CIP Group Pty Ltd v So

Solicitor for the First and Fourteenth to Twentieth Respondents: Colin Biggers & Paisley

Counsel for the Twenty-First Respondent: The Twenty-First Respondent did not appear

Counsel for the Twenty-Second and Twenty-Third Respondent: The Twenty-Second and Twenty-Third Respondents did not appear

BETWEEN: CIP GROUP PTY LTD ACN 610 483 577 First Applicant

CIP 1 PTY LTD ACN 611 408 710 Second Applicant

PYRMONT PORTFOLIO PTY LTD ACN 608 496 617 Third Applicant

GGPG PTY LTD ACN 609 675 505 (RECEIVER AND MANAGER APPOINTED) Second Respondent

PARK RIDGE 94 PTY LTD ACN 616 893 924 (RECEIVER AND MANAGER APPOINTED) (and others named in the Schedule) Third Respondent

order made by: DERRINGTON J DATE OF ORDER: 4 December 2024

1. The interlocutory application dated 1 November 2024 be allowed.
2. Within 3 days of the date of this Order, the parties provide written submissions as to the appropriate form of order arising from these reasons.
3. The applicants and second to thirteenth respondents pay the first and fourteenth to twentieth respondents' costs of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 This is an application by the first and fourteenth to twentieth respondents (broadly, the "So interests") for the discharge or partial discharge of previous orders enjoining the first and fourteenth to eighteenth respondents from dealing with the proceeds of the sale of certain property. At the time the injunction was granted, the sales of the property had not yet completed and the quantum of the anticipated proceeds was yet to be ascertained. That property was subsequently sold by the receivers appointed by some of the So interests pursuant to certain securities, and the amount now held on account of those proceeds is in excess of $18 million. In considering the present application, it is important to keep steadily in mind that the So interests, particularly Ultimate Investment Portfolio Pty Ltd (Ultimate) and UIP 1 Pty Ltd (UIP 1), claim to be entitled to those funds as the repayment of the principal and interest of certain loan facilities which they provided as part of the "Carver's Reach" land development project. The companies involved in that development are generally referred to in this litigation as the "Carver's Reach entities", and they comprise the second to thirteenth respondents in the proceeding. There is little doubt that the Carver's Reach entities borrowed money from Ultimate and UIP 1 for the purposes of the project and, on the face of the several loan and security documents, those lenders are entitled to recover the funds due to them. 2 However, the applicants in the proceeding (being the "Clancy interests"), as well as the Carver's Reach entities on whose behalf the Clancy interests bring derivative claims, have asserted the existence of certain breaches of fiduciary duty by some of the So interests in the making and enforcement of the loans. 3 On 23 May 2023, on the basis of the material which was before the Court at that time, an injunction was granted restraining the disposition of the proceeds of sale arising from the enforcement of the securities by the So interests in the following terms: Upon the usual undertaking as to damages given by Mr Marc Andrew Clancy: 1. The first and fourteenth to eighteenth respondents: (a) notify the applicants in writing no later than 7 business days prior to the proposed settlement of any sale of any real property in Stages 7 to 11 of the development (such properties being identified in Annexure A); (b) not assign or otherwise deal with any rights, entitlements or interests to any or all proceeds from the sale of any real property in Stages 7 to 11 (Stage 7 to 11 proceeds) under any instrument; (c) hold in a trust account maintained by their solicitors, any or all of the Stage 7 to 11 proceeds purportedly payable to the seventeenth or eighteenth respondents pursuant to any asserted right, entitlement, or interest under any instrument; (d) save for making any payment into a solicitors' trust account in order to comply with Order 1(c) above, not dispose of or otherwise deal with or diminish the value of the Stage 7 to 11 proceeds. 2. Order 1 above is to apply until further order of the Court, or unless the applicants expressly provide prior written consent in respect of any proposed non-compliance orders, a request for such consent to be received no later than seven business days prior to the proposed non-compliance. … 4 The So interests now seek a variation of those orders to allow them to use some of the funds held for the payment of legal costs which have been incurred and which will be incurred in the prolonged litigation brought by the Clancy interests.

Background 5 There is no need to set out at any length the full nature of the dispute between the Clancy interests and the So interests as it arises in the current complex litigation. 6 It suffices to mention that Mr Marc Clancy and Mr Shan Ngai So are land developers who, through their various corporate entities, undertook the "Carver's Reach" project. For that purpose, they incorporated and jointly owned and controlled a number of companies, namely, the Carver's Reach entities. 7 Mr Clancy and Mr So had a falling out during the course of the development of Carver's Reach. Each has made a number of allegations against the other, including of breaches of fiduciary duty and other corporate obligations. Those allegations underpin the various claims and counterclaims made in the current actions. 8 The litigation has been prolonged and persons and companies in the general orbit of the main protagonists have been impacted by its gravitational pull, with a number of them becoming participants in one way or another. 9 Presently, there are three separate proceedings which are all being heard together commencing on 7 April 2025. 10 The progress of the combined proceedings has been marred by persistent interlocutory skirmishing between the parties and that has no doubt added to the substantial costs incurred on both sides. It has also been affected by the slow pace at which the Clancy interests have sought to prosecute their claims. They have failed to comply with the Court's directions on a number of occasions and this too has contributed to the increasing costs. Significantly, the hearing of the trial in the matter, which was initially set down to commence in September 2024, recently had to be adjourned as a result of difficulties encountered by the Clancy interests.

