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[2025] NSWSC 579
General information, not legal advice.
Supreme Court of NSW
2025-06-05
Brereton J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Qiu v Westpac Banking Corporation trading as St George Bank [2025] NSWSC 579
Hearing dates: 19 May 2025
Date of orders: 5 June 2025
Decision date: 05 June 2025
Jurisdiction: Equity - Applications List
Before: Brereton J
Decision: See [57]
Catchwords: CIVIL PROCEDURE – security for costs – where plaintiffs are ordinarily resident outside Australia – where plaintiffs have no significant assets within the jurisdiction – where plaintiffs contend that the reason for their lack of assets in Australia is due to second defendant’s conduct – where prima facie case of wrongdoing – whether costs orders can be enforced against plaintiffs assets in Hong Kong – security for costs granted – freezing order – where prima facie case that second defendant has dishonestly taken assets of the plaintiffs – where plaintiffs delayed in commencing application – where second defendant has not dissipated assets to date – where second defendant alleges plaintiffs would not be able to satisfy an undertaking as to damages – limited freezing order appropriate – security required to support undertaking as to damages.
Legislation Cited: Foreign Judgments Act 1991 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Foreign Judgments Regulations 1992 (Cth)
Cases Cited: Bajramovic v Calubaquib [2015] NSWCA 139
Dalma Formwork Pty Ltd v Concrete Constructions Group Ltd [1998] NSWSC 472
Farmitalia Carlo Erba SrL v Delta West Pty Ltd (1994) 28 IPR 336; (1994) AIPC 91-085
KTC v Singh [2018] NSWSC 1510
Kupang Resources Ltd (subject to Deed of Company Arrangement) v Elias [2018] NSWSC 1553
Logue v Hansen Technologies Ltd (2003) 125 FCR 590; [2003] FCA 81
Maxim’s Caterers Ltd v Magnona Pty Ltd (No 1) [2010] FCA 450
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; [1991] HCA 36
Royal Guardian Management Pty Ltd v Nguyen [2015] NSWCA 148
Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102
Texts Cited: N.A.
Category: Procedural rulings
Parties: Lisha Qiu (first plaintiff)
Zubiao Weng (second plaintiff)
Westpac Banking Corporation trading as St George Bank (first defendant)
Zhi Yang (second defendant)
Representation: Counsel:
S A Lees (plaintiffs)
S Philips (second defendant)
No other appearances
Solicitors:
Yingke Law Firm (plaintiffs)
Hicksons Lawyers (second defendant)
File Number(s): 2024/349517
Publication restriction: N.A.
The proceedings arise out of a business relationship between the plaintiffs and the second defendant. The plaintiffs are a married couple. Through a company, they have operated a business in Australia that provides educational and related services to persons in China who wish to study in Australia. The second defendant is an Australian citizen who resides in Sydney. The plaintiffs entrusted the second defendant with a significant part of their business activities in Australia. The plaintiffs’ daughter resided in Sydney with the second defendant for some time.
By an amended statement of claim, the plaintiffs allege that the second defendant engaged in a series of unauthorised transactions on bank accounts held by each of the plaintiffs and their corporate vehicle. In simple terms, they allege that she stole from them. The total claimed is about an amount approaching $1m. The second defendant contends that the transactions were authorised, or were transactions for which she was not responsible. The plaintiffs also sue the first defendant as their banker. The claims against the first defendant are not relevant for present purposes.
(a) $141,811.99 within 28 days of the determination of the security for costs motion; (b) $55,852.50 within 7 days after the allocation of a hearing date; and (c) $58,410.00 no later than 28 days before the hearing date.
It is common ground that the plaintiffs are ordinarily resident outside Australia and that they have no significant assets within this jurisdiction. This engages the power of the Court to make an order for security for costs and provides a strong foundation for the making of such an order: PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321 at 323. But the proper exercise of the discretion to make an order for security for costs requires that I weigh up all of the relevant circumstances.
