On Sky Enterprise (HK) Ltd v Lanco International Holdings Ltd; On Sky Enterprise (HK) Ltd v Leung (No 2)

1. [1]

   In December last year I delivered judgment in these proceedings: On Sky Enterprise (HK) Ltd v Lanco International Holdings Ltd; On Sky Enterprise (HK) Ltd v Leung [2025] NSWSC 1599 (“J1”). This judgment deals with various consequential issues and assumes familiarity with my December judgment.

2. [2]

   The trial involved the determination of claims made by the plaintiff (“OSE”) in two separate proceedings (the “2019 proceedings” and the “2020 proceedings”: J1 [3]). The active defendant in the 2020 proceedings was Ms Rachel Leung, formerly Shiu (“Rachel”: J1 [6]). The active defendants in the 2019 proceedings were Rachel, her daughter, and a trustee company controlled by her (“the Shiu Parties”: J1 [39]).

3. [3]

   OSE was successful overall in both proceedings: see J1 [653]. Among the orders which I made were orders for the sale of property held by the Shiu Parties and the appointment of a receiver. I also made various orders of an accounting nature against the Shiu Parties.

4. [4]

   As part of the process of settling the orders, the Shiu Parties had foreshadowed that they would appeal. Without opposition from OSE, I granted interim stays covering most of the orders. This was to allow the Shiu Parties, if they proceeded with their foreshadowed appeal, to make an application to a Judge of Appeal to extend the stays until the appeal had been heard: see J1 [861] order (15).

5. [5]

   As explained at J1 [840], it was not possible in my December judgment to deal finally with issues of costs. The parties agreed on a timetable for the resolution of those issues which culminated in a hearing on 27 February this year.

6. [6]

   Following the delivery of the December judgment, the Shiu Parties did indeed appeal. There are two separate appeal proceedings, one against the decree I made in the 2019 proceedings and the other against the decree I made in the 2020 proceedings.

7. [7]

   The Shiu Parties duly applied in the appeal proceedings to extend the stays until the appeal had been heard. That application came before Hammerschlag JA. There was little to no opposition to the extension of the stays. There was, however, a dispute about the terms on which the stay should be granted. Some of the conditions sought by OSE were accepted but conditions requiring the disclosure of information and production of documents by the Shiu Parties were not. His Honour remitted the question for determination by me at the hearing on 27 February.

8. [8]

   On 27 February, I heard argument on the costs issues and on the imposition of further conditions on the stays. I then announced my conclusions, giving a brief oral summary of reasons for those conclusions, and asked counsel for the parties to agree on minutes of order giving effect to them.

9. [9]

   Counsel later agreed on the minutes of order dealing with costs. There was, however, disagreement on the form of the stay orders, which was the subject of further written submissions.

10. [10]

    I now make orders in the agreed form, resolving the issue concerning the stay orders and setting out the reasons for those orders. My reasons are based on the ex tempore summary which I gave on 27 February, supplemented by further contextual and explanatory material.

Costs

1. [11]

   Counsel for the Shiu Parties recognised that, with OSE succeeding in both the 2019 and 2020 proceedings, the starting point was that it should receive costs orders in its favour. But counsel submitted that there were various subordinate points on which OSE had not succeeded, and the costs orders in favour of OSE should be qualified by reference to those points. Counsel submitted that, in each case, OSE should receive an order for 60-65% of its costs overall.

2. [12]

   Before the hearing on 27 February, I referred the parties to the approach that I have developed in earlier cases to the award of costs where one party is successful overall but does not succeed on every claim or issue which has been litigated. The reasoning behind that approach is most fully explained in Akierman Holdings Pty Ltd v Akerman (No 3) [2021] NSWSC 869 at [67]-[85]. It can be summarised as follows (Ahmau Developments Pty Ltd v Preet [2025] NSWSC 604 at [659]-[660]):

3. [13]

   I indicated that, subject to any submission which counsel might make, I would take that approach as the starting point for the purposes of the present dispute. Counsel were content to proceed on that basis.

4. [14]

   I will deal first with the unsuccessful claims by OSE which, counsel for the Shiu Parties contended, should result in an award of costs in her favour.

5. [15]

   The first was OSE’s alleged entitlement to a mortgage over the Lindfield property to secure its judgment debt (see J1 [530]-[550]). That was a claim for specific performance arising out of the terms of the loan agreement. It was entirely distinct from the successful s 37A claim which resulted in the make-available order in OSE’s favour. It was also more advantageous to OSE than the s 37A claim. If it had succeeded, there would have been no sharing of the proceeds of the Lindfield property at all.

