//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] NSWSC 765
Supreme Court of NSW
2026-07-01
Muston J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Sun v Chen; Yu v Chen [2026] NSWSC 765
Original judgment source is linked above.
Hearing dates: 3-4, 25 March 2026
Date of orders: 1 July 2026
Decision date: 01 July 2026
Jurisdiction: Equity
Before: Muston J
Decision: (1) Proceedings are dismissed as against Ms Yu.
(2) Ms Yu’s cross-claim is dismissed.
(3) The parties are to file and serve submissions, along with any supporting evidence, on the question of costs, by 10 July 2026.
(4) The parties are to respond to the submissions, and provide evidence in reply, on the question of costs by 15 July 2026.
(5) The issue of costs will thereafter be determined in Chambers.
Catchwords: CONVEYANCING — s 37A of the Conveyancing Act 1919 (NSW) — whether the plaintiff is a creditor in the relevant sense — whether intent proven directly or inferentially — whether the transfer of the property was for the purpose of defeating creditors or the completion of a contractual obligation
CONVEYANCING — defence in s 37A(3) of the Conveyancing Act 1919 (NSW) — definition of “purchaser” — whether transfer of the property was made for “valuable consideration”
EQUITY — equitable interests in property — where property was purchased by the two defendants jointly — where the second defendant paid the bulk of costs associated with the property but the mortgage was being paid evenly — whether the property was treated as a “joint asset”— whether an express, resulting or constructive trust arose
FAMILY LAW — financial agreements — setting aside of financial agreements — principles guiding the application of s 90K(1)(aa)(i) of the Family Law Act 1975 (Cth) — role of s 37A of the Conveyancing Act 1919 (NSW) jurisprudence in interpreting s 90K(1)(aa)(i) of the Family Law Act 1975 (Cth) — whether financial agreement was entered into for the purpose, or for purposes that include the purpose, of defrauding or defeating creditors
Legislation Cited: Conveyancing Act 1919 (NSW) s 37A
Design and Building Practitioners Act 2020 (NSW) s 37
Family Law Act 1975 (Cth) ss 4, 4A, 90B, 90C, 90D, 90K
Cases Cited: Australian Securities and Investments Commission & Rich & Anor [2003] FamCA 1114
Aviani v Loh (No 2) [2022] NSWSC 1148
Barton v Official Receiver (1986) 161 CLR 75; [1986] HCA 44
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59
Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26
Commissioner of Taxation v Oswal (No 6) [2016] FCA 762
ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10
Grainger v Bloomfield [2015] FamCAFC 221
Grapple Pay Pty Ltd v Conroy [2025] NSWCA 171
Lloyds Bank Ltd v Marcan [1976] 1 W.L.R. 1387
Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3
Megna & anor v Marshall & anor [2005] NSWSC 1347
On Sky Enterprise (HK) Ltd v Lanco International Holdings Ltd [2025] NSWSC 1599
Rahman v Rahman [2025] NSWCA 219
Roberts v Mawabe Pty Ltd [2025] NSWSC 374
Saba v Plumb (2018) 97 NSWLR 278; [2018] NSWCA 60
Super Vision Resources BVI Registered No 1,810,534 v AC Holdings Co Pty Ltd [2020] NSWCA 319
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57
Trustees of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6
Watson v Foxman (1995) 49 NSWLR 315
Wentworth v Rogers & Anor [2004] NSWCA 430
Wise Investments Pty Ltd v Ruddy Tomlin’s & Baxter, Solicitors [2019] QCA 271
Wurz bht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404
Young v Lalic [2006] NSWSC 18
Texts Cited: D Hodson, “How the Rich Get Richer: a Study in Legislative Response to Lawyer Initiatives” (2004) 17(3) Australian Family Lawyer 19-20
Family Law Amendment Bill 2003 (Cth)
Notes on Clauses in the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003
R Chisolm, C Christie, J Keamey, Annotated Family Law Legislation (7th Ed, 2026, LexisNexis)
Category: Principal judgment
Parties: Yiwen Sun (Plaintiff)
Tao Chen (First defendant/Cross-defendant)
Xia Yu (Second defendant/Cross-claimant)
Representation: Counsel:
J Nathan (Plaintiff)
G Wang (First defendant/Cross-defendant) (solicitor) on 3-4 March 2026
Self-represented (First defendant/Cross-defendant) on 25 March 2026
H Fielder (Second defendant/Cross-claimant)
Solicitors:
Citilawyers (Plaintiff)
Herald Legal (First defendant/Cross-defendant) from 3 March 2026 to 25 March 2026
Self-represented (First defendant/Cross-defendant) prior to 3 March 2026, and on 25 March 2026
Broaden Legal (Second defendant/Cross-claimant)
File Number(s): 2024/00084205
In late 2019, the plaintiff (Ms Sun) engaged Bright Star Construction Pty Ltd to construct three houses in the Sydney suburb of Bardia. For reasons which are not immediately relevant, she has asserted that those works were carried out negligently.
Bright Star Construction is in external administration. In these proceedings, Ms Sun alleges that the first defendant (Mr Chen) is personally liable for the defective work carried out by Bright Star Constructions by operation of s 37 of the Design and Building Practitioners Act 2020 (NSW).
The second defendant (Ms Yu) is the former wife of Mr Chen. She had no involvement in the operations of Bright Star Constructions or the works carried out by that company for Ms Sun.