The plaintiffs advance three matters that they contend weigh sufficiently against an order for security for costs that the Court should not, in the exercise of its discretion, make such an order. Those three matters concern: (1) the strength of the case; (2) the reason for the lack of funds in Australia; and (3) the ability of the second defendant to enforce a costs judgment in Hong Kong. The plaintiffs also have made submissions about the character and form of an order for security for costs if the Court is minded to make such an order, including: (1) whether it should be conditioned on a freezing order; (2) the amount of security; and (3) other matters as to timing and the like. I address these matters below.
The plaintiffs contend that they have a strong prima facie case (see UCPR r 42.21(1A)(a)). Counsel for the second defendant accepted that the Court is entitled to proceed, for the purposes of the present applications, on the basis that the plaintiffs have “at least a prima facie case”. The second defendant baulks, however, at the use of the word “strong” to describe the strength of the plaintiffs’ case. The second defendant also contends that she has advanced evidence demonstrating that she has a reasonably arguable defence. She contends that she has established a prima facie defence that is the equal of the plaintiffs’ prima facie case.
I was taken by counsel for the plaintiffs through some examples of bank transfers that appear to include misleading or false descriptions. At face value, this certainly raises suspicions about the transfers and suggests dishonesty on the part of the second defendant. For instance, there appear to be transactions undertaken by the second defendant that involve amounts withdrawn from a St George bank account held by the first plaintiff, which are paid into a Commonwealth Bank account held by the company that is associated with the plaintiffs. It appears that those amounts are transferred almost immediately from that account with the description “owner withdrawal” into an ANZ bank account in the name of the second defendant and her husband.
The second defendant contends that there are good explanations for these, and all the other, impugned transactions. She denies any wrongdoing. In some cases, for example, she contends that the plaintiffs had access to the accounts and effected the transfers. She contends that some payments ultimately made to her reflected repayment of loans she had advanced. She contends some payments were on account of expenditure for the benefit of the plaintiffs’ daughter. She contends that over 100 online transfers were effected or caused by the plaintiffs for the purpose of generating legitimate-looking activity on an account in order to strengthen visa applications made by one or both plaintiffs.
There are aspects of the evidence that are troubling. For instance, the second defendant admits that she used photoshop to alter an ASIC company extract, to record falsely the name of a director of the company, and forwarded the falsified document to the first plaintiff. The second defendant says that she prepared the falsified document on the request of the first plaintiff. This is denied by the first plaintiff, who says that she was unaware that the ASIC company extract was not genuine. While the second defendant now says she should not have falsified the ASIC company extract, it is difficult to avoid the conclusion that, even on her version of events, she was willing to engage in seriously dishonest conduct. Altering an ASIC company extract in order to record a person as a director of a company when he is not a director, even if undertaken at another’s request or direction, betrays a willingness to engage in fraud.
The plaintiffs submit that the reason they have virtually no funds in Australia is because the second defendant dishonestly emptied their Australian bank accounts, by transferring much of that money to herself and her husband. This is something I can take into account: see UCPR r 42.21(1A)(d).
This submission is related to the submission concerning the strength of the case. I accept that at one time the plaintiffs had at their disposal in Australia assets that would have been sufficient to meet a costs order, but that following the transfers that are the subject of the proceedings, they no longer have assets in Australia sufficient to do so. The question about whether there is “a real causal connection between the conduct and the impecuniosity” turns on the character and strength of the case: see Dalma Formwork Pty Ltd (Administrator Appointed) v Concrete Constructions Group Ltd [1998] NSWSC 472. If the plaintiffs’ claims are correct, there is a clear causal connection between the conduct and the local impecuniosity. I have already remarked on the strength of the case.
The plaintiffs are not generally impecunious. There is evidence that the first plaintiff has funds in the Hong Kong branch of the Bank of China worth about $600,000 and that the second plaintiff has funds in a similar account worth about half that amount. The evidence is that the plaintiffs are unable to return to Australia. Both plaintiffs have put on evidence that it would be “difficult” for them to transfer money from China to Australia due to Chinese restrictions on residents transferring money overseas. They say that those restrictions “generally” or “normally” only permit the transfer of about USD $50,000 per annum out of China. The qualifications embedded in the words “generally” and “normally” are not exposed. Clearly the USD $50,000 limit is not a hard rule.
