Cong v Shen

The deceased's Will dated 3 May 2016 (but executed, it seems, in early June 2016)

1. Under the deceased's Will, by cl 5, Ms Shen and Edmund were appointed as executors and trustees.
2. Cl 7 of the Will provides that: 7. My will has been drafted to enable my family to benefit from the structure of my financial affairs. All long term holdings are held by Jolly Trading Pty Ltd with a view to providing a continuing income stream for the beneficiaries. The assets held by Jolly Trading Pty Ltd have been identified as the ones best sold for the purpose of discharge of all debts although these debts are readily serviced by income. I therefore encourage my executors and beneficiaries to take the appropriate legal financial and taxation advice relating to the administration of my estate.
3. Pausing here, the first and second defendants maintain that, on any view, the Will was inaccurate in a number of respects (see T 33). They note that Jolly Trading, the company through which the deceased (initially with his first wife and later his second wife) carried on a sheep skin export business, did not own any land (so that the reference in the Will to "long term holdings" is unclear). It is also noted by the first and second defendants that the Will (drafted by Glynns Lawyers shortly before the deceased's death) assumed the deceased had "very abundant financial resources", which they say was not the case.
4. Relevantly, cl 9 of the Will, among other things, contained the following provisions.
5. By cl 9(b), the deceased left all his right title and interest in the shares and business conducted by Jolly Trading to Ms Shen; and went on to provide as follows: I GIVE to Teresa Mae Yin Cong and Laurence Xavier Xiao Ming Cong and Edmund Bede Hao San Cong an annuity each, payable by equal monthly instalments from my death for a period of 10 years, which bears the same relation to $10,000.00 as the Consumer Proce Index All Groups, Weighted Average of Eight Capital Cities or the index which is substituted for it current at the date of my death bears to that index at the date of this Will, and my Trustees must vary the annuity on each anniversary of my death so that the annuity amounts to a sum which bears the same relation to $10,000.00 as the index current at the date of each anniversary bears to the index at the date of this Will.
6. Clause 9(c) then directed "my trustee" to retain ownership of properties at 43 Amy Street, Campsie and 56 and 58 Duke Street, Campsie (the Duke Street properties in fact not being owned by the deceased but being in Ms Shen's name; and the deceased's interest in the 43 Amy Street property being as a joint tenant with Ms Shen) for a period of "no more than ten (10) years" after the date of his death "so as to maximise its value as a result of any rezoning of those properties and at the expiration of this period".
7. Clause 9(d) then provided: I acknowledge that my spouse will pay to Teresa Mae Yin Cong and Laurence Xavier Xiao Ming Cong and Edmund Bede Hao San Cong the agreed amount as contained in the Deed dated 2 May 2016 which is attached to this my Will.
8. Clause 9(e) identified the residuary beneficiaries of the Will as Ms Shen and, in the event that Ms Shen did not survive him, their three children (Bruce, David and Leon Cong) (who were to share the residue equally, provided they attained the age of 21).
9. The first and second defendants note that cl 10(p) of the Will burdened the "annuity given by clause 9 C" upon the residue of the estate and expressly exonerated the rest of the estate from the claims by "the annuitant"; and that it provided that "when the annuitant dies" the appropriated fund was to fall into the residue of the estate.

The Deed

1. The reference in the Will to a deed "dated 2 May 2016" must be a reference to a deed dated 3 June 2016 between the deceased and Ms Shen (the Deed), prepared by Glynns Lawyers.
2. The Deed recited: that the deceased and Ms Shen were the registered proprietors in joint names of a series of properties in Burwood and Campsie (in fact, of the Campsie Properties, that seems to have been the case in relation to only the 43 Amy Street, Campsie Property) (Recital A); that the deceased and Ms Shen were married and had three (there named) children under the age of 18 years (Recital B); that the deceased was previously married and had three children to this earlier marriage (again each there being named) all above the age of 18 years (Recital C); that "[o]n current information and to the best of [the deceased and Ms Shen's] knowledge and belief", four specified properties were "proposed by the local authority for rezoning for high density living and as a consequence will increase in value" (Recital D); and it was the intention of the deceased and Ms Shen "to retain ownership of the [properties specified in Recital D] until rezoning or until such time that the local authority determines the zoning of these properties" (Recital E).
3. The Deed also recited that the deceased had made a Will dated 2 May 2016 which was attached and marked A to the Deed (Recital G).
4. The Deed further recited that the purpose of the Deed was to make provision for Teresa, Laurence and Edmund upon the death of the deceased (Recital H).
5. Clause 2 of the Deed provided as follows: 2. Operative provisions Cong and Shen agree between each other and with Teresa, Laurence and Edmund as follows: (a) In the event of Cong's death, Shen will retain ownership of the Campsie properties for no longer than to ten (10) years for the purposes of the rezoning of the these properties; and (b) Upon rezoning of the Campsie properties or sale of any or all of the Campsie properties Shen agrees to pay to Teresa, Laurence and Edmund no sooner than 10 years after my death an amount in her absolute discretion to be divided equally between them an amount of no less than $6 million and not more than $9 million such amount to be determined by her as to the then market value of the Campsie properties; (c) In the event the Campsie properties are not rezoned for high density living within 10 years of the death of Cong, Shen agrees to pay $3 million to Teresa, Laurence and Edmund to be divided equally between them. (d) In the event of the sale of the said property at 43 Amy Street, Campsie before my death I direct and agree that upon rezoning of the remaining Campsie property to pay Teresa, Laurence and Edmund an amount between $5 million and $8 Million [sic] such amount to be determined by Shen in her absolute discretion. (e) In the event of my death before the refund of the Bond that amount is to be paid to Shen. [the reference to the Bond is to a bond amount that the Deed recites the deceased paid of $10,000 in relation to the application for residency in Australia of Ms Shen's mother, Ms Wu, - see Recital F]
6. Prior to the deceased's death, he and Ms Shen entered into a contract for the sale of the property at 43 Amy Street, Campsie for the sum of $1,375,000. After the deceased's death, there was an unsuccessful attempt by Ms Shen (through her lawyers) to terminate the contract of sale, which led to proceedings in this Court; and ultimately the sale was completed on 17 July 2017 (Exhibit 2). (Thus, the first and second defendants submit, and I accept, that it cannot be said that this sale was to frustrate any judgment in these proceedings - T 73.7).

Events after the deceased's death

1. Teresa has deposed that, following the deceased's death, Ms Shen said to her (affidavit of Teresa Cong, affirmed 18 July 2018, at [46]): [46] He [the deceased] told me to keep the Campsie properties until each could be sold for a black zoning amount. Then to cut the pie between you and [Laurence] and Edmund as well as paying you each $10,000 each year for 10 years. Also I must pay for your wedding.
2. In August 2016, shortly after the deceased's death, Ms Shen incorporated two companies, Cong Australia International Pty Ltd (Cong Australia) (on 9 August 2016) and Ugg Australia International Pty Ltd (Ugg Australia) (on 10 August 2016).
3. The plaintiffs say that, after the deceased's death, Ms Shen depleted the assets of Jolly Trading by transferring moneys from its account to her own account (they claim that a total of $689,000 was withdrawn from Jolly Trading's account in this manner) (see the affidavit of Anastasia Joyce, sworn 22 March 2019, at [22]). The plaintiffs note that the payments were made: on 6 September 2016 ($409,000); on 9 September 2016 ($143,000); on 14 September 2016 ($38,000); and on 27 September 2016 ($99,000).
4. On 15 February 2017, Ms Shen transferred the 58 Amy Street, Campsie property to Ms Wu for a stated consideration of $1,675,000. The plaintiffs note that Ms Shen asserts that the consideration for the transfer was past loans allegedly given by Ms Wu to pay Jolly Trading's debts. Complaint is made by the plaintiffs that Ms Shen does not specify the amounts of these loans, the dates on which they are said to have been given, or how such funds are said to have been advanced by her mother.
5. On or about 14 September 2017, Jolly Trading was deregistered. (It is noted by the plaintiff that the ASIC form 6010 Application for Voluntary Registration of a Company purports to have been certified by the deceased, nearly a year after his death.)
6. Ms Shen has deposed that the likely nature and value of the distributed and net estate is nil. The defence filed 15 May 2018 pleads that Jolly Trading was insolvent at the date the Will was executed (at [29]).
7. On or around 10 May 2018, a caveat was lodged by Capital Securities XVIII Pty Ltd (Capital Securities) against the 58 Amy Street, Campsie property. The caveat records that Ms Wu guaranteed a loan issued by Capital Securities on 20 March 2018.
8. On 16 June 2020, the first plaintiff caused caveats to be lodged over 4 Woodside Avenue, Burwood, 2 Duff Street, Burwood and 58 Amy Street, Campsie. The equitable interest claimed in relation to the 58 Amy Street, Campsie property is said to arise under a half secret trust (see [79]-[86] of the amended statement of claim filed 28 February 2020) in favour of the deceased's estate. The equitable interest claimed in relation to the 4 Woodside Avenue, Burwood and 2 Duff Street, Burwood properties arises by reason of a resulting trust in favour of the deceased's estate (see [127]-[133] of the amended statement of claim, filed 28 February 2020). (The first and second defendants note that probate has not yet been granted.)
9. The plaintiffs claim that Ms Shen holds her interest in the respective properties on resulting trust for the deceased's estate in such proportion as reflects the deceased's contribution to the costs of acquisition of the properties. It is said that the only purchase in respect of which Ms Shen has produced documentary evidence as to the source of funds is the 58 Amy Street, Campsie property and then only as to $400,000 (which sum Ms Shen asserts was gifted to her by the deceased) (see the affidavit of Marion Thorburn, sworn 26 February 2019, at [108]).
10. At the time of the deceased's death: Teresa was 25 and had finished her tertiary studies in 2016; Laurence was 23 and had left school in 2012; and Edmund was 20 and had left school in 2013. It is said that none of Edmund, Teresa and Laurence has received any substantial gifts from the deceased, over and above his paying for their education and general upkeep, and that the deceased's estate has only paid the following amounts to them: Teresa $8,500; Edmund $5,500 and Laurence $4,000.

