Gu v Zhou

File Number(s): 2025/56936

Publication restriction: No

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JUDGMENT

1. The proceedings were commenced with the filing of a statement of claim on 12 February 2025. The plaintiff, a cleaner, alleged that:

2. On 19 March 2023, the plaintiff loaned the defendant, a real estate agent, $200,000. The loan had a term of six months and carried an interest-rate of 12% per annum.

3. On 12 April 2023, the parties entered a “Co-operation Agreement” to facilitate the purchase of an apartment “off-the-plan”. The plaintiff paid the defendant $145,800, which was the deposit required for the purchase of the apartment. The plaintiff, pursuant to the agreement with the defendant, sought the return of the $145,800 but it was never paid back.

4. On 17 May 2023, another “Co-operation Agreement” was signed by the parties to enable the purchase of another “off-the-plan” apartment. On this occasion the plaintiff paid the defendant $67,300, again being the required deposit for the purchase. Once again, the plaintiff requested the return of the money, but it was not received.

5. On 15 June 2023, the plaintiff loaned $20,000 to the defendant at an interest-rate of 10% per annum. The loan has never been repaid.

6. On 26 July 2023, the plaintiff loaned $40,000 to the defendant at an interest-rate of 10% per annum. This loan has also not been repaid.

7. On 9 October 2023, the plaintiff loaned $20,000 to the defendant which has also not been repaid. Interest is claimed pursuant to s 100 of the Civil Procedure Act 2005 (NSW) (the Act).

8. On 6 December 2023, the plaintiff loaned $55,000 to the defendant which has also not been repaid, and interest is claimed under the above Act.

9. On 13 December 2023, the plaintiff loaned $10,000 to the defendant and, once again, it has not been repaid, and interest is claimed pursuant to the Act.

10. On 3 January 2024, the plaintiff signed a “Facility Agreement” whereby she made her home available as a security for a loan from Qiaofen Ji to the defendant of $500,000, which was to be repaid when the defendant sold a property in “Wahrooga”. The property was sold and the defendant was supposed to repay Qiaofen Ji the $500,000 but has not done so, in turn placing the plaintiff’s residence at risk.

11. $2,000 has been repaid by the defendant. The statement of claim asserts that the total amount still owing to the plaintiff by the defendant is $1,058,100 plus interest of $96,022.15.

12. A defence was not filed to the statement of claim. On 25 August 2025, default judgment was entered against the defendant for the sum of $584,736.36. The application for the default judgment excluded the $500,000 said to arise from the Facility Agreement signed on 3 January 2024.

13. On 17 February 2026, the defendant filed a notice of motion seeking an order that, pursuant to r 36.16 of the Uniform Civil Procedure Rules (NSW) 2005 (UCPR), the judgment entered against her be set aside. The defendant also relies upon r 36.15.

14. For the purposes of UCPR r 36.15 the defendant says the judgment was entered irregularly and against good faith. In respect of r 36.16 the defendant says there is an explanation for the delay, and she has a defence on the merits.

15. There are three emails from the defendant’s current solicitors to the plaintiff’s solicitors which I think need to be set out at this stage. None of the emails were sent on a without prejudice basis.

16. On 18 November 2025, the defendant’s solicitors, after receiving a bankruptcy notice, wrote:

“We are instructed to propose a payment arrangement as follows:

1. Payment of $15,000 by close of business 30 November 2025.

2. Further payments at the end of each month in the sum of $15,000 monthly until all amounts including associated Interest, Court, filing and solicitor fees are paid in full.”

8. On 8 December 2025, the defendant’s solicitor wrote to the plaintiff’s solicitor stating that he had received further instructions from his client. He quotes his client who says, inter alia, that:

“I fully understand and accept the fact that the amount has been outstanding for so long. I sincerely apologise for the stress and inconvenience caused to Ms Gu ...”

9. The email continues with the defendant proposing a payment plan in which the sum of the instalments is $586,568.06, which is about $2,000 more than the judgment amount.

10. On 15 January 2026, the defendant’s solicitor wrote to the plaintiff’s solicitor proposing yet another payment plan in which the total of the proposed instalments is $560,000.

11. The above three emails may be collectively described as admissions by the defendant.

12. When asked to comment on the admissions, counsel for the defendant frankly conceded their strength, but said they had been made before the defendant had been “interrogated” by her lawyers, including counsel, and that it was only after the interrogation that the existence of a defence to the statement of claim was identified.

13. The defendant submitted that the statement of claim was a document of overwhelming simplicity which omitted some basic constituents of the claims made, for example repayment dates of loans.

14. The statement of claim is simple but the proposed defence, at least in some respects, is very difficult to accept as viable.

15. The defendant, in her affidavit of 16 February 2026, describes herself as a real estate agent with limited English skills, and limited experience in dealing with lawyers. She states:

“I have met lawyers socially from time to time and in Chinese culture lawyers or people to be revered and respected. As such I have found lawyers to be intimidating people.”

16. I would have thought that a real estate agent had many dealings with lawyers. I would also have thought that a real estate agent would make appropriate records of monies that were borrowed. In her proposed defence the defendant says that many of the amounts advanced to her were provided in cash, and the cash handed over to her by the plaintiff was not the sum she thought she was borrowing.

17. In para 3 of the proposed defence, the defendant deals with an asserted loan of $200,000. The defence states that the plaintiff provided her with cash in a plastic bag. The defendant continues that she “did not count the cash in the plastic bag at the time but says it was significantly less than $200,000 … .”

