//
[2026] NSWSC 1229
General information, not legal advice.
Supreme Court of NSW
2026-10-06
Parker J
Zoe will write a short plain-English summary of this judgment and email it to you for free: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Hong v Guo (No 2) [2026] NSWSC 1229
Hearing dates: 2 September, 2 October 2026
Date of orders: 06 October 2026
Decision date: 06 October 2026
Jurisdiction: Equity
Before: Parker J
Decision: See [158]
Catchwords: PRIVATE INTERNATIONAL LAW — recognition of foreign judgment debt in previous judgment — application to vary judgment and reopen defence to challenge interest awarded — whether claim for contractual interest statute-barred — applicable limitation period determined by Chinese law — no Chinese law limitation defence pleaded or proved — whether interest awarded under foreign judgment properly compared with statutory post-judgment interest — interest sought was pre-judgment interest in this Court — whether base interest and additional interests under Civil Procedure Law of the People’s Republic of China art 253 were penal — base interest derived from contractual rate and not penal — additional interest following default not, without more, penal — no reason to depart from first-instance authorities treating art 253 interest as non-penal — reopening refused — separate application for execution remedies — no stay of judgment — Registrar’s refusal of garnishee orders set aside — garnishee orders, writ of levy, production and examination orders, and asset-preservation orders made — adjournment pending appeal refused.
Legislation Cited: Civil Procedure Act 2005, ss 100-101, 108(1)(a)-(b)
Civil Procedure Law of the People’s Republic of China (amended 2003), arts 253, 264
Limitation Act 1969
Provisions of the Supreme People’s Court on Several Issues Concerning Application of Law in the Trial of Private Lending Cases, art 29
Supreme Court Act 1970, s 95(1)
Uniform Civil Procedure Rules 2005, rr 36.4, 36.7(1), 36.16(3A), 39.38, 49.19-20
Cases Cited: Accom Finance Pty Ltd v Mars Pty Ltd [2006] NSWSC 726
Bao v Qu (No 2) (2020) 102 NSWLR 435
Bay Bon Investments Pty Ltd v Selvarajah [2008] NSWSC 1251
Benefit Strategies Group Inc v Prider (2005) 91 SASR 544
Commercial N Pty Ltd v Huang [2024] NSWSC 23
Crescent Capital v Chanine [2026] NSWSC 371
Degmam Pty Ltd v Wright (No 2) [1983] 2 NSWLR 348
Ealing London Borough Council v El Isaac [1980] 1 WLR 932
Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211
Guo v Yufeng Investment Group (Australia) Pty Ltd [2024] NSWSC 1599
Guo v Yufeng Investment Group (Australia) Pty Ltd (No 2) [2026] NSWSC 1035
Hong v Guo [2026] NSWSC 530
Hung Fung Enterprises Holdings Limited v The Agricultural Bank of China [2012] 3 HKLRD 679
Lym International Pty Ltd v Chen [2009] NSWSC 167
Multispan Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd (No 2) [2001] NSWSC 1047
Noble Earth Technologies Pty Ltd v Hampic Pty Ltd [2012] NSWSC 935
Schnabel v Lui [2003] NSWSC 15
Shanghai Chenggong Industrial Co v Zhihua Chen [2025] NSWSC 1112
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Watson v Whitehead [2015] NZHC 739
Wilson v Wilson [2024] NSWSC 506
Yufeng Investment Group (Australia) Pty Ltd v Guo [2026] NSWCA 3
Zhengzhou Lvdu Real Estate Group Co Ltd v Shu [2024] NSWSC 58
Texts Cited: Davies, Bell and Brereton, Nygh’s Conflict of Laws in Australia (11th ed, 2025, LexisNexis)
Collins of Mapesbury and Harris, Dicey, Morris & Collins on the Conflict of Laws (16th ed, 2022, Sweet & Maxwell)
Practice Note SC Gen 16, Pre-judgment interest rates (Supreme Court of New South Wales)
Peter Taylor (ed), Ritchie's Uniform Civil Procedure New South Wales (LexisNexis, looseleaf)
Category: Principal judgment
Parties: Notice of Motion filed 29 May:
Tao Hong (plaintiff/respondent)
Wencheng Guo (defendant/applicant)
Notice of Motion filed 13 August:
Tao Hong (plaintiff/applicant)
Wencheng Guo (defendant/respondent)
Representation: Counsel:
Notice of Motion filed 29 May:
D Pritchard & J Foley (plaintiff/respondent)
TD Castle & D Levi (defendant/applicant)
Notice of Motion filed 13 August:
D Pritchard & J Foley (plaintiff/applicant)
T Bagley & T Maybury (defendant/respondent)
Solicitors:
Gills + Co Lawyers & Advisors (plaintiff)
Legal Point Lawyers (defendant)
File Number(s): 2021/223606
Publication restriction: nil
In May this year I gave judgment in favour of the plaintiff against the defendant: Hong v Guo [2026] NSWSC 530 (“J1”). There are now cross-applications by the parties arising out of the judgment. The defendant applies to vary the judgment and reopen its defence on the question of interest. The plaintiff applies for execution remedies in aid of enforcement of the judgment (either as to the whole, or, alternatively, only the part which is not the subject of the variation application).
The plaintiff, Tao Hong, and the defendant, Wencheng Guo, are both Chinese businessmen, although Mr Guo now lives in Australia. The proceedings arose out of a judgment in favour of Mr Hong against Mr Guo given by the Shenzhen Intermediate People’s Court in Guangdong Province, China. That judgment was given in June 2016.
The Shenzhen Court gave judgment against Mr Guo for ¥185.7 million ($39.0 million at current exchange rates). The Court also ordered Mr Guo to pay interest on the judgment sum at specified rates.
In the present proceedings, Mr Hong succeeded in obtaining a judgment from this Court by way of enforcement of the Shenzhen judgment. The judgment sum in this Court was ¥698.6 million ($146.6 million). The difference of more than $100 million was nearly all attributable to interest which accrued after delivery of the Shenzhen judgment.
The factual background to the case is set out at J1 [10]-[32]. In summary, it is as follows. I use the same defined terms as are used in the May judgment.
The Shenzhen judgment arose out of loan transactions between Mr Hong and Mr Guo. The loans began in December 2012 and involved a running account between Mr Hong and Mr Guo. Mr Guo’s last repayment was in April 2015 (J1 [41]).
The evidence in the present case was that there was at the time a thriving market in China for unsecured short-term lending, in which Mr Hong and Mr Guo both operated (J1 [13]). The loans in question were the subject of a formal Loan Agreement between the parties, dated August 2013 (later amended in May 2014). The agreement provided for Mr Guo, as borrower, to pay interest at 2.5% per month on the outstanding balance (J1 [51]-[52]).
On 30 July 2015, Mr Guo signed an acknowledgment referred to in the evidence as the “Confirmation Letter”. The Letter acknowledged a principal debt of ¥160 million together with interest up to the date of the Letter of ¥25.7 million (J1 [25]).
Mr Guo did not appear in the Shenzhen proceedings. On 7 June 2016 the Shenzhen Court gave judgment in favour of Mr Hong based on the terms of the Confirmation Letter (J1 [6]).
Mr Hong claimed further interest for the period from 30 July 2015. That claim was upheld by the Shenzhen Court, which ordered that Mr Guo pay interest on the judgment sum of ¥185.7 million (J1 [6]). The order contained two components.
First, the Court ordered Mr Guo to pay interest on the judgment sum at 24% per annum from 31 July 2015 onwards. I will refer to this as “base” interest. The rate was determined by starting with the rate prescribed in the Loan Agreement (2.5% per month or 30% per annum), and applying a cap imposed in a regulation issued by the Supreme People’s Court of China (Provisions of the Supreme People’s Court on Several Issues Concerning Application of Law in the Trial of Private Lending Cases, art 29). That cap limited the interest which could be awarded to 24%.