The current application 11 The substance of the current application is found in paragraph 2 of the interlocutory process dated 1 November 2024 on which the Court was moved. It read: In the alternative to paragraph 1 above, upon the undertaking by the respondent to repay any amount paid out of the funds that are the subject of paragraph 1 of the orders made by Justice Derrington on 24 May 2023 (Stage 7 to 11 proceeds) if the applicants and second to thirteenth respondents are successful in establishing a claim to those funds, an order that paragraph 1 of the orders made by Justice Derrington on 24 May 2023 be varied such that it does not prevent the first and fourteenth to twentieth respondents from using the Stage 7 to 11 proceeds up to an amount of $3,500,000 to pay: (a) invoices issued by the solicitors acting for them in this proceeding in respect of professional fees and disbursements incurred in relation to this proceeding; (b) invoices issued by the solicitors acting for the nineteenth respondent in her capacity as the respondent to proceeding QUD498/2023 in respect of professional fees and disbursements incurred in relation to that proceeding; (c) invoices issued by the solicitors acting for the applicants and cross-respondents in proceeding QUD462/2022 in respect of professional fees and disbursements incurred in relation to that proceeding. (Emphasis omitted). 12 By paragraph 1 of the interlocutory process, the So interests sought that the injunction made on 24 May 2023 be discharged. That, however, was not the focus of the submissions made by the parties during the application where the variation of the injunction to allow the So interests to fund the proceedings was the focus.

Variations to interlocutory injunctions 13 There is little doubt that the Court has wide jurisdiction to vary or set aside any interlocutory order. There is express power to do so by r 39.05(c) of the Federal Court Rules 2011 (Cth), and a similar power exists under s 1324(5) of the Corporations Act 2001 (Cth). 14 In Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121 [26], Jagot J observed that, in the matter before her, the principles relating to whether a court should vary a previous interlocutory order were not in dispute and were as follows: • A court has jurisdiction to vary or set aside any interlocutory order but the re-litigation of issues already decided, even on an interlocutory basis, is undesirable having regard to the need for finality (Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46). • The "overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case" (Brimaud at 46). • The interests of justice should be assessed having regard to the nature of the interlocutory order in question. Interlocutory orders that are merely procedural or made by consent without any contest are different from substantive orders made after a contested hearing and intended to operate until the final hearing. In the latter case the general rule is that there must be a material change in circumstances or the discovery of new material which could not reasonably have been put before the court on the earlier application (Brimaud at 46). • There is a debate in the authorities between approaches that are more and less permissive. Nevertheless the approach generally adopted at first instance accords with that of Goldberg J in P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466; [2009] FCA 413 at [49], namely, that an applicant seeking to vary a substantive interlocutory order made after a contested hearing must persuade the Court that: … one or more of the following factors has occurred or is satisfied: (a) there is new material or new evidence which was not available, or reasonably available, to them at the time the orders were made …; (b) there has been a material change in the circumstances since those orders were made; (c) there are exceptional circumstances which warrant re-consideration of the matter…; and (d) as a matter of discretion, the justice of the matter requires that the applicants be allowed to revisit the matter … 15 There is, of course, much common sense in those principles and, to some degree, the basis for them was referred to by Yates J in Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 2) [2021] FCA 894 [30]: In the case of an interlocutory order of a substantial nature made after a contested hearing - in contemplation that the order will operate until the final disposition of the hearing - the usual rule is that a variation (or discharge) of the order must be founded on a material change in circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett (1988) 217 ALR 44 (Brimaud) at 46; Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 (Adam P Brown) at 177-178; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 (Hutchinson) at 447. (Emphasis omitted). 16 There, his Honour identified that the rationale for the usual rule was that the interlocutory order was made in contemplation that it would preserve the position until the final disposition of the hearing of the action in which it was made. In that sense, it established the status quo for the parties to the litigation pending the trial. Such orders are usually self-evident and begin with the orders "until the trial of this action …". 17 So much is clear from the observations of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44, 46 - 47 (which were cited with approval by Abraham J in Roberts-Smith v Fairfax Media Publications Pty Limited (No 31) [2022] FCA 271 [14]): Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will. The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest "until further order" (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979) . In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164 -5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447 -8; Chanel Ltd v F W Woolworth & Co [1981] 1 All ER 745; [1981] 1 WLR 485; Adam P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177-8; 35 ALR 625 at 629-30; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano Building Contractors Ltd v Burgess [1988] 1 WLR 890 at 894. 18 The foregoing views reflect the modern approach to the variation of interlocutory orders, though it must be noted that some earlier authorities suggested a slightly more stringent test in the first instance, such as the need to show "exceptional circumstances": P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466, 478 [39]. 19 In this case, the injunction was granted following a contested hearing where the Clancy interests and the Carver's Reach entities (by way of derivative claims) alleged the existence of some proprietary right to the proceeds of the sale of any real property in stages 7 to 11 of the Carver's Reach development and it was anticipated that, without the injunction, those proceeds would be dissipated. This brings the current application within that class of cases where the application is to set aside or vary an injunction granted for the purposes of protecting some proprietary right. It is not, as was suggested by the So interests, a case where the Court had granted a freezing order over their assets.