A consideration I may take into account is the “ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff”: see UCPR r 42.21(1A)(n). The plaintiffs contend that the application for security for costs should be refused because the second defendant could enforce a costs order of this Court against the first plaintiff’s assets in Hong Kong.
Part 2 of the Foreign Judgments Act 1991 (Cth) concerns reciprocal enforcement of foreign judgments. Section 5 of that Act provides that if the Governor-General is satisfied that substantial reciprocity of treatment will be assured in relation to the enforcement in another country of money judgments of all Australian superior courts, regulations may provide that Part 2 extends to that other country. Item 13 of the Schedule to the Foreign Judgments Regulations 1992 (Cth) lists “Hong Kong Special Administrative Region of the People’s Republic of China”, which means that Hong Kong is subject to the reciprocal enforcement regime. The plaintiffs tendered, without objection, the Foreign Judgments (Reciprocal Enforcement) Ordinance and the Foreign Judgments (Reciprocal Enforcement) Order and submitted that this reflected the relevant legislation in force in Hong Kong. The submission (which was not disputed) is that the legislation provides that a costs judgment from this Court can be enforced in Hong Kong.
The mere fact that the plaintiffs are ordinarily resident in one of the countries specified in regulations made under the F**oreign J**udgments A**ct will not be a sufficient basis, on its own, to resist an application for security for costs: see Farmitalia Carlo Erba SrL v Delate West Pty Ltd (1994) 28 IPR 336 at 342; Logue v Hansen Technologies (2003) 125 FCR 590; [2003] FCA 81 at [40]. However, it may be different if the plaintiffs: (1) establish that they have substantial assets in Hong Kong that are fixed and available for enforcement of a costs order; (2) there is evidence as to the steps required to enforce a costs order in Hong Kong; (3) there is an open offer to provide security in an amount that is generously sufficient to cover the costs of enforcement; and (4) there is an undertaking not to seek any order for security for costs in respect of any application for enforcement. That was the case in Maxim’s Caterers Limited v Magona Pty Ltd [2010] FCA 450.
In the present case, the plaintiffs adduced evidence that they held substantial assets in Hong Kong. However, those assets constituted deposits in a bank account and, presumably, could easily be removed from Hong Kong, at least to an account in mainland China. The plaintiffs proffered an undertaking that they will not transfer or move the funds or investments that they hold in Hong Kong to any country or jurisdiction other than Australia. However, there was no evidence from the plaintiffs about how such an undertaking could be enforced. Nor was there evidence about the process, including the time, cost and difficulty, associated with enforcing a costs judgment of this Court in Hong Kong.
(a) the evidence as to past actual costs is given at a high level, making it impossible to consider the reasonableness of the amounts; (b) the identification of work to be performed is given at a high level and the cost for the additional work is too high; (c) the amount claimed includes the costs for the security for costs, which should be removed because those costs will be dealt with separately: Kupang R**esources Ltd (subject to D**eed of C**ompany Arrangement) v Elias [2018] NSWSC 1553 at [27]; and (d) the application assumes that an assessment of costs on the ordinary basis will yield 75% of total costs, but a more conservative and proportionate estimate is 60% (noting that an order for security is not intended to be a full indemnity for costs recoverable from the unsuccessful party: Royal Guardian Management Pty Ltd v Nguyen [2015] NSWCA 148 at [25]).
Taking all of these matters together, the plaintiffs contend that if substantial security for costs is to be ordered, an appropriate amount is $139,000.
The second defendant contends that there is conservatism in its estimate of costs because the evidence it has advanced on this application is based on an estimated trial duration of some three to four days, whereas the trial is likely to take at least 10 days. This extended estimate is not accepted by the plaintiffs.
There should be an order for security for costs. I do not consider that the matters raised by the plaintiffs are a sufficient basis to reject the application for security in circumstances where they do not reside in Australia and have little by way of assets within the jurisdiction.