Secondly, the Court ordered that, should Mr Guo fail to satisfy the judgment within ten days from the effective date of the judgment, he was to pay further interest on the judgment sum under Article 253 of the Civil Procedure Law of the People’s Republic of China (“CPL”). The relevant article describes this (as translated) as “double interest”. As Nixon J pointed out in Zhengzhou Lvdu Real Estate Group Co Ltd v Shu [2024] NSWSC 58 at [65], this term is something of a misnomer. The article does not double the interest rate otherwise awarded on the judgment. Rather, it increases the award by 0.0175% per day, which equates to 6.3875% per annum. The term would be better translated as “additional interest” or “default interest”. I will refer to it as “article 253 interest”.
100 Interest up to judgment
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit—
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
…
(3) This section—
(a) does not authorise the giving of interest on any interest awarded under this section, and
(b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise …
…
CPA s 100(1) expressly makes the rate of interest awarded discretionary. But Practice Note SC Gen 16, at [5], states that “practitioners and litigants should expect” that in making an award the Court “will have regard to” the cash rate published by the Reserve Bank of Australia plus 4%.
CPA s 101 relevantly provides:
101 Interest after judgment
(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.
(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from—
(a) the date on which the judgment takes effect, or
(b) such later date as the court may order.
…
(6) This section does not authorise the giving of interest on any interest payable under this section.
…
For the purpose of CPA s 101(2), the “prescribed rate” is the cash rate published by the Reserve Bank of Australia (“RBA”) plus 6%: Uniform Civil Procedure Rules 2005 (“UCPR”), r 36.7(1).
As I describe in more detail below, in their closing submissions counsel for Mr Hong sought entry of judgment in his favour for the Shenzhen judgment sum, ¥185.7 million, together with interest down to judgment at the rates awarded by the Shenzhen Court. Counsel for Mr Guo conceded that, if judgment was to be entered for the Shenzhen judgment sum, interest so calculated should be included.
On 30 April this year, I circulated my reasons for judgment in draft form. I invited the parties to confer and agree on the form of orders necessary to reflect my conclusions, including the calculation of interest.
Initially, I fixed 8 May as the date for any argument on the form of the orders and for the entry of judgment accordingly. On that day, calculations were presented by counsel for Mr Hong, including the calculation of interest from 31 July 2015 in accordance with the rates awarded by the Shenzhen Court. The hearing was, however, adjourned at the request of senior counsel for Mr Guo to enable him to take further instructions.
The matter returned to Court on 15 May. Senior counsel foreshadowed an application for leave to reargue the question of interest (the precise form of the question is set out later in the judgment). But in the end he accepted that I should enter judgment in accordance with the calculations presented by counsel for Mr Hong (which were not disputed, as a matter of calculation). Any application to vary the interest award could then be made within 14 days, pursuant to UCPR r 36.16(3A).
The judgment as entered relevantly included the following components:
principal due under the Loan Agreement as at 30 July 2015 (as per the Confirmation Letter, and included in the Shenzhen judgment sum): ¥160 million;
interest under the Loan Agreement to 30 July 2015 (likewise as per the Confirmation Letter, and included in the Shenzhen judgment sum): ¥25.7 million;
base interest at 24%, in accordance with the Shenzhen judgment, from 31 July 2015 down to 15 May 2026: ¥414.6 million; and
article 253 interest at 6.3875%, in accordance with the Shenzhen judgment, from 6 October 2016 down to 15 May 2026: ¥98.2 million.
Counsel for Mr Hong did not seek to vary the rate of post judgment interest under CPA s 101(2). The judgment thus carries interest at the cash rate published by the RBA, plus 6%. No stay was sought on the enforcement of the judgment pending appeal, or otherwise.
On 29 May, the last available date under the Rules, a notice of motion was filed on behalf of Mr Guo seeking to vary the judgment. Proceedings on the motion came before me for case management. On 9 July, an amended version of the notice of motion was filed which sought, as well as variation, leave to reopen Mr Guo’s case and to amend his defence so as to dispute components (3) and (4) in the judgment. I will refer to the motion as the “variation motion”.
The proposed amended defence for Mr Guo pleads that the 24% base interest ordered by the Shenzhen Court (component (3) of the judgment debt in this Court) is “a penalty under Australian law” and that the 6.3875% article 253 interest (component (4)) was “penal in nature”. In each case, the defence alleges that the order of the Shenzhen Court “is not enforceable in New South Wales as a matter of public policy”.
Counsel for Mr Guo contended that this defence was reasonably arguable, at the least. The amount involved was huge. In counsel’s submission, the issues raised by the defence were purely issues of law which did not require any further evidence. For the Court to decline to deal with it would work a serious injustice on Mr Guo.
Counsel for Mr Hong contended that the proposed defence was a hopeless one. And even if it were tenable, the application should be refused for discretionary reasons. The point had been expressly abandoned by Mr Guo’s previous counsel and there was no explanation for the change of heart.
In this connection, counsel submitted that to allow the new defence to go forward would impose an undue burden on Mr Hong. The new defence did not merely raise questions of law. Responding to it would, or at least might, require further evidence. Furthermore, counsel foreshadowed that if the new defence were permitted, Mr Hong would make a counter-application for interest to be awarded, both up to and after judgment, at the contractual rate (2.5% per month, or 30% per annum), or, at least, at the post-judgment rate prescribed under CPA s 101(2).
The agreement to pay interest as damages for late repayment attracts the doctrine of penalties if, as a matter of substance, the sum payable is not a genuine pre-estimate of the loss the plaintiff may suffer by being kept out of its money, but is in the nature of a punishment [citation omitted]. The moneys are payable as a consequence of a breach of contract rather than as the withdrawal of an incentive. This distinguishes this case from those where a mortgage stipulates a higher rate of interest reduceable to a lower rate if instalments are paid on time.
…
In Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656, the High Court referred with approval to a statement by Mason and Wilson JJ in AMEV–UDC Finance Ltd v Austin (1986) 162 CLR 170 at 190 that an agreement to pay a sum as damages should only be struck down as a penalty if “it is out of all proportion to damage likely to be suffered as a result of breach” (at 667 [27]). In Ringrow Pty Ltd v BP Australia Pty Ltd the High Court said (at 669 [32]):
“Exceptions from that freedom of contract require good reason to attract judicial intervention to set aside the bargains upon which parties of full capacity have agreed. That is why the law on penalties is, and is expressed to be, an exception from the general rule. It is why it is expressed in exceptional language. It explains why the propounded penalty must be judged ‘extravagant and unconscionable in amount’. It is not enough that it should be lacking in proportion. It must be ‘out of all proportion’”.
… it demonstrates, as the transactions in this case demonstrate, that there is a market for loans of last resort at very high interest rates. However, there comes a point …, where a rate is so high that it cannot be considered proper. That point is reached where the rate operates in terrorem and as a punishment for default rather than as compensation to the lender for being kept out of its money.
See also the decision of Henry J in Commercial N Pty Ltd v Huang [2024] NSWSC 23 at [302], where her Honour referred to several more recent cases in which interest rates of 60% or more were sustained.
At [51] in Bay Bon, White J addressed the evidentiary practicalities raised by a challenge to an interest provision on penalty grounds:
Whilst I accept that the onus is on the defendant to show that the provision is a penalty, it appears to me that once some evidence is adduced which may be sufficient to satisfy that onus, there is an evidentiary onus on the plaintiff to explain the nature of its business, the rates at which it is able to lend, and how, when the contracts were entered into, it would have been anticipated that the moneys would be re-deployed on repayment of the loans. This information was entirely in the plaintiff’s camp. Evidence is to be weighed according to the power of a party to produce it. Where facts are peculiar within the knowledge of one party, comparatively slight evidence may be sufficient to discharge the onus of proof lying on the opposite party [citations omitted]
(see also Crescent Capital v Chanine [2026] NSWSC 371 at [6], per Rees J).
