview property to a third party for $15,000,000.

On 15 March 2022, Ms Cheng (as lender) and B66 (as borrower) entered into a further loan agreement pursuant to which Ms Cheng agreed to advance up to $10,000,000 to B66 for the purpose of its purchase of a property in Crooks Road at Mandalong in New South Wales, and for building expenses following the acquisition of that property (the second B66 loan agreement). The terms of that agreement were otherwise substantially the same as the terms of the V29 loan agreement and the first B66 loan agreement.

Ms Cheng exhibited to her affidavit a loan statement in respect of both loans to B66, together with bank statements and transaction records. According to the loan statement, Ms Cheng had advanced amounts totalling $1,775,000 to B66 prior to the execution of the first B66 loan agreement and advanced further amounts totalling $11,172,349 before the Bayview property was sold on 10 December 2021. The loan statement records that, on 13 December 2021, the total principal and interest owing was $14,760,195. The loan statement records that the debt was reduced by a payment of $10,000,000 to Ms Cheng on that date. A settlement statement and bank statements tendered by the applicants confirm that the sum of $14,245,929 was payable to B66 on settlement of the sale of the Bayview property, that this sum was paid into B66’s bank account on 10 December 2021, and that $10,000,000 was then paid out of B66’s account to Ms Cheng’s account on 13 December 2021. The loan statement records a series of further payments made to Ms Cheng during the period from 16 December 2021 to 11 February 2022 reducing, but not eliminating, the balance owing. The loan statement records interest continuing to accrue at the rate of 15 per cent per annum on the balance owing from time to time. The loan statement records further advances made by Ms Cheng to B66 on 15 March 2022 and on 17 June 2022 for the deposit and stamp duty payable in respect of the property at Crooks Road, Mandalong (the Mandalong property).

Ms Cheng has given evidence that, as at 15 May 2023, there is an amount of $1,082,643 of principal and interest owing to her under the B66 loan agreements.

I note that Mr Tonks has given evidence in his affidavit sworn on 25 May 2023 that, prior to being served with the exhibit to Ms Cheng’s affidavit affirmed on 23 May 2023, the provisional liquidators had not been provided with copies of the first B66 loan agreement, the second B66 loan agreement and the statement referred to above. The provisional liquidators’ report dated 24 February 2023 noted that they had no information at that time about who had funded B66’s purchase of the Bayview property, and questioned why $10,000,000 of the sale proceeds had been paid to Ms Cheng and further sale proceeds had been paid to Mr Li. The report noted that B66 appeared to have disbursed the whole of its profit on the sale of the Bayview property, leaving it without funds to pay the capital gains tax on that profit.

According to the provisional liquidators’ report dated 24 February 2023 and Mr Tonks’ affidavit sworn on 17 May 2023, B66 has not completed its purchase of the Mandalong property and the provisional liquidators do not object to Mr Li’s proposal to attempt to extricate B66 from that contract and recover the deposit. B66 does not have any current assets other than minor cash at bank and has estimated net liabilities of approximately $1,500,000, irrespective of whether it completes the contract to purchase the Mandalong property.

The general principles governing the grant of interim injunctions are well established: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; (2001) 76 ALJR 1; (2001) 185 ALR 1; [2001] Aust Torts Reports 81-627; (2001) 54 IPR 161; [2001] HCA 63, especially at [8]-[13], [18] (Gleeson CJ), [91] (Gummow and Hayne JJ, Gaudron JJ agreeing); Papas v Grave [2013] NSWCA 308 at [83] (Emmett JA, Sackville AJA agreeing).

The purpose of an interim injunction is to preserve the status quo until the rights of the parties can be determined at a final hearing or, to adopt the language of Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats, supra, to “prevent the practical destruction” of the right in respect of which the plaintiff claims final relief “before there has been an opportunity to have its existence finally determined”. [5]

A plaintiff must establish that:

As Newnes JA said in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 at [87] (McLure P and Corboy J agreeing), the first requirement:

The inadequacy of a remedy in damages is often stated as a separate factor to be considered, but it is more accurately assessed as one aspect of the balance of convenience. The Court must determine whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; (1968) 42 ALJR 80; [1968] ALR 469; [1968] HCA 1.