Ms Yu, and the children of her marriage with Mr Chen, live in the Sydney suburb of Berala. Between July 2010 and March 2024, the Berala property in which she resides with her children was owned by Ms Yu and Mr Chen as joint tenants. On 5 March 2024, Mr Chen’s interest in the Berala property passed to Ms Yu upon the lodgement of a transfer bearing the Land Registry Document Identifier AT881034. On the same day, these proceedings were commenced by way of Summons in the District Court.
Since that time, these proceedings have been transferred into this Court. Ms Yu was joined as a defendant and the relief sought by Ms Sun expanded such that it now includes claims for, inter alia:
A declaration that the transfer of Mr Chen’s interest in the Berala Property to Ms Yu was an alienation of property made by Mr Chen to Ms Yu for the purpose of defrauding creditors within the meaning of s 37A of the Conveyancing Act 1919 (NSW).
A declaration that the transfer referred to in the above paragraph is void pursuant to s 37A of the Conveyancing Act.
Further, or in the alternative, an order pursuant to s 90K(1)(aa)(i) of the Family Law Act 1975 (Cth) that the financial agreement entered into pursuant to s 90C of the Family Law Act by Mr Chen and Ms Yu on or about 8 July 2021 be set aside.
By way of cross-claim, Ms Yu has sought:
A declaration that, at all material times, Mr Chen held his interest in the Berala property on trust for her.
Further, or in the alternative, a declaration that as at December 2014 (or, alternatively, by no later than about 8 May 2023, or any other date the Court considers appropriate), Mr Chen relinquished his claim to and/or interest in the Berala property.
On 12 December 2025, Peden J ordered that the claim made by Ms Sun under s 37A of the Conveyancing Act and Ms Yu’s cross-claim be heard and determined separately, and in advance of, all other issues in the proceedings. I subsequently varied that order to include the claim made by Ms Sun under s 90K of the Family Law Act in this preliminary hearing.
I do not doubt that Ms Sun attempted to provide an honest account of the events addressed in her evidence. However, certain features of her affidavit evidence — developed through the evidence she gave under cross examination — suggested to me that significant portions of Ms Sun’s affidavit evidence are more reflective of a reconstruction on her part than an accurate recollection of the events described.
Ms Sun’s affidavit evidence developed in an incremental way over a period of almost 2 years. As issues in the proceedings evolved, so too did Ms Sun’s purported recollection of what was said in important conversations. Aspects of her evidence — such as the dates on which she claimed to have attended the Berala property, and as to her use of a doorbell at that property — were revisited and adjusted from one affidavit to the next to accommodate the objective evidence and aspects of the affidavit evidence given by Ms Yu. Her memory of such matters was shown to be unreliable when exposed to scrutiny under cross examination.
As McClelland CJ in Eq observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:
“…human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or what could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, often subconsciously, constructed. All this is a matter of ordinary human experience.”
These observations aptly capture the impression I formed of the affidavit and oral evidence given by Ms Sun, particularly insofar as it related to conversations she claimed to have had with Mr Chen.
To those issues I would add the fact that Ms Sun’s affidavits recount, in English, conversations which are most likely have been conducted in another language. I draw this inference from the fact that both Ms Sun and Mr Chen gave their oral evidence through a Mandarin interpreter, and from the language each used in certain other communications that were in evidence. There is no indication that an interpreter was involved in the preparation of Ms Sun’s affidavits or of the process by which any of those conversations came to be translated into English.
That is not to say that I have entirely disregarded the evidence Ms Sun gave of these conversations. As was explained in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 at [27]–[29]:
“[27] Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin):
the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth. (Emphasis added).
[28] Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.
[29] Context is critical for at least two reasons. Documents and events take their meaning from their context. The context in which events occurred may not necessarily be apparent to a court many years later when hearing a case. A clear understanding of context, both commercial and cultural, is also important where, as in the present case, some or all of the events under consideration occurred overseas and in settings that may differ from those usually dealt with in domestic litigation.”
(Emphasis in original).
The observations in Watson v Foxman, extracted at [11] above, apply with equal force to aspects of the evidence given by Ms Yu.
In contrast to the affidavit evidence of Ms Sun and Mr Chen, each of Ms Yu‘s affidavits was accompanied by an interpreter’s affidavit, in which the interpreter indicated that the content of the affidavits was sight translated in the Mandarin language and that, following this, Ms Yu confirmed that she had understood the interpretation and agreed with the entire content.
Nevertheless, I place little weight on the evidence she gave as to the content of conversations she claimed to have had with Mr Chen or members of her family, the earliest of which was said to have occurred more than 15 years before she came to affirm her affidavit.
I have also approached, with significant caution, evidence she gave of agreements she said she reached with Mr Chen regarding the Berala property and arrangements between him and her parents. While I accept that the evidence Ms Yu gave in relation to these issues reflected her honest belief, I have placed far greater weight on the available contemporary materials, objectively established facts and the apparent logic of events when assessing them: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31].
Other than the two hearing days in which opening submissions were made and evidence given — during which he was represented by a solicitor — Mr Chen represented himself throughout the proceedings.
He served and relied on a short affidavit; the majority of which did not withstand objections taken by Ms Sun to its admissibility. In any event, it did not respond in any substantive way to the evidence which had been served by Ms Sun. Like the affidavits of Ms Sun, there is no indication that an interpreter had any involvement in the preparation of Mr Chen’s affidavit.