English courts have no jurisdiction to entertain an action… for the enforcement, … directly or indirectly, of a penal, revenue or other public law of a foreign State ….
Bergin J considered the application of the rule in Schnabel v Lui [2003] NSWSC 15. Counsel for both parties referred me to that case. In it, the plaintiff sued on a judgment which he had obtained in Utah. The judgment included an award of damages for fraud of $2.18 million, together with “punitive damages” of twice that amount ($4.36 million). It was argued that the judgment was penal in the relevant sense and therefore unenforceable.
Her Honour dealt with the argument at [164]-[180]. She declined enforcement of the punitive damages, but entered judgment for the rest of the Utah judgment sum. She reasoned (at [176]-[177]):
Judge Pregerson [the Utah judge] stated that the purpose of the punitive damages was to “penalise” the first defendant and to deter others from failing to comply with the court’s orders ... Although the plaintiffs were placed in a situation of detriment by the failure of the first defendant to comply with the Court’s orders, the damages were not compensation for the detriment. The damages were to punish or penalise the first defendant and even though the damages were payable to the opposing party … I am of the view that the purpose of the award of the damages was to punish the first defendant and was a sanction. Multiple damages were the “penal consequence” for the first defendant’s failure to comply with the Court’s orders.
Punishment for the failure to comply with the US Court’s order in my view does fall within the categories of either a penal law or other public law of the foreign jurisdiction and is unenforceable by this Court. ...
As counsel for Mr Guo pointed out, the decision in Schnabel was considered by the South Australian Full Court in Benefit Strategies Group Inc v Prider (2005) 91 SASR 544. The plaintiff in that case brought an action to enforce a judgment in its favour from California. The judgment included an award of punitive damages on account of the “brazen and fraudulent” conduct of the defendant.
At first instance, it was conceded by counsel for the plaintiff that the punitive damages component of the Californian judgment was unenforceable. Judgment was entered for the balance. On appeal, the defendants submitted that such “severance” was impermissible.
In the Full Court, the defendants failed in their argument that severance was impermissible. There was no cross-appeal. The enforceability of the punitive damages award therefore did not arise. Nevertheless, Bleby J, giving the judgment of the Court, doubted that the concession made at trial had been correct (at [60]-[73]). His Honour reasoned (at [68]):
The judgment sought to be enforced in this case, although described as “punitive damages”, was a judgment in respect of a private right for his alleged “brazen and fraudulent conduct”. There was no public element in the remedy being sought. In my view, it did not fall within the type of judgment which this Court would refuse to enforce on public policy grounds relating to the non-enforcement of foreign penal or revenue laws.
I do not pass on the correctness of that decision. If correct, it is distinguishable on the footing that it was a penal award, having an obvious “public” connotation, for failing to comply with an order of the United States court. ...
The rule against enforcement of penal judgments has since been considered, specifically in its application to an award of “double interest” under CPL art 253 (now renumbered as art 264), in a number of first instance decisions of this Court. I was referred to these decisions by counsel for both parties.
Bao v Qu (No 2) (2020) 102 NSWLR 435 was a decision of Rothman J. The Chinese Court had awarded interest down to judgment, and for a further 10 days after judgment, at the applicable benchmark interest rate, as published by the People’s Bank of China (this is what I have referred to as “base interest”; his Honour called it “General Interest”), and, in the event of failure to satisfy the judgment by the end of that 10 day period, at the “double rate” prescribed by CPL art 253 thereafter.
His Honour stated that, in the ordinary course, it was “appropriate to make an order for pre-judgment interest in accordance with the foreign judgment” (at [57]); see also Wilson v Wilson [2024] NSWSC 506 at [42] per Campbell J). His Honour awarded interest down to the entry of judgment in this Court at the General Interest rate and (following default) at the article 253 interest rate. As to the article 253 interest he said (at [63]):
In the circumstances of this case, no evidence is before the court nor were submissions received as to whether the imposition of Article 253 Interest has a “public element” of the kind described by the court in Benefit Strategies. As such, and having regard to the interest rate imposed, which is not substantially dissimilar to the rate applicable for General Interest, I consider it appropriate to award pre-judgment interest to the plaintiff in accordance with the Final Chinese Judgment, including the element of Article 253 Interest.
Hereafter, interest will accrue at the rate applicable to a judgment of the Supreme Court and [CPA s 101] applies. The interest payable under [s 101] is not to be calculated on the interest payable under the [the Chinese judgment]. If not otherwise clear, interest is not payable on interest and, further, the interest payable under [s 101] shall be in substitution for and not in addition to any interest otherwise payable for the same period.
The most recent decision is that of Peden J in Shanghai Chenggong Industrial Co v Zhihua Chen [2025] NSWSC 1112. In that case the Chinese Court had awarded base interest at 3.55% and, following default, article 264 interest as well. It was argued that the article 264 interest was penal in nature and therefore unenforceable.
Her Honour rejected this argument and entered judgment for the full amount of the interest awarded by the Chinese Court. At [28]-[29] she referred to several previous first instance decisions of this Court, and of the Victorian Supreme Court, including Bao, in which such interest had been awarded, and distinguished a decision of the Hong Kong Court of Appeal (Hung Fung Enterprises Holdings Limited v The Agricultural Bank of China [2012] 3 HKLRD 679), which concerned a different CPL provision.
Her Honour’s conclusion was:
Article 264 interest is triggered where there is late or deferred payment. I consider it is appropriate to compensate a plaintiff for being held out of money, just the way the UCPR provides for post-judgment interest on judgment debts. The Article 264 interest appears to recognise and enforce [the plaintiff’s] private law rights for repayment of a debt, with a post-judgment interest rate. The Article provides a formula for the calculation of post-judgment interest in the context of other lower rates for pre-judgment interest
….
In the above circumstances, I am satisfied that the purpose of the interest ordered was to compensate, not to punish. Therefore, the whole of the judgments ought to be enforced.
Argument for Mr Guo: Counsel for Mr Guo began by analysing the nature of Mr Hong’s claim for interest. In this regard, counsel referred to the rules of private international law discussed in Davies, Bell and Brereton, Nygh*’s* Conflict of Laws in Australia (11th ed, 2025, LexisNexis) at [40.46]-[40.47]. According to the learned authors’ statement of those rules, a plaintiff wishing to enforce a foreign judgment against the defendant in the forum can proceed in two distinct ways.
One is to rely on the fact that, at common law, a foreign judgment is treated as a simple contract debt. The foreign judgment creditor may therefore bring an action in debt in the forum based on the judgment itself.
The alternative is to bring a further action in the forum based on the cause of action that gave rise to the foreign judgment. That cause of action does not merge in the foreign judgment, so a further action is available. But the foreign judgment operates as an estoppel by way of res judicata, which prevents the defendant from advancing any defence to the underlying cause of action in the forum.
Counsel contended that the judgment obtained in this Court fell into the former class. Mr Hong’s statement of claim pleaded a cause of action based on the Loan Agreement, but the proceedings, as already noted, were not brought until August 2021. That was (just) more than six years after the Confirmation Letter was signed on 30 July 2015. A contractual action based on the Loan Agreement was therefore statute-barred (a point which had been taken in Mr Guo’s defence. Only an action on the judgment itself was available.
