Kuo v Barrow-Yu [2025] ACTSC 259 (19 June 2025)

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

[2025] ACTSC 259

PRACTICE AND PROCEDURE - FREEZING ORDERS - Ex parte application - where proceedings ongoing in Victorian County Court - where a previously granted freezing order restraining property in favour of other plaintiffs still in force - where the same property now sought to be frozen by present plaintiffs - sufficient prospect that present plaintiffs will obtain favourable order in Victoria enforceable in this court - sufficient risk that defendants, or entities in their control, will secure the discharge of the existing freezing order and dispose of the assets - freezing order made

PRACTICE AND PROCEDURE - JOINDER - Ex parte application - where freezing order made in existing proceedings - where present plaintiffs seek freezing order over the same assets - where existing proceedings solely concerned the enforcement of a judgment debt - where judgment debt since paid - not appropriate to permit joinder

Court Procedures Rules 2006 (ACT), r 743

LB Business Pty Ltd v Feng [2024] ACTSC 102

1. This is an application for a freezing order relating to two properties in Canberra. The applicants for the orders, Yi‑Ling Kuo (also known as Amy Kuo) and Gavin Chen, seek to replicate a freezing order already in existence in proceedings between Shin‑Ching Ho (also known as Tom Ho) and Yu Fen Chou (also known as Joanna Chou) and the defendants. The defendants are two individuals and a company: Lawrence Barrow‑Yu, Stephen Barrow‑Yu and The Barrow‑Yu Trading Pty Ltd. For ease of reference, these persons will be referred to in these reasons by their English first names:

(a) Amy and Gavin, the present applicants for the freezing order;

(b) Tom and Joanna, the beneficiaries of the existing freezing order; and

(c) Lawrence and Stephen, the individual defendants in the current proceedings.

1. The Barrow‑Yu Trading Pty Ltd will be referred to as the Company.

1. In proceedings SC 102 of 2025, Tom and Joanna sought a freezing order in relation to two Canberra properties. Those two properties were two units identified by certificates of title volume 3002, folios 263 and 267. The application was made, and orders were granted, on 31 March 2025. The reasons for the making of the orders were not put before the court on the present application. However, the evidence discloses that it was made in the following circumstances:

(a) Tom and Joanna are husband and wife.

(b) In May 2024, Tom and Joanna commenced legal proceedings in the County Court of Victoria against Lawrence and Stephen to recover $800,000 that had been lent to them, plus interest.

(c) Lawrence and Stephen filed a defence on about 11 July 2024.

(d) Tom and Joanna applied for summary judgment.

(e) Lawrence and Stephen opposed the summary judgment application. Stephen swore two affidavits dated 15 and 17 October 2024 in opposition to the application. Lawrence affirmed an affidavit on 18 October 2024 in opposition to the application. The effect of those affidavits was to indicate that the defendants were in the process of refinancing property owned by them or a trust they controlled, that the grant of summary judgment would be "catastrophic", and that the application should be adjourned so as to allow the defendants to pay the amount owing.

(f) A judge of the County Court granted summary judgment on 18 October 2024 and made comments about the lack of merit in Lawrence and Stephen's defence in the proceedings.

(g) Although the affidavit evidence presented on the summary judgment application was consistent with an intention, had the proceedings been adjourned, to pay the judgment debt promptly, following the grant of summary judgment, that did not occur. It had not occurred by the time the application was made to this court on 31 March 2025.

(h) The solicitors for Tom and Joanna corresponded with the solicitors for Lawrence and Stephen. This correspondence included warning them not to attempt to dissipate, diminish or dissolve their assets for the purposes of frustrating Tom and Joanna's enforcement of the summary judgment. No response was made to that communication.

(i) On 9 January 2025, Tom and Joanna obtained orders for the oral examination of Lawrence and Stephen. They also served a bankruptcy notice on 20 January 2025.

(j) After some delays, the solicitor for Lawrence and Stephen indicated that he did not hold instructions to accept service of the bankruptcy notice. That was notwithstanding the fact that the same lawyers were acting for Lawrence and Stephen in the County Court. As a consequence, an application was made for an order for substituted service, and that order was made on 12 March 2025. The notice was then served in accordance with that order.