The nature of the injunction 20 The parties' written submissions assumed that the injunction granted was within the above discussion of principle, being one that was made "in contemplation that it would operate until the final disposition of the proceedings". With respect, on the face of the orders, that does not appear to be the case at all. For instance, the terms of the injunction do not include words such as, "until the hearing of this matter", or anything similar. Rather, the wording of Order 2 of the Orders made on 24 May 2023 provides that "Order 1 … is to apply until further order of the Court". Thereafter, a provision is made for the Clancy interests to provide consent to use the funds outside of the limitations established by Order 1. In this sense, the order is of an interim nature and not one which was necessarily expected to remain in force until the trial of the action. Indeed, its terms contemplate that variations would be required. That appeared to flow from the fact that the development of Carver's Reach was being continued by the receivers appointed by the So interests, and that land was constantly being sold. In such fluid circumstances, it should have been expected that, from time to time, variations to the terms of the order may occur. 21 However, a consideration of the terms of the reasons for judgment underpinning the orders suggests that the injunction was to operate as an interlocutory one until the rights of the parties were determined, and the parties approached the application on that basis. That being so, it is appropriate to proceed on the assumption that the injunction was of the usual interlocutory kind.

The changed circumstances 22 The So interests relied upon a number of matters which they submitted constituted a material change of circumstances from those which pertained when the interlocutory injunction was first granted. The establishing of this fact would, on the authorities, enliven the Court's discretion.

The lack of funds to conduct the proceedings 23 The first change of circumstances was that the So interests had effectively run out of funds with which to prosecute the defence of the action. In this respect, they seek relief by way of an order that they be entitled to use some of the money in respect of which the Clancy interests have an arguable proprietary interest, for their own purposes. 24 Consideration was given to similar circumstances in Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301 [18] - [19] (Sales LJ, with Longmore and Beatson LJJ agreeing) where the following was observed: 18. In this sort of situation, the guidance from the authorities is clear. The ordinary position is that a defendant who has resources of his own which are not affected by a good arguable claim by the claimant that they are his (the claimant's) property should be required to use those unaffected resources to finance his legal defence and to meet his living expenses: Sundt Wrigley & Co. Ltd v Wrigley, Court of Appeal, unreported, 23 June 1993; Fitzgerald v Williams [1996] QB 657, CA; and the Ostrich Farming case. … 19. A more difficult situation may arise if the claimant has a good arguable proprietary claim in relation to funds in the defendant's hands and the defendant has no, or inadequate, other assets of his own unaffected by such proprietary claim from which he can meet his living and legal expenses. In that case, the court will have to weigh up the balance of justice to decide whether the defendant should then be permitted to have recourse to the proprietary assets. As Sir Thomas Bingham MR put it in Sundt Wrigley, in this situation "a careful and anxious judgment has to be made in a case where a proprietary claim is advanced by the plaintiff as to whether the injustice of permitting the use of the funds held by the defendant is out-weighed by the possible injustice to the defendant if he is denied the opportunity of advancing what may in course turn out to be a successful defence." Under the Civil Procedure Rules which came into force in 1999, the court should examine this question in the light of the overriding objective to deal with cases justly and at proportionate cost: CPR Part 1. In deciding where the balance of justice falls at this stage, it may be relevant to consider whether the defendant is willing to undertake to replenish the funds taken from the proprietary assets at a later stage out of non-proprietary assets which might thereafter become available to him, as was done in Armco Inc. v Donohue, Jersey Court of Appeal, unrep. 24 September 1998. 25 In Goulston v Sundell as executor of the estate of the late James Ralph Sundell [2024] NSWSC 12 [32], Slattery J identified a similar principle in the following terms: As Bogasi has an arguable case, that it is the owner of the CPT1 and CPT2 units in Kim's name, Bogasi argues that the general principle applies that a defendant who has resources of its own, which are not affected by a good arguable proprietary claim that they are the plaintiff's property, should ordinarily be required to be used first to finance both the defendant's defence and living expenses: Frederic Marino v FM Capital Partners Ltd [2016] EWCA Civ 1301 at [18] and Sundt v Wrigley & Co Ltd v Wrigley, EWCA Civ, unreported, 23 June 1993 ("Sundt") and see Millard Shaw Pty Ltd v Byrnes [2019] SADC 60 ("Millard Shaw"). The test being postulated appears to be a two-stage test, with the first stage comprising threshold issues in which the onus lies on the defendant to establish that the defendant does not have assets unaffected by the proprietary claim which they can draw to meet their living and legal expenses: Fitzgerald V Williams [1996] QB 657 ("Fitzgerald"). If the threshold is met, then the Court can make what has been described as a "careful and anxious judgment" in exercising its discretion after considering the balance of justice. 26 It is to be recognised that the circumstances being considered in the above authorities concerned the existence of an injunction preventing the use by a defendant of assets in which the applicant or plaintiff asserted a proprietary interest, and the question arose whether there should be some "carve out" to allow the defendants, who were without funds to defend the action, to access the disputed assets for the conduct of the litigation. The present case is not quite of that nature. It can be reasonably expected that when the injunction was granted, the So interests expected that they would have had sufficient funds to finance the defence of the claims in the ordinary course. The evidence reveals that they have already expended well over $1 million in the defence of the proceedings to date. As it has come to pass, they require a further substantial amount for the purposes of seeing the proceeding to completion. 27 The appropriateness of the guiding principles referred to above is apparent where the opposing parties have competing claims to the rights, interests or entitlements to property which are the subject of dispute. However, the circumstances of this case throw up some difficulties in their application. 28 First, this is not a case where all of the parties constituting the So interests have the same claims or interests. Ultimate and UIP 1 hold security interests over the proceeds of the sales and have a direct claim to the disputed funds. Others of the So interests do not have those claims or interests. Theirs' are derivative upon the result of the claims of those lender companies. For instance, some of Mr So's family members lent money to Ultimate and UIP 1 for the purposes of those funds being lent to the Carver's Reach entities. Their interests are to ensure that the funds are recovered but they are not directly involved in the Carver's Reach entities' claims against Ultimate and UIP 1. In general, they have little or no part to play in the litigation, save that they are persons who might be affected by the outcome of the issues between the main protagonists. 29 The second issue, which is related to the first, is that it generally appears that Mr So (being the first respondent) and the fourteenth to eighteenth respondents, against whom the injunction was granted, do not have any income or assets of their own which they can apply to the defence of the proceedings. They have, however, previously borrowed substantial sums from family members, including those who are also parties to the proceeding, and the Clancy interests assert that they should keep borrowing unless and until those family members indicate that they will not lend any further. The authorities referred to above are far from clear as to the extent to which the Court should examine the potential financial resources of the respondents and whether that extends to obtaining, if possible, unsecured loans from third parties. Despite that question, the parties proceeded upon the basis that consideration should be given to all of the respondents' financial resources, including any unsecured borrowings which might be obtained, and it is appropriate to deal with the application on that basis. 30 The third point to be made is that the particular sensitivity in relation to allowing one party to use funds which are subject to the injunction is that, if the injunction was rightly granted and the applicants establish their proprietary right to the assets, the order allowing access to the funds would be tantamount to allowing party A to use the property of party B to defend party B's claim. That is, obviously, a significant issue underpinning the principles referred to above. However, the position is vastly different where it is shown that the property held subject to the terms of the injunction is in excess of any proprietary claim of the applicants. Whether such circumstances exist in the present case was not made clear.