The next step in counsel’s argument was that, as a plaintiff seeking a judgment in debt based on the Shenzhen judgment, independently of the underlying cause of action, Mr Hong had to take that judgment “as [he found] it”. For the purpose of considering whether the judgment was penal as a matter of New South Wales public policy, the comparison was not with interest rates which might be permissible for contractual purposes but with the interest rates awarded on New South Wales judgments. Nor would it be permissible, in the exercise of this Court’s statutory power to award interest, to “mix and match” by having regard to contractual entitlements.
Counsel submitted that, when compared with the rate prescribed for the purposes of s 101(2), the interest payable under the judgment of the Shenzhen court, a total of 30.4% per annum, was so excessive as to be penal in character. Calculations presented by counsel indicated that the interest so calculated exceeded interest at the prescribed rate by a factor of 3.45. Even if the article 253 interest was ignored, the base rate of 24%, standing on its own, was, according to counsel, exorbitant by comparison with the prescribed rate.
In this connection, counsel invited me to consider the perverse incentive which, they argued, would arise from enforcing the payment of 30.4% interest on the Shenzhen judgment. Mr Hong had waited five years to bring his action. Had he brought it earlier, he would have obtained judgment earlier, and would thereafter only have received interest under s 101(2) at the statutory rate. By delaying, he had greatly increased his recovery.
In their submissions, counsel for Mr Hong emphasised the clarity and the deliberateness of the concessions made on the interest issue in the course of the trial.
In his opening written submissions, lodged in March last year, then counsel for Mr Guo, Mr Knowles SC, submitted that if the Shenzhen judgment were recognised and enforced in this Court:
… no enforcement should be given to any award of post judgment penalty interest payable under Chinese law. That amount does not form part of the judgment and is not capable of enforcement in Australia.
a. any award of prejudgment interest should be calculated in accordance with Chinese law; and
b. any award of post judgment interest (i.e. post the judgment of this Court) would be pursuant to s 101 of the Civil Procedure Act 2005 (NSW) noting that interest should not be payable on interest.
In written submissions in response, then counsel for Mr Hong noted that it did not appear to be disputed that interest up to judgment should be awarded in this Court in accordance with the judgment awarded by the Shenzhen Court, including the base interest and article 253 interest. They noted however that any interest accruing on the judgment would be calculated in accordance with CPA s 101.
In written submissions in reply, Mr Knowles agreed that there was “no dispute as to the principles in relation to the calculation of interest”. As already noted, following the issue of the draft judgment, Mr Knowles did not dispute the calculations of interest presented for Mr Hong.
Counsel for Mr Hong made a further point about the penalty argument as presented to me. Counsel pointed out that it was quite different from the argument foreshadowed by Mr Knowles at the hearing on 15 May this year. Mr Knowles said:
My client puts forward the submission that your Honour should defer making these final orders for this reason: he has provided instructions that his understanding is that Chinese law no longer permits interest to be calculated at the very generous rate, particularly the 24% contractual rate, and that a Chinese court would not enforce that contractual rate. He wishes to have an opportunity to put on evidence of that.
It is convenient to begin with the merits of the proposed penalty defence, as presented by counsel for Mr Guo. I think that the defence has its difficulties. Those difficulties arise at three different steps in the argument.
I begin with counsel’s assertion that a contractual claim by Mr Hong for recovery of the interest is statute-barred. I am not sure that the assertion is justified. Two points may be made.
The first point is that the argument proceeds on the assumption that the cause of action accrued on 30 July 2015, the date of the Confirmation Letter. But for the purposes of our law of limitation, the cause of action accrues on breach.
In the Confirmation Letter, Mr Guo undertook to pay the agreed amount of ¥185.7 million “as soon as possible” (J1 [100]). The ¥185.7 million figure seems to have involved a compromise (see J1 [159]). It therefore gave rise to a fresh contractual obligation. The time by which Mr Guo was obliged to pay would have depended on what “as soon as possible” meant in the context. It seems unlikely to have been as little as the six days which counsel’s argument required.
The second point is more fundamental. It was common ground between the parties that the contractual arrangements between the parties were governed by the law of China. Accordingly, in an action brought in this Court for breach of contract, the applicable limitation period would be determined by Chinese law not New South Wales law: Garsec Pty Ltd v His Majesty the Sultan of Brunei [2008] NSWCA 211 at [141]. Although a limitation defence was pleaded by reference to the Limitation Act 1969, there was no plea of limitation in accordance with Chinese law, and no evidence on the subject.
Admittedly the Confirmation Letter contained a confirmation from Mr Guo that “the statute of limitations shall restart from the date of execution herein for two years” (J1 [100]). That suggests that under Chinese law the limitation period may in fact have been less than the six-year limitation period under New South Wales law. That cuts across the first point I have made. But in the end, it underlines the fact that no Chinese limitation defence was pleaded.
I turn to the next step in counsel’s argument. Even if Mr Hong’s claim in these proceedings were confined to bringing an action on the Shenzhen judgment, it would not necessarily follow that the proper comparison is between the interest rates in the Chinese judgment and the post-judgment interest rate in this State under CPA s 101.
In fact, the base interest and Article 253 Interest which were awarded on 15 May were awarded for the period leading up to judgment in this Court. It follows that CPA s 101 was not relevant. What was involved was the exercise of the Court’s power to award interest.
In a normal commercial situation where interest continues to run, the creditor’s legitimate expectation will be to have interest at the contracted rate until payment. The interests of justice are not served by an outcome which sees such a creditor suffer the substitution of some lower prescribed interest rate for the contracted rate just because he has been forced to pursue the debtor to judgment. I distinguish a case in which the due date for payment of principal has passed and it is clear that interest ceased to accrue at that point. That is not a case in which the legitimate expectation to which I have referred can be seen to exist.
…
There may, of course, be limits to this approach. The court will obviously pay some attention to the reasonableness of the parties' bargain. As is shown by the decision of Shepherdson J in Asia Pacific International Pty Ltd v Dalrymple [2000] 2 Qd R 229, there are limits beyond which a court will not enforce a covenant to pay interest. That case involved interest at 20 per cent per month compounding monthly. Notwithstanding that the parties contracted at arm's-length and with their eyes open, the court regarded the case as one of unconscionability attracting the intervention of equity. But no such excess has been suggested here.
The decision clearly supports the proposition for which it was cited by counsel for Mr Hong. Counsel for Mr Guo did not suggest that the qualification at [9] was applicable. The reasonableness of the parties’ bargain was not an issue in the present case.
In passing, I note that in Bao, Rothman J stated at [71] that an award of interest under CPA s 101(2) should be limited to interest on the principal amount, and should not extend to interest accruing between the time the debt fell due and the delivery of judgment. But counsel for Mr Guo did not rely upon this statement. I have not made any enquiry about whether that is the way interest was calculated in the present case.
Having made these comments on the preliminary steps in counsel’s argument, I come to the final question. Were the base interest and the article 253 interest awarded by the Shenzhen Court, to the extent reflected in the judgment in this Court, penal in character?
In answering this question, there seems to me to be no justification in lumping together the base rate and the article 253 rate as counsel did. The two awards were made on separate bases by the Shenzhen Court. Consistently with the approach to severance taken in Schnabel (see at [177]-[180]) and Benefit Strategies (see at [74]-[75]), they should be analysed separately.
I start with the award of base interest at 24%. Although this is substantially more than the base rate in Bao or Shanghai Chenggong, it is difficult to see it as punitive in character. It was derived from, and was in fact less than, the contractual rate of interest in the present case.
It seems to me that, unless such a rate itself amounts to a contractual penalty (which was not argued in the present case), it is properly used in this State as a basis for calculating both pre-judgment and post-judgment interest. The award merely reflects the enforcement of the agreement made between the parties, in accordance with the ordinary principles of contract law.