1. What had occurred in that period was that Lawrence and Stephen had:

(a) arranged for the removal of a caveat over the properties after summary judgment had been granted;

(b) arranged for a discharge of a mortgage on 14 January 2025;

(c) transferred the properties on 14 January 2025, purportedly based on an agreement dated 18 October 2024 (the day upon which summary judgment had been granted); and

(d) arranged for a mortgage with Pepper Finance Corporation Limited which was recorded on 14 January 2025.

1. Searches conducted by Tom and Joanna's solicitors indicated that the Company was controlled by Lawrence and Stephen, who were its directors and shareholders.
2. Having regard to the statements made in opposition to the summary judgment application indicating an intention to promptly pay the amount owing, the failure on the part of Lawrence and Stephen to pay the judgment debt after summary judgment was granted, the lack of cooperation in relation to issues of service of the bankruptcy notice and the steps taken to transfer the two properties out of their personal names, it is unsurprising that McWilliam J was satisfied that it was an appropriate case in which to make a freezing order in relation to those properties in circumstances where part of the relief claimed included declarations that the two properties had been transferred to the Company with the intent to defraud the plaintiffs as creditors of Lawrence and Stephen.

1. Amy and Gavin also lent money to Lawrence and Stephen. There were three loans totalling $1,219,000 which were subject to interest at 8 percent per annum. Amy and Gavin rely upon emails which include tables identifying the payments, repayments and the calculation of interest on amounts outstanding as admissions of the debt. Amy and Gavin have also commenced proceedings in the County Court seeking to recover those loans.
2. Lawrence and Stephen have not filed a defence in those proceedings. They have not foreshadowed a direct defence to the debt. Rather, they have foreshadowed a set‑off defence based upon a consultancy arrangement relating to different companies. It is not necessary to record in detail the progress of those proceedings, other than to note that Lawrence and Stephen have adopted an approach to the proceedings which has those proceedings making slow rather than quick progress towards their determination. This approach to the proceedings may be explicable on the basis that both Lawrence and Stephen are engaged in property development projects referred to later in these reasons which appear to place them, or entities they control, under significant financial pressure.
3. Proceedings were commenced in the County Court by Amy and Gavin on 18 March 2024. Default judgment was granted to Amy and Gavin on 18 November 2024. The defendants appeared on 7 February 2025, and on 11 March 2025, the default judgment was set aside by consent. There has then been procedural skirmishing which has, to date, avoided the necessity for Lawrence and Stephen to file a defence. Once a defence is filed, the plaintiffs will consider, having regard to the admissions of the debts in the email correspondence, making an application for summary judgment in the same way that Tom and Joanna did.
4. Title searches indicate that Lawrence and Stephen have negligible real property assets elsewhere. However, they may control other real property through the vehicle of an unidentified trust referred to in an affidavit sworn by Stephen for the purposes of the summary judgment application. On the other hand, the Company is the proprietor of two units which were previously in Lawrence and Stephen's personal names. Those are subject to a mortgage to Pepper Finance Corporation.
5. Through various companies and trusts, Lawrence and Stephen are also involved in a development known as Reunion Place, 11 units of which remain unsold. Those are subject to caveats or warrants of seizure and sale, indicative of those units being significantly encumbered.

1. This application is made pursuant to r 743 of the Court Procedures Rules 2006 (ACT). That rule permits the Supreme Court to make a freezing order where an applicant has a good arguable case on an accrued cause of action that is justiciable in another court, if there is sufficient prospect that the other court will make an order in favour of the applicant and if the order will be registered in or enforced by the Supreme Court: r 743(1)‑(3). The court may make a freezing order or ancillary order, or both, against a prospective enforcement debtor if satisfied, having regard to all the circumstances, that there is a danger that an order or prospective order will be completely or partly unsatisfied because the assets of the prospective enforcement debtor are disposed of, dealt with or diminished in value: r 743(4). Similarly, the court may make a freezing order or ancillary order, or both, against a third party if there is a danger that the prospective order will be completely or partly unsatisfied because a third party has possession of, or a power of disposition over, assets of the prospective enforcement debtor: r 743(5)(a). The court also has such a power where there is a process in the court that may ultimately be available to the applicant by which the third party may be obliged to disgorge assets: r 743(5)(b).
2. A useful summary of the principles relevant to the granting of a freezing order is provided in LB Business Pty Ltd v Feng [2024] ACTSC 102 at [32].