As I have mentioned earlier in these reasons, counsel for the applicants submitted that an alleged risk of dissipation or removal from Australia of the proceeds of sale of the Point Piper property was also relevant to the Court’s determination of the claim for interlocutory injunctive relief. Any such danger must be established by evidence, rather than being merely asserted. The evidence may take a number of forms, including direct evidence that the defendant has previously acted in a way which shows that its probity is not to be relied on. However, it is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment. It is sufficient if the respondent’s conduct or proposed conduct is, objectively speaking, calculated to have the effect of frustrating the enforcement of any judgment that the applicant may obtain: UCPR, r 25.11; Samimi v Seyedabadi [2013] NSWCA 279 at [72]-[74] (McColl JA, citing Frigo v Culhaci [1998] NSWCA 88 at pages 6 and 8 per Mason P, Sheller JA, Sheppard AJA and Finn v Carelli [2007] NSWSC 261 at [4] per Brereton J (as his Honour then was)).

Notwithstanding that the applicants chose to frame their application as one for an interlocutory injunction rather than a freezing order, the injunction sought would have the same effect as a freezing order, and the proposed mandatory injunction requiring AR Capital to pay the proceeds of sale into court would go even further. It is therefore necessary to bear in the observations by Court of Appeal said in Frigo v Culhaci [1998] NSWCA 88, in a passage subsequently approved in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; (1999) 73 ALJR 657; (1999) 162 ALR 294; (1999) 45 IPR 1; [1999] HCA 18 at [51] (Gaudron, McHugh, Gummow and Callinan JJ), that a freezing order:

I have considered all of the written and oral submissions made on behalf of the applicants and AR Capital.

The evidence of Mr Li’s dealings with the shares in V29 relied on by Ms Yang in support of her application to appoint the provisional liquidators, [6] together with the evidence about the company’s financial affairs, [7] establishes a strong case for V29 to be wound up on the grounds of insolvency and/or pursuant to ss 461(1)(e), (f) or (k) of the Corporations Act. I accept that, if the applicants establish a claim that a liquidator appointed to V29 may bring on behalf of the company that raises a serious question to be tried, the Court has jurisdiction to make a freezing order if warranted in all the circumstances to prevent the frustration of the Court’s winding up process by seeking to meet a danger that a prospective Judgment that could be obtained by a liquidator will be wholly or partly unsatisfied by assets of the prospective judgment debtor being dissipated or removed from the jurisdiction: Re Hpack Investment Pty Ltd (2020) 149 ACSR 303; [2020] NSWSC 1638 at [36]-[49]. However, as I have already mentioned, the applicants in the present case rely on the Court’s power to grant interlocutory injunctions rather than invoking the freezing order jurisdiction.

AR Capital is the registered mortgagee of the Point Piper property.

Although the applicants’ submissions referred to the Point Piper loan deed and Point Piper mortgage as documents that were “purported to have been executed weeks after V29 purchased the Point Piper Property” and referred to this as a “strange course of events”, the applicants did not challenge Ms Cheng’s evidence that the documents were in fact executed and ultimately did not submit that the documents were not genuine. The applicants did not identify any potential claim to avoid or set aside the Point Piper loan deed or the Point Piper mortgage, or any challenge to the registration of the mortgage. Nor did they dispute AR Capital’s submissions that the appointment of the provisional liquidators to V29 was an event of default under the Point Piper loan deed and mortgage, which entitled AR Capital to take possession of the property and exercise its power of sale. [8] The applicants do not seek to restrain the sale of the property.

The applicants submitted that, if V29 is wound up, its liquidator or liquidators may commence proceedings for and in the name of V29 against AR Capital to recover the sum of $13,700,000, being a sum equivalent to the amount that the applicants contend that V29 paid to Ms Cheng from the sale proceeds of its Vaucluse property in excess of the amount that Ms Cheng had advanced to V29 under the V29 Loan Agreement. I note that the evidence summarised above discloses two payments made by V29 to Ms Cheng from the sale proceeds of the Vaucluse property in excess of the principal and interest owing under the V29 loan agreement, and that the total amount of those payments is $10,385,799. [9]

Counsel for the applicants, articulated the allegations underpinning that potential claim in the following terms:

The applicants’ submission that this potential claim raises a serious question to be tried as to whether AR Capital or V29 is entitled to the proceeds of sale of the Point Piper property depends on acceptance of the applicants’ assertion that there is no explanation for the payments that V29 made to Ms Cheng out of the sale proceeds of the Vaucluse property between 7 June and 17 June 2022 after the principal and interest owing under the V29 loan agreement had been paid in full.