Mr Chen was cross examined. That cross examination elicited from Mr Chen evidence to the effect that he had read Ms Sun’s affidavits and had not responded to them because he believed that most of their content was false. Whilst this likely provided an answer to any suggestion that Ms Sun’s evidence of conversations with Mr Chen was “unanswered”, his evidence otherwise had little bearing on the any issue being determined at this stage in the proceedings.
37A Voluntary alienation to defraud creditors voidable
(1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.
(2) This section does not affect the law of bankruptcy for the time being in force.
(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.
“That [Mr Chen] shall, on and after the date of this agreement, sign all required documents and take all necessary steps to transfer all his right, title and interest in the [Berala property] to the wife with the $270,000 mortgage.”
90K Circumstances in which court may set aside a financial agreement or termination agreement
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
…
(aa) a party to the agreement entered into the agreement:
(i) for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors of the party; …
In granting leave to amend, I did not permit Ms Sun to rely on s 90K(1)(aa)(ii) of the Family Law Act, which permits a court to set aside a financial agreement if satisfied that a party to that agreement entered into it “with reckless disregard of the interests of a creditor or creditors of the party”. I took this course given the extremely late nature of the proposed amendment and the prejudice that allowing Ms Sun to rely on s 90K(1)(aa)(ii) at that late stage in the proceedings would have caused to Ms Yu and Mr Chen.
There is a very substantial overlap between s 90K(1)(aa)(i) of the Family Law Act and s 37A(1) of the Conveyancing Act. While Ms Yu claimed that she would suffer prejudice in the event that Ms Sun were permitted to rely on any aspect of s 90K(1)(aa), I did not accept that this was the case insofar as s 90K(1)(aa)(i) is concerned as, in a practical sense, it raised substantially the same case as Ms Yu was already prepared to meet under s 37A(1) of the Conveyancing Act. However, I was satisfied that irremediable prejudice would be suffered by Ms Yu if she had been forced to confront the materially different evidentiary enquiry contemplated by s 90K(1)(aa)(ii) for the first time after the hearing of the separate question had actually commenced.
For three fundamental reasons, it is necessary to differentiate between the financial agreement and subsequent transfer when considering Ms Sun’s attack on the alienation of the Berala property.
First, because each of the financial agreement and subsequent transfer — which, on one view, was merely a step taken in execution of the financial agreement — must nevertheless be approached as separate acts of alienation.
In Super Vision Resources Ltd BVI Registered No 1810534 v AC Holdings Co Pty Ltd [2020] NSWCA 319, the Court of Appeal considered a broadly analogous situation in which an attack invoking s 37A of the Conveyancing Act was made on a transfer of land pursuant to a contract for sale. At [23], Meagher JA (with whom Basten JA agreed) observed:
“Where the alienation is of Real Property Act land and by a transfer under a contract for sale, there is a question, which does not appear to have been answered in the authorities, as to whether the intention of the vendor, and the purchaser’s notice of that intention, is to be assessed at the time of contract or of transfer. The text of s 37A(1) and (3) provides that these questions are to be determined “at the time of the alienation” of property sought to be avoided. The language of “alienation”, which replaced that of “conveyance or assurance” in the Elizabethan statute, is more naturally understood as referring to the transfer than to the entry into the contract pursuant to which that transfer is to occur.”
“On one view, “alienation” is apt to refer to both the contract and subsequent transfer, taken together; in Marcolongo v Chen, the High Court reinstated orders setting aside both a contract of sale and a transfer made pursuant to it, albeit that contract and transfer took place at the same time. There may be a question whether it is strictly necessary to set aside a contract which has been ‘spent’ by performance when avoiding a transfer made under it. What is, however, tolerably clear is that “the time of the alienation” is not the time of contract alone, and it will suffice for the relevant intention, and notice thereof, to have been present at the time of transfer…”
In On Sky Enterprise (HK) Ltd v Lanco International Holdings Ltd [2025] NSWSC 1599, a similar approach was taken by Parker J in relation to a transfer made following the relevant parties entering into a binding financial agreement made under the Family Law Act where no application had been made to have it set aside under s 90K: see [478]-[493].
Secondly, and as was implicitly recognised by Ms Sun through the late amendment to her pleadings, because different statutory powers are engaged by her attack on the financial agreement and the transfer respectively. In turn, this raises a threshold question about whether this Court has jurisdiction to make an order under s 90K of the Family Law Act were it otherwise appropriate to do so.
Finally, because entry into the financial agreement and the subsequent transfer occurred at materially different points in time. The factual context in which the financial agreement and transfer occurred were, accordingly, different. The knowledge and intention of both Mr Chen and Ms Yu may also have changed from one point to the next. As such, a conclusion that there is no basis to set aside the financial agreement under s 90K of the Family Law Act would not necessarily preclude a finding that the intention required to enliven s 37A of the Conveyancing Act was present at the date of the transfer.
Ms Sun’s claim for relief under s 90K(1)(aa)(i) are proceedings under the Family Law Act. That aspect of her claim is a “matrimonial cause” through the combined operation of subparagraph (eab) of the definition of that term provided by s 4 and s 4A of the Family Law Act.
The power available under s 90K is granted to “a court”, which is relevantly defined by s 4 of the Family Law Act as:
in relation to any proceedings, means the court exercising jurisdiction in those proceedings by virtue of this Act…
There is conflicting authority in this Court as to whether it has jurisdiction to exercise the power conferred by s 90K of the Family Law Act.