1. The applicants submitted that they have a good arguable case in the County Court and that the conduct of the defendants in relation to Tom and Joanna's claim indicated that there was a real risk of the Canberra properties being dealt with in a manner so as to put them beyond the reach of Amy and Gavin in the event that they were successful in the County Court proceedings.
2. Counsel for the applicants identified that, in opposition to the matter proceeding ex parte, the defendants may have raised the fact that there was already an existing freezing order in place, that because of there being a first charge in favour of the ACT Government over the property, discharge of that would take some time, and that the transfer of the property from Lawrence and Stephen to the Company took some three months.
3. The applicants submitted that Lawrence and Stephen were sophisticated defendants engaged in property development and transactions, giving rise to the potential that, if given notice of the application, they would take steps to put the properties beyond Amy and Gavin's reach. The applicants submitted that they had no formal way of knowing when the existing freezing order might be discharged, although there was a significant potential for that to occur given that the debt that gave rise to the order has now been discharged and the proceedings as a whole were commenced in order to allow recovery of that debt. They pointed to the manner in which Lawrence and Stephen responded to the summary judgment application in Tom and Joanna's proceeding, their conduct over the seven months following the entry of summary judgment, and the fact that the same firm of solicitors was acting for them in Amy and Gavin's proceedings as in Tom and Joanna's proceedings.

1. I am satisfied that it is appropriate to deal with the matter on an ex parte basis in the first instance. There is no issue of immediate detriment given the existence of the current freezing order. However, if notice was given, the present applicants have no capacity to influence the orders made in the proceedings involving Tom and Joanna, particularly if they are made by consent, and steps may be taken in relation to the Canberra properties prior to a contested hearing as between Amy and Gavin and the defendants.
2. I am satisfied that Amy and Gavin have a good arguable case in the sense that there is a sufficient prospect that the County Court will make an order in favour of Amy and Gavin and that the order will be registered in or enforced by this court. I am satisfied that there is a danger that the prospective order will be completely or partly unsatisfied because the assets of the prospective enforcement debtors will be disposed of, dealt with or diminished in value. I am satisfied that the circumstances give rise to a sufficiently arguable case that the transaction between Lawrence and Stephen and the Company would be voidable as against Amy and Gavin. I am satisfied that the company has a power of disposition over the two properties and is in possession of them, and that a process of the court may require property to be disgorged in order to satisfy a judgment debt obtained by Amy and Gavin in the County Court.
3. The amount sought to be the subject of the freezing order is the amount of $1,420,845.69. This is arrived at as follows:

Defendants' calculation of interest to 29 February 2024

8% interest per annum for 17 days (from 1 March to 17 March 2024 inclusive) upon the principal sum of $1,219,000

1. I do not accept the submission made by the applicants that these orders should be made in the existing proceedings brought by Tom and Joanna. The application made by Amy and Gavin included orders seeking that they be joined as parties to the existing proceedings. I do not consider that to be an appropriate course notwithstanding that some efficiencies would be involved. Rather, given that those proceedings are likely to be largely resolved by the payment of the judgment debt, notwithstanding the factual similarities between the circumstances of the cases, it is appropriate that Amy and Gavin be required to commence separate proceedings seeking the relief that they do. Counsel for Amy and Gavin indicated that they would do so if that was the course required by the court.
2. In those circumstances, I consider it appropriate to make a freezing order in the terms that were sought.

[Counsel for the applicants gave an undertaking on behalf of her clients that they file and serve, within seven days, an originating process.]

(1) Upon the undertaking given by counsel for Yi-Ling (also known as Amy) Kuo and Gavin Chen (the plaintiffs) that they will file and serve within seven days an originating process, the plaintiffs have leave to file in court the application in proceeding dated 6 June 2025 and the affidavits of Alistair Teo dated 6 June 2025 and 16 June 2025.

(2) The plaintiffs have leave to rely upon the affidavit of Shin-Ching Ho dated 28 March 2025 filed in proceedings SC 102 of 2025 for the purposes of the present application.

(3) Each of the affidavits referred to in orders 1 and 2 are taken to have been read and the exhibits admitted into evidence.

(4) Upon the undertaking of the plaintiffs in Schedule A of the Penal Notice Schedule to these orders, orders as set out in that Penal Notice Schedule.

(5) Further to the liberty granted in the Penal Notice Schedule, liberty is granted to relist the matter before Mossop J on 24hrs' notice.

TO: Lawrence Barrow-Yu, Stephen Barrow-Yu and The Barrow-Yu Trading Pty Ltd

• (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

• (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO: Lawrence Barrow-Yu, Stephen Barrow-Yu and The Barrow-Yu Trading Pty Ltd

This is a 'freezing order' made against you on 19 June 2025 by Justice Mossop at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.

1. (a) The application for this order is made returnable immediately.

(b) The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected on the defendants by 5pm on 26 June 2025.

1. Subject to the next paragraph, this order has effect up to and including 8 July 2025 ('the Return Date'). On the Return Date at 9:15am there will be a further hearing in respect of this order before Justice Mossop.
   1. Anyone served with or notified of this order, including you, may apply to the Court at any time

to vary or discharge this order or so much of it as affects the person served or notified.

(a) 'applicant', if there is more than one applicant, includes all the applicants;

(b) 'you', where there is more than one of you, includes all of you and includes you if you are a corporation;

(c) 'third party' means a person other than you and the applicant;

(d) 'unencumbered value' means value free of mortgages, charges, liens or other encumbrances.

1. (a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

(b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

(a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of, your interest in the lands comprised in Units 29 and 33, Section 13 Block 13 DP 11399 comprised in Volume 3002, Folios 263 and 267 ('Australian assets') up to the unencumbered value of AUD$1,420,845.69 ('the Relevant Amount').

(b) If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(a) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(b) in relation to matters not falling within (a) above, dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

1. You and the applicants may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

1. (a) This order will cease to have effect if you:

(ii) pay that sum into a joint bank account in the name of your solicitor and the solicitor for the applicant as agreed in writing between them; or

(iii) provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.

(b) Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.

(c) If this order ceases to have effect pursuant to (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

1. The costs of this application are reserved to the judge hearing the application on the Return Date.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT

This order does not prevent any bank or lending institution, including but not limited to Pepper Finance Corporation Limited (ACN 094 317 647), from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

(1) The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

(2) As soon as practicable, the applicant will file and serve upon the respondent copies of:

(a) this order;

(b) the application for this order for hearing on the return date;

(c) the following material in so far as it was relied on by the applicant at the hearing when the order was made:

(i) affidavits (or draft affidavits);

(ii) exhibits capable of being copied;

(iii) any written submission; and

(iv) any other document that was provided to the Court.

(d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

(e) the originating process, or, if none was filed, any draft originating process produced to the Court.

(3) As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it.

(4) The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent's assets.

(5) If this order ceases to have effect the applicant will promptly take all reasonable steps to inform in writing anyone who has been notified of this order, or who the applicant has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

(6) The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

(7) The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent's assets.

Name of Deponent Date affidavit made

(1) Shin-Ching HO 28 March 2025

(2) Alistair TEO 6 June 2025

(3) Alistair TEO 16 June 2025

NAME AND ADDRESS OF APPLICANT'S LEGAL REPRESENTATIVES

The applicant's legal representatives are:

Avia Lawyers

Tel: 03 8612 1688

Fax: 03 8648 6361

Suite 2.09, Level 2, 2 Queen Street, Melbourne VIC 3000 Australia

I certify that the preceding twenty‑five [25] numbered paragraphs and Penal Notice Schedule are a true copy of the Reasons for Judgment of his Honour Justice Mossop.