I turn to the award of article 253 interest. Counsel only very faintly argued that this component of the judgment, considered on its own, was penal. Their reticence was not surprising.
As counsel for Mr Hong pointed out, it has generally been accepted that the imposition of an increased rate of interest on an outstanding debt once the time for payment has passed is not, of itself, penal. The 2% difference between the standard pre-judgment and post-judgment interest rates under CPA ss 100 and 101 itself provides an example. That 2% increase is less than the 6.3875% imposed by CPL art 253, but it would be difficult to argue that the difference is significant enough to engage the penalty principle.
Even more compellingly, the first instance decisions culminating in have specifically accepted that article 253 Interest is not penal.
There are three parts to the execution remedies motion. The first is the application for review of the Registrar’s decision. The second is the application for execution remedies themselves. The third is the application for asset preservation orders in aid of execution. Before addressing these topics, it is necessary to say something more about the facts.
As already noted, the application by Mr Knowles SC which was foreshadowed on 15 May, was followed by the filing of the initial version of the variation notice of motion on 29 May. That notice of motion sought variation of the judgment “so as to remove the entry of judgment for any and all claims for the enforcement of interest”. Leave was sought to reopen Mr Guo’s defence “and make submissions that the interest component of the Shenzhen Court judgment is unenforceable as a penalty under Australian Law”.
The notice of motion also contained prayers for relief, seeking that “execution or enforcement” of the judgment entered on 15 May be stayed “until further order of this Court or final determination of the Motion”. This prayer was described as “interim relief” in the notice of motion, but no application was made for such relief on an interim basis.
As already noted, no application was made for a stay of execution when the judgment was given on 15 May. Had such an application been made, I would have followed my usual practice in such cases, which has in the past been described as the “usual policy” in this Division: see Lym International Pty Ltd v Chen [2009] NSWSC 167 at [17]. My practice is to be fairly liberal in granting a stay, but to grant it only for a sufficient period of time to allow the appellant to make an application in the Court of Appeal for a stay pending the hearing of the appeal.
The variation motion first came before me on 3 July for directions. I asked junior counsel then appearing for Mr Guo about the question of enforcement of the judgment. The following exchange took place:
HIS HONOUR: … there is no appeal against the judgment.
LEVI: Notice of intention to appeal has been filed, your Honour.
HIS HONOUR: [In] this sort of situation, a respondent [judgment debtor] needs to move quickly. You have not made application for a stay.
LEVI: It is in the motion, but we have not moved on that.
HIS HONOUR: Do you intend to?
LEVI: Up until I came up this morning, I was unaware enforcement action had been taken by the plaintiff. I proposed the stay would be dealt with alongside the motion, as part of the motion. That is new information that has come to light this morning from my friend. We are getting instructions around that and so what I was proposing is to work off the plaintiff's orders which I am happy to do.
Your Honour will see there was liberty to apply on 48 hours' notice in the defendant's proposed short minutes of order. If that were to be brought over, we would get instructions and it might be the case next week we wish to agitate the stay, but I don't have instructions to do that.
HIS HONOUR: [It is] not a question for the plaintiff. Your client knows very well judgment [has been] given against him. If he wants to arrest the process, it is up to him to move; it is not for him to wait for the plaintiff to act, and then react by saying “now I would like time to consider my position”.
LEVI: I hear what your Honour said. I don't have instructions.
HIS HONOUR: … he won't get a stay pending appeal from me in these circumstances, and I venture to suggest if he's going to ask the Court of Appeal for a stay, he will have to file a notice of appeal and move swiftly. [It] may already be too late.
I also raised with counsel a question about the overall utility of the variation application. As I understood it, the application did not extend to the principal amount of the judgment (¥160 million). No challenge to that part of the judgment had been foreshadowed on 15 May or subsequently.
This was a substantial sum in its own right. I asked counsel whether, if Mr Guo could not demonstrate he was capable of satisfying it, there was any practical point in pursuing an application to vary the judgment which would leave that part of the judgment intact. Counsel indicated that this would be addressed, to the extent considered necessary, in Mr Guo’s evidence and argument on the variation motion.
Following this hearing an amended version of the variation notice of motion was filed for Mr Guo on 9 July. The application for a stay by way of interim relief was removed. The prayers for relief concerning variation were amended so as to confine the challenge to the base interest and article 253 interest components of the judgment.
The motion returned to me for further directions on 10 July. On that occasion I made consent orders providing for it to be heard on 2 September. There was a further directions hearing on Friday 17 July, at which point consent orders were made concerning the terms of a notice to produce which had been issued for the purpose of the motion hearing.
As already noted, the Registrar’s orders dismissing Mr Hong’s garnishee motions were made on 20 July. This was the Monday following the directions hearing which took place on Friday 17 July.
The only evidence before me of what happened is contained in the formal record of the Registrar’s decision. That record began by noting three matters.
The first was the variation notice of motion filed on 29 May, which was described as a motion “seeking to stay enforcement and vary the terms of” the 15 May judgment. Next was Mr Hong’s garnishee notices of motion filed on 4 June seeking enforcement of the judgment. The third matter noted was my orders of 17 July, referring to the amended version of the variation notice of motion, which was described as “seeking to vary the terms of” the judgment.
The record continued:
1. The relief sought in the Garnishee Motions filed on 4 June 2026 referred to above is refused, pursuant to r 39.38 UPR and on the basis that the orders, if made, would be inappropriate, in circumstances where:
a) there is an extant Motion listed for hearing before Justice Parker on 2 September 2026; and
b) [that Motion] seeks to vary the terms of the judgment.
Counsel for Mr Hong reminded me that when application is made for review of the Registrar’s decision, I do not have to confine myself to the evidence which was before the Registrar, nor does error on the Registrar’s part need to be demonstrated. I should consider the matter “afresh”, but have regard to the Registrar’s reasoning. In support of these propositions, counsel cited the decision of Hallen AsJ in Noble Earth Technologies Pty Ltd v Hampic Pty Ltd [2012] NSWSC 935 at [39].
Counsel submitted that the Registrar had apparently proceeded on the basis that the existence of a pending application by Mr Guo to vary the judgment was sufficient reason to decline to make garnishee orders. But this, counsel argued, was not so. In the absence of a stay, Mr Hong ought to have been able to enforce the judgment in the ordinary course.
Counsel for Mr Guo did not respond to these submissions. Nevertheless, as I am differing from the Registrar, I will briefly explain why I think they should be accepted.
I think that it is clear from the record of decision in evidence that the only ground upon which the Registrar relied was the pendency of the variation motion. The Registrar did add a reference to UCPR r 39.38. But it did not take matters any further.
Sub-rule (1) confers on the Court a general power to refuse to make a garnishee order if the Court is of the opinion that “such an order is inappropriate”. But the Registrar had already described the garnishee orders as “inappropriate” because the judgment was under challenge. Sub-rule (2) provides, without limiting the scope of sub-rule (1), that the Court may consider that a garnishee order is inappropriate because of the smallness of the amount recoverable under the judgment, or the smallness of the debt to be attached. But neither of these considerations could have applied in the present case.
It seems that the Registrar may not have appreciated that the variation application left ¥185.7 million of the judgment untouched. Even if the pendency of the motion had been a sufficient justification for refusing to issue the garnishee notices in the full amount of the judgment, enforcement should have been permitted for the uncontested amount.
It is true that the “interim relief” sought in the original version of the variation notice of motion was a stay, apparently of the entire judgment, until determination of the motion. But for the reason I have just given, there was no rational justification for this, and, as was made clear on 3 July, no application had been made for such relief in aid of the motion. The putative application was in any event withdrawn in the amended version of the notice of motion, filed on 9 July. The Registrar noted both versions of the notice of motion. It seems, however, that the change may not have been apparent to her.