In Roberts v Mawabe Pty Ltd [2025] NSWSC 374, Slattery J held (at [53]) that this Court does not have jurisdiction to grant relief under s 90K. This may be contrasted with the opposite view expressed by Brereton J in Megna & a**nor v Marshall & a**nor [2005] NSWSC 1347 at [3].
In Young v Lalic [2006] NSWSC 18, Brereton J returned to consider the question of this Court’s jurisdiction in relation to matrimonial causes arising under the Family Law Act. While his Honour did not directly consider the powers available under s 90K, he observed more generally (at [37]-[39]) that:
“[37] … this court has, since the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (‘the Commonwealth Cross-vesting Act’), all the jurisdiction of the Family Court of Australia in matrimonial causes (subject to a limitation which is irrelevant for present purposes in respect of proceedings under Family Law Act, s 60G).
[38] Originally, under Family Law Act, s 39, matrimonial causes could be instituted in the Supreme Court of a State or Territory as well as in the Family Court of Australia [Family Law Act, s 39(1)], and the Supreme Courts were invested with federal jurisdiction with respect to matrimonial causes [Family Law Act, s 39(5)]. However, provision was made for the Governor-General to fix by proclamation a date from which matrimonial causes and other proceedings referred to in s 39(5) may not be instituted in or transferred to the Supreme Court of a State or Territory [Family Law Act, s 40(3)]. A proclamation dated 27 May 1976, published in Gazette 1976, No S86, 1 June 1976, fixed 1 June 1976 as the date on and after which proceedings of certain classes may not be instituted in, inter alia, the Supreme Court of New South Wales, so as effectively to make the jurisdiction of the Family Court in matrimonial causes exclusive from that date, except in relation to causes already pending or related to those already pending. A further proclamation dated 23 November 1983, published in Gazette 1983, No S288, 24 November 1983, fixed 25 November 1983 as the date on and after which proceedings that are the matrimonial causes referred to in s 39(5)(a) or (b), or proceedings referred to in s 39(5)(c), (d) or (e), may not be instituted in, inter alia, the Supreme Court of New South Wales. Its effect was to ensure that the Supreme Courts were divested of any jurisdiction they may have (probably unintentionally) acquired in relation to matrimonial causes within those paragraphs of the definition of matrimonial cause which had been added since the first proclamation, and thus might not have been covered by the first proclamation: see Perlman v Perlman (1984) 155 CLR 474 (per Gibbs CJ). That brought to an end the jurisdiction of this court in matrimonial causes, until the commencement in 1998 of the cross-vesting scheme created by the various Jurisdiction of Courts (Cross-vesting) Acts of 1997 of the various States and the Commonwealth (‘the Cross-vesting Acts’).
[39] However, the Commonwealth Cross-vesting Act, s 4(1), invests all State Supreme Courts with jurisdiction with respect to civil matters with respect to which the Family Court of Australia has jurisdiction (subject to a limitation in respect of ‘special federal matters’, of which the only relevant instance is that created by Family Law Act, s 60G). This new investing of State Supreme Courts with jurisdiction superseded the removal of jurisdiction by the proclamations of 1976 and 1983 pursuant to Family Law Act, s 40(3).”
Amendments made to the Family Law Act on 1 September 2021 have cast doubt on this Court’s jurisdiction in relation to “de facto financial causes”: see Aviani v Loh (No 2) [2022] NSWSC 1148 at [239] and [255]; Wurz bht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404 at [68]. However, those amendments have no impact on this Court’s ability to exercise powers under s 90K of the Family Law Act.
The observations from Young v Lalic extracted above have more recently been cited with approval by the Court of Appeal in Rahman v Rahman [2025] NSWCA 219 at [100]. There is no obvious reason why these observations would not apply equally to s 90K(1)(aa)(i) of the Family Law Act. I am satisfied that this Court does have jurisdiction to exercise powers under that section.
Unlike s 37A of the Conveyancing Act, and somewhat surprisingly, s 90K(1)(aa) of the Family Law Act has not been the subject of extensive litigation. The principles are not well established.
Section 90K(1)(aa) was inserted into the Family Law Act in 2004, following a decision made by the Family Court in the context of ASIC’s prosecution of Jodee Rich. Two days following the appointment of a receiver to One-Tel, Mr Rich and his wife entered into a binding financial agreement to transfer approximately $5 million of his assets into the name of his wife. ASIC applied to the Family Court to have the financial agreement and transfers set aside.
Although there was found to have been “an arguable case” that the agreement was entered into with an intention to defraud creditors, O’Ryan J dismissed the application on the basis that the Family Court had no jurisdiction to deal with an application by a third party to set aside a financial agreement: Australian Securities and Investments Commission & Rich & Anor [2003] FamCA 1114.
ASIC later applied to this Court to have the agreement set aside. Eight days after ASIC announced this next step, Mr Rich announced that he and his wife had terminated the agreement: see D Hodson, “How the Rich Get Richer: a Study in Legislative Response to Lawyer Initiatives” (2004) 17(3) Australian Family Lawyer 19-20.
The Federal Government subsequently added the now s 90K(1)(aa) to an omnibus Family Law Amendment Bill 2003 (Cth) to “overcome the problems raised in the Family Court judgment…in relation to the binding financial agreement provision”: Notes on Clauses in the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003.