The So interests have a paucity of funds 31 As has been mentioned, the So interests seek to have access to up to $3.5 million from the $18 million held subject to the injunction for the purposes of meeting the expenses which they have incurred to date in the proceeding (and related proceedings) and those which they are yet to incur. It should be noted that, of the $3.5 million sought, only $2.2 million is sought to be used in relation to the legal costs of the costs of the present proceeding in which the injunction was granted, being QUD 93 of 2022. The remainder is sought in relation to the two related actions, QUD 462 of 2022 and QUD 498 of 2023. 32 The So interests claim to have a paucity of funds with which to defend the proceedings. However, the Clancy interests contested the effect of the evidence relied upon by them as to their financial standing, and submitted that they were not bereft of the necessary funds, but merely that those who stood behind them had become reluctant to continue to lend more. They submitted that the evidence does not establish that funding from third parties will cease. 33 The corporate entities which comprise the So interests were shown to have insufficient funds for the purposes of meeting the past or future costs of the litigation. No attempt was made to suggest otherwise. It sufficiently appears that, to date, they have been borrowing from Mr So's family members to fund the litigation. 34 There would appear to be little doubt that Mr So does not have any assets exceeding $50,000 in total, or any real property. He has previously sold what he had owned to fund what was referred to as the Golden Gate Property Group and the Carver's Reach entities. He is not currently employed and depends on his family to pay his everyday living expenses. Some suggestion was made that he was involved in managing the investments for his family and was paid for those services, though the extent of any remuneration was not shown. It can be accepted for present purposes that he is not a person who has sufficient assets of his own with which he might fund the litigation. 35 It was, however, submitted that the So interests benefited from Mr So's family, the members of which funded the corporate So interests over time and that it was not shown that those family members were without assets which they might apply to the litigation. That submission should be accepted. In the first place, it appears that over a significant period of time, Mr So's family have been closely involved in Mr So's businesses and the businesses of the companies associated with him. The evidence shows that they have lent money into the venture pursued by the corporate So interests, and that Mr So is otherwise involved in the investment of family funds. In such circumstances, the financial capacity of the family members to support the current litigation is relevant to the assessment of the overall circumstances. Whilst it can be accepted that some of the family members have little to contribute, the same cannot be said for Ms Lai Wah Wong (Mr So's mother). In particular, she has interests in 14 properties, 13 of which are located in Hong Kong and one which is located in China. There was no attempt to value that entire portfolio, though it might be expected that it would be substantial. Indeed, two largely unencumbered properties owned by her in Hong Kong were valued at a total of AUD3.6 million. It follows that some of the properties owned by Ms Wong, either by herself or with her husband, could be used for the purposes of raising funds to continue the litigation. This conclusion is supported by the evidence that Ms Wong has offered an undertaking to repay the amount of $3.5 million if that amount is released from the injunctions which are presently in place. As was submitted on behalf of the Clancy interests, if Ms Wong is prepared to repay that amount in the future, there is no reason why she would not be able to raise it now. 36 Further, it is likely that the rental stream from those properties would be substantial. If the So interests require $3.5 million to complete the litigation, it is likely that they would be able to borrow that amount, albeit not necessarily all at the one time. It was not shown that the income stream would be insufficient to meet the repayments on any loan facility which the So interests, or some of them, might acquire for the purposes of funding the litigation. 37 The conclusion that Mr So's family have sufficient funds to continue supporting the litigation undermines the primary basis on which the present application was brought. The So interests do have access to resources on which they can draw for the purposes of advancing the litigation. This conclusion is sufficient to negate the suggestion made in the course of the hearing that, if the orders sought by the So interests were not made, the litigation could be stifled consequent upon the So interests' solicitors ceasing to act for them. 38 For the foregoing reasons, the primary basis on which the application was advanced, must fail.