Freezing orders

1. I will summarise in due course the claims made in the proceedings. First, however, it is relevant to note that on 15 May 2019 Robb J made freezing orders by consent on a without admissions basis.
2. The matter then came before Henry J sitting as duty judge on 31 May 2019 on which occasion her Honour extended the freezing orders on the basis of the plaintiffs' usual undertaking as to damages and on the basis of an undertaking given without admissions on the part of the first and second defendants.
3. The matter came back before Henry J on 7 June 2019, on which occasion freezing and other orders were made in relation to a number of properties including Ms Shen's family home at Burwood (on the giving by the first and second plaintiffs of the usual undertaking as to damages and upon an undertaking given to the Court and recorded in a Deed Poll by a company with which, as I understand it, one or more of the plaintiffs (or their mother) is associated).
4. On 30 August 2019, the matter came before me. On that occasion, at issue was whether the repayment of a loan by Ms Shen was in breach of the then existing regime of freezing orders. Relevantly, I made orders varying the terms of order 2(a) of the orders made by Henry J on 7 June 2019. I noted on that occasion that it was acknowledged by Ms Shen that the payment of the sum of $50,000 to Ms Vivian Stefadouros on 3 July 2019 was in breach of order 2(a) of the orders made by Henry J on 7 June 2019; that the plaintiffs did not propose to take any steps for Ms Shen to be sanctioned for contempt in relation to that breach; and that Ms Shen had proffered an explanation for the circumstances in which the payment was made and had proffered an apology to the Court in relation to the making of that payment (leaving to the final hearing of the proceedings what consequences, if any, might flow from that breach).
5. On 27 September 2019, Slattery J extended the operation of the orders until 5 business days after delivery of judgment in an application that had been heard by his Honour that day (relating to a pleadings dispute). That judgment was delivered on 29 November 2019, when the operation of the orders was extended to 6 December 2019.
6. The orders were further extended by me on 3 December 2019 until 16 March 2020; and then on 20 February 2020 I again extended the orders until 12 November 2020 (being one week after the conclusion of the time in which the matter is listed for hearing before me).
7. What next transpired was that the plaintiffs became aware that (without notice to them) a mortgage had been registered on or about 18 May 2020 over one of the properties the subject of the freezing orders (58 Amy Street, Campsie), a property held in the name of Ms Wu. That led to a further interlocutory application by the plaintiffs on an ex parte basis before me on 11 June 2020. I made orders on that day requiring Ms Wu to provide an affidavit explaining the circumstances of the grant of the registered mortgage over that property and the use or intended use of the proceeds of the loan the subject of that mortgage, following which both Ms Shen and Ms Wu served affidavits affirmed on 15 June 2020 (in which, among other things, reference was made to a loan arrangement between Ms Shen and her brother, about the existence of which there had been no previous disclosure in these proceedings). The first and second defendants indicated that arrangements were being made in order to repay the borrowed moneys (and hence to remedy the (seemingly admitted) breach of the freezing orders).
8. It was against that background that the plaintiffs filed their notice of motion of 18 June 2020, their solicitor (Ms Marion Thorburn) deposing to a concern that Ms Shen was then planning to relocate overseas (see her affidavit sworn 17 June 2020, at [55]) and a concern that, despite the existence of the freezing orders, the first and second defendants were taking steps to dissipate their assets and put them out of the plaintiffs' grasp (see her affidavit at [56]). I made orders further freezing orders on an ex parte basis on 18 June 2020 and those were then extended on 19 June 2020.
9. Meanwhile, leave had been granted to the plaintiffs by Slattery J on 21 May 2020 to amend certain subpoenas issued in June 2018 to various banks and to another entity (Freight Solutions (Vic) Pty Ltd) and for the provision of discovery by the defendants of certain documents specified in a notice to produce issued by the plaintiffs.
10. What has transpired since then, according to the affidavit affirmed 11 July 2020 of Ms Shen (which I note was only provisionally read by me, over the objection of the plaintiffs on the basis that it was incomplete as to the relevant financial circumstances), is that, on or around 8 July 2020, Westpac advised Ms Shen that it had "stopped" all her bank accounts as it had been advised that she was subject to freezing orders and she also discovered that her NAB credit card had been disabled (see her affidavit at [16]-[17]). Without going into her affidavit evidence in detail (since it is the subject of objection by the plaintiffs on the basis of unfair prejudice, as adverted to above), the position of Ms Shen now appears to be that she does not have enough money to pay for her mortgage repayments and other property holding expenses or to pay for the living expenses of herself and her four sons (see at [14] of her affidavit). (Ms Shen now has a fourth son from a subsequent marriage, as to which I say more below.) Ms Shen has deposed that she has applied for Centrelink benefits and is in receipt of $700 fortnightly payments from Centrelink but that, as her accounts are frozen, she has no means to pay any money at the moment (see at [18] of her affidavit).
11. The first and second defendants' legal representative has deposed to the defendants having fallen into arrears in the payment of their legal fees and that for many months the defendants' solicitors have not been in funds to continue the preparation of this matter (see Mr Hao Fan's affidavit, affirmed 8 July 2020, at [14]).
12. In a nutshell, the current (in my opinion, unsatisfactory) state of affairs seems to be that: on the one hand, the plaintiffs have an understandable concern as to the breaches that have occurred in respect of the freezing orders to date; the plaintiffs maintain that incomplete financial information has been provided by the defendants; and the plaintiffs object to funds that they maintain are trust funds being expended on the preparation by the defendants of their defence of these proceedings which are listed for hearing later this year; and, on the other hand, the first and second defendants maintain that they are not in a position financially to prepare the case for hearing and (now Ms Shen's bank account has been frozen and credit card disabled - not, I would here add, by any order obtained by the plaintiffs but seemingly in response by the banks to the existence of the freezing orders), Ms Shen maintains that she is unable to provide for her family's living expenses. (Pausing here, it should be noted that Ms Shen has remarried and there is no information available to me as to her now husband's assets or the position of the company or companies through which, as I understand it, he and she now trade.)

The plaintiffs' claims

1. At this point it is convenient to summarise the plaintiffs' claims as pleaded in their amended statement of claim filed pursuant to leave granted by Slattery J on 29 November 2019 (the amended statement of claim, filed 28 February 2020) (not least because the first and second defendants are critical of various aspects of the case as pleaded and say that this is relevant to the continuance of the freezing orders).
2. Prayer 1 of the amended statement of claim seeks an order pursuant to r 78.19 of the Supreme Court Rules 1970 (NSW) that a grant of administration of the estate of the deceased be made to the first plaintiff, Edmund.
3. Prayers 2-11 of the amended statement of claim seek declaratory and other relief in relation to the Campsie Properties by reference, at least in part, to the obligations of Ms Shen under the Deed dated 3 June 2016.
4. In this regard, the first and second defendants describe the claims here made as asserting a claim on behalf of the estate for specific performance of a covenant in cl 2 of the Deed by Ms Shen in favour of the estate to pay (depending on certain contingencies) either $3 million, $5 million or $6 million to the plaintiffs and their late brother's estate in 2026 (and they say that this is notwithstanding the rule that an executor cannot sue herself).
5. Further, it is said that these claims assert implied trusts over the Campsie Properties (or alternatively the proceeds of sale thereof) in favour of the deceased to secure performance of the said covenant. It is noted that (referring to 16 of the amended statement of claim filed 28 February 2020) this is said to arise by implication from the terms of the Deed. In this regard, the first and second defendants say that the Deed contains no such promise, nor any promise to retain the Campsie Properties; that the Deed contains an entire agreement clause; and that the Campsie Properties were heavily mortgaged (and one of them was under a contract of sale) at the time of the making of both the Will and the Deed.
6. Prayers 12-13 of the amended statement of claim relate to the annuities (of $10,000 per year for 10 years) provided for under the Will.
7. Prayers 14, 15, 16(c), 17-20 (said by the first and second defendants to be inconsistent with the relief sought at prayers 2-11) assert direct claims by the plaintiffs and the estate of Laurence based on a trust in their favour in respect of the Campsie Properties (see the pleading at [79]-[88] and [91]-[113]). (The defendants say that, inconsistently with those prayers for relief, [10] and [16] of the amended statement of claim assert a trust in favour of the deceased). It is noted that these claims are said to arise from a "half secret trust" established by cl 9(c) of the Will, cl 2 of the Deed and an oral undertaking (see [79]-[84] of the amended statement of claim). Complaint is here made by the first and second defendants that no particulars of the alleged oral undertaking have been provided. (In this regard, I note that the first and second defendants say that the Will and Deed were not read in English to Ms Shen (or even to the deceased) by Mr Glynn, or anyone else, nor were they translated into Chinese.)
8. As to the alleged trust in favour of the plaintiffs (and the estate of Laurence), the first and second defendants again emphasise that the Deed contains an entire agreement clause. They say that the Deed does not purport to contain any statement of the trust, and that it must fail under the parol evidence rule or by reason of s 23C of the Conveyancing Act 1919 (NSW) (Conveyancing Act). It is further noted that the Deed contains no covenant for any proprietary benefit to the plaintiffs (only cash) and that cl 9(c) of the Will does not purport to make any gift to Ms Shen (i.e., it is not settling property on her). The first and second defendants say that the fact that the plaintiffs have difficulty in formulating the objects of the trust (and its terms), is indicative of further difficulties with this claim.
9. Prayer 21 of the amended statement of claim seeks a declaration that Ms Shen holds some or all of her interest in specified properties (including some, but not all, of the Campsie Properties) on resulting trust for the deceased's estate (see at [9], [10], [114]-[133]). In this regard, it is said that the omission of 58 Amy Street, Campsie from prayer 21 indicates some "confusion" between acceptance that 58 Amy Street, Campsie, was from the time of its acquisition Ms Shen's own property (subject to the case based on the later execution of the Deed, or perhaps of the Will), and the "assimilation" of the 58 Amy Street, Campsie property into the plaintiffs' general case that all of the plaintiffs' acquisitions were from inception held on resulting trust for the deceased (referring to [133] of the amended statement of claim).
10. Complaint is made by the first and second defendants that the amended statement of claim (at [114]-[133]) does not identify any specific contribution by the deceased to the purchase of any of the properties; rather, that the allegation is that the deceased "facilitated" each purchase by "the provision of part [not identified] of the purchase price". The first and second defendants say that the plaintiffs are seeking to make some case of "indirect facilitation" (Counsel's emphasis) and they say that this is apparent from the "broad-brush allegations" repeatedly made in the form of the pleading at [116] or the particulars to [114].
11. It is noted by the first and second defendants (who have pleaded the presumption of advancement in their defence) that all but the first two properties were purchased after the deceased and Ms Shen were married. It is said that the first of those two properties acquired before marriage (58 Amy Street, Campsie), is the subject of evidence in the plaintiffs' own case that the deceased made statements to their witnesses that he made a gift to Ms Shen to assist her in that purchase for her own benefit; and that the second (16 Nicholson Street, Burwood) was purchased in the deceased's and Ms Shen's names as joint tenants. The defendants complain that the plaintiffs' "real" case remains unidentified.
12. The first and second defendants argue that the plaintiffs are here asserting an interest in the performance of a personal covenant to pay money. It is said that if the properties vest in the estate, they are not available to Ms Shen as assets from which she can discharge this liability, unless they return to her through the gift of the residue. They say that, to the extent that the plaintiffs assert specific implications or effects arising from the Deed and/or the Will confined to the Campsie Properties, their case does not seem to depend on the alleged resulting trusts over those properties (as they seem to be asserting that Ms Shen undertook new obligations). So, the first and second defendants say, the plaintiffs' case stands or falls on the Will and the Deed ("except for the monopoly money of the annuities") and that this would not justify a freezing order.
13. Prayers 16(a)-(b) and 22-23 of the statement of claim relate to the affairs of Jolly Trading. It is said by the first and second defendant that, under the Will that the plaintiffs propound, the shares in Jolly Trading were given to Ms Shen. The first and second defendants say that the plaintiffs have no conceivable interest in that company. It is submitted that the plaintiffs have no standing to assert claims on its behalf, derivatively for the benefit of an estate as shareholder, from which they stand to gain nothing.
14. In particular, complaint is made that [29] of the pleading alleges that the deceased was engaged through Jolly Trading in a scheme of fraudulent tax evasion. The first and second defendants say that the pleading is embarrassing because it does not allege any ingredient in any cause of action against Ms Shen (and does not allege that Ms Shen participated in this conduct). (It is said that the plaintiffs' affidavits and that of Ms Joyce in their case do make that allegation, and do so by implicating themselves in the alleged conduct.)
15. Complaint is here made that Slattery J disallowed the first defendant's Reid v Howard (1995) 184 CLR 1; [1995] HCA 40 objection to the discovery sought by the plaintiffs (on the basis that the plaintiffs will not be permitted to maintain that (fraud) case because it is not pleaded). The first and second defendants submit that no authority supports the proposition that such an objection (which they note stems from fundamental common law rights) depends on the "machinations" by which the opposing parties construct their case. (Complaint is also made as to some of the correspondence that has passed between the parties' legal representatives in this regard.)
16. The first and second defendants say that the pleading at [29] of a claim with no particulars and in which the plaintiffs have no conceivable interest "is not deserving of interlocutory protection" and that no freezing orders should be granted to assist it. It is submitted that "[t]he fishing expedition which has so far run without trammel should be terminated".
17. As to the allegations of misappropriation from Jolly Trading after the death of the deceased, the first and second defendants say that money was put into that company "shortly before it was recouped" in order to pay the creditors of that company (referring to Ms Stefadouros' affidavit). It is said that Ms Shen "would have been much better off just letting the Company collapse" and that she is "being opportunistically harassed for taking the responsible course of paying the company's creditors". It is said that Ms Shen was under no obligation to use her personal exertions to keep it afloat.
18. Prayers 24-25 raise (further and in the alternative) a claim by the plaintiffs for family provision. The first and second defendants say that this can only arise if all other claims fail "in which case the plaintiffs would incur heavy costs liabilities". It is submitted in this regard that: Assuming that this claim could survive the significant objections arising out of the plaintiffs' conduct towards the deceased's widow and their little brothers, and responsibility for the costs of the primary elements of these proceedings, the extraordinarily broad claim to designate notional estate is made in order to support what could only be a modest claim for provision in favour of two able bodied adult children. It is likely, however, that provision would be futile because they would be bankrupted on their liability for costs.
19. Thus it is said by the first and second defendants that the family provision claim is disproportionate in any realistic evaluation and can supply no basis for a freezing order.