I reject the applicants’ submission that Ms Cheng has offered no explanation for those payments totalling $10,385,799. Ms Cheng’s affidavit exhibits the V29 loan agreement and the V29 loan statement, together with supporting transaction records. Clause 8 of the V29 loan agreement required all of the sale proceeds to be paid to Ms Cheng’s account to be applied first to repay the principal and interest owing by V29 under that agreement, and secondly to repay any monies owed to Ms Cheng by associated companies, including One Lake. [11] The applicants do not submit that there is any serious question to be tried in relation to the validity or enforceability of the V29 loan agreement, including clause 8. Nor do they submit that there is any potential claim for relief under s 588FF of the Corporations Act in respect of that agreement. The V29 loan statement records that the amounts totalling $10,385,799 that were paid to Ms Cheng between 7 June and 17 June 2022 were applied to amounts owed to her by One Lake. [12]

I reject the submission made by counsel for the applicants that there was no evidence of any debt being owed by One Lake to Ms Cheng as at June 2022. There is evidence that, at that time, One Lake had borrowed from Ms Cheng in order to fund its $6,000,0000 purchase of the Eraring property and construction costs of approximately $5,000,000, and that One Lake remained indebted to Ms Cheng. There is no evidence of the amount owed by One Lake in June 2022, but counsel for the applicants did not identify any basis for inferring that One Lake did not owe Ms Cheng the sum of $10,385,799 recorded in the V29 loan statement as having been applied to One Lake’s debt. [13]

Counsel for the applicants described $10,385,799 as an “extraordinary” sum of money paid to Ms Cheng and submitted that the payment is “of concern” to the provisional liquidators. Mr Tonks gave evidence that he was “not satisfied as to whether” the funds that AR Capital advanced to V29 for the purchase of the Point Piper property “were not one and the same as the sale proceeds which appear to rightfully belong to Vaucluse 29 and Bayview 66”. [14] Neither those submissions, nor the evidence of Mr Tonks, raise a serious question to be tried about whether Ms Cheng was entitled to receive the payments totalling $10,385,799 out of the proceeds of sale of the Vaucluse property. In circumstances where the applicants do not point to any serious question to be tried concerning the validity and enforceability of the V29 loan agreement, that question depends on the theory that One Lake was not in fact indebted to Ms Cheng in the amount of at least $10,385,799 in June 2022. That theory does not rise above the level of speculation. I accept that applicants for interlocutory injunctive relief are not required to prove their case in respect of the potential claim, or to prove that it would probably succeed at trial. However, something more than unfounded speculation is required.

I mention for completeness two additional themes that featured in the applicants’ submissions, which did not advance their contention that there is a relevant serious question to be tried.

First, the applicants submitted that it was “unusual” or “notable” that the V29 loan agreement had been entered into after Ms Cheng had already advanced approximately $11,800,000 to V29 for the purchase of the Vaucluse property. Counsel for the applicants described those advances as “past consideration”, but did not submit that there was no consideration moving from the lender for the V29 loan agreement. The submission that the execution of the agreement after significant funds had already been advanced was “notable” did not grapple with Ms Cheng’s evidence to the effect that the written agreement formalised an earlier verbal agreement, that it included promises by the lender to make future advances, and that the V29 loan statement records further advances made after the execution of the written agreement. [15] Counsel for the applicants was unable to identify how the timing of the execution of the V29 loan agreement supported the applicants’ contention that the potential claim referred to at [111] above raises a serious question to be tried as to whether AR Capital or V29 is entitled to the sale proceeds of the Point Piper property.

