Chua (Trustee) v Dawn Fortune Pty Ltd

ZION ROCK FORTUNE INTERNATIONAL TRADE PTY LTD ACN 642 639 692

Upon the applicants by counsel giving the usual undertakings as to damages:

1. The applicant's outline of submissions be placed on the court file QUD 850 of 2025 notwithstanding it is entitled in the Federal Circuit and Family Court of Australia (Division 2).
2. For the purposes of this proceeding, insofar as these orders bind the first and second respondents, it be sufficient for the purposes of binding those respondents respectively if the order is:

(a) telephoned to the solicitors for the first respondent at the telephone number of their solicitors; and

(b) thereafter forthwith sent by email to the following email addresses:

(i) as to the first respondent: john@cjmlaw.com.au, as given in oral evidence today; and

(ii) as to the second respondent: ray.li@legalment.com.au, as given in oral evidence today.

1. On settlement of the sale of the property located at Unit 3001, 15 - 19 Peerless Avenue, Mermaid Beach, Queensland, 4218, otherwise identified as Lot 3001 Survey Plan 320556 with title reference 51329784 (Property), the First Respondent must cause a solicitor who is acting for it in respect of the sale of that property to get into and then retain into its trust account the entirety of the Net Proceeds.
2. If the Net Proceeds from the sale of the Property are in the possession or control of the Second Respondent, then the Second Respondent must cause a solicitor who is acting for it in respect of the sale of that property to get into and then retain into its trust account the entirety of the net sale proceeds.
3. The net sale proceeds are to be held in the trust account of the solicitors acting for the First Respondent or the Second Respondent in the sale of the Property until further or other order.
4. The Respondents be restrained from dealing with the Net Proceeds from the sale of the Property until further or other order of the Court.
5. For the purposes of this order, Net Proceeds means the net proceeds from the sale of the Property following discharge of the amount owed to the Mortgagee, the National Australia Bank, and other sale costs, including the amount assessed to be owed to the Second Respondent.
6. The matter be adjourned to a date to be fixed.
7. The Respondents have liberty to apply on short notice.
8. Costs be reserved.

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

IN THE MATTER OF DAWN FORTUNE PTY LTD AS TRUSTEE FOR THE DAWN FORTUNE FAMILY TRUST

KAILY LYN CHUA AS TRUSTEE FOR THE BANKRUPT ESTATE OF QING YANG

DAVID JAMES HAMBLETON AS TRUSTEE FOR THE BANKRUPT ESTATE OF QING YANG

DAWN FORTUNE PTY LTD ATF DAWN FORTUNE FAMILY TRUST ACN 671 856 554

ZION ROCK FORTUNE INTERNATIONAL TRADE PTY LTD ACN 642 639 692

1. Order 7 of the Orders made this day (principal orders) be varied by deleting "including" and inserting "excluding".
2. The variation take effect nunc pro tunc from the time when the principal orders were made but without prejudice to any action taken by any person prior to the variation.
3. This order may be served in the same manner as provided for by the principal order.

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

1. King Yang was made bankrupt on a creditor's petition on 9 April 2025. The trustees of Ms Qing's, bankrupt estate appointed pursuant to the sequestration order are Kaily Lyn Chua and David James Hamilton. Ms Chua and Mr Hamilton are respectively the first and second applicants. The first respondent is Dawn Fortune Pty Ltd ATF for the Dawn Fortune Family Trust, the second respondent (hereafter Dawn Fortune). The second respondent is Zion Rock Fortune International Trade Pty Ltd (hereafter Zion Rock).
2. Filed earlier today is an application by the trustees in bankruptcy, to which Dawn Fortune and Zion Rock are respondents, in which the trustees seek a declaration that the first respondent, Dawn Fortune, holds on trust for the applicants as trustees in bankruptcy of Ms Qing's bankrupt estate the real property located at unit 3001, 15-19 Peerless Avenue, Mermaid Beach, Queensland 4218, otherwise identified as lot 3001, survey plan 320556 with title reference 51329784 (the property).
3. That property is the subject of a contract for sale which is due to settle today. Originally, the time of settlement was 3 pm. That settlement time has been brought forward to 2 pm. That may be, of course, just for convenience, but it is nonetheless curious that the settlement time has been brought forward in circumstances where, to the knowledge of the solicitors acting for the owner of the property, Dawn Fortune, the bankruptcy trustees have, as a matter of singular urgency, sought particular interlocutory injunctive relief in respect of the proceeds of the sale of the property and claimed that the bankruptcy trustees have an interest in the sale proceeds.
4. I have received oral evidence from the solicitor for the bankruptcy trustees as to email addresses with which he has been conducting meaningful correspondence with those acting, as the case may be, for Dawn Fortune and Zion Rock in relation to the property and the proceeds of sale - and the disposition of the proceeds of sale thereof. The bankruptcy trustees seek by way of interim relief the following orders:
   1. On settlement of the sale of the property located at Unit 3001, 15 - 19 Peerless Avenue, Mermaid Beach, Queensland, 4218, otherwise identified as Lot 3001 Survey Plan 320556 with title reference 51329784 (Property), the First Respondent must cause a solicitor who is acting for it in respect of the sale of that property to get into and then retain into its trust account the entirety of the Net Proceeds.
   2. If the Net Proceeds from the sale of the Property are in the possession or control of the Second Respondent, then the Second Respondent must cause a solicitor who is acting for it in respect of the sale of that property to get into and then retain into its trust account the entirety of the net sale proceeds.
   3. The net sale proceeds are to be held in the trust account of the solicitors acting for the First Respondent or the Second Respondent in the sale of the Property until further or other order.
   4. The Respondents be restrained from dealing with the Net Proceeds from the sale of the Property until further or other order of the Court.
   5. For the purposes of this order, Net Proceeds means the net proceeds from the sale of the Property following discharge of the amount owed to the Mortgagee, the National Australia Bank, and other sale costs, excluding the amount assessed to be owed to the Second Respondent.
   6. The matter be adjourned to a date to be fixed.