Counsel for Mr Hong sought:
the making of the garnishee orders which had been sought in Mr Hong’s notices of motion of 4 June;
the issue of a writ of levy of property against Mr Guo; and
various orders for the disclosure of information by Mr Guo about the nature and value of his assets, namely orders for production of documents, for examination of Mr Guo and (as ancillary to the asset preservation orders sought) for Mr Guo to file an affidavit identifying his assets.
Counsel recognised that there was now (following the filing of the notice of appeal) a challenge to the whole of the judgment delivered on 15 May. As Mr Hong continues to live in China and has no assets in Australia (apart from his entitlements under the judgment against Mr Guo), there would be a risk that, if the appeal were to succeed, funds collected under the judgment might have been moved offshore or dissipated in the meantime. To deal with this risk, counsel proffered an undertaking that any money received in satisfaction of the garnishee orders would be paid into court pending the outcome of the appeal.
In response, counsel for Mr Guo proffered a set of undertakings from Mr Guo. The undertakings proffered were:
not to dispose of or deal with any of his property or diminish its value except in the ordinary course of business (apart from payment of legal costs and reasonable living expenses, which were specified as $2,000 per week);
to file and serve an affidavit giving comprehensive details of his assets worldwide; and
to pay into a controlled money account, or into court, any amount received in relation to the Yufeng litigation (see [142]-[145] below) pending appeal.
Counsel for Mr Guo also proffered an undertaking on behalf of Nianle Pty Limited. Nianle is controlled by a relative of Mr Guo, and is not party to these proceedings. Counsel for Mr Hong, however, took the pragmatic view that, if on offer, the proffered undertaking might as well be accepted.
It was not practicable for me to give my decision immediately at the 23 September hearing. I therefore accepted these undertakings on an interlocutory basis, and they were duly given.
The principal submission by counsel for Mr Guo on execution remedies was that this application should be stood over to be dealt with at the end of Mr Guo’s appeal. But alternatively, if the application was not to be stood over, counsel resisted the making of the garnishee orders. There was no resistance in that event to the other orders, they being the production of documents, examination, and the writ of levy of property.
Adjournment: It is true that, since I made my comments at the directions hearing on 3 July, a notice of appeal has been filed for Mr Guo which challenges the whole of the judgment. But Mr Guo has still done nothing to expedite the appeal or to seek a stay of execution on the judgment.
(a) 152 Rowy Pty Limited; (b) Changran Huang; (c) JQ3 Pty Limited; and (d) Yufeng Investment Group (Australia) Pty Limited;
pursuant to Division 4, Part 39 of the UCPR.
(a) Payslips for the last twelve (12) weeks. (b) All documentation relating to proof of government benefits including but not limited to Centrelink statements, pensions, child support or rental assistance income. (c) Bank statements for all bank accounts including savings, cheque account and term deposits held in the Defendant's name or jointly for the previous six (6) months. (d) Bank statements for all bank accounts in which funds are held for, or for the benefit of, the Defendant, irrespective of whether the Defendant is the named account holder, for the previous six (6) months. (e) Deeds, mortgage documents and Contracts recording any legal or equitable interest that the Defendant holds in or in respect of any land, homes or property. (f) Registration papers, bills of sales, insurance policies for all motor vehicles, boats, motorcycles or assets held in the Defendant's name or jointly. (g) Certificates or statements detailing all shares, bonds or other investments held in the Defendant's name or jointly. (h) In respect of all corporations in which the Defendant holds (legally or beneficially) shares:
(i) Executed shareholders agreement; (ii) Profit and loss statements, balance sheet, depreciation schedules and trial balance for the previous three (3) years; (iii) Tax returns and notice of assessment for the previous three (3) years; (iv) Statements for all bank accounts and related loan or offset accounts for the previous twenty-four (24) months; and (v) Minutes of meeting, resolutions and other records.
(i) Profit and loss statements, balance sheets and trial balances for any businesses or companies in which the Defendant holds an interest. (j) In respect of any trust in which the Defendant is a beneficiary:
(i) Fully executed Trust Deed and any amendments or variations to the Trust Deed; and (ii) Profit and loss statements, balance sheet, depreciation schedules and trial balance for the previous three (3) years; and (iii) Tax returns and notice of assessment for both the trust and the trustee company for the previous three (3) years; and (iv) Distribution statements including details of income capital trust distributions from the trust or associates from the previous twenty-four (24) months; and (v) Statements for all trust accounts and relation loan or offset accounts for the previous twenty-four (24) months; and (vi) Minutes of meeting, resolutions and other records showing who controls the trustee entity or holds power to appoint and remove trustees; and (vii) Any documents or deeds relating to the vesting date or termination of the trust.
(a) the satisfaction of the judgment debt owing by the relevant defendant; (b) 12 months after the date of this Order; or (c) further order of the Court varying or discharging the orders.
(a) of the Plaintiff to pay into Court, pending any further order of the Court, any amounts received under the Garnishee Orders now made; and (b) of the Defendant to continue undertaking no. 3 made and given to the Court on 13 August 2026 until further order of the Court being in the following terms:
‘Any amount received by or on behalf of the Defendant pursuant to the Orders to be made in the Yufeng Proceedings (2022/0329483) following Guo v Yufeng Investment Group (Australia) Pty Ltd (No 2) [2026] NSWSC 1035 will be paid into a controlled money account or into Court pending the appeal.’.
**********
Catchwords updated [5] grammatical error. [34] grammatical error. [61] grammatical error. [82] grammatical error. [149] grammatical error.
Hong
Guo (No 2)
[2026] NSWSC 371
(2020) 102 NSWLR 435
(2005) 91 SASR 544
(1950) 81 CLR 418
(2005) 224 CLR 656
(1986) 162 CLR 170
These proceedings were commenced in August 2021. Soon afterwards, solicitors for Mr Guo entered an appearance on his behalf. Mr Guo was represented by solicitors and counsel at all times thereafter. Initially, his solicitors were Coleman Greig Lawyers. In January 2022, CKSD Lawyers took over acting for Mr Guo.
The pre-trial steps were extensive and involved several rounds of affidavit evidence from lay witnesses, all of whom, apart from Mr Guo, were resident in China. The timetable also provided for expert evidence, and expert reports were filed on behalf of Mr Hong. In the end, Mr Guo did not present any expert evidence.
The hearing began on 31 March last year. There were various adjournments, mainly as a result of difficulties associated with the presentation of the oral evidence (all witnesses gave evidence through interpreters, and all of the witnesses, apart from Mr Guo, gave evidence by video link from Hong Kong). Eventually, the hearing occupied nine days, with oral closing submissions being presented on 9 October. Both parties were represented at the trial by senior counsel.
It is convenient at this point of the judgment to refer to the provisions of the Civil Procedure Act 200**5 (“CPA”) which govern the award of interest in this Court. CPA s 100 deals with interest down to judgment. CPA s 101 deals with interest thereafter.
CPA s 100 relevantly provides:
Meanwhile, on 4 June, Mr Hong’s lawyers filed notices of motion seeking, by way of enforcement of the judgment, the making of garnishee orders against certain persons who were alleged to be debtors, or potentially debtors, of Mr Guo. Mr Guo’s lawyers objected. The motions came before the Registrar on 20 July. The Registrar declined to make the orders sought.
On 13 August, a notice of motion was filed on Mr Hong’s behalf seeking review of the Registrar’s decision. The motion also sought to have the Court grant other enforcement remedies, and to make preservation orders pending enforcement. I will refer to it as the “execution remedies motion”.
Both motions came before me for hearing on 2 September. Both parties were represented by counsel. Mr Guo was represented by separate counsel on the two motions.