Plaintiffs' submissions

1. The plaintiffs maintain that Ms Shen has breached the Deed. Although they accept that cl 2(a) of the Deed does not stipulate the minimum period of time that Ms Shen had to retain the Campsie Properties, the plaintiffs say that the clause is to be construed by reference to recital E and to the statement of purpose expressly recorded in cl 2(a); namely, to facilitate the rezoning of the properties. It is said that this is consistent with the balance of cl 2, which adjusts the sum due to the plaintiffs by reference to the results of the foreshadowed rezoning. The plaintiffs argue that the parties should be taken to have agreed that the properties not be sold before the process of rezoning has come to an end.
2. In that regard, I note that the first and second defendants point to evidence that suggests it is now certain that there will be no rezoning - see the affidavit of Alexander Wong, affirmed 17 April 2019, at [22]. The first and second defendants submit that neither the deceased nor Ms Shen (nor Mr Glynn, who drafted the Will) understood the precise nature of what was involved in any rezoning. It is said that there is no realistic possibility of any such rezoning and certainly not before a final hearing and determination of these proceedings. The first and second defendants say that whatever meaning "can be tortured out of" the Deed, it is not realistic to think that the contingency for a $6 million liability, or even a $5 million liability, can possibly be fulfilled; nor is it appropriate to think that the deceased intended that any payment would be made to the estate of a deceased child - given his expressions indicating his intention to benefit his family, which it is said does not extend to his ex-wife.
3. The plaintiffs point to the exception provided for by cl 2(d) of the Deed. It is noted that the only exception to the conclusion which the plaintiffs propound relates to 43 Amy Street, Campsie (in respect of which contracts had been exchanged before the deceased's death). It is submitted that it was natural that the parties consider what should happen if (as did not in fact occur) completion did not occur before the deceased's death. It is said that it is striking that this was the only exception which the parties contemplated.
4. The plaintiffs point to the fact that parties' bargain was attended by the formality of a deed, to the statements in recital E (recording the joint intention of the deceased and Ms Shen to retain the Campsie Properties until rezoning or the determination of the issue of rezoning), and to recital H which recorded that the "purpose of this Deed is to make provision for [the plaintiffs] upon the death of [the deceased]". It is noted that in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407, Campbell JA reasoned (at [380]) that recitals can, in appropriate cases, constitute an admission by the party to the deed of the truth of the matter stated, under the general law concerning evidence, and can give rise to an estoppel by deed or an estoppel by convention that would prevent a party to the document asserting the contrary of the fact stated in the recital.
5. The plaintiffs say that the fact that they are not parties to the Deed does not derogate from their rights to enforce it, referring to the observation of Cotton LJ in Gandy v Gandy (1885) 30 Ch D 57 that (at pp 66-67): Now, of course, as a general rule, a contract cannot be enforced except by a party to the contract; and either of two persons contracting together can sue the other, if the other is guilty of a breach of or does not perform the obligations of that contract. But a third person - a person who is not a party to the contract - cannot do so. That rule, however, is subject to this exception: if the contract, although in form it is with A., is intended to secure a benefit to B., so that B. is entitled to say he has a beneficial right as a cestui que trust under that contract; then B. would, in a Court of Equity, be allowed to insist upon and enforce the contract.
6. Reference is also made in this regard to In re Schebsman [1944] Ch 83, where du Parcq LJ said (at pp 101-102): It is open to parties to agree that, for a consideration supplied by one of them, the other will make payments to a third person for the use and benefit of that third person and not for the use and benefit of the contracting party who provides the consideration. Whether or not such an agreement has been made in a given case is clearly a question of construction, but, assuming that the parties have manifested their intention so to agree, it cannot, I think, be doubted that the common law would regard such an agreement as valid and as enforceable (in the sense of giving a cause of action for damages for its breach to the other party to the contract), and would regard the breach of it as an unlawful act. If the party from whom the consideration moved somehow succeeded in intercepting a payment intended for the named payee he would be guilty of a tort, and, in certain circumstances, of a crime, and he would also be breaking his contract, since it would be implicit in his agreement with the other party that he would do nothing to prevent the money paid from reaching the payee. If he sought to argue that because he had himself provided the consideration he alone was interested in the destination of the money, the answer would be that the other contracting party had not agreed (and, perhaps, might never have thought of agreeing) to make a payment either to him or for his benefit. If he can persuade the payee to hand the money over to him by lawful means, he is, of course, at liberty to do so, and there may be circumstances dehors the contract which give him rights against the payee. Subject to that qualification, he can never, in the case of such a contract as I have supposed, lawfully claim payment of the money for himself while the contract remains unaltered. That the common law allows it to be varied nobody doubts. At any time the parties may agree that payment shall in future be made, not to the payee named in the contract, but to the party from whom the consideration moved, or, for that matter, to any other person, but in the case of such a contract there cannot be a variation at the will of one of the parties any more than a condition introduced into a contract for the benefit of both parties can be waived by only one of them.
7. The plaintiffs complain that, in breach of cl 2(a) of the Deed, Ms Shen transferred 58 Amy Street, Campsie on 15 February 2017 to Ms Wu, instead of retaining it for the purpose of rezoning. It is noted that the transfer form states that the consideration was $1.675 million, but that Ms Shen deposed that the consideration was past loans by Ms Wu to pay Jolly Trading's debts. It is said that, in further breach of this cause, Ms Shen sold the 56 Duke Street and 58 Duke Street, Campsie. (The plaintiffs, when informed of these sales, apparently did not oppose them but took the position that they did not thereby consent to any breach of the Deed.)
8. It is said that, in further breach of cl 2 of the Deed, Ms Shen sold 43 Amy Street, Campsie on 18 July 2017 to Amy Street Campsie Investments No. 1 Pty Ltd for $1.375 million, which sale completed on or about 18 July 2017. It is said that Ms Shen has failed to retain those proceeds on trust for the plaintiffs and has thereby diminished her ability to pay the moneys due under the Deed.
9. The plaintiffs claim that it was an implied term of the Deed that Ms Shen would not by any act within her power or control do anything to destroy or diminish her ability to pay the moneys due under the Deed by selling the Campsie Properties and not retaining the proceeds and by causing Jolly Trading to divest itself of its assets and cease trading. They note that the existence of such an implied term of co-operation was recognised in Mackay v Dick (1881) 6 App Cas 251 at p 263 and Brand v Monks [2009] NSWSC 1454 at [332]. It is noted that, where parties to a contract have agreed that something shall be done which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to what is necessary to be done on its part for the doing of what the contract said had to be done.
10. The plaintiffs say that the evidence suggests that Ms Shen caused the assets of Jolly Trading to be diverted to her personally (in the case of money), and to be transferred to her own companies, Cong Australia and Ugg Australia (in the case of Jolly Trading's export business). It is said that, in so doing, Ms Shen frustrated the deceased's wish that Jolly Trading's profits be used to discharge the mortgages securing the Campsie Properties (referring to cl 7 of the Will).
11. The plaintiffs thus say that they have a good arguable case that Ms Shen has liquidated and dissipated estate assets to deprive the plaintiffs of any substantial inheritance from their father's estate. They submit that the most obvious remedy in this case is an order for specific performance, brought at the instance of the deceased's representative. Reference is made to what was said by Basten and Bell JJA (as her Honour then was), Beazley JA (as Her Excellency then was) agreeing, in Dome Resources NL v Silver (2008) 72 NSWLR 693; [2008] NSWCA 322 at [54]: [54] The arrangements with respect to retirement benefits were entered into under seal, thereby avoiding the need for there to be consideration passing in order to allow them to be enforceable at law. However, to the extent that an equitable remedy in the nature of specific performance or a mandatory injunction was sought, the appellants contended that equity would not lend its aid to a volunteer and that no consideration supported the promise contained in the variation deed to pay an amount to Fair Choice on Mr Silver's retirement. Claims for damages were also made by the respondents in the Court below, but were apparently not pursued and have not been reagitated on appeal. Nor, on the other hand, was it contended that equitable relief should be withheld because damages would constitute an adequate remedy. This was understandable, the case of a promise by one party to a second to provide a benefit to a third being a common situation in which damages will not provide an adequate remedy: see R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies 4th ed (2002) at 661 [20-050].
12. As to the plaintiffs' claim for a resulting trust over the properties at 2 Duff Street and 4 Woodside Avenue, Burwood, this is said to be largely based on evidence that the deceased derived significant cash income from the operation of Jolly Trading, and that such cash was used to make substantial contributions to the acquisition of those properties. The plaintiffs say that the supporting evidence is provided by Ms Joyce, who deposes that: during her relationship with the deceased, she and the deceased had violent differences that were almost always due to "how our business should be run"; the deceased, who could not read and write English, demanded that Ms Joyce provide documentation to avoid the companies paying the correct taxation, and that profits be recorded as overseas loans; the deceased required that two sets of export documents be provided - one for Australian customs and taxation purposes, which recorded the sales price at approximately 3 per cent above the cost price plus shipping and other costs - but the actual sale price "was much greater"; large loan amounts came back into the deceased's and Ms Joyce's personal account, in lump sums, instead of the actual sales amounts for shipments; sale profits were then either remitted through banks or brought back physically by the deceased; the deceased's practices had the business recording "profits of sometimes about $50,000 year when in actuality it was making millions which [the deceased] used to buy real estate, build and renovate houses, pay suppliers, purchase motor vehicles and fund a comfortable lifestyle".
13. The plaintiffs say that they have a good arguable case that Ms Shen largely depended on financial contributions provided by the deceased through his business to purchase of the properties at 2 Duff Street and 4 Woodside Avenue, Burwood. They say that the deceased's business practices, as explained by Ms Joyce, provide a plausible explanation for the receipt of large deposits in Ms Shen's bank account.
14. The plaintiffs further say that they have a good arguable case that a purpose of the transfer of 58 Amy Street, Campsie to Ms Wu was to remove that property from the pool of assets that was available to the plaintiffs, and that Ms Wu holds the 58 Amy Street, Campsie property on trust for them.
15. As to their family provision claim, the first and second plaintiffs say that they have a good arguable case that adequate provision was not made for them under the deceased's will. They note that each is an eligible person within the meaning of s 57 of the Succession Act 2006 (NSW) (the Succession Act). Pursuant to the amended statement of claim, they seek orders pursuant to ss 65 and 66 of the Succession Act.
16. It is said that the following assets form part of the deceased's notional estate: the net proceeds from the sale of 16 Nicholson Street, Burwood which was sold by Ms Shen in January 2017 for $2,470,000; the net proceeds from the sale of 43 Amy Street, Campsie which was sold by Ms Shen in July 2017 for $1,375,000; the net proceeds from the sale of 56 and 58 Duke Street, Campsie (approximately $585,185), which were sold by Ms Shen in July 2019; the 58 Amy Street, Campsie, and 2 Duff Street, and 4 Woodside Avenue, Burwood properties; the moneys received by Ms Shen on account of the deceased's life insurance policy in the sum of $1,200,000; and the moneys held in bank accounts jointly between the deceased and Ms Shen.
17. In summary, therefore, the plaintiffs submit that their application for further freezing orders should be granted because they have a good arguable case that: 1. Ms Shen has breached the Deed (described by the plaintiffs as a testamentary deed executed by her and the deceased in favour of the plaintiffs), by disposing of assets (the Campsie Properties), which in substance were to be used to fund the payment of significant sums to the plaintiffs as recorded by that Deed, and so diminishing her ability to pay moneys to the plaintiffs under the Deed; 2. Ms Shen holds her interest in two Burwood properties (2 Duff Street, Burwood and 4 Woodside Avenue, Burwood) on resulting trust for the deceased's estate in such proportion as reflects the deceased's contribution to the costs of acquisition of those properties; 3. Ms Wu holds her interest in 58 Amy Street, Campsie on trust for the deceased's estate; 4. Ms Shen breached the existing regime of freezing orders on 3 July 2019 (as noted in the orders made on 30 August 2019); and 5. Ms Wu, assisted by Ms Shen, breached the existing regime of freezing orders on or around 18 May 2020 by mortgaging the 58 Amy Street, Campsie property in favour of OUF Commercial Pty Ltd.
18. The plaintiffs say that, although the most recent breach of the freezing orders is said to have been cured, that occurred only after intervention by the plaintiffs. They say that Ms Shen has dealt with estate assets; that she has failed to comply with the Court's orders restricting her ability to deal with her own assets; and that she has assisted Ms Wu to encumber an asset that is the subject of freezing orders. The plaintiffs say that they have a proper basis to be concerned that the first and second defendants will not, unless further restrained, preserve estate assets for the benefit of the beneficiaries. They say that the further restraints are necessary because the defendants have disregarded their obligations under the previous regime of freezing orders (and in the case of Ms Shen, that such disregard has now been demonstrated on at least two occasions). It is thus said that the previous regime has proved ineffective.
19. The plaintiffs submit that the balance of convenience favours the grant of a freezing order because the risk of the court's process being frustrated by the transfer of estate assets to third parties in a manner that would wholly or partly avoid satisfaction of a judgment debt as a result of the proceedings is a real risk greatly outweighing any potential prejudice to Ms Shen caused by the grant of interlocutory relief.
20. The plaintiffs say that the 15 June 2020 affidavits of the first and second defendants, although apologising to the Court, do not explain why the breach came about. It is noted in this regard that Ms Shen was served with a translation of the orders made on 7 June 2019 shortly thereafter.
21. In her affidavit affirmed 15 June 2020, Ms Shen deposed that: she had borrowed $680,000 from her brother to pay back various debts owed to the suppliers by the deceased (see at [4]); in October 2019, her brother asked her to repay the loan (see at [5]); on 19 November 2019, she borrowed $600,000 from a friend, Wen Gan Chen (see at [6]); she repaid her brother using the money borrowed from Wen Gan Chen (see at [8]); Wen Gan Chen requested her to repay the loan (see at [9]); on 18 May 2020, Ms Wu gave Ms Shen $600,000 to repay Wen Gan Chen, which Ms Shen did (see at [9]); on 18 May 2020, Ms Wu transferred $200,000 to Ms Shen's second husband, which was then used in part to advance a loan to Ms Vivian Stefadouros and to repay the husband's debts (see at [11]); and Ms Shen has requested her husband and Ms Vivian Stefadouros to repay the $200,000 in full within one week of 15 June 2020 (see at [12]).
22. In Ms Wu's affidavit affirmed 15 June 2020, Ms Wu has deposed that: she was concerned about the Ms Shen's debts (see at [10]); Ms Shen told her that she could borrow against 58 Amy Street, Campsie as it did not have a mortgage against it (see at [12]); in April 2020, Ms Wu asked Ms Shen to contact Overseas Union Finance Pty Ltd about borrowing $1,000,000 and charging 58 Amy Street, Campsie (see at [13]); on 4 May 2020, Ms Wu executed a formal loan agreement for $1,000,000 (see at [15]); and on 18 May 2020, Ms Wu: withdrew $600,000 by bank cheque for the repayment by the first defendant of the loan from Wen Gan Shen (see at [17]); transferred $200,000 to Ms Shen's husband (see at [18]); and transferred $20,0000 to Ms Shen for legal expenses (see at [19]). Ms Wu deposes to her understanding that she has requested Ms Shen repay all the moneys borrowed, and that Ms Wu will be able to discharge the mortgage within seven days of 15 June 2020 (see at [22]).
23. It is noted by the plaintiffs that in their affidavits affirmed on 22 June 2020, the first and second defendants deposed that they were taking steps to discharge the mortgage against 58 Amy Street by procuring a replacement property as security for the loan from OUF Commercial Pty Ltd; and that the replacement property is owned by Auswan Development Pty Ltd, a company associated with Wen Gan Shen. It is said that the mortgage over 58 Amy Street, Campsie was "apparently" discharged on 7 July 2020 in circumstances which are not disclosed to the Court.
24. Reference is made to what was said in TZ Ltd v ZMS Investments Pty Ltd [2010] NSWSC 196 (TZ v ZMS) by Barrett J, as his Honour then was (at [26]): [26] A general law freezing order is warranted only if, in the words of Bryson J in Acquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146, there has been "conduct on the part of the defendants which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments or of being intended to do so or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the company have been or will be dealt with in an irregular way".
25. The plaintiffs note that the risk of dissipation of assets to avoid a judgment may be inferred from evidence of the defendant's misconduct. Reference is made in that regard to Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 (Patterson v BTR Engineering), where it was said that such evidence may establish that the defendant, unless restrained, will not preserve his or her assets intact so that they might be available to a judgment creditor (see at pp 325-326, per Gleeson CJ).
26. The plaintiffs say that the threshold represented by the "good arguable case" test is not a particularly exacting one; and that it is satisfied if the case is "more than barely capable of serious argument" (with "more than barely" indicating a degree of substance that is real rather than imagined and appreciable even though falling short of a 50% probability of success) (referring to TZ v ZMS at [23], per Barrett J, as his Honour then was).
27. In the present case, the plaintiffs submit that the balance of convenience weighs in favour of granting additional freezing orders for the following reasons.
28. First, that there is clear evidence of breach of the Deed. It is said that Ms Shen has acted in disregard to her obligations and duties as executor of the deceased's Will and pursuant to the Deed that she executed. It is submitted that the evidence supports the inference that Ms Shen has maintained an entitlement to treat the estate assets as her own, in disregard to the plaintiffs' beneficial interest in that property; and that Ms Shen has demonstrated a willingness to deplete the available assets of the estate. It is said that, unless restrained, there is a real risk that refusal of the injunction will preclude the plaintiffs from recovering if they are successful in the final hearing.
29. Second, that the plaintiffs do not wish to prevent Ms Shen from completing any sale of the properties, discharging any mortgages that exist over the properties and purchasing a new property in New South Wales, provided that her interest in such property is not charged or pledged in some way to a third party. The plaintiffs accept that Ms Shen should be permitted to draw down on available equity in the properties, if need be, to pay for her ordinary and reasonable living expenses, including mortgage payments and her legal expenses. The plaintiffs emphasise this because they note that the question of the adequacy of the undertaking as to damages is not to be decided in the abstract. Reference is made to Bridge Property Investments Pty Ltd v Garland Lot 3 Pty Ltd [2014] NSWCA 82, where Barrett JA (with whom Beazley P, as Her Excellency then was, and Macfarlan JA concurred) said (at [47]): [47] The court must weigh up the comparative injury that will arise from granting or withholding the temporary injunction, seeking out the major risk of damage and in particular of any irreparable damage. This aspect was referred to in Cayne v Global Natural Resources plc [1984] 1 All ER 225 as "the balance of the risk of doing an injustice".
30. Third, the plaintiffs say that this is not a case in which the first and second plaintiff do not proffer an undertaking but, rather, that they do so in circumstances where their financial capacity is limited, (unsurprisingly, it is said, given their ages). Reference is made to the observation in Meagher, Gummow and Lehane's Equity: Doctrine and Remedies (5th ed, 2015, LexisNexis Butterworths) at 21-410 that: [21-410] The better view is that failure to offer an undertaking at all is a significant factor against the grant of injunctive relief, while the value of an undertaking is a factor to be borne in mind and weighed against the extent to which refusal of the injunction because of the lack of value in the undertaking as to damages will preclude the plaintiff's rights being determined at the final hearing. [Footnotes omitted]
31. Fourth, the plaintiffs say that the inability of the first and second plaintiffs to give a valuable undertaking as to damages is a factor that is taken into account but does not necessarily preclude the grant of interlocutory relief. It is noted that in TZ v ZMS, Barrett J (as his Honour then was) said at [62]: [62] The relevance to be attached to doubt about a plaintiff's financial capacity should now be brought into focus. A conclusion that such doubt exists does not lead inexorably to the result that interlocutory restraint will be refused. In Wentworth v Wentworth (unreported, NSWSC, 12 June 1997), Hodgson J said: "As regards the undertaking as to damages question, it is clear in my opinion that the inability of a plaintiff to give a valuable undertaking as to damages does not necessarily preclude the granting of relief. However, where one is balancing monetary disadvantages as between a plaintiff and a defendant, the inability of a plaintiff 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 even be decisive."
32. Fifth, it is said that, to the extent that the first and second plaintiffs' financial capacity is limited, then this is explained by their ages and the postponement of their receipt of the financial benefits of their father's estate, in accordance with his testamentary intention (which were assented to by Ms Shen). It is said that the plaintiffs are in a position of vulnerability vis-à-vis Ms Shen, who was appointed by the deceased to hold and manage assets for the benefit of the plaintiffs until their adulthood was more advanced. It is said that financial standing is entirely a product of their youth and a decision made for them and Ms Shen that the latter should receive the fruits of the deceased's estate immediately and the former should receive their fruits only after an extended period of time.
33. It is submitted that the present case is analogous with applications for injunctions in family law proceedings where the impecuniosity of the plaintiff stems from the defendant's control of the matrimonial assets. It is noted that in Blueseas Investments Pty Ltd v Mitchell (1999) 151 FLR 298; [1999] FamCA 745, Nicolson CJ, Lindenmayer and O'Ryan JJ said (at [54], [57]): [54] … There is, we think, an additional highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation: that is the fact that very often the wealth of the parties is controlled by one rather than both of them. This in turn means that it is not uncommon for one of the parties to have no means of meeting any liability that may be incurred pursuant to an undertaking as to damages. … [57] No doubt in ordinary civil litigation the impecuniosity of a party is a matter that may be relevant to the issue of balance of convenience. For the reasons already stated however, we consider that family law cases must be looked at in a different light. In our view it would be unconscionable to accept a broad principle that the impecuniosity of a party in family law proceedings would be given such weight as to prevent an injunction being granted where all the other requirements for the grant of such an injunction are present. Indeed, it may even be doubtful whether the impecuniosity of one of the parties to family law proceedings would usually be a factor militating against a grant of interim or interlocutory injunctions if the other tests for the grant of the same were otherwise satisfied. This is not to say that such a factor would never be relevant but in the present circumstances at least, where the injunction may have the effect of preserving the only piece of property to which the wife might have recourse, it would be unreasonable in the extreme for her impecuniosity to operate to prevent an injunction being granted.
34. Further, the plaintiffs say that the present case is encapsulated in Campbell J's statement (as his Honour was) in Varley v Varley [2006] NSWSC 1025 (Varley) at [68] (though in that case his Honour went on to say that the failure to offer an undertaking as to damages was there another significant factor against the application) that: [68] It is implicit in the Full Court's decision in Blue Seas Investments v Mitchell that if a litigant was in straitened circumstances in family law proceedings, because the manner in which the marriage had been conducted was one which had lead him or her to be in those straitened circumstances, that is a circumstance which could legitimately be taken into account in deciding whether to grant an interlocutory injunction even though an undertaking as to damages might be of dubious value.
35. Sixth, it is noted that Ms Joyce has offered security, being the proceeds of sale of a property at Willow Tree, after associated costs have been paid, in support of the application for interlocutory relief. It is said that the fair value of the property in May 2019 was between $120,000 and $125,000.
36. Seventh, it is said that it will be unjust if an interlocutory injunction is refused and the deceased's estate is dissipated, as the plaintiffs will have been denied an opportunity of vindicating their rights in a hearing (referring to Custom Credit Corporation Limited v Whitehall Holdings Pty Limited (Supreme Court (WA), 7 April 1992, unrep), cited with approval in Varley at [63], per Campbell J, as his Honour then was). It is submitted that unless Ms Shen is restrained from further dissipating the assets of the estate, the subject matter of the litigation may disappear, which would effectively deprive the plaintiffs of the utility of a full trial.
37. Finally, insofar as the first and second defendants now seek to discharge the freezing orders made on 20 February 2020, the plaintiffs note that those orders were initially made by the court in June 2019 following a contested hearing on the merits before Henry J and that they were extended, with minor modifications, by consent thereafter. It is said that the defendants have not, in accordance with the principles identified by McLelland J, as his Honour then was, in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 (Brimaud) at pp 46-47, served any evidence establishing a material change of circumstances since the original application was heard, or show that there has been the discovery of new material which could not reasonably have been put before the court on the hearing of the original application that might otherwise justify discharging the freezing orders made on 20 February 2020.

The first and second defendants' submissions

1. The first and second defendants accept that the object of a freezing order is to protect the Court's jurisdiction to administer justice. They say that therefore it must be moulded in any particular instance to the proper objects that that jurisdiction exists to serve in the particular case and that, because it involves a serious interference with liberty and property rights, the interference should not be disproportionate to the proper object of the proceedings.
2. The first and second defendants say that they are presently burdened with: the limited freezing orders made on 20 February 2020 which will continue until 12 November 2020; the additional freezing orders made on 19 June 2020; and the caveats lodged in June 2020 over the two properties in Burwood and the property at 58 Amy Street, Campsie.
3. They say that this regime is unduly intrusive and burdensome; that the caveats are vexatious and harassing, and that the duplication is vexatious. It is noted that Ms Shen's bank account was recently frozen by Westpac. The first and second defendants say that there is grave risk that the current regime, instead of protecting the administration of justice by the court, will "derail it".
4. In particular, the first and second defendants say that the regime is out of all proportion to the claims. They say (having regard to the criticisms earlier made of the pleading) that the plaintiffs "do not have a good solid claim for anything like the amounts claimed" and, to the extent that they have lesser claims, there is no need for a freezing order.
5. It is said that the first and second defendants' representatives are not in funds to conduct the defence; that the extensive agitation over the interlocutory regime last year was very costly; that there is a continuing need to sell down assets to pay debt, which has been difficult to achieve at an acceptable price; and that the practical difficulty needs to be solved quickly for the defence to be conducted efficiently.
6. It is submitted that the proceedings are "lopsided" because the plaintiffs are "persons of straw". It is said that Ms Joyce is the real "driver" of this litigation, noting that she is the sole beneficiary of Laurence's intestate estate. It is said that Ms Joyce is unwilling to make herself a party because she does not want to be exposed to costs (though, as I see, this can be no more than speculation). Laurence's estate is represented in these proceedings by the first and second plaintiffs. It is further said that they and their mother are sheltering their assets in a discretionary trust; and that the consequence of this is that these proceedings are being conducted without the usual commercial restraint imposed by the risk of costs.
7. The first and second defendants emphasise that Ms Shen is the widow (albeit one who I interpose to note is now remarried) of the deceased who died in 2016; that these proceedings were commenced a year later in 2017; and that most of the dealings of which the plaintiffs complain were carried out (they say) without any hint that proceedings were in the offing. It is said that there could be no intent to defeat the process of the court when no claim was even "hinted at" by the plaintiffs.
8. It is noted that the plaintiffs' original claim was for family provision, and it is said that the application for probate of the 2016 Will and derivative enforcement of the Deed was an "afterthought" added by amendment when the proceedings were fundamentally reconstituted in February 2018.
9. The first and second defendants point out that the sale of 43 Amy Street, Campsie, of which the plaintiffs complain, was a consequence of a contract entered into by the deceased and Ms Shen during the lifetime of the deceased, and upon which the purchaser insisted on completion. It is said that it supplies no basis for apprehending an intention to defeat the jurisdiction of the court.
10. The first and second defendants say that the transfer of 58 Amy Street, Campsie by Ms Shen to Ms Wu was also undertaken without any notice of the claims now asserted. It is said that 58 Amy Street, Campsie was a property originally purchased by Ms Shen in her own name with her own money; and that the deceased never had any estate or interest in it. However, the first and second defendants do not dispute that, shortly before the purchase, the deceased transferred a substantial sum to Ms Shen in order to assist her in this purchase. It is submitted that the proposition that there is the slightest moral turpitude in Ms Shen dealing with that property to recognise obligations that she considered she owed to her mother is "fanciful".
11. As to the property at 16 Nicholson Street, Burwood, it is noted that this accrued to Ms Shen by survivorship. It is said that it was the subject of a substantial mortgage liability at the time of the death of the deceased; and that later, Ms Shen sold it, thereby discharging the estate of its equal liability for the mortgage debt. It is said that this makes Ms Shen a creditor of the estate as to one half of that debt. The first and second defendants say that at the time of that sale there was not the "slightest hint" of any claim in relation to that property. They say that the claim that is now asserted (that it was held on resulting trust for the deceased) is absurd, noting that: no such claim was advanced until 2018; no particulars have been supplied; and the property was held by the deceased and Ms Shen as joint tenants. It is said that even if it was held on trust for the deceased, it would pass with the gift of residue, and subject to the burden of the mortgage (see Conveyancing Act s 145), and therefore that the plaintiffs have no interest in it.
12. As to the properties at Duke Street, Campsie, it is said that these were heavily mortgaged and were sold during these proceedings under a regime approved by the plaintiffs and the court; and that those sales afford no basis for a freezing order.
13. Complaint is also made by the first and second defendants that the proceedings have not been prosecuted expeditiously and that the plaintiffs' claim has gone through "many iterations or draft iterations". It is said that, at bottom, the dispute is about the financial outcome of the deceased's death and that, reading the Will and the Deed, it is plain that the wish of the deceased was to make ample provision for his widow and three little boys, as well as substantial deferred cash provision for his elder children (deferred until 2026).
14. It is submitted that the highest legitimate purpose that these proceedings can have is to vindicate that objective (if it be possible, which on the evidence as it stands they say seems remote). It is submitted that it is not reasonable to think that an outcome of these proceedings would be that "a widow and her children after years of litigation would be subjected to further years of grindingly close regulation under a freezing order or equivalent final orders operating until 2026 and probably resulting in a bankruptcy of the widow at the latest by 2026 if the plaintiffs succeed in their claims".
15. The first and second defendants further say that an outcome of that nature would demonstrate that the deceased plainly did not appreciate the nature and extent of his estate and the claims upon him of his widow and younger children; and that this would result in a conclusion that he either lacked testamentary capacity or that he did not know and approve the true effect of his Will.
16. It is submitted that whether the Deed is enforced is a question for his estate and for those interested in the gift of residue (who, the first and second defendants note, do not include the plaintiffs, or Ms Joyce). The first and second defendants say that the plaintiffs are volunteers in this regard. It is said that the plaintiffs' claim rises no higher than a modest claim for provision "against which has to be set the impact and cost of their conduct in and through these proceedings".
17. The first and second defendants submit that the proposition that "a widow and her young children" would be "kept under close regulation and the suspension of normal life through subjection to the extraordinary remedy of a freezing order or equivalent final orders continuing until 2026 is so monstrously oppressive as to be absurd". It is submitted that the interim orders therefore have no proper object and should be discharged.
18. As adverted to earlier, the first and second defendants say that the plaintiffs' case for a freezing order is dependent on their case under the Will. It is said that the plaintiffs bear the onus to prove that that Will was the true will of the deceased, in that he knew and approved its contents and effects, that he had capacity under the Banks v Goodfellow test (see Banks v Goodfellow (No 2) (1871) LR 11 Eq 472), and that it was duly executed. The first and second defendants say that the plaintiffs have yet to address any serious submissions to these requirements in making any case that they have a sufficiently solid claim to warrant a freezing order. It is submitted that their evidence on that point is "flimsy".
19. The first and second defendants say that the harder and higher the plaintiffs press their claim, the more difficult it is to think that the testator "understood what he had, what his obligations were and what he was doing". It is said that it is likely that the solicitor, Mr Glynn, did not understand these matters himself. Indeed it is submitted (see at [50]) that: … It is difficult for anyone to understand what he purported to draft. The Will for example, contains totally inappropriate clauses and inconsistences that if anyone had paid attention to them, whether the solicitor or a properly advised client, it could not be supposed they would have been allowed to stand. At the very least this goes to knowledge and approval of the Will, if not also to capacity on the Banks v Goodfellow test. Mr Glynn seems to have ignored the proprietorship of the land, the state of the title, the nature of the "rezoning" that was fundamental to the scheme, the liabilities burdening the land, the claims of the First Defendant and her boys, the plain existence of a conflict of duties and the most basic requirements of reading, translating and explaining the instruments to the persons affected before they signed. His conduct was hopeless and deplorable. He had previously acted for Mrs Joyce.
20. The first and second defendants note that Ms Shen has a claim to set aside the Deed (referring to her cross-claim, filed 15 May 2018). The first and second defendants point generally to the observations in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49, and say that it is difficult to understand what answer is made to that case by the plaintiffs, assuming that they could demonstrate any sufficient interest in the question. It is said that the defence to cross-claim is not informative and that, if the plaintiffs want a freezing order, the plaintiffs should provide a convincing argument on that subject so as to show that their claim is solid.
21. Complaint is also made that "despite the current Covid plague and economic consequences", no updating valuation has been provided of the "shack" at Willow Tree. It is said that that property had already been for sale for a long time when it was first proffered as security; and it is submitted that "[i]t would seem to be unsaleable at any price considered acceptable by Mrs Joyce [sic]". The first and second defendants say that there could be no confidence in its worth; and that it is common ground that the plaintiffs' personal undertaking is worthless. It is submitted that Ms Joyce, as sole beneficiary of Laurence's estate, is unwilling to provide a personal undertaking as to damages.

Determination

1. It is accepted by both parties that the purpose of the grant of a freezing order is to prevent the frustration of the processes of the court by a defendant whom it is apprehended will seek to put his or her assets out of the reach of the plaintiff so as to prevent enforcement of a judgment.
2. Gleeson CJ (sitting in the Supreme Court) said in Patterson v BTR Engineering (at pp 321-322): The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant's absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
3. Turning first to the application to discharge the freezing orders (as, logically, if they are to be discharged altogether the question of the making of additional orders of that kind would not arise), although much was made in oral submissions of the position of the "widow" and her young children, in fact (as I have already noted) Ms Shen has now remarried (see T 27.30; and her affidavit, affirmed 11 August 2019 at [28]). That highlights the incompleteness of the financial information now before me on the part of the first and second defendants (there being no information as to the financial position of Ms Shen's second husband or the company through which it appears he trades - see, for example, Exhibit D which includes documents relating to a company associated with Ms Shen's second husband (IMC NSW Pty Ltd) listing various transactions).
4. At the outset I note that I have not here addressed the argument raised by the plaintiffs as to whether the first and second defendants should be heard at all on their opposition to the grant of additional orders or their application to discharge the freezing orders having regard to the breach of the existing orders because, as it turned out, it seems the most serious breach in monetary terms (the encumbering of the 58 Amy Street, Campsie property) has in practical terms now been cured (seemingly by some form of related company refinancing) (see Exhibits C and 7; T 8.20ff; T 41). I note, however, that reliance was placed by the first and second defendants on the observation of Lindsay J in Stokes (by a tutor) v McCourt [2013] NSWSC 1014 at [43] to the effect that there is not an absolute rule that a contemnor cannot be heard at all; rather that it is a "discretionary rule" or "a rule subject to exceptions" (T 10.37ff). Given the steps that had been taken to cure the breach of the orders (by the refinancing of the OUF mortgage), and given the concerns raised by the first and second defendants' counsel as to the ongoing conduct of the matter for hearing, I considered it appropriate to proceed to hear submissions on both of the applications before the Court in relation to the freezing orders, and I propose to deal with those applications on their merits.
5. It is relevant to note that, after the initial freezing orders were made by consent by Robb J on 22 May 2019, as extended by Henry J on 31 May 2019, the freezing orders were further extended and varied following a contested hearing before Henry J on 7 June 2019 (the debate on that occasion largely, as I understand it, raising issues as to the adequacy of the undertaking as to damages that had been proffered). For those interlocutory orders (as later varied) to be discharged, the first and second defendants need to point to a material change in circumstances or evidence to warrant interference in the interlocutory regime then put in place (see Brimaud).
6. I would accept that the total freezing of Ms Shen's bank accounts (and her inability to access Centrelink funds), even for ordinary living expenses, would amount to a material change of circumstances so as to warrant a reconsideration of the existing freezing regime. However, in the absence of a complete picture as to Ms Shen's financial circumstances (and, by extension, those of her mother, Ms Wu); and, in particular, given my complete ignorance of the financial position of Ms Shen's now husband and his ability (or otherwise) to support not only Ms Shen and their now baby son but also Ms Shen's three older infant children, I am not persuaded that it is appropriate to interfere with the existing freezing orders (beyond making it clear that there is nothing in these orders that would preclude Ms Shen withdrawing from her bank accounts funds received from Centrelink for her and her family's ordinary living expenses).
7. In this regard, I note that Ms Shen's present husband's financial resources - or, perhaps more specifically, his ability and willingness to support Ms Shen and their infant son (if not also her other children) - is relevant here and, indeed, that the lack of evidence as to this issue bears on the determination of Ms Shen's application.
8. In this respect, Senior Counsel for the plaintiffs took an evidential objection on the basis of "the incompleteness of the financial material" and reserved his right to argue that the evidence should be excluded on the basis that it is "unfair and partial" (see T 29.1-6; T 29.25-26). I do not consider it necessary here formally to rule on that undertaking objection, since I am not persuaded to discharge the freezing order regime altogether in any event. I will treat the affidavit as provisionally admitted subject to weight and relevance; its incompleteness will obviously affect the former.
9. As here relied on by the plaintiffs, Derham AsJ in Vasilaras and Co Pty Ltd v Laprese (2019) 58 VR 155; [2019] VSC 56 said (at [73]): 73. Where there is an application for a variation of the terms of the freezing order, the variation is dictated by what justice demands in the particular circumstances of the case. The following matters are established by the authorities: … (c) the defendant carries the burden of establishing the lack of assets, other than those bound by the injunction, out of which the expenses might be paid; (d) a general assertion about inability to pay expenses is insufficient; (e) when a defendant seeks variation of a freezing order allowing a specific dealing, even for intended permitted purposes, it is relevant to take into account whether the defendant has access to other sources of funds for those purposes; …
10. The authorities there referred to by Derham AsJ include Bird v McComb (No 3) [2011] FCA 697; Deputy Commissioner of Taxation v Gashi [2012] VSC 401 at [16] per Warren CJ; Clark Equipment Credit of Australia v Como Factors Pty Ltd (1988) 14 NSWLR 552; Allomak Ltd v Allan [2010] VSC 187; and Deputy Commissioner of Taxation v Karas [2011] VSC 673.
11. Having in mind the above, it is sufficient to emphasise that Ms Shen has the burden of establishing a relevant lack of financial resources and the absence of evidence in relation to, for example, her husband's resources his and ability to support Ms Shen goes to the burden of proof - a general assertion is not sufficient. In the context of the applications before me, and for the reasons here stated, it is not necessary to consider, or to make, any inferences of the kind discussed in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (Jones v Dunkel).
12. The complaint by the first and second defendants as to the "monstrosity" or "absurdity" of the oppression said to be caused by the existing freezing orders continuing through to 2026 does not in my opinion relevantly arise at this stage. What is here in contemplation is only the continuation of the existing freezing order regime until the final hearing of the substantive dispute between the parties (and presumably the determination thereof, which it would be hoped, or might reasonably be expected, would be sometime in the first half of next year if the final hearing is completed by the end of November this year). What happens thereafter will be a function of the determination of the substantive disputes between the parties.
13. It is not appropriate for me at this stage to entertain in any detailed way the complaints made by the first and second defendants as to the pleaded claims (not least because they will need to be determined on their merits by me following the hearing later this year). Suffice it to say that there has been no application to strike out the pleading on the basis that it does not give rise to a reasonably arguable cause of action. Nor can I possibly form the view at this stage that the current (or proposed additional or varied) freezing order regime is wholly disproportionate to the amount of relief that might ultimately be obtained by the plaintiffs.
14. As to the apprehension that the first and second defendants may take action to dissipate the assets available for judgment, to some extent that has been amply borne out by reference to the breaches of those orders that have occurred to date. It is not to the point that the initial breach of order 8 of Henry J's orders would not have been a breach on the standard form freezing order (on the basis that it was said to be within the usual exception for the repayment of loans) (see the submissions for the first and second defendants at T 72.40ff). Nor is there any satisfactory explanation for the encumbrance of the 58 Amy Street Campsie property after the making of the freezing orders. Even if not intended to dissipate assets, the effect of such action must inevitably be to prejudice the ability to have resource to those assets in the event that the plaintiffs are successful in these proceedings (at least until the encumbrance was removed).
15. I accept that evidence of the breaches of freezing orders that have occurred to date gives rise to concern as to the willingness or ability of Ms Shen (and Ms Wu) to understand the making of, and comply with, the freezing order regime. That said, the concern as to Ms Shen relocating overseas seems now shown to have been unfounded, and the concern as to the dissipation of assets (while it obviously has some basis given what has occurred to date) cannot extend to the sale of the 43 Amy Street, Campsie property (pursuant to a contract of sale entered into before the deceased's death), or any dealings with other properties at a time before the first and second defendants were on notice of those of the present claims that go beyond the claim for provision out of the deceased's estate.
16. It is sufficient, however, for the plaintiffs to point (as they here do) to the breaches of the orders to date in order to give rise to a reasonable apprehension that, absent continued restraint, there is a risk of dissipation of assets that could frustrate their (or, relevantly, the deceased's estate's) ability to recover if the plaintiffs are successful in obtaining judgment on one or more of their causes of action in this matter.
17. As to the proposition that Ms Joyce is the "real driver" of the litigation, I could not draw such a conclusion merely from the fact that she ultimately stands to benefit from any distribution of Laurence's estate. In any event, to the extent that she has proffered her property at Willow Tree in these proceedings as support for the plaintiffs' undertaking as to damages, she is obviously standing behind their litigation to some extent.
18. Therefore, subject to what I propose in relation to the amendment to the freezing order regime to make it clear that Ms Shen is not prohibited from withdrawing money for ordinary living expenses or to permit the sale of property (on prior notice to the plaintiffs) in order to fund the defence of the litigation, I am not persuaded that the freezing orders should be discharged altogether.
19. As to the plaintiffs' application for a variation of the freezing orders, the difficulty I have is that it appears to me that there is the prospect of confusion in having overlapping or duplicated regimes in place and I am not persuaded that the extension of the freezing order regime is necessary (or necessarily likely to be effective) to prevent a frustration of the plaintiffs' ability to recover judgment if they are successful at the end of the day. Given that the last orders failed to prevent breaches it is not clear why an extension of those orders would be thought likely to do so.
20. A comparison between the existing orders and those now sought is instructive in this regard.
21. On 31 May 2019, on the first and second plaintiffs (by their counsel) giving to the Court the usual undertaking as to damages (and on the basis of an undertaking, contained in MFI-2, by consent and without admissions on the part of the first and second defendants) Henry J extended the orders made by consent by Robb J on 15 May 2019 up to and including 5pm on 7 June 2019.
22. Those orders were further extended on 7 June 2019 by Henry J and relevantly operated such that: 1. As against the first defendant, [the Court] orders: a. that the first defendant provide to the plaintiffs (through their solicitor) one business day's notice in writing of her intention to exchange any contract for sale or to execute any other document transferring any of her interest in: i. 4 Woodside Avenue, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 1/231995 (4 Woodside Avenue); ii. 2 Duff Street, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 3/207828 (2 Duff Street); iii. 56 Duke Street, Campsie in the State of New South Wales, being the land comprised in Folio Identifier A/360203 (56 Duke Street); and iv. 58 Duke Street, Campsie in the State of New South Wales, being the land comprised in Folio Identifier B/360203 (58 Duke Street, collectively the Properties) b. that, at the time of providing notice in order 1a. above, the first defendant provide to the plaintiffs (through their solicitor): i. the front page of the proposed contract for sale and the proposed special conditions thereof, together with the details of the proposed purchaser, if those details are not recorded on the front page; and ii. to the extent that any of the plaintiff's interest in 4 Woodside Avenue or 2 Duff Street or 56 Duke Street or 58 Duke Street is to be transferred other than by a contract of sale, the document which is proposed to be executed; c. the first defendant be restrained from exchanging on any contract for sale or acting on any other document transferring title without providing to the plaintiffs (through their solicitor) the aforesaid information in the time identified in order 1a. above. 2. An order that the first defendant, by herself, her servants and agents, be restrained from transferring, alienating, encumbering, removing from Australia or otherwise dealing with the net proceeds of sale of any of 4 Woodside Avenue or 2 Duff Street or 56 Duke Street, Campsie or 58 Duke Street, Campsie or any further property purchased by the first defendant, as provided for by paragraph h. below (the Replacement Property) (after payment of mortgage debts secured against the property being sold or [if she so wishes] payment towards any other existing mortgage secured over any of the Properties and/or the Replacement Property, usual conveyancing adjustments and statutory charges, agent's commission and legal costs of sale), otherwise than by: a. payment of $17,000 per month to the first defendant for the purpose of her and her children's living expenses; b. payment of $250,000 to the first defendant for the purpose of her legal expenses; c. payment of interest expenses on existing loans and any loan to purchase the Replacement Property and usual outgoings including council rates, water rates and reasonable repairs and maintenance in respect of any of the Properties and/or the Replacement Property; d. payment of marketing expenses advised by the Agent appointed on the sale of any of the Properties; e. payment of $36,990.51 to discharge the first defendant's current liability for school fees for the three young children of Zi Li Cong; f. payment into any of the offset accounts linked to the first defendant's existing mortgage facility in respect of any of the unsold Properties and/or the Replacement Property for the sole purpose of facilitating payments otherwise permitted by this Order 2 and up to the limits thereby; g. payment to reduce or discharge any of her existing mortgage liabilities in respect of any of the Properties and/or the Replacement Property; h. payment to purchase a residential property in New South Wales in the first defendant's name alone, provided that the first defendant does not thereafter charge or encumber her interest in such property (other than to secure any loan for the purpose of such property) until further order of the Court. 3. An order that the first defendant, upon completion of the sale of the last of 4 Woodside Avenue or 2 Duff Street or 56 Duke Street, Campsie or 58 Duke Street, Campsie, pay, after satisfaction of her mortgage liabilities, the balance held by her in any offset account linked to the first defendant's mortgage facility in respect of any of those properties, into KH Legal Trust Account ([xxx] 886) and thereafter into any controlled money account controlled by the first defendant's solicitor, pending further orders of the Court or written agreement by the parties, such monies to be used for the sole purpose of facilitating payments otherwise permitted by Order 2 and up to the limits thereby provided. 4. An order that the first defendant be restrained, by herself, her servants and agents from removing from Australia any assets, including by transferring monies to any bank account operating outside of Australia. 5. An order that the first defendant be restrained, by herself, her servants and agents from: a. charging or encumbering the Properties; and b. drawing down against any financial accommodation or facility presently secured against any of the Properties, otherwise than to make payments within the same limits as those prescribed by paragraphs 2(a) to (h) of these Orders or, in the case of a Replacement Property, to provide funds for use in acquiring such property. 6. An order that on the 21st day of each month, the first defendant cause to be delivered to the plaintiffs' solicitor a copy of the prior period statements of account relating to all bank accounts and loan facilities held in her name. 7. As against the second defendant, an order that the second defendant, by herself, her servants and agents, be restrained from transferring or alienating the property known as 58 Amy Street Campsie, in the State of New South Wales, being the land comprised in Folio Identifier 1/927473, without first giving the solicitors for the plaintiffs not less than 21 days notice in writing setting out full details of the proposed transaction. 8. The second defendant, by herself, her servants and agents, be restrained until such further order, from charging, encumbering or borrowing further monies against 58 Amy Street Campsie without first giving the solicitors for the plaintiffs not less than 21 days notice in writing setting out full details of the proposed transaction.
23. On 20 February 2020, I made the following orders, upon the first and second plaintiff giving the usual undertaking as to damages and upon the undertaking given by a named company, and recorded in the original Deed Poll retained on the Court file, such orders to operate to 5pm on 12 November 2020: 1 As against the first defendant, [the Court] orders: a. that the first defendant provide to the plaintiffs (through their solicitor) one business day's notice in writing of her intention to exchange any contract for sale or to execute any other document transferring any of her interest in: i. 4 Woodside Avenue, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 1/231995 (4 Woodside Avenue); and ii. 2 Duff Street, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 3/207828 (2 Duff Street); b. that, at the time of providing notice in order 1a. above, the first defendant provide to the plaintiffs (through their solicitor): i. the front page of the proposed contract for sale and the proposed special conditions thereof, together with the details of the proposed purchaser, if those details are not recorded on the front page; and ii. to the extent that any of the plaintiff's interest in 4 Woodside Avenue or 2 Duff Street is to be transferred other than by a contract of sale, the document which is proposed to be executed; c. the first defendant be restrained from exchanging on any contract for sale or acting on any other document transferring title without providing to the plaintiffs (through their solicitor) the aforesaid information in the time identified in order 1a. above. 2 An order that the first defendant, by herself, her servants and agents, be restrained from transferring, alienating, encumbering, removing from Australia or otherwise dealing with the net proceeds of sale of any of 4 Woodside Avenue or 2 Duff Street or any further property purchased by the first defendant, as provided for by paragraph h. below (the Replacement Property) (after payment of mortgage debts secured against the property being sold or [if she so wishes] payment towards any other existing mortgage secured over any of the Properties and/or the Replacement Property, usual conveyancing adjustments and statutory charges, agent's commission and legal costs of sale), otherwise than by: a. payment of $17,000 on a monthly basis (commencing on the 22nd day of the month and ending on the 21st day of the month) to the first defendant for the purpose of her and her children's living expenses; b. payment of $300,000 to the first defendant for the purpose of the defendants' currently outstanding and future legal expenses; c. payment of interest expenses on existing loans and any loan to purchase the Replacement Property and usual outgoings including council rates, water rates and reasonable repairs and maintenance in respect of any of the Properties and/or the Replacement Property; d. payment of marketing expenses advised by the Agent appointed on the sale of any of the Properties; e. payment of a further $62,694.44 to Trinity Grammar School to discharge the first defendant's 2020 liability for school fees for the three young children of Zi Li Cong, f. payment into any of the offset accounts linked to the first defendant's existing mortgage facility in respect of any of the unsold Properties and/or the Replacement Property for the sole purpose of facilitating payments otherwise permitted by this Order 2 and up to the limits thereby; g. payment to reduce or discharge any of her existing mortgage liabilities in respect of any of the Properties and/or the Replacement Property; h. payment to purchase a residential property in New South Wales in the first defendant's name alone, provided that the first defendant does not thereafter charge or encumber her interest in such property (other than to secure any loan for the purpose of such property) until further order of the Court. 3 An order that the first defendant, upon completion of the sale of the last of 4 Woodside Avenue or 2 Duff Street, pay, after satisfaction of her mortgage liabilities, the balance held by her in any offset account linked to the first defendant's mortgage facility in respect of any of those properties, into KH Legal Trust Account ([xxx] 886) and thereafter into any controlled money account controlled by the first defendant's solicitor, pending further orders of the Court or written agreement by the parties, such monies to be used for the sole purpose of facilitating payments otherwise permitted by Order 2 and up to the limits thereby. 4 An order that the first defendant be restrained, by herself, her servants and agents from removing from Australia any assets, including by transferring monies to any bank account operating outside of Australia. 5 An order that the first defendant be restrained, by herself, her servants and agents from: a. charging or encumbering the Properties; and b. drawing down against any financial accommodation or facility presently secured against any of the Properties, otherwise than to make payments within the same limits as those prescribed by paragraphs 2(a) to (h) of these Orders or, in the case of a Replacement Property, to provide funds for use in acquiring such property. 6 An order that on the 21st day of each month, the first defendant cause to be delivered to the plaintiffs' solicitor a copy of the prior period statements of account relating to all bank accounts and loan facilities held in her name. 7 As against the second defendant, an order that the second defendant, by herself, her servants and agents, be restrained from transferring or alienating the property known as 58 Amy Street Campsie, in the State of New South Wales, being the land comprised in Folio Identifier 1/927473, without first giving the solicitors for the plaintiffs not less than 21 days notice in writing setting out full details of the proposed transaction. 8 The second defendant, by herself, her servants and agents, be restrained until such further order, from charging, encumbering or borrowing further monies against 58 Amy Street Campsie without first giving the solicitors for the plaintiffs not less than 21 days notice in writing setting out full details of the proposed transaction. …
24. On 18 June 2020, I made orders (ex parte) in the standard form for freezing orders (again on the plaintiffs giving the usual undertaking as to damages, and on the undertaking of the plaintiffs to procure and provide to the court by 5pm, 19 June 2020 a further Deed Poll of the kind annexed to the orders made on 20 February 2020 to secure that undertaking). Relevantly, those orders (which operated only up to and including 5pm on 19 June 2020, that being the day on which there was to be a further hearing at which the defendants could be represented) included: 4. Upon the plaintiffs giving to the Court the usual undertaking as to damages, an order: a. as against the first defendant: i. the first defendant shall provide to the first and second plaintiffs (through their solicitor) one business days' [sic] notice in writing of her intention to exchange any contract for sale or to execute any other document transferring any of her interest in: 1. 4 Woodside Avenue, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 1/231995 (4 Woodside Avenue); 2. 2 Duff Street, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 3/207828 (2 Duff Street); ii. in terms of Annexure A hereto [which was the standard form freezing order but without the requirement for an affidavit to be provided by the first defendant as to her assets], but on the proviso that such order does not prohibit the first defendant from entering into a contract of sale in respect of either 4 Woodside Avenue or 2 Duff Street. b. as [sic] against the second defendant, an order in terms of Annexure B hereto [the standard form freezing order but again without the requirement for an affidavit as to her assets].
25. Under the freezing orders as then made, the first defendant was restrained from removing from Australia or disposing or dealing with or diminishing the value of any of her Australian assets to the unencumbered value of AUD$6,000,000; in the second defendant's case that amount being AUD$1,700,000. The exceptions to the order made in respect of the first defendant included paying up to $17,000 a month on her ordinary living expenses (plus school fees), paying reasonable legal expenses, and dealing with or disposing of any of her assets in the ordinary and proper course of her business - but, if the payment exceeded $5,000, two working days' notice was to be provided to the plaintiffs' solicitor.
26. On 19 June 2020, when the matter came back before me, I made similar freezing orders to operate up to 15 July 2020 but (on the basis of the submissions made on that occasion by the first and second defendants' counsel) I did not accede to the request that the freezing orders include the requirement for the provision of income as to the assets of the first and second defendants. (I interpose to note that it seemed to me that there had been information already provided as to those assets and that the focus should be on preparation of the matter for hearing.)
27. What is now sought in the plaintiffs' notice of motion filed 18 June 2020 are orders: 4. Upon the plaintiffs giving to the Court the usual undertaking as to damages, an order: a. as against the first defendant: i. the first defendant shall provide to the first and second plaintiffs (through their solicitor) one business days' [sic] notice in writing of her intention to exchange any contract for sale or to execute any other document transferring any of her interest in: 1. 4 Woodside Avenue, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 1/231995 (4 Woodside Avenue); 2. 2 Duff Street, Burwood in the State of New South Wales, being the land comprised in Folio Identifier 3/207828 (2 Duff Street); ii. in terms of Annexure A hereto [in the standard form freezing order, including the requirement for the provision of information as to the first defendant's assets], but on the proviso that such order does not prohibit the first defendant from entering into a contract of sale in respect of either 4 Woodside Avenue or 2 Duff Street. b. as against the second defendant, an order in terms of Annexure B hereto [in the standard form freezing order, including the requirement for the provision of information as to the second defendant's assets].
28. In essence, as I understand it, what is sought by way of the latest iteration of the freezing orders (apart from some amendment that was not pressed as to the amount of the living expenses carve-out to those orders) is for the provision of information as to the first and second defendants' assets. There seems to me (and I say this with no criticism of the plaintiffs' legal representatives who have clearly been responding to concerns that have arisen from time to time as a result of matters discovered in relation to the affairs of the first and second defendants) to be obvious room for confusion as to the regimes that are presently operative. What I consider should happen (as I indicated in the course of oral argument) is that the existing freezing orders be consolidated into one set of orders and that those orders should make clear the need for the plaintiffs to be notified before any further encumbrance or disposal of any of the properties the subject of the present proceedings so as to give the plaintiffs an opportunity to seek to restrain such steps or to put in place a consensual regime for that to occur.
29. The focus, it seems to me, should be on both sides prosecuting the matter with expedition to the forthcoming final hearing, consistent with the overriding statutory mandate under s 56 of the Civil Procedure Act 2005 (NSW).
30. One matter of real concern to me is that the hearing date not be prejudiced. In that regard, it is a matter of no little complaint by the plaintiffs that, while the first and second defendants were permitted to expend some $300,000 in legal fees, of the amount realised from the sale of the Duke Street properties there was a surplus of $585,185.63, of which it is said that only some $140,000 was paid for legal expenses (see Ms Shen's affidavit, affirmed 11 August 2019, at [21], [41]; T 58.20; 88).Complaint is made that there has been no explanation as to why that surplus of $160,000 was not or could not have been used for the payment of legal fees, and that there is an inconsistency in the first and second defendants' position insofar as it appears that roughly $100,000 has been spent on financial matters (a loan of $45,000 to Ms Stefadouros and some $50,000 expended in the import of face masks for sale - see Ms Shen's affidavit, affirmed 15 June 2020, at [11]), and yet it is said that there is no money for payment of legal counsel. Further complaint is made as to the use of funds over which a trust is claimed in order to pay legal fees to defend that trust claim (namely, the property at 58 Amy St, Campsie) (T 88). Complaint is also made in this context as to the lack of explanation for the conduct to date (referring to the principles in Jones v Dunkel, as articulated in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418, per Handley JA).
31. The first and second defendants, on the other hand, say that there is no suggestion that the transactions about which complaint was made were to dispose of funds or to hide assets and, while it is accepted that breach of the existing orders should not have occurred, it is said that this is not a case of egregious dissipation of assets in breach of freezing orders (see, eg, T 72.50ff).
32. I consider that the existing orders should adequately protect the plaintiffs' position (but should be consolidated into one stand-alone set of orders, as noted above). As to the expenditure on legal fees, noting that an amount of $300,000 had been contemplated and only $140,000 appears to have been paid, I consider that a further sum of $100,000 should be allowed as an exception to the freezing orders for expenditure on future legal costs to the end of the hearing. I appreciate that this might mean (depending on the fate of the trust claims at the hearing) that trust funds will ultimately have been used to defend the claims as to a trust but that seems to me to be the fairest way to strike a balance in circumstances where the focus now must be on this matter proceeding to a concluded hearing.
33. In this respect, it is sufficient to note that, as observed by Garling J in Birketu Pty Ltd v Westpac Banking Corporation (No 2) [2018] NSWSC 494, where a plaintiff has a proprietary claim to moneys, there is the "obvious risk of injustice" if those moneys are expended on the defendant's living and legal expenses and the plaintiff ultimately succeeds: the plaintiff's funds would, of course, have been used to finance the defendant's unsuccessful defence thereby compounding the plaintiff's loss. His Honour there noted that a "careful and anxious judgment" was required whereby the court must assess whether any injustice to the plaintiff would be outweighed by the potential injustice to the defendant if he or she was precluded from accessing funds and therefore, perhaps, denied the opportunity to advance an arguable defence (see at [60]-[62]; and see also, for example, Polly Peck International Plc v Nadir (Asil) (No 2) [1992] 4 All ER 769 at 784 per Scott LJ, as his Lordship then was, Solomon v Corporate Affairs Commission (NSW) (1992) 10 ACSR 67 at 76 per Cripps JA; both cited by Black J in In the matter of Courtenay House Capital Trading Group Pty Limited (in liquidation) [2018] NSWSC 1918 at [49]).
34. As to the need for a "careful and anxious judgment", Garling J there quoted Bingham MR, as his Lordship then was, in Sundt Wrigley Co Ltd v Wrigley (Court of Appeal (UK), 23 June 1993, unrep) as cited in Halifax v Chandler [2001] EWCA Civ 1750 at [17] per Clarke LJ, as his Lordship then was.
35. In amplification of this point, I also note what was said by Lloyd J, as his Lordship then was, in PCW (Underwriting Agencies) Ltd v Dixon [1983] 2 All ER 158 at 164: …even if I could regard the whole of the defendant's assets as a trust fund, I would be quite unwilling to uphold the ex parte order in the present case on that basis. All injunctions are, or course, in the end discretionary. I would regard it as unjust in the present case if the defendant were compelled to reduce his standard of living, to give up his flat or to take his children away from school, in order to secure what is as yet only a claim by the plaintiffs. I would regard it as even more unjust that he should be prevented from defending himself properly (for that is what it would amount to), merely because the plaintiffs say that in doing so he is using somebody else's money." It seems to me that that observation is, as his Honour properly recognised, no more than the explanation of the manner in which his Honour exercised his discretion in the particular circumstances then before him. If, contrary to my view, his Honour was expressing any wider view that a defendant should generally be permitted to use funds that are arguably, or likely, another's trust funds to defend himself or herself, that approach would not be consistent with the Australian case law to which I have referred.
36. As to costs, I consider that costs of the present applications should be reserved and dealt with in the final "wash-up" of the matter.

Orders

1. Accordingly, I make the following orders: 1. Dismiss the first and second defendants' notice of motion filed 9 July 2020. 2. Direct the parties to file within seven days agreed (or, if not agreed, competing) short minutes of order, reflecting these reasons, to put in place a regime whereby (on the plaintiffs' usual undertaking as to damages and supported by the Deed Poll previously provided to the Court) in place of the existing freezing orders the first and second defendants are restrained from transferring, alienating, further encumbering, removing from Australia or otherwise dealing with or disposing of their respective interests in the properties the subject of the existing freezing orders without first giving the plaintiffs 14 days' notice in writing of their intention to do so; or otherwise disposing of assets up to a limit of $6 million in the case of the first defendant or $1,700,000 in the case of the second defendant (but with a carve-out or exception, in the case of the first defendant of up to $17,000 per month for ordinary living expenses, plus school fees, or in the case of the second defendant of up to $2,000 per month for ordinary living expenses; and, together, of up to $100,000 for legal expenses for the conduct of the forthcoming hearing (and payable only to the defendants' legal representatives for that purpose); with a view to those orders being made in chambers and the existing freezing orders being discharged. 3. Reserve the costs of the respective notices of motion.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2020