18. The defendant does not say how much money was in the bag but presumably she counted the money sooner or later. While I am prepared to accept that it might have been considered unseemly to count the money in the presence of the plaintiff, as soon as it was discovered that it was “significantly” less than the right amount, the defendant would have known that she had a defence to the claim for $200,000. The defendant certainly would not have needed to have been interrogated to realise that she had a simple defence that she never received $200,000.

19. The same claim of underpayment is made in respect of a number of the other cash advances asserted to have been made by the plaintiff.

20. Counsel for the defendant described his client as unsophisticated. I do not accept the defendant was so unsophisticated that she did not realise that monies she was borrowing had not actually been received by her.

21. In my view default judgment should not be set aside because to do so would be futile. I think the admissions I have set out above, together with the sheer unbelievability of the defendant not knowing that she did not have a defence to a proposition as simple as not having been paid the amount she had borrowed, pose an almost impossible obstacle for the defendant to overcome.

22. Futility was discussed by Peden J in Gleneagle Securities Nominees Pty Ltd v Kirkham International Pte Ltd [2025] NSWSC 934 at [6]. Her Honour stated:

“The requirement that ‘sufficient cause [be] shown’ requires a consideration as to whether the exercise of the discretion would be futile: Manhari Recycling at [18]. The question is ‘whether it is in the interests of justice to allow the party seeking to set aside the default judgment to be permitted to defend the proceedings on the merits’: Viol at [76], citing Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43] (McColl JA).”

23. As discussed by Peden J, it is necessary to examine whether it is in the interests of justice to set aside the judgment. This is where the defendant’s assertions of irregularity and lack of good faith, or a lack of procedural fairness, come into play. If the conduct of the plaintiff’s solicitors was so egregious then there might be a case that the judgment be set aside, notwithstanding the countervailing considerations.

24. However, the conduct complained about is essentially the plaintiff’s solicitors not providing particulars when requested, suggesting particulars sought were inappropriate, issuing subpoenas, and not responding to correspondence from the defendant’s solicitors. Also included is an allegation that it would have been prudent, although not obligatory for the plaintiff to have informed the defendant that an application for default judgment was to be made.

25. I agree that responses to a request for particulars such as “the requests are not properly made” and “your client is not entitled to the evidence requested …” are very rarely justified. Nevertheless, I am not prepared to say that the plaintiff’s solicitors acted in any underhand manner. It was made clear to the defendant that she should file a defence (email of 17 March 2025) and the defendant’s solicitor actually wrote on 18 March 2020, after putting forward a proposal that:

“If it is not agreed, we are instructed that our client will file the defence within 7 days.”

26. The defendant suggested that an inference could be drawn from the issuing of subpoenas to the defendant and to her banks that the proceedings would be continued through to hearing. I do not see why that inference would arise. There could be many reasons for issuing the subpoenas, including trying to ascertain the financial position of the defendant for purposes of enforcing a judgment.

27. At first sight, I thought the refusal of the plaintiff’s solicitor to deal with the defendant’s solicitor because a notice of appearance had not been filed, was perhaps inappropriate. However, the conduct is explained by Mr Oliveri, in his email of 2 October 2025, where he states:

“There are a lot of other lawyers who have purported to act for the defendant in the above matter. Each lawyer has made a statement to the effect that the defendant wants to negotiate. With respect, that statement is meaningless and even more so in the present case, because a Statement of Claim has been filed and no response to the Statement of Claim has been filed and served. What is there to negotiate?

Neither you, nor any other lawyer has seen fit to go on the record by filing an appearance, to represent the defendant. We therefore do not accept that you represent the defendant.”

28. In summary, I am not satisfied that there has been any lack of procedural fairness, any lack of good faith or anything irregular about the entry of judgment. It seems patently clear that the defendant has always accepted the debt to the plaintiff, but has endeavoured, either through changing lawyers frequently, or seeking to negotiate, to put off the ‘day of judgment’.

29. Turning to r 36.16 of the UCPR I am not satisfied that there is a defence on the merits, even at the relatively low level by which a defence might be measured. If there is a defence, such as the whole of the funds were never received, that defence has been available since the filing of the statement of claim and has never been expressed.

30. The proposed defence does raise other points besides the non-receipt of the whole of the amount allegedly loaned. However, the defendant’s assertion that prior to her interrogation, she did not appreciate she had a defence based on the receipt of lesser amounts than those alleged to have been loaned, is so untenable that I think it affects my acceptance that she was unaware of any defence at all. It is to be remembered that although the defendant did not have her current solicitors throughout the process, she was generally represented by solicitors. As to her current solicitors, they are the solicitors that sent the emails containing the effectively full admissions.

31. As mentioned above, it was anticipated on 18 March 2025, that a defence would be filed within seven days. It was not filed, but presumably, having regard to the anticipated defence, instructions had been taken upon which a defence might be verified and filed.

32. As mentioned, I think the admissions made by the defendant have such an overwhelming effect that it would have required significantly underhand or contumelious conduct to overcome the admissions. Such conduct does not exist here.

33. The defendant’s notice of motion will be dismissed with costs.

34. I make the following orders:

35. The notice of motion filed by the defendant on 17 February 2026 is dismissed.

36. The defendant is to pay the plaintiff’s costs of the notice of motion.

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