7. The Respondents have liberty to apply on short notice.

8. Costs be reserved.

1. The application is one which is heard, effectively, an ex parte basis. When the proceeding was called on, and although each of the respondents was notified of the application for injunctive relief, there was no appearance by or on behalf of any respondent. There was, though, what purports to be and, for the purposes of the present proceedings, I have assumed to be a submission lodged on behalf of Zion Rock, authored by one Chia Jeng Hom, who describes himself as solicitor for the second respondent. Those submissions have been marked as exhibit "1".
2. In my view, the jurisdiction of the court having been invoked by the declaratory relief sought in respect of a bankruptcy, s 30 of the Bankruptcy Act 1966 (Cth) provides ample power for the making of the orders sought by the applicant bankruptcy trustees, if so persuaded. I respectfully agree with the following observation made by Pincus J, when a judge of this Court, in Re Bayliss; ex parte Official Trustee in Bankruptcy (1987) 15 FCR 167, at 169:

It appears to me to follow, inter alia, that it is not necessary in every such case as this to show that there is a serious question to be tried; it may be that at an early stage so little information is available with respect to the matter in relation to which an injunction is sought that the "serious question" test cannot be passed. Where one has an uncooperative bankrupt who has arranged his affairs in a complex way, the trustee may have difficulty in showing shortly after bankruptcy where and how the bankruptcy money has gone. Interlocutory orders to hold the position may nevertheless be necessary.