In Grainger v Bloomfield [2015] FamCAFC 221, a case which considered the standing of a creditor for orders under s 90K(1)(aa) and s 90K(3) in the context of a bankruptcy, the Full Family Court of Australia made the following observations:
“[27] Thus, for there to be jurisdiction for courts (exercising jurisdiction under the Family Law Act) in proceedings to set aside a financial agreement between married, or formerly married persons on the ground specified in s 90K(1)(aa) (being that the agreement was entered into for the purpose of defeating or defrauding, or with reckless disregard for the interests of, a creditor), the proceedings must be between on the one hand, the parties to the agreement or their legal personal representatives, and on the other hand, a creditor of one of those parties or the legal personal representatives of the creditor or ‘a government body acting in the interests of a creditor’.
…
[29] …it will be useful at this point (having regard to the provisions of s 15AB of the Acts Interpretation Act 1901 (Cth)) to set out, notwithstanding their length, the relevant paragraphs of the Notes on Clauses in the Supplementary Explanatory Memorandum to the Family Law Amendment Bill 2003…
Item 2 — After section 4
Section 4A — Third party proceedings to set aside financial agreement
9. Item 2 inserts a new section 4A to provide a definition of ‘third party proceedings’ for the purposes of new paragraph 4(1)(eab) of the definition of ‘matrimonial cause’.
10. Subsection 4A(1) provides that the court will have the jurisdiction to hear proceedings for the setting aside of a financial agreement on the new ground specified in paragraph 90K(1)(aa) where such proceedings are between either or both of the parties to the agreement and a creditor or government agency acting in the interests of a creditor.
11. Subsection 4A(2) defines ‘creditor’ for the purposes of subsection 4A(1) to mean one of two groups of people. Firstly, a ‘creditor’ can be a creditor, in the normal commercial sense of the word, of either of the parties to the financial agreement. Or secondly, a ‘creditor’ can be a person who, at the commencement of the proceedings, could reasonably have been foreseen by the court as being reasonably likely to become a creditor of either of the parties to the financial agreement. This is intended to cover situations, such as those that existed in the ASIC and Rich case, where there is the possibility that someone is reasonably likely to become a creditor of either of the parties to the financial agreement but is not yet a creditor, for example as a result of other pending court proceedings. The relevant time for the court to determine the existence of this reasonable foreseeability and likelihood is at the time that the creditor files the proceedings.
12. The reason why the provision requires the court to determine the standing of the person at the time the proceedings commence is to ensure that only those who fall within the definition of ‘creditor’ at the time of the proceedings are able to bring an action. It may be that during the time of a financial agreement many people may possibly fall within the definition. It is not intended that simply because a person came within the definition at some stage that they could commence proceedings.
…
Item 3 — After paragraph 90K(1)(a)
14. New paragraph 90K(1)(aa) inserts a new ground on which a court may make an order setting aside a financial agreement or a termination agreement. Subparagraph 90K(1)(aa)(i) provides that the court may make a setting aside order if either party to the agreement entered into the agreement for the purpose, or for purposes that included the purpose, of defrauding or defeating the interests of a creditor or creditors of the party.
…
16. ‘Creditor’ for the purposes of new paragraph 90K(1)(aa) is defined in new subsection 90K(1A).
Item 4 — After subsection 90K(1)
17. New subsection 90K(1A) provides that for the purposes of setting aside a financial agreement under the new ground in paragraph 90K(1)(aa), the term ‘creditor’, in relation to a party to the agreement, includes a person who could reasonably have been foreseen by the party, at the time the agreement was entered into, as being reasonably likely to become a creditor of the party.
…”
Given s 90K(1)(aa)(i) was enacted against the substantial body of jurisprudence which addressed s 37A of the Conveyancing Act and its analogues in various other State and Commonwealth legislation, I am satisfied that the Parliament intended that it be interpreted in the same manner; thereby achieving its objective of filling the gap in that legislative landscape which had been identified in Mr Rich’s case. I consider the principles that can be drawn from this jurisprudence when addressing s 37A of the Conveyancing Act below.
As with s 37A of the Conveyancing Act, Ms Sun bore the onus of proving that Mr Chen and/or Ms Yu entered into the financial agreement for the purpose of, or for purposes that included the purpose of defrauding or defeating her as creditor in the sense contemplated by s 90K(1)(aa)(i).
Approaching the term ‘creditor’ in the “normal, commercial sense of the word” (i.e. in the sense established by the case law relating to s 37A of the Conveyancing Act and other analogous provisions), I am satisfied that Ms Sun was, at the relevant time, a creditor for the purposes of s 90K(1)(aa)(i).
It is not necessary that one or both of Mr Chen and Ms Yu had as their sole or even dominant purpose the defrauding of creditors, nor is it necessary that defrauding creditors be the sole or dominant purpose of the agreement: R Chisolm, C Christie, J Keamey, Annotated Family Law Legislation (7th Ed, 2026, LexisNexis) at 812. Ms Sun was required only to prove that at least a purpose of the financial agreement was to defeat her as creditor.
Ms Yu and Mr Chen married in 2009. They subsequently had two children together.
In July 2010, they purchased the Berala property for $390,000. It was Ms Yu’s evidence that it was she who decided to purchase the Berala property and that Mr Chen’s name was included on the title for the sole purpose of enabling her to obtain mortgage finance for the purchase, which was otherwise unavailable to her as she was “on a temporary visa”.
