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[2026] NSWSC 641
Supreme Court of NSW
2026-06-05
Brereton J
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: In the matter of Australian Fulin Agriculture Pty Ltd [2026] NSWSC 641
Hearing dates: 22 May 2026
Date of orders: 05 June 2026
Decision date: 05 June 2026
Jurisdiction: Equity - Corporations List
Before: Brereton J
Decision: Application for leave pursuant to s 237 of Corporations Act 2001 (Cth) is dismissed with costs
Catchwords: CORPORATIONS – application for leave to bring proceedings in name of a company – extensive litigation history between relevant parties with outstanding costs orders – where plaintiff seeks to bring an action against a former director for breach of fiduciary duties – where company has no relevant assets – where plaintiff is a foreign resident and has proffered an insufficient undertaking as to costs – where plaintiff is acting in good faith – where proceeding would not be in the company’s best interests – where there is a serious question to be tried – application dismissed with costs
Legislation Cited: Corporations Act 2001 (Cth)
Limitation Act 1969 (NSW)
Cases Cited: Chahwan v Euphoric Pty Ltd Trading As Clay and Michel [2008] NSWCA 52; 65 ACSR 661
Gillespie v Gillespie [2025] NSWCA 24; 172 ACSR 183
In the matter of Carbon Copies Composites Pty Ltd [2022] NSWSC 1638
Re Yinsanity Pty Ltd [2019] NSWSC 1290
Sui v Jiang [2021] NSWSC 435
Sui v Jiang [2021] NSWCA 285
Sui v Jiang [2024] NSWSC 1013
Sui v Jiang (No 2) [2025] NSWCA 86
Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; 42 ACSR 313
Texts Cited: N.A.
Category: Procedural rulings
Parties: Guangyi Sui (plaintiff)
Zhaoqing Jiang (first defendant)
Oriental Aurora Pty Ltd (second defendant)
Shangze Cui (third defendant)
Australian Fulin Agriculture Pty Ltd (fourth defendant)
Representation: Counsel:
M W Young SC (plaintiff)
N Kidd SC (first defendant)
No other appearances
Solicitors:
Dixon Holmes Lawyers (plaintiff)
Sunfield Chambers Solicitors & Associates (first defendant)
File Number(s): 2026/24625
Publication restriction: N.A.
The plaintiff, Mr Guangyi Sui, seeks leave under s 237 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of Australian Fulin Agriculture Pty Ltd (Fulin) against the first defendant, Mr Zhaoqing Jiang. Mr Sui is a 40% shareholder of Fulin and has been one of its directors since 2018. Mr Jiang was formerly a director of Fulin.
The second defendant is Oriental Aurora Pty Ltd (Oriental Aurora). It owns 50% of the shares in Fulin and is controlled by Mr Jiang’s wife. The third defendant, Mr Shangze Cui, is a 10% shareholder of Fulin and is the other director of the company. Neither Oriental Aurora nor Mr Cui appeared at the application. Fulin is the fourth defendant.
As well as seeking leave to bring the proposed proceedings on behalf of Fulin against Mr Jiang, Mr Sui seeks relief against Mr Jiang, Mr Cui and Oriental Aurora under s 233 of the Corporations Act on account of what he contends to be the oppressive conduct in connection with the affairs of Fulin.
This application was confined to the question of whether to grant leave under s 237. For the following reasons, leave is not granted.
There is a long history of litigation involving Mr Sui and Mr Jiang concerning Fulin.
Mr Sui sued Mr Jiang and Fulin in this Court in proceedings commenced in 2019, claiming there was an agreement made in 2017 between Mr Sui, Mr Jiang and Fulin concerning the payment of $1.5m by Mr Sui. Mr Sui alleged that Mr Jiang and Fulin were in breach of the agreement and he claimed damages of $1.5m. He made an alternative claim in debt, alleging that the $1.5m was a loan to Fulin which had been guaranteed by Mr Jiang.
The claim failed at first instance: Sui v Jiang [2021] NSWSC 435. Johnson J rejected Mr Sui’s contention that there was any breach of the agreement. His Honour accepted that the agreement provided that Mr Sui would invest funds for the activities of Fulin on the basis of a 10% return for 3 years with various scenarios available in year 4.