1. Those observations commended themselves, as they do to me, to Ryan J in Re Karas, Tom; Pattison, Paul (as Trustee of the Bankrupt Estate of Tom Karas) v Commore Pty Ltd [1999] FCA 1247. In that case, also, Ryan J considered that s 30 of the Bankruptcy Act empowered the court, even on limited material, to make orders preserving a position so that a trustee's investigations might be completed in order to ascertain whether disputed property did or did not form part of a bankrupt estate.
2. Even so, it seems to me that in the ordinary course of events, the price of obtaining such injunctive relief would nonetheless be the giving of the usual undertaking as to damages by applicant bankruptcy trustees. Such an undertaking has been given by Ms Chua and Mr Hamilton by their counsel.
3. The evidence before me establishes that even though made bankrupt in early April this year Ms Qing has failed, either within the time prescribed by the Act, or at all, to lodge with her bankruptcy trustees a statement of affairs. The evidence further discloses that Dawn Fortune is indeed the trustee of a trust and at least until settlement today the owner of the property. It further discloses that the trust concerned was created on 2 October 2023. Yet further, the evidence discloses the existence so far as the applicant bankruptcy trustees can presently ascertain of a large debt to the Commonwealth of Australia payable to the Commissioner of Taxation in respect of taxation liabilities in the amount of $858,660.59. Of that sum at least $8,448.85 relates to the income tax year ended 30 June 2023. That, of course as to that component, is prior to the creation of the trust.
4. Quite apart from the failure of Ms Qing to launch as required her statement of affairs there are other reasons as disclosed in the material relied upon which give rise to concern on the part of the bankruptcy trustees. The evidence discloses that Ms Qing held $299,760.95 in a bank account with the Bank of China as at the time when she became bankrupt. It further discloses that those funds have been dispersed to a third party. Yet further, notwithstanding, a demand made by the bankruptcy trustees these funds have not been paid to the bankruptcy trustees. Prima facie at least, that sum of $299,760.95 would form part of the property of the bankrupt. Whether that is indeed so is something which requires further investigation by the bankruptcy trustees. Ms Qing has filed an application for the review of the sequestration order, but that application for review discloses no grounds in respect of the basis for the review.
5. On 3 October 2025, Ms Qing removed herself as director of Dawn Fortune and replaced, in lieu of her, the director of that company as one Yauza Lal. On the face of the removal, the appointment date was said to be 1 November 2024. But the evidence relied upon by the bankruptcy trustees today gives pause for thought, to say the least, that that removal and replacement may have been backdated.
6. Another curious feature arising from the evidence relied upon today is that the solicitors acting for Dawn Fortune on the conveyance of the property provided a settlement statement to the solicitors for the bankruptcy trustees which, on its face, stated that there would be shortfall arising from the sale of the property. It is moot as to whether that is so.
7. Another curious feature of the case is that there is no registered mortgage whatsoever shown on a title search in respect of the property. Nonetheless, in exhibit "1", the solicitors for the second respondent, Zion Rock, assert an interest arising under a mortgage which is said to secure a loan under which it is said funds are owed by Dawn Fortune to Zion Rock.
8. I am firmly of the view that the material relied upon by the bankruptcy trustees at least grounds occasion for the conduct of much more detailed investigation by the bankruptcy trustees of the bankrupt and the bankrupt's dealings with Dawn Fortune, and whatever dealings there may have been as between Dawn Fortune and Zion Rock.
9. The bankrupt is a member of a class of beneficiaries for which the trust of which Dawn Fortune's trustee provides, and in relation to whom a discretion may be exercised. However, the bankrupt is also, in terms of that trust deed, the appointor in respect of that trust, with power to change and remove beneficiaries.
10. There is a real question in these circumstances as to whether the bankruptcy trustee has succeeded to the role of appointor - and, if so, how that power might be exercised by the bankruptcy trustees.
11. At most, and having regard to the submission made by - or purporting, at least, to be made by - the solicitors for the second respondent in writing in exhibit "1" - there is an asserted interest under an unregistered mortgage in respect of the proceeds of sale. If there is any merit in that asserted interest, then the granting of the interlocutory injunctive relief today will preserve a fund from which moneys could be paid to Zion Rock after due investigation.
12. For the present, I regard the case as a compelling one for preserving the whole of the proceeds until further order so as to allow the trustee time within which to conduct investigations. It may well be that this is one of those cases where the bankrupt will have to be brought into court quite soon for the purposes of conducting a public examination, with all of the consequences that might flow in the event that either false or evasive answers were given.
13. However that may be, for the present - and although I do not consider that a conclusion that a serious question to be tried is necessarily present in relation to the claim for declaratory relief - I am very well satisfied indeed that there is occasion, on the materials, for the trustees to investigate further whether there is truly an interest of the bankrupt estate represented in the sale proceeds, perhaps also including the making of settlements to avoid the consequences of bankruptcy or, otherwise, to defraud creditors. That is in no way to prejudge that subject - only to recognise that there is a case to be investigated.
14. Given the urgency of the settlement, there is a need, undoubtedly, for the abridgment of time and, further, for provision - which I have made in the orders - for those orders to bind Dawn Fortune and Zion Rock by the transmission of the terms thereof by email to addresses which can be reliably regarded as email addresses that will bring the contents of those orders to the attention of those in control of those companies.
15. Further - and, again, given the singular urgency - I was persuaded that even before then, it was necessary to make those orders binding by the communication of the contents thereof by the solicitors for the bankruptcy trustees by telephone to the solicitors acting on the conveyance for Dawn Fortune, with that, in turn, binding each of the respondents. I say "each of the respondents" because there is, in my view, an inescapable inference, given the speed of response by the solicitors for Zion Rock, that those solicitors are very much aware of and in communication with those acting for Dawn Fortune on that sale.
16. It is, then, for these reasons that I have made the orders sought. It will be necessary for the further conduct of this case to become the subject of direction by the allocated docket judge. Further, in the event that any of the named parties seek to vary the orders made today, that can be done at short notice pursuant to liberty to apply. I reserve the costs of today.
17. Later in the day, and after the foregoing reasons had been delivered by me for the orders just made, the solicitors for the bankruptcy trustees contacted chambers to suggest that a correction was needed to those orders to remedy a slip. The draft of those orders had been prepared and approved by me in circumstances of considerable urgency, given the imminent time for settlement. Upon checking the orders, I was well satisfied that there was indeed present the slip asserted. I therefore made pursuant to r 39.05(h) of the Federal Court Rules 2011 (Cth) an order correcting the slip but without prejudice to anything which had occurred before the correction.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.