I have difficulty accepting what was said by Ms Yu to have been the transactional nature of Mr Chen’s inclusion as a purchaser of the Berala property, or that there was, at the time of its purchase, a mutual understanding that it was “her property”. At the time of the purchase, Ms Yu and Mr Chen were married. The property was to be their matrimonial home. As discussed below, during much of their marriage both contributed equally to the repayment of the loan they had jointly taken out to fund the purchase of the Berala property. Fourteen years later, the Berala property was expressly treated by them both as a “joint asset” in the financial agreement.
I find that Mr Chen’s inclusion as a purchaser of the Berala property was not merely a device to facilitate the borrowing of money for its purchase by Ms Yu and that they were, in every relevant sense, joint owners of that property from the date it was acquired.
I do accept that Ms Yu paid the deposit of $39,000. At settlement, Ms Yu paid a further sum of $35,295.88 toward the settlement sum. It was Ms Yu’s evidence that these funds were predominantly sourced from her parents and other members of her family, who were at that time not living in Australia. It was said by Ms Sun that there is nothing in the banking and other records relied on by Ms Yu which excludes the possibility that those funds were provided by Ms Yu’s family to her and Mr Chen jointly. However, nothing was put forward which contradicted Ms Yu’s claim that these funds were predominantly sourced by her from her family, and I accept that this was the case.
The balance of the purchase price was paid through a $7,000 government grant and mortgage finance in the amount of $310,000. The evidence does not disclose which of Ms Yu or Mr Chen applied for — or was entitled to receive — the government grant. The mortgage finance was obtained in the joint names of Ms Yu and Mr Chen.
Ms Yu said that, after purchasing the Berala property, she was solely responsible for all payments in relation to it; including council rates, water rates and strata fees. Although undoubtedly material in the context of their family budget, these were relatively small sums of money.
Other payments made by Ms Yu included $22,455.80 received from her parents, which she contributed towards renovations undertaken in 2011 and 2012. She also gave evidence that, in early 2019, she contributed $10,000 from her savings toward further renovations at the Berala property. The documentary evidence she relied on in support of the latter contention comprised a series of hardware receipts and associated bank records which, on their face, appear to relate to the purchase of materials. Under cross examination, Ms Yu maintained that Mr Chen did not contribute any money toward the 2019 renovations. However, the evidence is silent on who carried out the works associated with these renovations or what commercial arrangements were in place regarding payment for these works.
Ms Yu says that she paid $30,000 of her own money into the loan account for the mortgage in 2012. Otherwise, the mortgage payments were made equally by Ms Yu and Mr Chen. Ms Yu suggested that this was Mr Chen’s way of contributing to rent or board given Ms Yu was paying for everything else in relation to the property. While Ms Yu may have viewed the arrangements by which the mortgage repayments were made in this way, it was not suggested by either Ms Yu or Mr Chen that there was ever any formal agreement to this effect. It was their matrimonial home. The evidence is largely silent on the source of the money used to fund the other living expenses incurred by Ms Yu, Mr Chen and their children during this period.
In these circumstances, I do not accept that Mr Chen’s contributions toward the repayment of their joint mortgage were in the nature of rent or board but, rather, consider it likely that they were reflective of the manner in which he and Ms Yu chose to distribute the payment of their joint liabilities and the family’s living expenses in the context of their marriage.
In late 2013, Ms Yu and Mr Chen decided to separate. Ms Yu said that, while they remained living together at the Berala property at this time, they “were emotionally separated”. Ms Sun did not challenge this evidence.
In April 2014, Mr Chen agreed to purchase a property in Hurstville. The deposit of $41,000 was paid from drawings made on the loan account maintained by Ms Yu and Mr Chen in relation to the Berala property; although Ms Yu said that this was done without her knowledge.
Whatever knowledge Ms Yu might have had regarding the decision to acquire the Hurstville property or the source of the funds used to pay the deposit, it was ultimately purchased by her and Mr Chen as joint tenants. Their joint loan in relation to the Berala property was refinanced and a fresh loan was taken out in both of their names to fund the purchase of the Hurstville property.
By 3 June 2014, bank records show that they held two separate loan accounts, which I infer were secured by mortgages over both the Berala and Hurstville properties. Each was described by the bank as an “Investment Loan”. One provided an advance of $820,000 and the other $275,000. Ms Yu asserts that the former related to the Hurstville property and the latter the Berala property. In circumstances where the purchase price listed in the transfer of the Hurstville property was $820,000, Ms Yu’s characterisation of the two loan accounts is likely to reflect the true position.
Ms Yu clearly agreed that she and Mr Chen should be recorded on title to the Hurstville Property as joint tenants. She said that she did this to enable Mr Chen to obtain sufficient borrowings to finance the purchase of that property in circumstances where he had already — and without her knowledge — committed himself to do so. Barring the $41,000 that Mr Chen withdrew from their joint account, Ms Yu said that she did not put any money towards the Hurstville Property. None of this was seriously challenged by Ms Sun and, in light of the unchallenged evidence regarding the breakdown of Ms Yu and Mr Chen’s relationship in late 2013, there is no reason to doubt Ms Yu’s account of these events.