Mr Sui appealed. The appeal was dismissed: Sui v Jiang [2021] NSWCA 285 (Gleeson and Leeming JJA; Brereton JA dissenting). Leeming JA concluded that the agreement provided that Mr Sui would pay $1.5m, by way of investment, and receive 40% of the shares in Fulin (as he did) and was entitled to sell the 40% interest after 3 years, on the basis that Mr Jiang would make up any shortfall if the sale price was less than $1.5m. His Honour also rejected the alternative argument that Mr Sui had lent $1.5m to Fulin and that Mr Jiang had guaranteed repayment.
In August 2022, Mr Sui commenced proceedings against Fulin and Mr Jiang to obtain documents from Fulin. He was successful. Some documents were provided in September 2022. Black J made orders giving Mr Sui access to various documents on 23 May 2023.
Mr Sui sold his shareholding in Fulin in May 2023 for $1,000 and sued Mr Jiang for the difference between the $1.5m and the $1,000 and also for non-payment of interest. The claim failed: Sui v Jiang [2024] NSWSC 1013. Stevenson J concluded that Mr Sui had not exercised the option that was provided by the agreement within the option window and so could not recover the difference between the $1.5m and the $1,000. Mr Sui did succeed in his claim against Mr Jiang for non-payment of interest, which gave rise to a judgment in his favour of $150,000.
Mr Sui appealed. The appeal was dismissed Sui v Jiang (No 2) [2025] NSWCA 86 (Payne, Stern and McHugh JJA).
In November 2025, Mr Sui repurchased the 40% interest in Fulin for a nominal sum. These proceedings were commenced in January 2026.
The claim that Mr Sui wishes to bring in the name of Fulin against Mr Jiang is that shortly after he contributed $1.5m for the benefit of Fulin, Mr Jiang caused Fulin to pay out $1,490,035, including a withdrawal of $500,035 on 15 June 2017, a “Loan to Ostar” of $100,000 on 22/23 June 2017 and a “Loan to Tred” of $890,000 on 5 July 2017. Mr Sui contends that none of those payments had a proper purpose, so far as Fulin was concerned. He contends that the payments were made for Mr Jiang’s purposes, in breach of his fiduciary duties to Fulin. The essence of the proposed case is that instead of using Fulin’s funds (which had come from Mr Sui’s investment) to improve Fulin’s leased land and fulfil the business purpose of cultivating red salvia on some land leased from the Crown in the Northern Territory, with a view to obtaining a freehold interest in the land, Mr Jiang misappropriated the money – leaving Fulin to fail.
Mr Sui initially contemplated that Fulin would sue Mr Jiang to recover the $1,490,035, plus interest. That amount was revised downwards to $550,635 after it became apparent that the entities who had been paid the amounts totalling $1,490,035 had apparently paid some of the money back to Fulin. Mr Sui also contends that by reason of Mr Jiang’s alleged wrongdoing, Fulin’s proposed business opportunity.
Mr Sui has not recovered any of the $1.5m and, unless he succeeds in these proposed proceedings, or in the oppression suit, he seems to have little chance of doing so.
One result of the extensive litigation is that there have been numerous costs orders. Costs orders were made against Mr Sui as a result of his failure in two sets of proceedings (including appeals). Mr Jiang (not Fulin) was ordered to pay the costs of Mr Sui’s proceedings to obtain documents from Fulin.
The costs orders made against Mr Sui in favour of Fulin and Mr Jiang in the initial proceedings and the appeal have been assessed. In August 2023, Fulin and Mr Jiang demanded payment of $151,192.05 on account of the assessed costs. Mr Sui did not meet the demand. Garnishee orders were issued to Westpac, resulting in recovery of $64,111.75. The balance remains unpaid.
There are other costs orders that have not yet been assessed. There is some money that was posted by Mr Sui as security for costs in relation to the some of the earlier proceedings.
Apart from its claim against Mr Sui in respect of the unpaid costs ($87,090.30 excluding any interest), and putting aside for the moment the potential claim against Mr Jiang, Fulin has no assets. The Crown leases that it once held, and hoped to develop for agricultural purposes, were terminated in 2021.
It was submitted by Mr Jiang that the 40% interest obtained by Mr Sui in Fulin came about by a sale of shares by Mr Jiang to Mr Sui and that the $1.5m was the consideration for the sale. Mr Jiang’s submission was that he loaned the $1.5m to Fulin and has never been repaid. He claims that Fulin remains indebted to him in the amount of $1.5m.
Mr Sui is a foreign resident.
The only evidence of property owned by Mr Sui in the jurisdiction is his ownership of an apartment in Waterloo, Sydney. The property is encumbered by a mortgage. Mr Sui has declined to provide any information about the encumbrance or any other assets owned by him. Mr Sui has the benefit of a costs order, but he is also subject to costs orders. There is no evidence of any assets of Mr Sui located offshore. It follows that I cannot conclude that Mr Sui has any net assets to meet any obligations as to costs in these proceedings.
(1) A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.
(2) The Court must grant the application if it is satisfied that:
(a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and
(b) the applicant is acting in good faith; and
(c) it is in the best interests of the company that the applicant be granted leave; and
(d) if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and
(e) either:
(i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or
(ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied.
It was common ground that if each of the matters set out in s 237(2) is satisfied, leave must be granted, and that if any condition is not met then leave must be refused. Mr Jiang submitted that the Court could not be satisfied of (b), (c) or (d). I am satisfied that the matters in (a) and (e) are satisfied.
It was for Mr Sui to establish to the satisfaction of the Court that he is acting in good faith: Chahwan v Euphoric Pty Ltd Trading As Clay and Michel [2008] NSWCA 52; 65 ACSR 661 at [69] (Tobias JA; Beazley and Bell JJA agreeing). I accept that this requires Mr Sui to demonstrate that he is seeking leave so that Fulin can vindicate a right that he genuinely believes that Fulin has: Gillespie v Gillespie [2025] NSWCA 24; 172 ACSR 183 at [27]-[30] (Gleeson, Mitchelmore and Ball JJA). The onus will not be discharged if Mr Sui is, in reality, seeking to further his own personal interests other than as a current shareholder of the company, rather than the interests of Fulin as a whole: Chahwan v Euphoric at [83].
Mr Sui seeks relief on account of alleged oppressive conduct that would compel the other shareholders to transfer their shareholdings to him. If that relief is granted, he will be the sole shareholder of Fulin and any success in a derivative action would find reflection in the enhanced value of those shares. In that sense, Mr Sui would personally benefit. However, he would benefit as a shareholder, on account of wrongs done to the company when he was a shareholder. The recovery of property by Fulin will, or may, see the value of his interest in the company increase (whether he holds 40% or 100% of its shares): see Re Yinsanity Pty Ltd [2019] NSWSC 1290 at [7] (Black J).
It is evident that Mr Sui feels wronged because he paid $1.5m in respect of an investment in Fulin and has not received a cent in return. In one sense, that is the perceived wrong that no doubt is motivating him. However, in the proposed proceedings, the vindication is sought reflectively through Fulin. Mr Sui perceives that the wrong to him came about because Fulin was wronged. By having Fulin take steps to right that wrong, he stands to benefit as a shareholder of Fulin. That he would personally benefit in this way does not bespeak an illegitimate collateral purpose.
At face value, there appears to be delay on the part of Mr Sui in bringing this application, because the alleged wrongs were committed in 2017. Lapse of time is an important consideration in assessing whether there is good faith: Gillespie at [36]. However, it cannot be suggested that Mr Sui was merely sitting on his hands. He has been assiduous in seeking to seek legal redress on account of his lost $1.5m. There have been two trials and appeals. He sued to obtain access to documents in 2022 that lie behind this proposed claim. It cannot properly be said that Mr Sui is merely dressing up his previous, unsuccessful actions in new clothing. It was not suggested that the efforts by Mr Sui to advance this derivative action is an abuse of process.
I am satisfied that Mr Sui honestly believes that Fulin has a good cause of action against Mr Jiang and that he also honestly believes that it has reasonable prospects of success. I am satisfied that Mr Sui is acting in good faith.
Mr Sui must satisfy the Court that it is in the best interests of Fulin that he be granted leave. This must be established on the balance of probabilities. The Court will take into account all of the relevant circumstances in order to be so satisfied: see Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; 42 ACSR 313 at [56] (Palmer J).
Fulin is not trading and is presently dormant. Mr Jiang’s counsel submitted that it is insolvent. As noted above, it has an asset in the form of an unpaid costs order against Mr Sui, in an amount of approximately $87,000, that has been unpaid for nearly 3 years. Mr Jiang submits that Fulin owes him $1.5m. The question is whether it is now in Fulin’s best interests to sue Mr Jiang on account of what is alleged to be a breach of fiduciary duties owed to the company. At the time of the alleged breaches, Mr Jiang was not appointed as a director of Fulin, but Mr Sui contends that he was a de facto or shadow director.
If Fulin sues Mr Jiang and loses, it is likely to be liable for his costs. The prospect of a costs order against the company is an important matter to be taken into account. Mr Sui has given evidence that he is prepared to indemnify Fulin for any costs orders in the proceedings. A relevant and significant matter in determining whether the proceedings are in Fulin’s best interests is the adequacy of that indemnity: In the matter of Carbon Copies Composites Pty Ltd [2022] NSWSC 1638 at [32] (Black J).
The indemnity that is proffered by Mr Sui is inadequate. As I have noted, he is a foreign resident, which may make it difficult to enforce any indemnity. There is evidence that he has had difficulty travelling from China to Australia because of a visa issue. While he is the registered proprietor of real property in Sydney, the property is encumbered and he has not been willing to disclose any material information about the encumbrance, or his general asset position. I can only proceed on the basis that there is a real risk that the real property will not be of value to Fulin if it secures a costs order against Mr Sui and that there will be no other assets available to meet a costs order. Mr Sui has not come to Court with any offer of security in the event that he is called upon to honour an indemnity to Mr Jiang on account of Fulin’s costs. Moreover, Mr Sui has demonstrated a willingness to refuse to meet his financial obligations to Fulin, having failed to satisfy a costs order. The fact that the debt is also owed to Mr Jiang does not much diminish the fact that he has failed for nearly 3 years to meet his obligations to Fulin.
Counsel for Mr Sui submitted that in the event that leave is granted, the Court will then hear an application for security for costs. He submitted that at that time, Mr Sui may be required to provide security and, if he cannot, the proceedings will be stayed. I do not consider that is an answer. The question is whether I can conclude on this application that it is in the best interests of Fulin for leave to be granted to Mr Sui. I am dealing with that application on the basis of the evidence before me. On that evidence, I cannot conclude that Mr Sui could or would honour any financial obligations to or in respect of Fulin (or Mr Jiang).
Although strictly it does not arise, I will address the requirement under s 237 that Mr Sui must satisfy the Court that there is a serious question to be tried.
There are difficulties with the proposed proceedings. When they were first articulated, it was on the basis that Mr Jiang was appointed as a director of Fulin at the time of the alleged wrongdoings and that none of the $1,490,035 had been paid back to Fulin. Both matters turned out to be wrong. Nearly $1m had been repaid. A further amount exceeding $500,000 was paid to Fulin by other entities that seem to have been affiliated with Mr Jiang. The proposed claim was adjusted to allege that Mr Jiang was a de facto or shadow director and the amount lost in terms of shortfall was $550,635, not $1,490,035. That is a harder case than the one first articulated, because Fulin will need to prove that Mr Jiang was a de factor or shadow director and will have to prove that payments were for an improper purpose notwithstanding that a large part of the money was repaid.
Mr Sui acknowledges that the claim is currently out of time and that an extension would be required. It was submitted that an extension may be granted under s 55(1)(b) of the Limitation Act 1969 (NSW) on the basis that the cause of action was fraudulently concealed from Fulin by Mr Jiang. This further complicates the proposed proceedings.
On the other hand, there is evidence that almost immediately after Mr Sui paid $1.5m to Fulin, close to that exact amount was paid out of the company, and there is some reason to believe that that occurred under instructions from Mr Jiang. There is no evidence from Mr Jiang that sought to explain why those transactions were legitimate. While Mr Jiang submits that the $1.5m paid by Mr Sui was a payment to him and he lent the money to Fulin, Mr Jiang did not submit that the payments reflected repayments of his loan to Fulin. He contends that Fulin still owes him that amount.
While the matter is far from clear, I am satisfied that there is a serious question to be tried.
Mr Sui’s application for leave pursuant to s 237 of the Corporations Act 2001 (Cth) to bring proceedings in the name of the fourth defendant, Australian Fulin Agriculture Pty Ltd, against the first defendant, Mr Jiang, is dismissed with costs.
The matter is stood over for further directions on 22 June 2026.
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I am not satisfied that it is in the best interests of Fulin that leave be given to Mr Sui to bring the proceedings in circumstances where Mr Sui has: (a) shown an unwillingness or inability to honour his legal obligations to Fulin, and (b) does not proffer an indemnity that can reasonably be said to be of any value to Fulin.
It follows that leave cannot be granted under s 237.
I note that Mr Sui is not prevented from pursuing the oppression proceedings. It is not obvious that those proceedings would be inadequate to enable him to recover compensation from Mr Jiang if his allegations in the proposed proceedings are substantiated.