Second, the applicants’ submissions suggested that the seven-day period for completion of the contract for sale of the Point Piper property entered into on 11 May 2018 is cause for suspicion of some kind, without articulating precisely what should be suspected or how any such suspicion points to a relevant serious question to be tried. There is some evidence suggesting that the seven day period may have been stipulated by the purchaser, rather than by the vendor. [16] Even assuming that it was stipulated by AR Capital as the vendor, I fail to see how this gives rise to any suspicion in circumstances where AR Capital informed the provisional liquidators on 24 January 2023 that it intended to take possession of the property and exercise its power of sale. [17]

The applicants’ contention that there is a serious question to be tried as to whether AR Capital or V29 is entitled to the proceeds of sale of the Point Piper property fails at the first stage of the analysis for the reasons explained at [112]-[115] above.

Looking beyond that first stage, it is doubtful that the period of approximately four months between the payment of the $10,385,799 to Ms Cheng under the V29 loan agreement and the incorporation of AR Capital in June 2022, and the advances made by AR Capital to V29 for the Point Piper property in October and November 2022, provides a rational basis for inferring that those advances were made by AR Capital out the funds that V29 had paid to Ms Cheng. The doubt arises not only due to the passage of time, but also from the evidence concerning the extent of funds available to Ms Cheng to make investments through AR Capital. [18] It is also difficult to reconcile Mr Li’s apparent willingness to provide a personal guarantee and security for the repayment of the funds advanced by AR Capital to V29 with the applicants’ theory that there is a serious question to be tried that those funds were “simply the recycled proceeds of sale of Vaucluse 29 Pty Ltd’s own property at 29 Carrara Road, a few months earlier”. [19] However, it is not necessary to express a more concluded view about those matters given that the first stage of the analysis reveals that there is no serious question to be tried.

Even if I had been persuaded that there was a serious question to be tried, I would not have considered that it had sufficient prospects of success to warrant the grant of the interlocutory injunctive relief sought by the applicants in all the circumstances of this case for the following reasons.

First, as counsel for AR Capital submitted, the applicants have neither commenced proceedings against AR Capital nor adduced evidence that they intend to do so or that they have even instructed solicitors to begin preparing a draft statement of claim. Moreover, the applicants adduced no evidence concerning the prospects of any liquidators who may be appointed to V29 securing funding to commence proceedings in respect of the potential claim referred to at [110]-[111] above. The information in the provisional liquidators’ report dated 24 February 2023 suggests that the Deputy Commissioner of Taxation is the only potential creditor of V29 who may have an interest in funding such proceedings. [20] The Deputy Commissioner has been investigating the position for some time, has had the benefit of the provisional liquidators’ report since 28 March 2023, and has been on notice of the application for interlocutory injunctive relief since 17 May 2023. There is no evidence that the Deputy Commissioner has indicated, even on a tentative basis, any interest in funding such proceedings. As counsel for AR Capital submitted, the Deputy Commissioner appears to be contemplating claims against Mr Li as the director of the taxpayer, rather than claims against AR Capital. [21] The applicants did not adduce any evidence of any discussions with the Deputy Commissioner concerning potential funding of such proceedings. The evidence does not provide any basis for inferring that there is a real prospect of future proceedings in respect of the potential claim referred to at [110]-[111] above.

Second, the sole basis on which the applicants submitted the Court should be persuaded to grant interlocutory injunctive relief against AR Capital, in circumstances where proceedings have not been commenced, was an alleged risk that the Point Piper sale proceeds will be dissipated or removed from Australia if the interlocutory injunction is not granted, resulting in an alleged risk that any judgment in respect of the potential claim (if proceedings are ultimately commenced and successfully prosecuted) might be wholly or partly unsatisfied. The existence of that risk was said to be demonstrated by the evidence of Mr Li’s authority to operate AR Capital’s bank account and his exercise of that authority to make one transfer of $5,000, [22] an alleged “propensity for transactions between related parties”, a history of payments being made without regard to potential taxation liabilities, an alleged failure to provide the loan agreements to the provisional liquidators, and the alleged absence of any explanation for V29’s payment to Ms Cheng out of the sale proceeds of the Vaucluse property of sums exceeding the principal and interest owing under the V29 loan agreement.