At around this time, the repayments on both of the joint loan accounts were converted to “interest only”. In relation to the $275,000 loan, Ms Yu and Mr Chen continued to contribute equally to those interest payments. Mr Chen alone took responsibility for paying the interest accruing on the $820,000 loan. The Hurstville property was tenanted. Ms Yu said that Mr Chen collected the rent paid on that property and that he used it to pay the interest on the $820,000 loan. Once again, none of this was challenged by Ms Sun and I accept that it is likely to reflect a loose understanding between Ms Yu and Mr Chen that the Hurstville property was treated as though it were owned by Mr Chen alone.
In late 2014, there was a further deterioration in Ms Yu and Mr Chen’s relationship. She says that, at that time, the two agreed to formalise their separation on the basis that Mr Chen would transfer his interest in the Berala property to Ms Yu, she would transfer her interest in the Hurstville property to him, she would retain custody of their two children, and he would pay whatever child support was legally required.
There is nothing in the evidence which casts doubt on this aspect of Ms Yu’s evidence. To the contrary, the evidence included a letter to Ms Yu and Mr Chen from Wang Lawyers Pty Ltd dated 8 December 2014, which notes:
“We act for Tao Chen (the Husband) and Xia Yu (the Wife). We have interviewed the husband and are advised that you have been separated since 20 Nov 2013 and you both have regarded the marriage as over.”
Thereafter, the letter records an agreement to the effect of that described by Ms Yu as having been “proposed” by Mr Chen and offers to produce the “detailed agreements” once the terms recorded in the letter “are agreed-upon”. Ms Yu said that she and Mr Chen did not proceed to formally document the agreement at that time and, instead, attempted to reconcile their differences. However, by early 2020, those differences had become irreconcilable.
Ms Yu said that, from that point onwards, she had no involvement in any of Mr Chen’s activities; a proposition not meaningfully challenged in her cross examination.
On 14 January 2021, Ms Yu and Mr Chen signed a contract for the sale of the Hurstville property. The sale price was $1,005,000 and, on 29 January 2021, $82,960 of the $100,500 deposit was released into a transactional account held in their joint names. Between 2 and 9 February 2021, Ms Yu transferred $14,500 from this account into her own personal bank account in three separate transfers, of which $6,000 of those transferred funds was used by Ms Yu to purchase a piano for their children. She said that $7,000 of the transferred funds was a partial repayment made by Mr Chen of loans which had been made to him by Ms Yu’s parents. While I have no reason to doubt that this was Ms Yu’s understanding, the evidence does not establish that any such loans were advanced or that any part of the $14,500 in transfers made by Ms Yu from their joint transactional account at that time was in fact the repayment of a loan made to Mr Chen by Ms Yu’s parents.
Ms Yu understood that the remaining $68,460 of the released deposit was transferred out of the jointly held transactional account by Mr Chen for his own use.
Upon settlement of the sale of the Hurstville property on 9 July 2021, $807,975 was paid to Westpac — presumably in discharge of the larger of the two loan accounts held by Ms Yu and Mr Chen. The sum of $90,000 was paid to Juris Chamber Lawyers Pty Ltd; this was characterised as a “Loan Payout”. The balance of the sale proceeds was applied to what would appear to have been the professional and other costs associated with the sale and conveyance.
Ms Yu asserted that, other than the $14,500 transfer made into her personal account, Mr Chen “received the balance of the sale proceeds from the Hurstville property”. While I again have no reason to doubt that this was her perception of the situation, the facts are less clear cut. The overwhelming majority of those sale proceeds were used to discharge the substantial loan that she and Mr Chen had taken out jointly. This was clearly to Ms Yu’s benefit as much as it was of benefit to Mr Chen. The evidence contains no details of the Juris Chamber Lawyers loan.
Ten days after the sale of the Hurstville property had completed, Mr Chen moved out of the Berala property and ceased contributing to the repayment of the loan referable to that property. Ms Yu said that, from that point onwards, she was solely responsible for making payments in relation to that loan. Both she and Mr Chen were challenged in relation to this aspect of the evidence.
Ms Sun relied on an exchange between Mr Chen and Dicker DCJ in the District Court on 8 March 2024. On that occasion, Ms Sun had moved in that court for urgent freezing orders against Mr Chen. In the context of that application the following exchange occurred:
“HIS HONOUR: The sentence is, ‘Mr Chen is entitled to pay regular mortgage payments owed by him and/or him and any spouse jointly to a financial institution concerning the property referred to in para 7(1)(c) above.’ What that means, Mr Chen, is, do you have a mortgage on your house at Berala? Do you pay the bank regular money for the house?
NATHAN [counsel for Ms Sun]: There is, your Honour, yes.
DEFENDANT [Mr Chen]: Yes.
HIS HONOUR: That means you could continue to pay that. There is no problem with that.
DEFENDANT: Okay.”
Ms Sun contended that this amounted to an acceptance by Mr Chen that, as at 8 March 2024, he was continuing to make payments toward the loan held jointly with Ms Yu in relation to the Berala property. I disagree.
I do not read the above exchange as a concession by Mr Chen that he was making payments toward the loan held in relation to the Berala property. The observations I was able to make of Mr Chen’s English language skills during the course of his cross examination in these proceedings reinforce this view.
More importantly, Ms Sun’s reliance on this exchange ignored a later exchange between Dicker DCJ and Mr Chen, which was in the following terms:
“HIS HONOUR: And they have written to you in relation to their claim. There’s been no response and they think there is – and also, you have connections with China, and they’re concerned that your assets may be moved or dealt with, so that at the end of the day, if they win, there’s nothing for them to recover. What do you say about that?