6. [16]

   I appreciate that the costs solely referable to the mortgage question may be small. However, as a matter of principle it is a separate claim. The costs order in OSE’s favour should therefore be reduced by the costs referable to that claim, and OSE should pay Rachel’s costs, if any, solely referable to it.

7. [17]

   Next, there was OSE’s application for execution remedies (see J1 [551]-[558]). On this issue, I accept the submissions of counsel for OSE. When I refer in this context to a “claim”, not every prayer for relief gives rise to a separate claim in the relevant sense. Different prayers for relief may be made which seek in substance the same practical result. I agree with counsel for OSE that, through the make-available order, OSE has in substance achieved the same outcome as was sought by way of execution remedies. This gave rise, at most, to an issue in the overall claim. There should be no deduction on that account.

8. [18]

   Thirdly, I come to the equitable fraud claim (see J1 [567]-[578]). This, in my view, was a separate claim. It was separate doctrinally, and if successful would have given OSE an account covering several hundred thousand dollars of income which, having regard to the way OSE’s claim was presented, was not otherwise claimed. It seems unlikely that there would be many costs solely referable to the equitable fraud claim, but as a matter of principle OSE should not receive its costs, and should pay Rachel’s costs, solely referable to that claim.

9. [19]

   Now I come to the questions which arose in formulating the make-available order about the allowances to be made in Rachel’s favour, and on which OSE was unsuccessful (J1 [673]-[744]). I consider that, if anything, these were merely issues arising as part of the claim. The order as ultimately formulated was not as favourable as had been contended for by OSE. But OSE’s lack of success, which I would describe as marginal in effect, does not affect its overall success on the claim. Accordingly, there will be no deduction on account of OSE’s failure on some of those issues.

10. [20]

    The other point concerns the joinder to the 2020 proceedings of the New South Wales Trustee and Guardian, and the tenant of the property (see J1 [34]). Again, this is likely to be a very small point financially. However, the judgment of the Victorian Court of Appeal in Dimos v Willetts [2000] 2 VR 170 makes it clear that where a plaintiff sues multiple defendants and succeeds against one but fails against another, the plaintiff will receive an order for costs, but that order is (unless otherwise stated) an order for recovery of the plaintiff’s costs of the proceedings as against the unsuccessful defendant. It does not carry with it costs solely referable to the plaintiff’s claim against the successful defendant (see at [45]).

11. [21]

    I propose to take the same approach here. The order in favour of OSE will be worded as an order that Rachel pay OSE’s costs of the proceedings against her. It will not cover any costs solely referable to the joinder of the additional parties, which will lie where they fall, no application for costs having been made by those parties.

12. [22]

    OSE’s claim for indemnity costs is no longer pressed. The agreement that costs attributable to both proceedings should be split 50:50 between them (J1 [831]), however, still stands. An order for interest on costs is not opposed.

13. [23]

    I indicated in my December judgment (J1 [834]-[837]) why I considered it appropriate to order that the costs order be enforceable at this point, and I elaborated on that orally on 27 February. I did not understand that counsel for the Shiu Parties wished to take the point any further. I will therefore make an order that the costs of the proceedings, up to the making of the decrees and including the hearing on costs, are to be assessed and are payable forthwith.

14. [24]

    I do not propose to make an order for payment of a percentage of OSE’s overall costs (whether 60-65%, which would be far too low, or any other figure). In this regard, I repeat what I recently said in a case where a plaintiff failed on his main claim and I was asked to make an order that he pay a percentage of the defendants’ costs overall (Lyons v Duke [2025] NSWSC 1396 at [74]):

15. [25]

    As I understand it, there is no dispute that OSE should receive an order for costs against the Shiu Parties since their joinder on 6 October 2022 (J1 [40]) and for the costs of the motion which resulted in their joinder (J1 [30]: I stated there that the notice of motion was filed in September 2020, but was informed by the parties at the 27 February hearing that the correct date was 9 June 2021).

16. [26]

    There is a dispute about whether the costs of OSE’s 2021 application for a garnishee order against Rachel, including the costs occasioned by her objection (J1 [32]-[33]), should also be included. On this issue, I agree with the submission by counsel for OSE. As a matter of substance, the ultimate outcome in the proceedings has justified the application. Accordingly, OSE should have an order for costs in its favour, but against Rachel only.

17. [27]

    However, insofar as OSE went further and sought costs against the Shiu Parties for the whole of its costs of the proceedings, I take a different view. Prior to the applications to which I have referred, the only active defendant in the proceedings was Joe Wing (see J1 [25]-[26]). On the Dimos v Willetts approach, OSE’s costs order against the Shiu Parties (or, in the case of the garnishee application, Rachel) would not usually include costs incurred in pursuing claims against him.

18. [28]

    It seems to me that the Court should only depart from this approach in circumstances which would justify a third-party costs order against the Shiu Parties for the costs of the proceedings against Joe Wing. I do not think they do. One would need a much more detailed investigation of exactly who had been involved in the decision-making in the proceedings and who stood to benefit from them than is available on the evidence before me.

19. [29]

    Then there are the two questions of vacation and adjournment. In relation to the vacation of the hearing before Slattery J on 11 October 2022 (see J1 [40]-[41]), the submissions of counsel for OSE demonstrate that the hearing date had already been fixed and that, until a relatively short time before the question of vacation arose, it would not have been practicable to fix the two proceedings for hearing together. Counsel also gave further detail about what was said at the hearing before Garling J on 6 October (J1 [41]), which I did not understand to be contested in point of fact by counsel for the Shiu Parties. It shows that as late as 6 October it was unclear how the proceedings should run, in the sense that no definite decision had been made about whether they were to be heard together, sequentially, or in some other way.

20. [30]

    In those circumstances, the hearing before Slattery J was, for practical purposes, inevitable. It should be treated as part of the case management of the proceedings. The costs of that hearing should therefore follow the other general costs of the proceedings and there should be no deduction on account of the costs of that occasion.

21. [31]

    Then I come to the adjournment in 2023 to obtain an assignment of Joe Wing’s claim for breach of fiduciary duty from the Bankruptcy Trustees (see J1 [44]-[46]). As counsel for the Shiu Parties accepted, there would only be a justification for making a costs order which covered the costs thrown away by reason of the adjournment. Counsel for OSE in my view were correct in suggesting that this would not, for instance, cover the costs of actually responding to the assigned claim. The proper measure of the costs thrown away is the additional expense incurred above and beyond that which would have been incurred if the claim which has been added had been included in the original version of the statement of claim.

22. [32]

    Prima facie, there seems to be no good reason why the claim could not have been pursued at a much earlier point. As I recall the evidence given by the solicitor at the hearing, it was really a case of the issue coming into increasing prominence during the course of the hearing until the point where a forensic decision was made that the interests of the plaintiff demanded the obtaining of an assignment and an adjournment for that purpose. On the face of it, therefore, there might have been an argument that the adjournment should not have been granted in the first place or, if granted, should only have been granted on terms that the costs thrown away be paid by OSE. But no such application was made at the time; the adjournment was granted by consent, according to my recollection.

23. [33]

    Another factor is this. I have no doubt that the fact that the adjournment eventually lasted for a year would have led to some increased costs, simply because, as time passed, it would have taken longer for the parties and their lawyers to get back into the swing of things. Certainly from the Court's point of view, that was so. But it is not clear why it is that it took a year for the case to come back. Counsel for the Shiu Parties said something from the bar table but it did not purport to be comprehensive and there was no actual evidence on the subject. In particular, there was no evidence that the Shiu Parties were pressing throughout that period to get the case back before the Court as quickly as possible.

24. [34]

    In these circumstances, the fact that the adjournment went on for longer than it now seems it really needed to, cannot be entirely blamed on OSE. The resulting increase in costs must be treated as something that both parties were prepared to accept as part of the general costs of the proceedings. In those circumstances, I do not propose to make any reduction on that account.

25. [35]

    The costs of the motion for additional interest on the registered judgment have already been dealt with (J1 [828]). Again, there is no opposition to an order for interest, nor to an order that the costs be assessable forthwith.

Additional terms and conditions for continuance of stays pending appeal

1. [36]

   The additional terms which counsel for OSE sought to include in the extension of the stays were orders obliging the Shiu Parties to provide information, verified by affidavit, as to the nature and value of their assets (in Australia or overseas). This was opposed by counsel for the Shiu Parties.