Other matters supporting the variation of the injunction 39 However, the So interests also relied upon the change in the circumstances of Mr Clancy as justifying the variation of the injunction. In particular, the evidence establishes that since giving his undertaking as to damages in support of the grant of the injunction on 23 May 2023, Mr Clancy has disposed of a substantial amount of his personal assets, and it is now evident that those which remain cannot be attributed any substantial value. 40 At the hearing of the application for the injunction in April 2023, evidence was given by Mr Benjamin Cohen, the solicitor for the Clancy interests, that Mr Clancy had access to substantial assets. Though that evidence was somewhat vague, neither Mr Cohen nor Mr Clancy were cross-examined on it. In the reasons for judgment: CIP Group Pty Ltd v So (No 3) [2023] FCA 518 (CIP (No 3)): the evidence as to the value of Mr Clancy's undertaking was described (at [100]) as follows: It was also submitted by UIP that the undertaking as to damages offered by Mr Clancy in the event that the injunction is granted is inadequate. This submission was somewhat unusual, given the absence of any cross-examination of Mr Cohen, the solicitor for the applicants, who, it should be acknowledged, had deposed rather generally that Mr Clancy had "extensive property and business interests unrelated to the Carver's Reach development the subject of this proceeding". No doubt a person may have such property and interests but nevertheless be subject to significant liabilities, or otherwise find the assets to be illiquid. However, in the absence of any cross-examination, the Court is left with the general, albeit untested, evidence that Mr Clancy has some assets that might support an undertaking. In his affidavit, Mr Cohen identified some of Mr Clancy's business and property interests and it is apparent that they are caught up in corporate structures that render his interests indirect rather than direct. Nevertheless, it is not seriously doubted that the participants in this litigation are well funded on each side. The evidence suggests, albeit without abundant clarity, that Mr Clancy has already caused some $850,000 to be deposited into his solicitors' trust account to be held as security for the costs that might incurred by the Carver's entities in relation to the derivative proceedings. That was referred to by the applicants as evidence of Mr Clancy's ability to access substantial amounts of money, and it can be taken as such. 41 At the current hearing, the evidence in relation to Mr Clancy's personal financial position was addressed and examined in somewhat more detail. Importantly, it now appears that two childcare centres in which Mr Clancy had an interest (albeit indirect) have been sold. Apparently he received some $2 million from those sales in July 2024, but the amount so received has since been spent. 42 The other interests which are held by Mr Clancy and which apparently supported the statement that he had "extensive property and business interests unrelated to the Carver's Reach development", appear to be somewhat illusory insofar as they constitute any valuable support for the undertaking as to damages which he gave. Reference was made to his interest in land located at Lasso Road in Gregory Hills, New South Wales. In fact, Mr Clancy was the "principal" of a discretionary trust which held 50% of the units in another unit trust which owned the Lasso Road property. On that basis he had no actual entitlement to any interest in that real estate. Indeed, it was not suggested that he was a person with any entitlement to distributions from either trust. In any event, there is evidence that the business of the childcare facility which is conducted on that land has been transferred to a third party which is unrelated to Mr Clancy's interests. It is also apparent that there are caveats over the Lasso Road property. These latter factors alone render the Lasso Road property irrelevant for the current discussion. Whatever Mr Clancy's actual interests are in the Lasso Road property, they are irrelevant for the purposes of supporting any undertaking as to damages. 43 Mr Clancy also claimed to have an interest in property at Leppington, New South Wales. However, his interest is one of a beneficiary of a discretionary trust where the trustee of the trust is a beneficiary of a superior discretionary trust, the trustee of which is a company, Leppington Projects Pty Ltd. Again, there is nothing in relation to this property which could be regarded as supporting any undertaking as to damages. There is no apparent right for Mr Clancy to receive anything from the trust. 44 To a similar effect is the interest claimed by Mr Clancy in property at Lethem Street in Hendra, Queensland, which is owned by Lethem Street Projects Pty Ltd. In an affidavit of Mr Cohen affirmed on 14 November 2024, it was asserted that Mr Clancy owned 50% of the shares in that company. It was said: Mr Clancy is the sole director and secretary of Lethem Street Projects Pty Ltd and owns 100 of the 200 issued shares. Mr Mitrokas owns the remaining shares. A copy of an ASIC search for Lethem Street is at Tab 15 of the annexure; 45 A cursory examination of the ASIC search in relation to that company reveals that all of the shares in the company are held by a Mr George Mitrokas and that none are held by Mr Clancy. It was also not disclosed in this current application by Mr Clancy that the property at Lethem Street was held as a discretionary trust. Again, there is little in this which would offer any support for the undertaking as to damages given by Mr Clancy. 46 None of the above "interests" claimed by Mr Clancy are useful in the consideration of whether there is any value to Mr Clancy's undertaking. Their inclusion as evidence of the purported value of Mr Clancy's undertaking only raises concerns about his other evidence in that regard. 47 The Clancy interests also relied upon Mr Clancy's interest in relation to property at Talinga Drive in Park Ridge, Queensland. It was said that Mr Clancy is the sole director and shareholder of GFYTS Pty Ltd which, in or about September 2022, acquired two options to purchase that property for $8,885,000. It was said that the options were acquired to use the land for development purposes but that Mr Clancy had determined in or around mid-2024 to sell the options associated with the property or the property itself. It was said that Mr Clancy is expected to receive a substantial amount from the sale. The terms of Mr Cohen's affidavit in relation to this were as follows: I am informed by Mr Clancy, and believe, that … in or around mid 2024, because of anticipated legal fees and other expenses associated with this proceeding, Mr Clancy decided to sell Talinga. That sale will complete for $15.1 million in February 2025 and Mr Clancy expects to receive approximately $5,500,000 in net profit from that sale. The terms of that sale are confidential. 48 With respect, that is derisory evidence on which to rely to support an undertaking as to damages. There is no certainty that the alleged sale will complete, and no basis is given for the alleged expectation of a profit of $5,500,000. The failure to exhibit any sale contract is concerning, as is the evidence about its effect which, in any case, appears to be secondary evidence of a document, even though no objection was taken to it. As it is GFYTS Pty Ltd that will receive the proceeds of sale, it is not Mr Clancy who will obtain any "profit" from the sale. It is not known what liabilities that company has or what other limitations there might exist on the proceeds flowing through to Mr Clancy. As a general matter, given the manner in which Mr Clancy has structured his business dealings in relation to other "interests", it would be surprising for him to have a direct entitlement to the asserted profit. This claimed interest is also inadequate to support his offered undertaking. Even if it were worthy of more weight, the absence of any suggestion that the funds would be available at the completion of the proceeding renders it an illusory factor. It may be that Mr Clancy will spend that money, as he did with the funds received from the childcare centres. 49 The necessary conclusion from the above is that the circumstances surrounding the value of Mr Clancy's undertaking as to damages have markedly changed since the granting of the injunction on 24 May 2023, leaving the undertaking as to damages far from what it was alleged to have been. The progression of the matter has revealed that Mr Clancy himself does not have extensive business interests, even if companies associated with him do. 50 The issue under consideration is whether the injunction granted in favour of the Clancy interests is supported by a valuable undertaking as to damages. It is beyond doubt that the price of obtaining an injunction is that the party seeking it gives an undertaking as to damages and establishes that it is valuable. This is an important aspect of the balance of convenience: see Maverick Biomaterials Pty Ltd v Abouelkheir [2021] FCA 1157 [32]. As was observed in Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 828 [334]: Where the court is balancing monetary disadvantages as between a plaintiff and defendant, the inability to give a valuable undertaking as to damages is a factor which can be taken into account in assessing the balance of convenience, and may be decisive: Wentworth v Wentworth (Unreported, Supreme Court of New South Wales, 12 June 1997, Hodgson J.) 51 In the present case the Clancy interests have obtained an injunction restraining the So interests from benefiting from the enforcement of their securities. They did so by reason of the evidence, albeit of somewhat substandard quality, that Mr Clancy had given an undertaking that was valuable: see CIP (No 3) [105]. It is clear from what has occurred since the granting of the injunction that the value of that undertaking has been diminished significantly. 52 The evidence now shows that the So interests are suffering detriment from the imposition of the injunction. It is clear that, as a result of the granting of the injunction, Ultimate and UIP 1 have suffered the incurring of additional interest in the amount of $1,479,985 as at 31 October 2024. Necessarily, that amount will continue to increase over time. On the material now before the Court, there is insufficient evidence to establish that Mr Clancy's undertaking is worth anything, were it to be enforced. Necessarily, the liquidation of Mr Clancy's interests in the childcare facilities which returned the sum of $2 million to him (which has been spent) has contributed to that circumstance. 53 In the result, the circumstances in which the injunction was granted have changed in a sufficiently material manner to warrant a variation to its terms.

