DC Rd DC Pty Ltd v Zhang

1. Clarence 104 Pty Ltd be permitted to withdraw from the NAB Business Options Facility (Account Number 787518590) secured against the property contained within SP 8/71152 and known as 104/50 Clarence Street, Sydney NSW 2000, up to and only up to the amount of $228,000, with such funds to only be paid in respect of its legal costs of these proceedings.

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

Delivered ex tempore, revised from transcript

1. On 22 February 2024, Ms Lian Li, Saiala Holdings Pty Ltd (Saiala) and Clarence 104 Pty Ltd (Clarence 104), (the Lian Parties), were joined to these proceedings and freezing orders were made against them on an ex parte basis. Relevantly, para [10] to the Annexure to those orders permitted Ms Li, Saiala and Clarence 104 to each pay up to $50,000 on legal expenses incurred in these proceedings from assets which were otherwise frozen by those orders (Lian Parties' Freezing Orders).
2. On 24 June 2025, I made orders inter alia varying the Lian Parties' Freezing Orders so as to permit each of the Lian Parties to pay up to $300,000 on account of their legal expenses incurred in these proceedings. Those orders were accompanied by a notation which provided that Saiala and Clarence 104 intended to approach funders for the purpose of raising funds for the payment of legal expenses in these proceedings and intended, upon receiving an offer for funding, and if agreement could not be reached with the Applicants, to approach the Court for a further variation to the Lian Parties' Freezing Orders.
3. By an amended interlocutory application dated 26 November 2025, Clarence 104 seeks an order permitting it to withdraw up to $228,000 from a loan account secured against real property it owns, with such funds only to be paid in respect of its legal costs of these proceedings up to (and not exceeding) the balance of the amount which the Court has permitted it to spend for that purpose. The applicants in the proceedings neither consent to, nor oppose, that application.
4. The application is made in circumstances where Ms Li, the sole director of Clarence 104, caused it to enter into an agreement with the National Australian Bank (NAB) for the provision of a business loan, which is secured by way of mortgage against Suite 104, 50 Clarence Street, Sydney (the Property) for the purpose of paying Clarence 104's legal expenses of these proceedings. On 5 November 2025, NAB advanced $670,000 to Clarence 104, being the maximum that NAB was willing to lend, even though Ms Li did not intend to spend any more than the $300,000 for legal expenses permitted by the Lian Parties' Freezing Orders. Two days later, the applicants' solicitors told Clarence 104's solicitors that they had noticed the registration of a mortgage on the title of Property.
5. On 14 November 2025, Clarence 104 caused $447,000 to be repaid to NAB. On 21 November 2025, Clarence 104 and Saiala filed an interlocutory application seeking to vary the freezing orders so as to regularise the loan and mortgage with NAB.
6. The figure of $228,000 referred to in the order sought by Clarence 104 is arrived at by subtracting from the amount of $300,000 permitted for legal expenses, an amount of about $76,000 already spent on legal expenses, and adding a loan application fee of about $5,000. As that amount has already been advanced, the order is sought nunc pro tunc.
7. Ms Li candidly accepts that this application ought to have been made prior to her entering into the loan agreement and mortgage with the NAB. Ms Li deposes, and I accept, that her failure in causing Clarence 104 to do so arose because of her ignorance of the effect of the relevant orders. The money advanced under the loan has not been spent. Clarence 104 does not otherwise have sufficient resources from which it can pay its legal expenses of these proceedings.
8. The Court is naturally concerned to ensure that there will be a fair trial according to law, which generally requires that a respondent has access to the necessary resources to pay its legal costs of defending the action.
9. Ms Li accepts that she acted imprudently in causing Clarence 104 to enter into the loan facility and mortgage with the NAB. However, I accept that she did so without appreciating that doing so would risk contravening the freezing orders made in respect of it. Ms Li has candidly apologised for that conduct, repaid the portion of the loan which exceeds the amount that Clarence 104 is presently entitled to spend on legal expenses, and has held back the balance so that if the Court rejects this application, Clarence 104 can be restored to the position it was in prior to its entry into the NAB loan.
10. In all the circumstances, it is appropriate to make the order sought.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.