2. [37]

   Counsel for the Shiu Parties submitted that OSE had already obtained various protections against the risk of dissipation of assets to which it is, or might become, entitled under the orders made in its favour in December. OSE has caveated the Kirribilli property which is the subject of the receivership order in the 2020 proceedings and the Lindfield property which is the subject of the receivership order in the 2019 proceedings. It also has caveats over the three other properties which it has identified as having been acquired, in whole or part, with the traceable proceeds of the funds which are the subject of the account in the 2019 proceedings (J1 [118]). The Shiu Parties are also obliged to keep the ongoing income from the Lindfield and Kirribilli properties in separate bank accounts (Lindfield: J1 [861] order (17); Kirribilli: orders (1)(a) and (b) of Hammerschlag JA on 13 February this year). Counsel submitted that, taken together, these protections adequately secured OSE’s position and it would be unwarranted to require information as to the general financial circumstances of the Shiu Parties.

3. [38]

   There are two relevant bases for this application. One arises in this way: OSE has obtained orders against the Shiu Parties for the taking of accounts. Ordinarily this would allow OSE to issue examination notices against them under UCPR r 38.1 for "answers to specified material questions" or to produce documents "in relation to material questions". It seems to have been assumed by the parties that the stay on the orders for account extends to the issue of examination notices based on those orders. But the Court retains the power to impose equivalent obligations as a condition of the grant of the stay.

4. [39]

   As I understood it, counsel for the Shiu Parties conceded that, but for the stay, OSE would have been entitled as of right under r 38.1 to issue examination notices in aid of the orders for account requiring disclosure of the documents sought in the present application. With respect, I think that concession was well made.

5. [40]

   It is true that OSE has the benefit of caveats over the five identified properties and orders designed to quarantine the income from two of them. But the orders for account are not limited to those assets. They provide for tracing into any other assets which the Shiu Parties still hold. Furthermore, any tracing rights will depend upon establishing that the assets in question can properly be traced back to the original receipts of money which are the subject of the orders. To the extent that this cannot be established, OSE will have to be content with an unsecured monetary judgment. It is likely that even if OSE is wholly successful in its tracing claims, the eventual outcome of the account will be an amalgam of proprietary and monetary relief.

6. [41]

   The stay is an indulgence in favour of the Shiu Parties. Once it is accepted that, but for that stay, OSE would have been entitled under r 38.1 to obtain information as to the Shiu Parties’ financial position, it is inevitable that, as a quid pro quo for the stay, the Court should impose a condition to ensure that that entitlement is not thereby prejudiced.

7. [42]

   Secondly, as I have explained, at least some of the relief which OSE will obtain under the accounting orders if they survive appeal will take the form of unsecured monetary judgments. The Shiu Parties’ liabilities for costs will also be unsecured. This opens the possibility of OSE making an application for a freezing order to protect its unsecured claims against dissipation of assets by the Shiu Parties, which is a legitimate basis for seeking disclosure: see r 25.12(2).

8. [43]

   For these reasons I concluded on 27 February that orders of disclosure should be made in the form sought by OSE. Two further issues have since arisen and have been debated in the parties’ written submissions.

9. [44]

   First, there is a dispute about how long the Shiu Parties should have to provide the disclosure to be ordered. Counsel for OSE seeks to have the specified information provided by written statement within 14 days, and confirmed by affidavit within 15 business days, of the date of the making of the order. Counsel for the Shiu Parties seeks a period of 28 days from the making of orders for both the statement and the affidavit.

10. [45]

    The Shiu Parties have known since 27 February that an order in this form would be made. From the outset, compliance periods of 14 days and 15 business-days have been sought. The effect of the delay in making the order is that the Shiu Parties will have had an additional three weeks anyway. There is no evidence before the Court that it will be impossible, or even difficult, for the Shiu Parties to comply in the time periods nominated by counsel for OSE. I will adopt the 14-day and 15-business-day periods sought.

11. [46]

    The second issue is this: counsel for the Shiu Parties intimated that they intended to appeal against the disclosure orders. Counsel seeks a stay of the orders consequential upon that proposed appeal. Counsel’s primary position is that the stay should last until the hearing of the appeal. Alternatively, counsel seeks to have it operate until the first return of the appeal proceedings so that an extension can be sought at that point.