On 10 June a notice of intention to appeal against my judgment had been filed on behalf of Mr Guo. On 15 August, three months after the judgment was delivered, a notice of appeal was filed. The grounds of appeal include challenges to judgment components (3) and (4), thus covering the same ground as the variation motion. They also include challenges to components (1) and (2), contending that my decision to enforce the Shenzhen judgment was erroneous.
The relief claimed in the notice of appeal was to set aside the judgment in its entirety, and in lieu thereof, that there be judgment for Mr Guo on Mr Hong’s claim against him. No application has however been made for a stay of the judgment pending the hearing of the appeal, or for expedition of the appeal proceedings.
Counsel submitted that the principles upon which Bergin J relied in Schnabel were engaged in the present case. The doubt expressed in B**enefit S**trategies was, as Bleby J expressly noted, obiter. Moreover, the approach of Bergin J had been adopted and applied in the first instance cases beginning with Bao and ending with Shanghai Chenggong.
Counsel noted in passing that in Bao the enforcement proceedings were brought within the six-year period, and there was no argument that the article 253 interest rate was penal. But in any event the decision was distinguishable because the Article 253 interest rate was comparable with the base rate (which varied between 6.15% and 5%). The Shanghai Chenggong decision should be distinguished for the same reason, the combined base rate (3.55%) and art 264 rate being comparable with the prescribed rate under CPA s 101(2).
Counsel candidly stated that, given that there was no controlling appellate authority, the issue would, however I might decide it, ultimately go to the Court of Appeal. But counsel submitted that it would still be desirable for me to “add to the first instance jurisprudence”.
Counsel acknowledged that invoking the contractual penalty doctrine would open up factual enquiries of the type mentioned by White J in Bay Bon and by Rees J in Crescent Capital. But counsel submitted that Mr Hong’s case was not founded on contract and the contractual penalty doctrine therefore did not arise. The action was founded on a judgment, and this gave rise to separate considerations.
Counsel submitted that in determining whether a judgment (as opposed to a contractual provision) is penal in character, the Court would be applying public policy considerations. Commercial circumstances in China leading up to the delivery of judgment would be irrelevant. The question was whether enforcement of the Shenzhen judgment accorded with public policy of this forum. This, in counsel’s submission, was a legal question arising under New South Wales law. It would involve no factual enquiry.
As already noted, the award of pre-judgment interest under s 100(1) is discretionary. The figure in the Practice Note ([18] above) is merely a guide. But there is a more fundamental point.
At least until judgment is delivered, contractual rights do not merge. Accordingly, it remains open to a plaintiff claiming in contract to claim interest at contractual rates right down to judgment.
That contractual right is quite independent of the discretion conferred by s 100(1). The distinction between interest awarded as a matter of discretion and interest to which the plaintiff is contractually entitled is expressly preserved by s 100(3)(b). Indeed it has been decided that, where the plaintiff has a contractual entitlement to interest at an agreed rate, the discretion under s 100(1) is not available, either to award less or to award more: see Degmam Pty Ltd v Wright (No 2) [1983] 2 NSWLR 348 at 353 and the other cases cited in Ritchie*’*s Uniform Civil Procedure at [s 100.85].
These cases all involved contractual entitlements to interest. But there is no reason why the principle stated in them should be confined to cases where the entitlement to pre-judgment interest is one arising in contract. Section 100(3)(b) applies wherever interest “is payable as of right”, under contract “or otherwise”.
It would follow that, in a case of an action brought on a foreign judgment, the first question for the Court in determining the pre-judgment interest to be awarded is whether interest “is payable as of right”. If so, then a successful plaintiff is entitled to have interest at the relevant rate included in the judgment and no discretion even arises.
In our legal procedure, there is a clear distinction drawn between pre and post-judgment interest. Pre-judgment interest, whether arising by way of legal entitlement or the exercise of discretion under s 100(1), is “included” in the judgment debt entered upon delivery of judgment (or other date on which the judgment takes effect: UCPR r 36.4). Thereafter the judgment debt carries interest under s 101(2), but this is an entirely different liability, which does not depend upon the judgment creditor’s pre-existing legal rights. It is an entitlement given by law.
It is apparent from the Shenzhen judgment that Chinese law is somewhat different. The judgment debt in the Shenzhen Court was the amount owing as at the date of the Confirmation Letter, 30 July 2015. The base interest which was awarded ran from that date and therefore covered both the pre-judgment and post-judgment periods. Unlike in our system, the Shenzhen Court did not include the pre-judgment component in the amount of the debt for which it gave judgment in June 2016. Furthermore, the source of the obligation to pay post judgment interest was found in the terms of the judgment itself, rather than some external statutory right.
A judgment in this form does not precisely reflect the distinction in New South Wales between pre-judgment and post-judgment interest. The obvious answer is to proceed by analogy. In an action on a judgment, pre-judgment interest should be awarded in accordance with the rights declared and arising out of the foreign judgment according to foreign law, even if not included in the foreign judgment sum itself.
In the present case, that would mean allowing pre-judgment interest, as a matter of right, at the rates specified in the orders of the Shenzhen Court. Alternatively, if the discretion is not excluded by s 100(3)(b), that discretion should, in the usual course, be exercised so as to award interest at those rates.
The point does not seem to have been argued before Rothman J in Bao, or in the later first instance cases either. But what I have called the obvious answer is consistent with the approach taken in those cases. I see no reason to disagree with that approach, which seems to me, for the reasons I have given, to be correct in principle.
Next, I assume, contrary to the analysis just undertaken, that the correct comparator is post-judgment interest awarded under CPA s 101(2). But that does not necessarily mean interest at the prescribed rate. The Court has a discretionary power under s 101(2), if an application is made for it to do so, to award more (or less).
In considering how this discretion might be exercised, it is necessary to return to first principles. Statutory provisions for judgments to carry interest, such as CPA s 101(2), exist because of the doctrine of merger. The general rule is that the plaintiff’s contractual right to interest merges in the judgment and can no longer be enforced. Hence the need for a statutory provision.
The doctrine of merger, however, does not always apply. The parties may in effect contract out of it, by agreeing that interest will continue to accrue at the contractual rate until the debt is paid in full. Such a stipulation will be enforced by the courts: Ealing London Borough Council v El Isaac [1980] 1 WLR 932 at 937-938; see also Watson v Whitehead [2015] NZHC 739 at [40].
Against this background, counsel for Mr Hong submitted that, at least in a commercial context, the discretion under s 101(2) may be, and (if its exercise is sought) often is, exercised by awarding post-judgment interest at the contractual rate. For this proposition, counsel for Mr Hong cited the decision of Barrett J in Multi**span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd (No 2) [2001] NSWSC 1047.
Multispan was a commercial case where interest was payable at a contractual rate higher than the prescribed rate. Barrett J noted the possibility of a contractual exception to the doctrine of merger but did not go into it. Instead, he applied the former s 95(1) of the Supreme Court Act 1970, the predecessor of CPA s 101(2). At [6] and [9] he said:
Finally, I should record that I am not sure that counsel for Mr Guo were correct in claiming that no evidentiary inquiry would be necessary to present their argument. I agree that it is a question of characterisation. That characterisation is carried out in accordance with the law of New South Wales. But it is still a characterisation of the purpose of an award of interest in a Chinese judgment.
It has not been found necessary, in any of the line of first instance cases to which I have referred, to place CPL art 253 in the wider context of other Chinese laws and usages. But if there were any doubt about the proper characterisation of the Shenzhen judgment, that wider context might arguably be relevant. If so, then expert evidence of those laws and usages would be required.