The ability of the second defendant to enforce a costs judgment in Hong Kong carries little weight given: (1) the absence of evidence about what is actually involved in that process as a matter of practice, and (2) the character of the assets held by the plaintiffs in Hong Kong. The undertaking proffered by the plaintiffs about the removal of assets from Hong Kong does not go far given the absence of evidence about the consequences that would flow if it is not honoured.
I have taken into account that there is a prima facie case, even a strong one, that the second defendant has dishonestly transferred funds from bank accounts and that has left the plaintiffs without assets in Australia. But I also take into account that that the second defendant has adduced evidence which, if accepted, would defeat the claim. If the second defendant’s defence is accepted, it is likely that it will mean the Court has accepted that the plaintiffs have engaged in what could be called, at the very least, dishonourable conduct. I stress that no such findings have been made in the context of this application – but note that there is evidence which, if accepted, would lead to that conclusion.
The character of the plaintiffs’ claim against the second defendant, and the evidence it has led to support it, does not lead me to the conclusion that there should be no security for costs, but does lead me to the conclusion that the order should make some accommodation to the plaintiffs, both in terms of the quantum of security and the form of the orders.
The alleged dishonesty on the part of the second defendant may have left the plaintiffs without assets in Australia. However, the evidence about their inability to transfer funds into Australia is not particularly compelling. There is vague reference to restrictions in China that “generally” or “normally” limit the ability of individuals to transfer funds from China. There is no evidence about the precise form of the restrictions or whether a requirement to give security for costs would constitute an exception to what is generally or normally the case. The plaintiffs had many hundreds of thousands of dollars in accounts in Australian bank accounts before the transfers. This means that they have previously been able to hold funds in this country and there is no evidence about how they came to hold those amounts.
Based on the evidence relied upon by the plaintiffs, I am not prepared to conclude that they could not provide security if ordered to do so. I am not prepared to conclude that there is general impecuniosity that has been caused by the second defendant.
(a) she is an Australian citizen, businessperson and company director who lives with her family in Sydney and owns and operates substantial businesses in Sydney (and elsewhere in Australia); (b) she (jointly) owns shares in two commercial businesses which she operates and which she estimates would be valued in excess of $1m, employing 36 staff members between them; (c) she owns real property in Mosman, Sydney which was valued in late 2024 at approximately $3.5m and has equity in that property of approximately $700,000; (d) her equity in her real property was reduced (from approximately $1.3m to $700,000) as a result of refinancing which she commenced in September 2024, some three months before the commencement of these proceedings; (e) as a result of the refinancing, she has been able to open a second store in her pet grooming business and open a second campus (in Melbourne) for her vocational college business; (f) she has not dissipated any of her assets since becoming aware of the proceedings; and (g) freezing orders would have a detrimental effect on her business interests, which are significant, and involve operations at two retail shops and two educational campuses.
Against this, there is prima facie evidence that the second defendant has dishonestly transferred funds from bank accounts held by the plaintiffs for her own benefit, as well as admissions of other dishonest conduct.
The plaintiffs also advanced the following responsive matters:
(a) no freezing orders are sought against the second defendant’s companies themselves; (b) the companies through which the second defendant carries on her businesses have been given recent capital injections, so it is doubtful that they would need further capital injections soon; (c) the second defendant has not adduced evidence of the companies’ financial statements so the Court cannot be satisfied of their need for capital, but their apparent turnover of $300,000 and $2m respectively suggests they can be self-supporting; and (d) the second defendant could have liberty to apply if she needs to make a capital injection whilst the freezing order is in place.
The second defendant contends that the application for a freezing order should be refused because of the inexplicable delay in making the application: see KTC v Singh [2018] NSWSC 1510 at [42]-[43]. She points out that the plaintiffs filed a notice of motion seeking freezing orders in mid-December 2024 shortly after the proceedings were commenced but then withdrew that application. The current application was not filed until mid-April 2025.
The plaintiffs submit that the fresh application was filed on the back of material they obtained under subpoena from the ANZ bank, which was produced in mid-January 2025. Those bank records, it was contended, revealed that the second defendant had been the recipient of unauthorised transfers from a bank account that had been misleadingly labelled as “to Lisha Qiu” (the first plaintiff). In effect, the contention was that the material produced on subpoena strengthened the evidence against the second defendant.
The first application for a freezing order was not argued on its merits and I accept that the emergence of new evidence may provide a proper justification for a fresh application. The plaintiffs relied on the discussion in Bajramovic v Calubaquib [2015] NSWCA 139 at [38]-[41]. As the plaintiffs recognised, the remarks in that case concerned a context where a fresh interlocutory application was made after a first application had been heard and determined. The same principles apply a fortiori where the first application was not heard and determined.
Accepting that the material produced by the ANZ bank on subpoena was fresh relevant evidence, there was nevertheless a delay of some three months in making the application for a freezing order. The January holiday period may explain a very short amount of delay but does not explain all of it. If the new evidence galvanised a real fear about the dissipation of assets, it is hard to understand why the application for a freezing order was not made at least before the end of February 2025.
The second defendant, at least at one stage, submitted that the application for the freezing order was an abuse of process because it was brought without any proper foundation and was, in effect, a defensive reaction to the second defendant’s application for security for costs. I did not understand that the second defendant ultimately pressed the submission that there was an abuse of process, however she maintained that the application was a defensive device put on a flimsy basis.
The plaintiff’s proffer the usual undertaking as to damages, which includes an undertaking 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.
The second defendant contends that she has a significant concern about the ability of the plaintiffs to meet any undertaking as to damages. They have approximately $20,000 in accounts in Australia and a further $30,000 is expected to arrive in the near future. They have offered to keep these funds in a trust account or a controlled monies account pending final orders in the proceedings to support an undertaking as to damages. The second defendant contends that this amount is manifestly inadequate.
The form of the freezing order sought by the plaintiffs is broad. It seeks an order that the second defendant not remove from Australia or in any way dispose of, deal with or diminish the value of her assets in Australia up to an unencumbered value of $922,694.76. In submissions advanced for the plaintiffs, it was contended that if the Court is not minded to make the full freezing order, an alternative is to make a partial order restraining the second defendant from borrowing against or encumbering her Mosman property above $2.8m (being the current balance of the loan that is secured by a mortgage on the property).
As to the Mosman property, there is evidence that there has been a recent refinancing, with the result that there is an estimated $700,000 in equity that is free of the mortgage (i.e. estimated property value of $3.5m and a loan secured by a mortgage with debt of $2.8m). The second defendant’s evidence does not point to any particular prejudice to the second defendant if she is unable to increase the debt secured by that mortgage. There was a recent refinancing that increased the amount secured by a mortgage from $2.2m to $2.8m. The majority of the $600,000 has been used but there is no evidence of any immediate need for further cash that would require a further drawdown secured by this mortgage.
There are strong factors that point against a freezing order of the wide breadth that the plaintiffs seek. Those factors are: the plaintiffs’ delay in making the application, the absence of evidence of dissipation of assets and the presence of the second defendant inside the country with substantial business and property interests.
However, there is a prima facie case that the second defendant has already dishonestly taken nearly all the substantial funds that the plaintiffs held in Australia. On her own evidence, she has engaged in conduct that can rightly be called dishonest. Although there has been no evidence of dissipation, on the evidence there is a risk that the second defendant will dissipate assets to avoid honouring any judgment obtained by the plaintiffs. The absence of evidence of dissipation of assets to date only provides so much comfort about whether there will be any dissipation in the future.
In the circumstances, I consider that a limited freezing order is justified. But it should be a relatively narrow one. It should be limited to precluding the second defendant from increasing the amount secured by the mortgage over the Mosman property or otherwise further encumbering or borrowing against the Mosman property. The second defendant should have liberty to apply to make alterations to the order in the event she can point to particular prejudice that arises from this order.
The plaintiffs will be required to give the usual undertaking as to damages as the price of the order. Given the current absence of assets in Australia, there should be security to support the undertaking. The amount to be given by way of security should not be significant, given that the freezing order will be limited and because of the prima facie reasons explaining why the plaintiffs have limited assets available to them in Australia.