The applicants’ submissions failed to grapple with Ms Cheng’s evidence about the reasons why Mr Li had authority to operate bank accounts, [23] and did not articulate why Mr Li’s use of that authority for one transaction of $5,000—an insignificant transaction in the scheme of all of the other transactions referred to in the evidence—provided a proper basis for inferring that he might cause the Point Piper sale proceeds to be transferred out of AR Capital’s account or transferred overseas. As counsel for AR Capital submitted, Mr Tonks’ evidence that Mr Li is not an Australian citizen and spends long periods of time overseas does not support any such inference. [24]

The applicants’ submission that this case involves a “propensity for transactions between related parties” implies that AR Capital can properly be characterised as a related body corporate or associated entity of V29 and One Lake. However, the applicants did not identify any evidence of matters that would support that characterisation consistently with ss 50 and 50AAA of the Corporations Act.

The history of payments being made without regard to potential taxation liabilities is attributable to conduct of V29, B66, and One Lake. As counsel for AR Capital submitted, that has no bearing on the alleged risk that AR Capital might dissipate and/or remove from Australia the sale proceeds of the Point Piper property.

I confess that I do not understand the applicants’ complaint about the alleged failure to provide the V29 loan agreement (and, presumably, the loan agreements between Ms Cheng and One Lake and B66) to the provisional liquidators. The correspondence between AR Capital’s solicitors and the provisional liquidators’ solicitors discloses that the provisional liquidators did not request those loan agreements, notwithstanding that they must have been aware from my reasons for judgment given on 12 December 2022 that Mr Li had identified Ms Cheng as the provider for the funds used by V29 to purchase the Vaucluse property. [25]

Contrary to the applicants’ submissions, Ms Cheng’s evidence does offer an explanation for the payments made to her by V29 out of the Vaucluse property sale proceeds, as I have explained in some detail above.

For those reasons, the alleged risk of frustration of the court’s process for the enforcement of any judgment that may be awarded against AR Capital (assuming in the applicants’ favour that proceedings might ultimately be commenced) does not rise above the level of assertion. Such assertions provide no basis for restraining a registered mortgagee from dealing with the proceeds of its exercise of a power of sale of the secured property. Contrary to the applicants’ submissions, the circumstances of the present case are very different to those in Re Hpack Investments Pty Ltd for all of the reasons that I have explained above. [26]

Third, although I do not regard Ms Cheng’s evidence referred to at [80] above as establishing that the opportunity to purchase the Queensland property will be lost to the proposed trust if it cannot proceed with its plans to use the Point Piper sale proceeds for that proposed purchase, the evidence clearly establishes that AR Capital would be prejudiced if the interlocutory injunction were granted because interest would continue to accrue in the amount of $5,793 per day in circumstances where the total amount of principal and interest owing under the Point Piper loan deed already exceeds the value of the Point Piper property indicated by the result of the sales and marketing campaign conducted since February 2023 and the valuation report referred to [55] above.

Fourth, as counsel for the applicants candidly acknowledged, the usual undertaking as to damages that was proffered by the applicants provides no comfort for AR Capital because it is clear from the information in the provisional liquidators’ report that V29 and B66 have no ability to pay any compensation that they might ultimately be ordered to pay in accordance with that undertaking if the interlocutory injunction were granted.

For all of the foregoing reasons, the applicants have failed to establish that the possible future claim by a liquidator of V29 referred to at [110]-[111] above raises a serious question to be tried. In the absence of a serious question to be tried, neither the provisional liquidators’ “concerns” about the transactions between V29, Ms Cheng and AR Capital, nor their duties as provisional liquidators, furnish a proper basis for the grant of injunctive relief restraining a secured creditor of the company in provisional liquidation from exercising its rights. [27] Even if the applicants had established a serious question, the matters referred to at [121]-[131] would have caused me to decline to grant the injunctive relief sought.

On 18 May 2023, AR Capital gave an undertaking to the Court, without admissions, not to deal with the sale proceeds of the Point Piper property. That undertaking should be discharged with immediate effect.

I am not aware of any reason why costs should not follow the event of the interlocutory process. Neither the applicants nor any of the respondents to the interlocutory process indicated that they would wish to be heard separately in relation to the question of costs once the outcome of the interlocutory process was known.

The orders of the Court are as follows: