The Owners – Strata Plan No 97938 v Golden Rain Development Pty Ltd

1. [1]

   By notice of motion dated 28 November 2025, the plaintiff seeks a freezing order restraining the first defendant, Golden Rain Development Pty Ltd (Golden Rain), from disposing of, dealing with, or diminishing the value of, its assets in Australia up to the unencumbered value of AUD $29,080,012.98. Alternatively, the plaintiff seeks an order restraining Golden Rain from dealing with its proprietary interest in 18 lots in what is known as the Honeycomb Terraces without giving prior notice to the plaintiff.

2. [2]

   The application is supported by an affidavit dated 28 November 2025 by the plaintiff’s instructing solicitor, Ms Laura Dale. Golden Rain opposes the application and relies upon an affidavit affirmed 21 January 2026 by its instructing solicitor, Mr Jonathan Light.

Some background matters

1. [3]

   The plaintiff comprises the Owners of Strata Plan No 97938. The strata plan relates to two seven-storey buildings with 109 apartments and basement car parking, known as the Sugarcube Apartments. The plaintiff has brought proceedings in this Court against Golden Rain and others seeking damages for defective works involving alleged breaches of statutory warranties under s 18B of the Home Building Act 1989 (NSW).

2. [4]

   Golden Rain developed the land to which the strata plan relates. It was incorporated in 2013 with a view to carrying out property developments. Its first project commenced around November 2014, when it acquired a former industrial site in Erskineville to be developed into residential units and terraces. The Erskineville Project had two main parts: the first involving construction of the Sugarcube Apartments and the second involving the construction of 18 terraces in the Honeycomb Terraces. The project also involved the construction of various public domain roads. Both the Sugarcube Apartments and Honeycomb Terraces have now been built but there have been delays in the issue of an occupation certificate. An interim occupation certificate was granted for the Sugarcube Apartments in November 2020. All those apartments have been sold and the proceeds were used by Golden Rain to repay its bank debt and business expenses.

3. [5]

   To date, no occupation certificate has been issued for the Honeycomb Terraces. Golden Rain lodged an application for a final occupation certificate for the Honeycomb Terraces on 10 December 2025. It is unclear when any such certificate may be issued. The freezing order sought by the plaintiff is primarily aimed at restraining Golden Rain from dealing with those terraces until the proceedings are completed.

4. [6]

   Several of the Honeycomb Terraces were sold “off the plan”. All of those contracts have been rescinded except for the contracts for sale in respect of lots 5, 11 and 18. Although Golden Rain received a 10% deposit on each of those three contracts, the balance of the purchase price remains outstanding. Assuming that the non-rescinded contracts complete at the contract price, the total amount outstanding is approximately $4,117,000, less the 10% deposit already received by Golden Rain for each of those contracts.

5. [7]

   A real estate agent has provided Golden Rain with recommended pricing for the remaining 15 terraces, which totals $33,090,000. Golden Rain has also obtained market assessment certificates in respect of lots 3, 12 and 15 which give a value of $2,467,500, $2 million and $2 million respectively.

6. [8]

   The sale of all the apartments in the Sugarcube Apartments generated approximately $91,772,000. Those proceeds were applied by Golden Rain to repay the principal on a loan with ANZ Bank in the amount of approximately $60 million along with payment of interest and fees on that loan in the amount of approximately $6.3 million.

7. [9]

   In November 2014, Golden Rain entered into various loan facility agreements with six shareholders (Facility Agreements), each of whom was a related party to Golden Rain. The loans were for the purpose of financing costs and expenses in developing the Sugarcube Apartments and Honeycomb Terraces. Each of the agreements carried an interest rate of 10% per annum. Notably, in the light of the events to follow, none of the loans were secured.

8. [10]

   In 2019, the parties to the Facility Agreements entered into supplementary deeds to those agreements (Supplementary Deeds), under which each of the lenders waived all interest payable by Golden Rain.

9. [11]

   On 24 July 2025, Golden Rain and six related party lenders entered into replacement Facility Agreements (Replacement Facility Agreements), which replaced the earlier Facility Agreements and the Supplementary Deeds.

10. [12]

    The identity of the lender and facility limit in each of the Replacement Facility Agreements are set out in the table below (which is extracted from Mr Light’s affidavit):

11. [13]

    There are several points to make about this table. First, two of the lenders are currently directors of Golden Rain and reside in Australia (Mr Hongliang Huang and Ms Rosemary Ren). The third director of Golden Rain is Mr Rui Xia. He is a citizen of China and a permanent resident of Australia. Mr Jibin Xia is a resident of China, as also appears to be the case with Fei Xia and Jizhong Xia. Mr Jun Zhang resides in Australia.

12. [14]

    Secondly, Mr Light deposed on information and belief that Fei Xia is the son of Jiguo Xia. Jiguo Xia was a related party lender under the original Facility Agreement and has been replaced by his son, Fei Xia, under the corresponding Replacement Facility Agreement.

13. [15]

    Thirdly, none of the six Replacement Facility Agreements explicitly requires Golden Rain to pay any interest on the loan facilities.

14. [16]

    According to Mr Light, Golden Rain’s indebtedness under the Replacement Facility Agreements totals $25,838,926.99. The money borrowed is to be repaid no later than 25 July 2026. The Replacement Facility Agreements are secured by a registered mortgage. The mortgagee is MSC Capital Pty Ltd (MSC).

15. [17]

    A copy of the registered mortgage between Golden Rain and MSC was included in the exhibit to Ms Dale’s affidavit.

16. [18]

    The Replacement Facility Agreements (copies of which were adduced in evidence in the exhibit to Mr Light’s affidavit) refer to a suite of other significant related documents which were executed on or around the same time as the Replacement Facility Agreements. Copies of none of those other documents were included in Mr Light’s affidavit. The suite comprises:

17. [19]

    No copies of those documents were provided in Mr Light’s affidavit. It was only after the Court raised the fact that the suite of documents had not been placed in evidence that copies were belatedly tendered by Golden Rain, without objection. The parties were given an opportunity to provide brief supplementary submissions in writing concerning the significance of these documents, to which I will return below.

18. [20]

    In August to September 2025, the six lenders involved in the Replacement Facility Agreements as set out in [12] above collectively advanced Golden Rain an additional amount of $1 million to be used to pay land tax due on the Honeycomb Terraces for 2024 and 2025, and other expenses. There is no formal written loan agreement in relation to this $1 million loan, but Mr Light gave evidence on information and belief that interest is payable at 10% per annum.

19. [21]

    Mr Light also gave evidence on information and belief from Ms Ren “that Golden Rain intends to pursue further development opportunities” after it receives the remaining proceeds of the sales of the Honeycomb Terraces and pays the amounts owing under the Replacement Facility Agreements and the $1 million loan.

20. [22]

    On 10 February 2022, Golden Rain entered into a Memorandum of Understanding (MOU) with Hunta Property Pty Ltd (Hunta) which is a property advisory firm specialising in assisting clients with property development opportunities. The MOU states that it is intended to guide the parties’ relationship pending the negotiation and execution of more detailed and binding agreements for each specific development opportunity. The purpose of the MOU is set out in clause 1, and includes recording the parties’ “shared understanding and broad commercial principles for cooperating in a Joint Venture … in property investment and development”, including “jointly undertaking property development and related advisory activities through project-specific special purpose vehicles and/or a new joint venture entity”. Clause 1.3 of the MOU states that, except for certain boilerplate provisions, the MOU “is intended to be an expression of commercial intent only and is not legally binding”.

21. [23]

    Mr Light also gave evidence, again on information and belief, as to various development opportunities explored by Golden Rain since early 2023. None of those opportunities have crystallised. In a “New Development Schedule” included in the exhibit to Mr Light’s affidavit, it is stated that offers were made in the period 2023 to 2024 in respect of three opportunities, but none were successful. The document also refers to due diligence having been carried out in respect of two development opportunities for which expressions of interest were due in early 2024 and late 2025 but no offers were submitted. The plaintiff correctly pointed out Golden Rain did not adduce evidence of the earlier offers or their terms and conditions. Mr Light gave evidence on information and belief from Ms Ren that Golden Rain had also considered in May 2025 acquiring two separate properties in Gordon and St Ives for development. Those opportunities were not pursued, however, as Golden Rain thought it was unlikely that it could obtain debt financing for those projects.

22. [24]

    Mr Light also gave evidence on information and belief (again from Ms Ren) that Golden Rain had been informed by the Commonwealth Bank in June 2025 that, if it wished to obtain a bank loan to fund a new development, it needed to provide proof of current income sources. As Golden Rain’s primary anticipated income source was and remains profits from the sale of the Honeycomb Terraces, which cannot proceed without an occupation certificate, it has paused its plans to obtain any such bank loan for a new development.

23. [25]

    It is notable that the only evidence adduced by Golden Rain relating to its intentions to undertake future developments and its stated present intention to pursue further development opportunities was given not by any of its directors (who could then have been cross-examined) but by its solicitor acting on information and belief provided by one of Golden Rain’s three directors. Of course, this is an interlocutory application and it is not uncommon for evidence to be given on information and belief, but the failure to call a witness to give direct evidence which may be tested by cross-examination may affect the weight to be given to the evidence in question, particularly where the evidence goes to central issues.

24. [26]

    Finally, Mr Light gave evidence on information and belief that, if the plaintiff obtained relief in the terms of prayers 1-2 of the notice of motion, Golden Rain may be prevented from obtaining a bank loan for it to pursue the opportunities referred to above, or other opportunities. Thus, it would be prevented from carrying out its business as a developer. It is notable that this evidence is directed to prayers 1-2 in the plaintiff’s notice of motion and is silent regarding the alternative prayer for relief in prayer 3.

Consideration and determination

1. [27]

   Prior to the filing of the present motion, there were detailed exchanges of correspondence between the plaintiff and Golden Rain in the period from 5 May 2025 to 26 November 2025 regarding the form of an undertaking from Golden Rain which might have obviated the need for the present application. Those discussions did not lead to any agreement and the plaintiff filed the notice of motion on 28 November 2025.

2. [28]

   The plaintiff contends that Golden Rain’s financial position is such that, unless it is restrained, there is a danger that any judgment obtained by it will be wholly or partly unsatisfied. Golden Rain’s Financial Statements for the financial year ending 30 June 2024 records it as having liabilities in the form of loans to the six related party lenders in the total amount of $26,953,463.

3. [29]

   The Balance Sheet for Golden Rain as at 30 June 2025 records it having total assets of $23,117,840.56, of which most relates to “total construction in progress” (comprising of $22,754,442.90). The stated liabilities include loans from the six related party lenders. Total liabilities are stated to be $27,325,606.56 and net assets are stated to be −$4,207,766.

4. [30]

   The financial records reveal that Golden Rain’s liabilities are overwhelmingly owed to related parties, being the six individuals who have lent it money. This is confirmed by Note 10 to the Financial Statements for the year ending 30 June 2024, which records “Loans – Related Parties: $26,953,463”.

5. [31]

   The MYOB Balance Sheet for the period from July to December 2025 (which is contained in Annexure A to these reasons for judgment) records total assets in July in the amount of $23,128,366.10, of which $22,845,474.12 relates to total construction in progress. That balance sheet also records a shareholder loan from Jibin Xia in the total amount of $6,423,900.47 as at July 2025 and increasing to $6,678,900.47 as at December 2025 (to be contrasted with the figure $6,170,147.71 in the table at [12] above) and a loan from HL Huang in the total amount of $6,282,255.79 as at July 2025 and increasing to $6,487,255.79 as at December 2025 (to be contrasted with the figure of $6,251,542.71 in the table). The net assets are stated to be −$4,220,667.24 as at July 2025. The increase in the total amount of the loans presumably reflects interest payable on the relevant part of the undocumented $1 million loan. Extracts from the MYOB Balance Sheet show an increase in the total loan amounts from the other four related party lenders over the six month period.

6. [32]

   The plaintiff also draws attention to the statement at Note 1(a) to the Financial Statements of Golden Rain for the financial year ending 30 June 2024, which states (emphasis in original):

7. [33]

   The evidence is unclear as to who are the guarantors of this continuing financial support and any terms and conditions are unknown.

8. [34]

   In the light of all these matters, the plaintiff contends that the only realistic source from which a judgment could be satisfied is future dealings by Golden Rain with development assets or proceeds, including after servicing related party loans. While it accepts that this amounts to “ordinary commercial activity”, it submits that when undertaken by a company with negative equity and no asset buffer, as is the case with Golden Rain, these activities will inevitably diminish or exhaust the only pool from which a judgment could be satisfied.

9. [35]

   There is an issue regarding the plaintiff’s capacity to fulfil the usual undertaking as to damages, to which I will return below.

10. [36]

    In brief, Golden Rain opposes the freezing order on the following grounds:

(a) The applicable principles summarised

1. [37]

   Although the parties placed different emphasis on the principles which guide whether or not to issue a freezing order, they were in substantial agreement as to these principles.

2. [38]

   Rule 25.11(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides:

3. [39]

   UCPR r 25.14(4) provides, relevantly, that the Court may make a freezing order if satisfied that “there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because … the assets of the judgment debtor, prospective judgment debtor or another person are … disposed of, dealt with or diminished in value.”

4. [40]

   The relevant principles are to be found in cases such as Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; Deputy Commissioner of Taxation v Huang (2021) 273 CLR 429; [2021] HCA 43 and Aqualand.

5. [41]

   Each case necessarily turns on its own facts, but the following broad principles are relevant:

(b) Applying the relevant principles to the circumstances here

1. [42]

   As is apparent from the summary above of Golden Rain’s arguments in opposing the relief sought by the plaintiff, it does not contest the plaintiff’s claim that it has a good arguable case. Rather, Golden Rain’s opposition focuses upon the issue of whether the plaintiff has established the requisite danger, as well as on other reasons why it says matters going to discretion favour it.

2. [43]

   Both parties devoted considerable attention to the issue of whether or not the circumstances here are relevantly distinguishable from those of Aqualand. I am not persuaded that this is an appropriate way of resolving the dispute. In my view, it is better first to focus on the relevant principles and apply those principles to the facts and circumstances at hand rather than adopt a “tick the box” approach. Whether or not the facts and circumstances in Aqualand are distinguishable from those here may be a relevant consideration but it ought not drive or dominate the analysis.

3. [44]

   For the following reasons, I am satisfied that the plaintiff has established the requisite danger to warrant the making of a freezing order.

4. [45]

   First, I accept the plaintiff’s submission that Golden Rain’s recent financial records, as summarised above, indicates that it is incapable of satisfying a substantial judgment in the plaintiff’s favour from its existing assets and would need to rely on future transactions and realisations as opposed to an existing pool of preserved assets.

5. [46]

   It is notable that Golden Rain’s liabilities are overwhelmingly owed to related parties and not arms-length creditors. This is shown in the extract of Golden Rain’s MYOB Balance Sheet for the period from July 2025 to December 2025 as set out in Annexure A to these reasons, which includes various figures concerning loans to the company from the six related party lenders.

6. [47]

   Presumably, these shareholder loans include both the Replacement Facility Agreements and the undocumented $1 million loan referred to above.

7. [48]

   Moreover, as alluded to in Note 1(a) to the Financial Statements for the financial year ending on 30 June 2024, Golden Rain’s solvency depends upon a guarantee having been given to its directors of continuing financial support. As the plaintiff correctly points out, this means that Golden Rain’s ability to continue trading depends on ongoing financial arrangements, the servicing of which would necessarily compete with the plaintiff’s prospective judgment. In circumstances where Golden Rain does not have an existing pool of preserved assets, the only realistic source from which it could satisfy a judgment in favour of the plaintiff is by way of future dealings with development assets or proceeds.

8. [49]

   Secondly, as Golden Rain acknowledged, it is well settled that the requisite danger need not depend upon establishing misconduct or suspicious dealings. Mr Kidd SC (who appeared for Golden Rain along with Mr Dooley) properly acknowledged that the present case fell into a “much narrower type of case”. I consider that the requisite danger in the present case is partly reflected in the fact that servicing the substantial related party loans is almost entirely dependent upon Golden Rain’s future dealings, particularly with the Honeycomb Terraces, which will inevitably deplete the only pool from which a judgment could otherwise be satisfied. There are other relevant matters which also highlight that danger. They include the significance of the timing and effect of the suite of documents executed in conjunction with the Replacement Facility Agreements. These related agreements have the effect of converting what previously were unsecured loans from the six related party lenders to secured loans which give priority to the related party lenders and place control of enforcement and allocation in their hands. I will elaborate upon these matters below.

9. [50]

   Meanwhile, it suffices to state in summary form that the requisite danger is established by the combined effect of Golden Rain’s negative equity, its dependence on future realisations, the predominance of related party loans in its existing liabilities, the timing and effect of the suite of documents associated with the Replacement Facility Agreements and undocumented $1 million loan, as well as the absence of any existing pool of preserved assets. The facts and circumstances here differ in some respects from those in Aqualand but those differences do not prevent the application here of the observations in Aqualand, which are set out at [41(c)] above.

10. [51]

    Thirdly, as already emphasised, there is the effect of the suite of documents belatedly produced by Golden Rain. The timing of their execution is of significance. They were all executed in July 2025 and on or around the execution of the Replacement Facility Agreements and shortly before the six related party lenders provided the additional $1 million undocumented loan. Thus, these transactions all occurred after the proceedings had been commenced and in the course of detailed preparation for trial.

11. [52]

    Turning to the content and effect of the suite of documents, I accept the plaintiff’s submission that their legal effect is to alter the priority and control of Golden Rain’s assets in a way that is directly relevant to the freezing order application. This legal effect is produced by the contractual reallocation of the entitlement to the proceeds of Golden Rain’s assets. The effect of relevant clauses in this suite of documents is that the proceeds of the sale of Golden Rain’s assets will be applied in a manner which, on the basis of the present estimates, leaves no realistic prospect of Golden Rain being able to satisfy in full any judgment in the plaintiff’s favour.

12. [53]

    It is convenient to set out relevant parts of the plaintiff’s analysis of the suite of documents in its supplementary submissions, with which I broadly agree, starting with the Replacement Facility Agreements executed in July 2025 (emphasis added):

13. [54]

    Fourthly, for the following reasons, I do not accept Golden Rain’s key supplementary submissions, which are to the effect that these documents are innocuous for the purpose of the present application:

14. [55]

    Fifthly, I reject Golden Rain’s contention that there is no sufficient danger here because there is no evidence of any risk of dissipation of assets. This submission contradicts Golden Rain’s separate contention that it should not be prevented from repaying the existing secured debt which is due to be repaid on 25 July 2026 by selling the Honeycomb Terraces, which will dissipate its assets to a large extent. This contention is also inconsistent with the clear import of the suite of documents. The evidence is clear that, unless restrained, Golden Rain will proceed to sell all 18 terraces and use a large portion of the proceeds to pay the existing debt obligations it owes to the related parties.

15. [56]

    Sixthly, I attach little weight to Golden Rain’s contention that, after it has used the sale proceeds from the Honeycomb Terraces to repay its existing debt obligations, it intends to use surplus sale proceeds to pursue further development opportunities and this intention should not be stymied. The available evidence on this topic is far from compelling. As noted above, in large part, the relevant evidence was given by Mr Light on information and belief. This necessarily meant that the plaintiff had no realistic opportunity to cross-examine on matters such as the reasons why past development opportunities for Golden Rain have not been realised or to test Mr Light’s evidence regarding Golden Rain’s stated present intention to pursue future development opportunities.

16. [57]

    Golden Rain has operated for over 12 years, yet it has embarked upon no other developments apart from those relating to the Sugarcube Apartments and the Honeycomb Terraces. None of the potential developments which it has explored under the MOU with Hunta have progressed or materialised. Moreover, it is notable that the MOU is not legally binding (save for particular boilerplate clauses). Golden Rain’s evidence did not include any specific agreement which had been entered into by it and Hunta concerning any individual development as contemplated by the MOU.

17. [58]

    The available evidence concerning Golden Rain’s claim that it presently intends to pursue future development opportunities falls short of substantiating its claim of prejudice if a freezing order is made. The limited weight which I give to the claim of prejudice also reflects the shortcomings described above regarding Golden Rain’s asserted intention of pursuing further development opportunities, as well as the history of its failed past attempts in this regard. It is also difficult to reconcile this aspect of Golden Rain’s claim of prejudice with the guarantee which has been given to and relied upon by the directors relating to Golden Rain’s solvency, as referred to at [32] above.

18. [59]

    For completeness, I find that, on the available evidence, Golden Rain’s claim of prejudice is not supported by the evidence and, accordingly, on the issue of prejudice, the circumstances here ultimately are little different from those in Aqualand.

19. [60]

    Finally, there is the issue raised by Golden Rain concerning the plaintiff’s capacity to honour the normal undertaking as to damages, which is relevant to whether the Court should exercise its discretion to impose a freezing order. The relevant financial evidence may be summarised as follows:

20. [61]

    These figures do cast some doubt on the plaintiff’s capacity to meet an order of compensation in Golden Rain’s favour if it suffers loss or damage as a result of a freezing order, such as lost profits on any development opportunity which is forgone by Golden Rain because of the freezing order.

21. [62]

    For the following reasons, however, I do not give this matter much weight in assessing the parties’ competing interests, which is relevant to discretion.

22. [63]

    First, Golden Rain’s likely loss or damage relating to the effect of a freezing order on any future development activities is entirely speculative, particularly having regard to the unimpressive history of its other development activities to date as outlined above.

23. [64]

    Secondly, in the event that Golden Rain seeks to enforce the plaintiff’s undertaking as to damages, the plaintiff’s capacity to pay any such compensation is not limited to it drawing upon existing assets. The Owners Corporation could seek to recover the quantum of compensation from lot owners by:

24. [65]

    Thirdly, if these avenues prove unfruitful, Golden Rain could apply to NCAT for a managing agent to be appointed under s 237 of the Act, who could then impose and enforce special levies.

25. [66]

    For these reasons, I give little weight to Golden Rain’s submission regarding the plaintiff’s capacity to fulfil its undertaking as to damages.

26. [67]

    I turn now to the issue of costs. This being an interlocutory application, it is appropriate that costs be costs in the cause, thereby enabling an order concerning costs to be made when the merits of the parties’ respective positions are known following a final hearing (see UCPR r 42.7). I understood both parties to agree with this position.

Conclusion

1. [68]

   For the above reasons, I consider that a freezing order ought to be made. I am not satisfied that a freezing order in the terms of either prayers 1 or 2 in the notice of motion should be made, particularly having regard to the difficulties at present of quantifying the damages which are likely to be obtained by the plaintiff if it succeeds in the substantive proceeding and the likely significant disparity between that amount and the proceeds from selling the Honeycomb Terraces. Rather, I consider that relief should be granted along the lines of the terms of prayer 3 in the plaintiff’s notice of motion, subject to excluding from that order the sale of lots 5, 11 and 18. If the existing unrescinded contracts for sale of those lots proceed to completion, Golden Rain should receive proceeds of approximately $4 million which it can use for its ongoing legal costs and other normal expenses. I also consider that the notification period should be at least 20 business days.

2. [69]

   The Court will make a freezing order in the following terms:

3. [70]

   Costs should be costs in the cause.