There will be orders that impose the freezing order as indicated above, but it will be subject to the plaintiffs providing security to support that undertaking in the amount of $20,000 within 21 days of today’s date and a further $20,000 within a further 21 days after that. There should be liberty for the parties to seek to vary these orders in the event that circumstances change.
I appreciate that an order that the undertaking as to damages is to be secured may make it more difficult for the plaintiffs to provide security for costs. But that is a price that must be paid for the freezing order. If there is delay in posting the security for the undertaking, the second defendant will be released from the freezing order until the security for the undertaking is posted.
My preliminary view is that as the parties have had mixed success on both motions, costs in both should be costs in the cause.
If either party wishes to contend for a different position, there should be orders for an exchange of brief written submissions and that question can be determined on the papers.
The parties will need to confer about the orders that will give effect to these reasons. That should be done quickly. Hopefully the orders can be agreed. If not, competing orders can be provided to my Associate, and I will make a ruling.
The orders of the Court are as follows:
The parties are to confer with the view of providing my Associate with agreed short minutes of order to give effect to these reasons.
If there is not agreement by 11 June 2025, the matter will be listed before me on 13 June 2025 for the purposes of making orders.
**********
[47] addition of 'not'
Qiu
Westpac Banking Corporation trading as St George Bank [2025] NSWSC 579
(1994) 28 IPR 336
(2003) 125 FCR 590
(1989) 18 NSWLR 319
(1991) 102 ALR 321
(2013) 84 NSWLR 141
The plaintiffs also allege that the second defendant falsified Commonwealth Bank records in order to disguise her misappropriation from the plaintiffs. This is denied by the second defendant. The absence of a series of transactions from Commonwealth Bank statements raises suspicions, and supports the prima facie case, but certainly no final conclusions can be drawn at this stage.
This is not the occasion to make any detailed findings about the various events and transactions that are to be canvassed at a final hearing. It seems plain that either the plaintiffs are lying or the second defendant is lying, or that all of them are lying. The ultimate resolution of the case will require a detailed forensic study of many records. It is likely that many business records will not be able to be taken at face value. There will be close scrutiny of the evidence of any witnesses. The trial will determine where the truth lies.
I proceed on the basis that the evidence advanced by the plaintiffs demonstrates a prima facie case, and one which can properly be described as a “strong” prima facie case. But having regard to the evidence advanced so far by the second defendant, I am also satisfied that the second defendant may have a good defence. Evidence that appears clear and compelling against her can be cast in a different light with explanations which, if accepted, undermine the case. I do not think that this is the occasion to delve more deeply into the merits. That would be a serious undertaking and is not something I should be doing on the present applications for security for costs and freezing orders.
There is some force in the plaintiffs’ contentions about the amount of security and the terms of the orders. I also consider that while the arguments advanced by the plaintiffs about why there should be no security do not defeat the application, they are matters that I can weigh in the exercise of discretion when it comes to the amount and terms of security. They support orders that involve a smaller amount of security and more time for it to be provided.
I will make orders requiring the plaintiffs to provide security for costs in the amount of $150,000, payable in four tranches as follows: (a) $75,000 to be paid within 42 days of today’s date; (b) $25,000 no later than 28 days after the close of evidence; (c) $25,000 no later than 28 days after the allocation of a hearing date; (d) $25,000 no later than 28 days before the hearing date. Both parties will have liberty to apply in relation to the implementation of the security for costs orders and as to the amount of security. Accordingly, the plaintiffs will have an opportunity to revisit the orders if, on better evidence, there is a particular problem that arises in providing the security. The second defendant will have the right to seek further security if the evidence it has adduced so far about costs proves to significantly underestimate the likely recoverable costs (noting that the evidence is prepared on the basis of a trial lasting three to four days). A period of seven days’ notice of any application for dismissal of the proceedings pursuant to UCPR r 42.21(3) is appropriate (I accept that two days’ notice is too short, but 14 days’ is too long). The parties should also confer about the form of security.