The interests of justice warrant a variation to the injunction 54 If at the time of the initial granting of the injunction, the value of Mr Clancy's undertaking had been shown to be that which it is now, it is most unlikely that it would have been granted. The position would have been that the So interests would have been restrained from exercising their prima facie rights in relation to the enforcement of their loans and securities with the potential of suffering damage, whilst the Clancy interests were not at risk of prejudice were they to fail in the litigation because Mr Clancy's undertaking as to damages is of insignificant discernible value. That is a significant matter in the discretion to vary the terms of the existing injunction. 55 The existence of the injunction is hampering the So interests in the prosecution of their defence. Whilst it can be accepted that it has not been established that they would not be able to acquire funds from third parties to meet the legal expenses, it is apparent that they will only be able to do so with some difficulty. They would be required to draw upon unsecured loans from the members of Mr So's family. In the absence of any valuable undertaking as to damages, it is not self-evident that they should be required to endure those difficulties. The Clancy interests submitted that the So interests' delay in making the present application should weigh against making an order to vary the injunction. That is, the So interests became aware of the proposed sale of the childcare centres on around 25 July 2024, but did not file their application until 1 November 2024. Though this delay is relevant to the discretion, it is not significant enough to outweigh the factors in favour of varying the injunction. Nor was it suggested that the delay was productive of any prejudice to the Clancy interests. Further, it must be remembered that the application was brought primarily on the basis that the So interests had run out of funds with which to defend the litigation, rather than the change in worth of the undertaking. 56 To a degree the Clancy interests sought to rely upon the findings made in CIP (No 3) as indicating that the merits of the litigation supported the dismissal of the application. Whilst such a submission is not inappropriate, it should not be thought that any finding made on an earlier interlocutory application on different evidence and submissions, established anything other than that the Clancy interests had a good prima facie case. As was emphasised on the hearing of the current application, success for the Clancy interests and Carver's Reach entities depends to a not insignificant degree on the Court accepting Mr Clancy's evidence as to the effect of a conversation between him and Mr So and alleged representations by Mr So that Ultimate and UIP 1 would not enforce the loan agreement according to its terms. Mr So denies that the conversation occurred and the merits of that issue can only be determined at trial where the Clancy interests bear the onus of proof. In this case the merits of the parties' respective claims are neutral. 57 There is, with respect, no real prejudice to the Clancy interests if the current injunction is varied to a relatively small extent. Whilst it is true that it will reduce the proceeds of the sale of stages 7 to 11 of the development, to which the Carver's Reach entities would be entitled if they succeed in their claims, it must not be forgotten that the So interests have a 50% interest (being either shareholding or unit holding) in the Carver's Reach entities and are entitled to any distributions of profit. If the Carver's Reach entities are entitled to the relief which they seek, that will result in a derivative benefit to the So interests. Indeed, even if they are successful in relation to some of the relief sought (albeit in the alternative), the Carver's Reach entities will still be required to repay the loans made by Ultimate and UIP 1. Without reaching any conclusion on the issue, there is reason to assume that any relief obtained by the Carver's Reach entities in relation to the loans might be subject to those companies disgorging any benefit obtained from the making of them. That is, it is possible that they will still be required to repay the capital borrowed, at the least. The documented loans are for considerable amounts and if that is required to be repaid and the amount now to be released by the orders sought is taken into account in relation to the amount due, the Clancy interests would suffer no damage at all. In this respect, the So interests accepted that any order should be on the basis that any amount now released to the So interests should be deducted from the amount owing to them following the hearing if the Carver's Reach entities are successful. Similarly, if an order is ultimately made under s 233 of the Corporations Act 2001 (Cth) that shares held by the Clancy interests in the Carver's Reach entities be purchased by the So interests, the amount now released to the So interests can be treated as if it remained part of the assets of the Carver's Reach entities. Given these factors, the risk to the Clancy interests is minimal. 58 In addition, Ms Wong offered to give an undertaking to repay the amount received from the funds which are presently the subject of the injunction and agreed to secure that undertaking by mortgages over two of her properties in Hong Kong. That undertaking can be accepted, though it is of little weight given that it would require the enforcement of the mortgages overseas and there was no evidence before the Court as to the manner in which that might occur. In particular, there was no suggestion of there being any reciprocal agreement between Australia and Hong Kong as to the enforcement of judgments. 59 Ms Wong also agreed to provide mortgages over two of her properties in Hong Kong which have a combined value of approximately AUD 3.5 million. In the circumstances, that offer should be accepted as providing some, if not substantial, protection for the repayment of any money to be released from the restrictions imposed by the injunction. 60 Some attempt was made to assert that the Clancy interests had suffered damage by reason of the So interests having already had access to $5,315,364.17 of funds from prior sales pursuant to the impugned loan, mortgages and securities. With respect, that is wholly irrelevant to the issues presently before the Court. The receipt of those funds occurred prior to the granting of the current injunction and the concern here is with the respective detriment that each of the parties might suffer as a result of its maintenance or alteration. 61 If the So interests are successful on this application, allowing them access to funds now would have the result that one party to an oppression action would be using funds from the companies in respect of which the claim is made to defend the claim against them. That should usually be avoided: see Re D G Brims and Sons Pty Ltd (1995) 16 ACSR 559, 591 - 592; Morara Pty Ltd v Kingslane Property Investments Pty Ltd (No 2) [2022] WASC 372 [74]. However, this is not a usual oppression action. Whilst such relief is sought, the action substantively involves commercial claims between two co-venturers who have fallen out and, in particular, cross-allegations of breaches of fiduciary duty and other corporate obligations. More importantly, the parties are not on an equal footing in relation to the outcome. If the So interests successfully defend the claims of the Clancy interests and of the Carver's Reach entities, they will effectively recover all of the proceeds derived from the land development as the repayment of the loans plus interest. Conversely, even if the So interests are not successful, they will retain a 50% interest in the recoveries of the Carver's Reach entities and, in relation to some of the claims advanced, will likely be entitled to repayment of the money advanced. At the very least, it is likely that they will be substantial creditors of the Carver's Reach entities. In this latter respect, even if the oppression action is successful, it will be in respect of companies which have substantial liabilities to the So interests.

Conclusion as to the variation of the injunction 62 It follows that the weight of the current circumstances supports the conclusion that the terms of the injunction should be varied to permit the release of funds to the So interests. Chief amongst those circumstances is the evaporation of the value of Mr Clancy's undertaking as to damages, assuming that it had any value when it was given. The injunction has caused damage to the So interests who presently have little recourse to remediation should the claims against them fail. It has also made the prosecution of the defence of the proceedings substantially more difficult.

Extent of variation 63 The next issue is the extent to which the injunction should be varied. The So interests sought a variation to enable them to access the proceeds the subject of the injunction up to the amount of $3.5 million. This, it was said, would enable the funds to be used to fund their legal expenses of the three proceedings which will be heard together in April 2025. The amount was put forward on the basis of the anticipated costs to be expended to the end of the hearings of the three actions. The cost of completing the main proceedings from April 2024 was said to be $2.2 million, and about $1.3 million was identified as being the cost of prosecuting the other two actions to completion. No doubt, this breakdown was advanced to support the initial basis for the variation of the injunction, being that the So interests had no assets unaffected by the injunction to draw upon to fund the three actions. Ultimately, that basis for effecting a variation was rejected above, with the consequence being that the breakdown of the amount sought is less relevant. However, as is mentioned above, the cost of the litigation has been taken into account in a more general way as part of the discretionary considerations. 64 Nevertheless, as the basis for varying the injunction is the diminution in the value of Mr Clancy's undertaking, there is no reason to take into account how much money was intended to be spent in each action. Whilst consideration of where the funds might be spent could have been relevant if the basis for the variation was the So interests' inability to fund the litigation, that is no longer a relevant consideration. 65 The application has been considered on the evidence before the Court, especially that which revealed the lack of any value to Mr Clancy's undertaking as to damages. That has been applied to the alternative relief sought in the interlocutory application, being the variation of the injunction to allow the withdrawal of same money. It is noted that this was the relief which the So interests focused on in the written submissions. Though the primary relief sought was for an order that the injunction be discharged in toto, as the submissions were not directed to that, it would be inappropriate to grant that relief, even if it might be technically available. Before such an order might be made, the Clancy interests should be given sufficient time in which to respond to any submissions made in support of that order. That is not to invite any further application which, in any event, would be determined on appropriate evidence. 66 In the result, orders should be made to the effect that the injunction granted on 24 May 2023 be varied to allow the So interests access to $3.5 million of the funds presently held. Such orders should be subject to the undertakings offered by Ms Wong prior to and again during the hearing of the application to repay that amount should the So interests not be successful, and mortgages given to secure that repayment. It is also subject to the undertaking given during the course of the hearing that the So interests acknowledge that should the second to thirteenth respondents be successful in the proceedings and any amount becomes owing to the fourteenth to twentieth respondents as distributions to the shareholders of the second to thirteenth respondents, the sum of $3.5million will be taken as already having been received by them. 67 Though the possible permutations of outcome in these proceedings are broad, there is the real possibility that one of them will include the second to thirteenth respondents being required to repay the loans to Ultimate or UIP and that is so regardless of who has success in establishing their causes of action. If the loans are found to be repayable, it would follow that the sum of $3.5 million will be brought account in any calculation of the parties' respective liabilities.

Costs 68 As the So interests have had success on the interlocutory application, the applicants and second to thirteenth respondents should pay the first and fourteenth to twentieth respondents' costs of the application.

The appropriate form of order 69 Given that the variation to the injunction is subject to a number of undertakings that were not formulated in writing, it is appropriate that the parties be given the opportunity to make submissions as to the form of the order. The parties should have three days in which to make those submissions. 70 Though not necessarily definitive, the following form of order appears to encapsulate the nature of the undertakings and acknowledgments made during the hearing: UPON THE UNDERTAKING BY THE NINETEENTH RESPONDENT to repay any amount paid out of the funds that are the subject of paragraph 1 of the orders made by Justice Derrington on 24 May 2023 (the Stage 7 to 11 proceeds) if the applicants and second to thirteenth respondents are successful in establishing a claim to those funds, AND UPON THE UNDERTAKING BY THE NINETEENTH RESPONDENT to grant mortgages over the properties referred to in these proceedings as Flat J on 14th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong and Flat B on 9th Floor of Tower 7, Harbour Place No 8 Oi King Street Kowloon, Hong Kong, in favour of the applicants and the second to thirteenth respondents in a form acceptable to the Queensland District Registrar, to secure the above undertaking, AND UPON THE FIRST AND FOURTEENTH TO TWENTIETH RESPONDENTS HAVING UNDERTAKEN BY THEIR COUNSEL that if the claims of the second to thirteenth respondents in these proceedings are successful, as a result of which there is a distribution of funds to their shareholders, the amount of $3,500,000 will be deducted from any amount payable to the second to thirteenth respondents and retained for the benefit of the applicants as shareholders of the second to thirteenth respondents, THE COURT ORDERS THAT: 1. Paragraph 1 of the Orders made by Justice Derrington on 24 May 2023 be varied such that the first and fourteenth to twentieth respondents are not prevented from using the Stage 7 to 11 proceeds up to an amount of $3,500,000. 71 The parties' further submissions should address any perceived difficulties with the wording expressed above. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.

SCHEDULE OF PARTIES QUD 93 of 2022 Respondents Fourth Respondent: PARK RIDGE 96 AND 98 PTY LTD ACN 618 802 618 (RECEIVER AND MANAGER APPOINTED) Fifth Respondent: PARK RIDGE 132 PTY LTD ACN 619 053 735 (RECEIVER AND MANAGER APPOINTED) Sixth Respondent: 168 PARK RIDGE PTY LTD ACN 619 549 334 168 (RECEIVER AND MANAGER APPOINTED) Seventh Respondent: PARK RIDGE 180 PTY LTD ACN 616 431 157 (RECEIVER AND MANAGER APPOINTED) Eighth Respondent: ROCHEDALE HOLDINGS PTY LTD ACN 610 535 076 (RECEIVER AND MANAGER APPOINTED) Ninth Respondent: ROCHEDALE HOLDINGS NO. 1 PTY LTD ACN 610 550 199 (RECEIVER AND MANAGER APPOINTED) Tenth Respondent: GGPG DEVELOPMENTS (NO.48) PTY LTD ACN 608 771 857 (RECEIVER AND MANAGER APPOINTED) Eleventh Respondent: PARK RIDGE DEVELOPMENT MANAGEMENT PTY LTD ACN 627 401 094 (RECEIVER AND MANAGER APPOINTED) Twelfth Respondent: COORPAROO HOLDINGS PTY LTD ACN 609 979 446 (RECEIVER AND MANAGER APPOINTED) Thirteenth Respondent: AXIS NORTH PTY LTD ACN 609 653 821 (RECEIVER AND MANAGER APPOINTED) Fourteenth Respondent: SIP GROUP PTY LTD ACN 610 480 914 (RECEIVER AND MANAGER APPOINTED) Fifteenth Respondent: SIP 1 PTY LTD ACN 611 408 925 (RECEIVER AND MANAGER APPOINTED) Sixteenth Respondent: MT FAMILY PTY LTD ACN 605 720 947 Seventeenth Respondent: ULTIMATE INVESTMENT PORTFOLIO PTY LTD ACN 611 531 778 Eighteenth Respondent: UIP 1 PTY LTD ACN 655 578 733 Nineteenth Respondent: LAI WAH WONG Twentieth Respondent: SUK KUEN LEUNG Twenty First Respondent: SEL PROPERTY INVESTMENTS PTY LTD ACN 612 436 950 Twenty Second Respondent: PAUL WONG Twenty Third Respondent: THYNNE & MACARTNEY (A FIRM)