12. [47]

    In support of these contentions, counsel repeated the submission made on 27 February that OSE was adequately protected by the existing caveats and orders. Counsel added:

13. [48]

    I do not accept that the disclosure orders will amount to some sort of enforcement of the orders for account before the appeal against those orders is determined. The disclosure orders do not determine any substantive rights of the parties. They are merely ancillary orders in aid of the accounting process (r 38.1) or in aid of a possible application for freezing orders (r 25.12). Only when the accounting process has been completed and the Shiu Parties’ liability quantified in monetary and proprietary terms will any question of actual enforcement arise.

14. [49]

    As explained above, on either basis there are legitimate forensic reasons for pursuing disclosure at this point even though the accounting proceedings may have been stayed. Disclosure may assist with the identification of lines of enquiry about tracing, which can be pursued without further delay if the challenge to the accounting order fails. It may also allow OSE to apply for freezing orders in aid of possible future monetary judgments. Given the time which has passed since the proceedings were commenced, and the findings I have made about the Shiu Parties’ conduct, it is unsurprising that those advising OSE might wish to obtain such disclosure before any appeal is resolved.

15. [50]

    Ordering disclosure at this point will result in further costs to both parties which may prove to have been wasted if the orders for account are ultimately set aside. If that happens, the Shiu Parties’ costs of compliance will be payable by OSE. There may be some residual cost and inconvenience to them. But the burden to the Shiu Parties needs to be balanced against the forensic value to OSE from having disclosure now.

16. [51]

    In striking this balance, the Court must give full weight to the fact that the orders for account were obtained after an exhaustive forensic context and are presumptively correct. A stay of the disclosure orders is certainly not necessary to protect the subject matter of the appeal against those orders. In these circumstances, I think that, if those acting for OSE wish, at its own risk as to costs, to proceed with obtaining disclosure, they should be permitted to do so. Indeed, to do otherwise would be positively unjust.

17. [52]

    My usual practice in making final orders, if informed that there is to be an appeal and a stay is to be sought, is to grant a short stay to allow the unsuccessful party to commence the appeal and apply, if so advised, to a Judge of Appeal to extend the stay until the appeal is heard. But the present application is a matter of practice and procedure. There has already been considerable delay in resolving it. The Shiu Parties will have sufficient time before compliance is due to mount an appeal (or application for leave to appeal) and approach a Judge of Appeal, if so advised. I will not myself grant a stay of the disclosure order.

Orders

1. [53]

   The orders of the Court for the 2020 proceedings are:

   1. (1)

      ORDER that the First Defendant pay the Plaintiff’s costs of the proceedings against the First Defendant, subject to the following:

   2. (2)

      ORDER that the First Defendant pay to the Plaintiff interest on the assessed costs, including disbursements, at the rates prescribed by rule 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) from the date of the payment of each amount until such time as the First Defendant has paid the costs and disbursements due to the Plaintiff.

   3. (3)

      ORDER that the costs and interest under these orders and prior orders are assessable and payable forthwith.

   4. (4)

      ORDER that for the purpose of assessment of the costs payable the costs of the trial of these proceedings and proceedings no. 2019/182525 be apportioned equally between those two proceedings.

2. [54]

   The orders of the Court for the 2019 proceedings are:

   1. (1)

      ORDER that the 8th, 9th and 10th Defendants pay the Plaintiff’s costs of its claims against them in the proceedings since 6 October 2022.

   2. (2)

      ORDER that the 8th, 9th and 10th Defendants pay the Plaintiff’s costs of the motion filed 9 June 2021.

   3. (3)

      ORDER that the 8th Defendant pay the Plaintiff’s costs of the Garnishee Motion filed 11 June 2021 and the Plaintiff’s costs of the Garnishee Order of that date and of the further proceedings under and in respect of that Order.

   4. (4)

      ORDER that the 8th, 9th and 10th Defendants pay to the Plaintiff interest on the assessed costs, including disbursements, at the rates prescribed by rule 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) from the date of payment of each such amount until such time as the 8th, 9th and 10th Defendants have paid the costs and disbursements due to the Plaintiff.

   5. (5)

      ORDER that the costs and interest ordered by these Orders and prior orders are assessable and payable forthwith.

   6. (6)

      ORDER that for the purpose of assessment the costs of the trial of these proceedings and proceedings no. 2020/276708 be apportioned equally between those two proceedings.

3. [55]

   The orders of the Court for the appeal proceedings are:

   1. (1)

      ORDER that Order 1 of the orders made by Hammerschlag CJ in Equity on 13 February 2026 be varied by inserting, after sub-paragraph (b) of that Order, the following additional terms and conditions: