Credit Suisse AG v Gu [2026] FCA 439 | Case summary

Federal Court of Australia|2026-04-17|Before: Cheeseman J

For the reasons given, the disposition of this proceeding follows from findings of fact made on the evidence and the application of settled principles of equity, insolvency law and statutory construction and contractual construction.
First, cl 7.2 of the Hu Deed did not create an equitable charge or other equitable proprietary interest in favour of the Hu Parties over the Superba Property or the Surplus Funds. That conclusion follows from an objective construction of the text of the deed, read in its commercial context and as a whole, and from the absence of language or incidents sufficient to effect a present appropriation of property as security. The alternative constructions advanced have been considered and rejected for reasons explained.
Second, the Great Lands Mortgage granted in June 2019 is void against the trustee in bankruptcy, and the Hu Parties as assignees of the trustee, under s 121(1) of the Bankruptcy Act. That conclusion rests upon the premise that was not ultimately contested by Great Lands that, at the time of the transfer, Mr Gu was insolvent or about to become insolvent and that Great Lands has not established the cumulative requirements of the good faith defence in s 121(4). In particular, Great Lands has not discharged its onus of proving that the consideration it gave was at least as valuable as the market value of the proprietary interest (the mortgage) transferred, and that it did not know, and could not reasonably have inferred, that Mr Gu was insolvent or that his main purpose in making that transfer was the proscribed purpose in The consequences that follow under , read with ‑ of the Insolvency Practice Schedule, result in the Hu Parties as the assignees of the trustee being required to pay to Great Lands the value of the consideration it gave for the voided transfer of the mortgage to it. I have determined that the amount to which Great Lands is entitled under is to account for the amounts it received in reduction of the principal sum under the Great Lands Loan: with the entitlement totalling $2,193,209.62.

I certify that the preceding four hundred and seventy-six (476) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

I-PROSPERITY PTY LTD ACN 142 091 585 (IN LIQUIDATION)

BARRY WRIGHT AS LIQUIDATOR OF I-PROSPERITY PTY LTD (IN LIQ)

JEREMY NIPPS AS LIQUIDATOR OF I-PROSPERITY PTY LTD (IN LIQ)

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Section 121(1) of the Bankruptcy Act renders void against the trustee in bankruptcy a transfer of property made by a person who later becomes bankrupt if the property would probably have become part of the transferor's estate or have been available to creditors if not for the transfer, and the transferor's main purpose in making the transfer was to prevent the transferred property from becoming divisible among the transferor's creditors, or to hinder or delay the process of making that property available for division among creditors. For the purposes of s 121, the grant of a mortgage or charge may constitute a transfer of property: s 121(9)(b); Peldan v Anderson [2006] HCA 48; 227 CLR 471 at [26] (Gummow ACJ, Kirby, Hayne, Callinan and Crennan JJ).
The requisite purpose of the transferor may be established directly from the facts and circumstances of the transaction, or indirectly by operation of statutory presumptions. Relevantly, s 121(4A) gives rise to a rebuttable presumption that the transferor was, or was about to become insolvent if, at the time of the transfer, the transferor had not kept, or had not preserved, such books, accounts and records as are usual and proper in relation to the business carried on by the transferor and as sufficiently disclose the transferor's business transactions and financial position. The inquiry under that provision requires attention to the nature of the business carried on by the transferor, the books and records usual and proper for a business of that kind, and whether such books and records were in fact kept or preserved.
If insolvency, or impending insolvency of the transferor, is established, that circumstance bears directly upon the purpose inquiry under A transfer made when the transferor was insolvent, or about to become insolvent, is by virtue of taken to have been made for the main purpose of putting the property beyond the reach of creditors or to hinder or delay its availability for distribution among them.

Credit Suisse AG v Gu

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