In summary, there are many obstacles in the way of accepting the argument propounded on behalf of Mr Guo. In particular, even if I had doubts about the conclusion reached in Shangha**i Chenggong (which I do not), I would not depart from that conclusion unless satisfied that there was a good reason to do so. I do not think any such reason has been identified in the argument.
In these circumstances, the appeal to the interests of justice is a muted one. The most that can be said is that an argument is available that the judgment should not have included interest components (3) and (4). It is not a case of a plain error or omission.
In fact, if the issue were re-opened, the Court would have to permit Mr Hong to claim interest at the rates in question after judgment as well as before. On the approach of Barrett J in Multispan, there is a real risk for Mr Guo that such a claim would succeed. Mr Guo might find himself worse off in the end, rather than better off.
It is not for me to say how Mr Guo’s argument might be received in the Court of Appeal. But given what I have already said, it is hardly a compelling invitation to ask me to add to the first instance jurisprudence.
Turning to discretionary factors, it is difficult to think of a more adverse case. The evidence shows that the argument, in its present form, was not devised until after judgment was given, and in circumstances where the possibility of resisting the award of interest had been repeatedly canvassed and expressly rejected.
As counsel for Mr Hong pointed out, no explanation has been offered for the approach taken at trial (or indeed in the approach foreshadowed by Mr Knowles SC on 15 May). It is difficult to draw any other conclusion than that it was an approach taken on the basis of express instructions, and upon full consideration. Mr Knowles’ closing submissions specifically referred to the judgment in Bao.
It hardly needs to be said that counsel now appearing for Mr Guo did not criticise Mr Knowles for the course that was taken. To my observation, Mr Knowles selected the points which he ran at trial in a careful and responsible way. This approach allowed him to present Mr Guo’s case at trial to its best advantage, albeit that the case was ultimately unsuccessful.
In accordance with settled principle, the penalty defence cannot be raised on appeal if, had it been raised at first instance, evidence could have been given which might have prevented it from succeeding: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438. The possibility which I have raised of evidence being given about Chinese law thus increases the risk of prejudice to Mr Guo if I refuse this application.
The degree of risk would depend ultimately upon how the argument is put in the Court of Appeal. It may be more apparent than real. But to the extent that it is real, any such risk is entirely self-inflicted. In my judgment, it is insufficient to shift the balance. The application to vary the judgment to permit re-opening must be refused.
It is also relevant that even the original notice of motion did not seek a stay in aid of a possible appeal. It is elementary that the mere filing of a notice of appeal (and, still less, the filing of notice of intention to appeal) does not itself operate as a stay. Unless an application was made for a stay, therefore, the possibility of an appeal was no reason at all to refuse to allow Mr Hong to issue garnishee orders. Again, this had been made completely clear to Mr Guo’s legal representatives at the hearing on 3 July. Against this background, even if there had been extant an application for some form of stay for the whole proceedings, it could on no view be justified.
For these reasons, the Registrar’s order of 20 July will be set aside. I will consider the making of garnishee orders along with the other execution remedies sought.
It will be clear from what I have already said that I consider that, unless Mr Guo can obtain a stay, the execution process should proceed in the ordinary way. Adjourning the application for execution remedies until after determination of the appeal would effectively grant him a stay without him having to apply for one. That is out of the question.
Garnishee o****rders: To understand the parties’ arguments concerning the application for garnishee orders, it is necessary to say something about the background.
The subject matter of the proposed orders consists of obligations arising out of litigation brought by Mr Guo in this Court in 2022. The proceedings arose out of a $20 million investment by Mr Guo in a shopping centre in Eastwood. The defendants in those proceedings were another Chinese-Australian businessman, Mr Changran Huang, and two companies associated with him, Yufeng Investment Group (Australia) Pty Limited and 152 Rowy Pty Limited.
In late 2024, Mr Guo obtained judgment against Yufeng for $2.9 million: Guo v Yufeng Investment Group (Australia) Pty Ltd [2024] NSWSC 1599. After he moved to enforce the judgment, JQ3 Pty Limited (another company within Mr Huang’s control) gave him a mortgage over a property it owned at Bondi Beach as security for the judgment debt.
In February this year, Yufeng’s appeal against the judgment failed: Yufeng Investment Group (Australia) Pty Ltd v Guo [2026] NSWCA 3. Mr Guo has now brought further separate proceedings against JQ3 to enforce the security. In his statement of claim, he alleges that JQ3 has defaulted on its obligation to satisfy the judgment debt. He seeks possession of the property.
The 2024 judgment was not the end of Mr Guo’s litigation against Mr Huang. In August this year Nixon J found Mr Huang and 152 Rowy liable to account to Mr Guo for $29 million: Guo v Yufeng Investment Group (Australia) Pty Ltd (No 2) [2026] NSWSC 1035. His Honour did not however enter judgment in Mr Guo’s favour. The proceedings were stood over so that interest could be calculated.
Against this background, Mr Hong seeks garnishee orders against each of Mr Huang, Yufeng, 152 Rowy and JQ3.
Counsel for Mr Guo pointed out that final orders had not yet been made in the Yufeng proceedings quantifying the amounts due to Mr Guo. Furthermore, there was likely to be an appeal. Counsel submitted that the making of garnishee orders would be premature.
The amount due to Mr Guo may not yet have been finally quantified, and, even when it is quantified, there may be obstacles in the way of obtaining payment. But this is not necessarily an answer to the making of a garnishee order.
In circumstances such as the present, the utility of the garnishee process should, I think, be very much a matter for the judgment creditor. As already noted, UCPR r 39.38 is expressed in terms of declining to make garnishee orders. Unless it is clearly demonstrated that the making of the order would be futile, the better course is generally to allow the process to go ahead, and for any issue about payment to be raised, and if necessary, fought out, in due course between those affected.
I asked counsel for the parties whether, if an order is made before the debt falls due, what would happen on the return of the order. The discussion was inconclusive. I am therefore not persuaded, even in relation to the August 2026 judgment, that the making of a garnishee order is sufficiently likely to be futile that it should be refused under UCPR r 39.38.
Furthermore, as counsel for Mr Hong pointed out, there is no reason at all to refuse the order against JQ3. On Mr Guo’s own allegation, JQ3 is liable to him to satisfy the 2024 judgment debt. And, although counsel did not expressly make the point, Yufeng, as the judgment debtor, also remains liable to satisfy that debt.
I therefore conclude that the garnishee orders against the four recipients should be made as asked.
Writ of l****evy of p****roperty: There was no dispute that, if the adjournment were refused, an order for the issue of a writ of levy of property should be made.
Disclosure: Again, there was no dispute that, if the adjournment were refused, an examination order and an appropriately worded order for the production of documents should follow. It is unnecessary to consider whether there is also power to make an order for an affidavit of assets to be filed in aid of execution, because one will now have been provided pursuant to the interlocutory undertaking given by Mr Guo. The parties should consider the form of the document production order in the light of that affidavit.
On 29 September, I issued to the parties a draft of the judgment as it then stood. I invited them to confer, and, if possible, agree on orders to give effect to my conclusions, and to deal with costs. The orders were largely, but not completely, agreed. The proceedings were listed on 2 October for further argument on the remaining areas of dispute. I note that, in the meantime, Nixon J had entered judgment in the Yufeng proceedings against Mr Huang and 152 Rowy for $39.8 million.
The parties agreed on the outcome of Mr Guo’s motion, on the issue of garnishee orders and a writ of levy of property (both excluding components (3) and (4) in the judgment), on the making of an examination order against Mr Guo, and on costs.
The parties also agreed, in large part, on the terms of an asset preservation order to be made against Mr Guo in aid of the enforcement of the judgment. I resolved the differences between them at the hearing, in a way which does not require any elaboration in this judgment. On 6 October the parties brought in a final minute of order accordingly.