DEFENDANT: I am stilling (sic) living in Australia. I’m not going to be doing anything like move to China. This isn’t a personal problem. I separate with my wife like two, three years ago. We’ve already separate.
HIS HONOUR: But you and your wife are still –
DEFENDANT: Because we, you know, I have no money to support a family, to support the kids. That’s why my wife, you know, has tried to separate with me.
HIS HONOUR: Who’s living at the house?
DEFENDANT: Pardon?
HIS HONOUR: Who’s living in your house?
DEFENDANT: There’s like my wife and with two kids.
HIS HONOUR: I understand. It’s still in your name though.
DEFENDANT: No, it’s not in my name.
HIS HONOUR: It is. There’s a title search showing it’s in your name and your wife’s name, joint name.
DEFENDANT: Okay. Because we already like divorced before. We’re not living for like two or three years.
HIS HONOUR: Where is the latest title search? It’s referred to in the affidavit as being one for 1 March.
…
NATHAN: I can tell your honour that my solicitor did another search yesterday to check that nothing had changed in terms of the ownership, and it’s still the case.
HIS HONOUR: Yes. That’s a very recent one. You’ll see that you and your wife are still on the title.
DEFENDANT: My wife do that, you know. I do not pay for the mortgage for over like three or four years. My wife pay all the mortgages.
HIS HONOUR: Okay, but you’re still on the title.
DEFENDANT: I don’t know. I didn’t ask my wife.”
In this more detailed exchange, Mr Chen made clear to Dicker DCJ that he had not been making any contribution to the repayment of the loan relating to the Berala property for some time. While his statement that he had not been making any such payments for “three or four years” was inconsistent with the more precise evidence given by Ms Yu in relation to the date on which she says he ceased making these payments, little turns on this fact.
I am satisfied that Mr Chen ceased making regular contributions to the repayment of the loan over the Berala property in July 2021.
While Mr Chen may not have made regular repayments towards the Berala property loan, in early 2023 he did make several lump sum payments towards that loan. Ms Yu refers to him having paid $7000 in three tranches at this time. These payments are reflected in the bank statements produced in relation to that loan.
At around the same time, two further lump sum payments of $2000 each would appear to have been made; each seems to have been a cash deposit made at Westpac’s Auburn branch and the identity of the depositor is not clear. Ms Yu has again characterised the payments made at this time by Mr Chen as a repayment of loans made to him by her parents. I am again not satisfied that this was in fact the case, although Ms Sun has not advanced any reason for me to doubt that this was at least Ms Yu’s belief at the time.
What the bank statements (which were in evidence) make clear is that these payments were made by Mr Chen after a period of significant default by Ms Yu in relation to the repayment obligations under that loan. Default interest was being charged on the loan, and fees had been passed on by the bank for the “Production Of Legal Notices”. Although not addressed by any party in cross examination or submissions, this context cannot be ignored when considering the payments made by Mr Chen at this time. Nor can the fact that the payments were made by him shortly before the finalisation of the financial agreement.
Whatever the state of Mr Chen’s relationship with Ms Yu might have been at the time he made those payments, the fact remained that his children were living in the Berala property. The payments he made toward the loan substantially remedied the then-default in the repayment obligations and, thereby, preserved the stability of the children’s accommodation. I do not consider the making of these payments to have been inconsistent with a wider understanding between him and Ms Yu to the effect of that which was, very shortly thereafter, recorded in the financial agreement.
On 8 May 2023, Ms Yu and Mr Chen filed an Application for Divorce in the Federal Circuit and Family Court of Australia. That document reflects the agreement between them that the children would “stay with” Ms Yu and “spend time with” Mr Chen and that Ms Yu would “pay for” both children. Ms Sun placed some reliance on the fact that in that application, Ms Yu and Mr Chen answer “no” to the question:
“Are there any existing orders, agreements, parenting plans or undertakings to a court about family law, child support, family violence or child welfare issues concerning any of the parties or children listed in this application?”
On 17 July 2023, the financial agreement was formalised. I use the term formalised as it is apparent that the financial agreement had been largely finalised by 8 May 2023. That was the date originally written in the agreement before being crossed out and replaced with 17 July 2023. It is not apparent when Ms Yu and Mr Chen executed the financial agreement, but the solicitor’s certificate confirming that independent advice had been provided to Ms Yu was dated 8 May 2023. The equivalent certificate provided — by a different solicitor — to Mr Chen was dated 17 July 2023.
I take from the dates written on the various components of the financial agreement that its terms had been agreed between Ms Yu and Mr Chen by 8 May 2023 at the latest, but that Mr Chen did not obtain the certificate of independent advice required to give effect to that agreement for the purposes of the Family Law Act until 17 July 2023. I am reinforced in this view by the fact that the terms contained in the financial agreement are entirely consistent with the agreement reflected in Application for Divorce, which was signed on 8 May 2023. I note that those terms are also largely consistent with the agreement Ms Yu said that she and Mr Chen had reached when they had first agreed upon the terms of their then-proposed separation some 9 years earlier; albeit the Hurstville property had been sold in the intervening period.
Insofar as it is relevant, the recitals to the financial agreement recorded that:
“The parties separated on 20 March 2020. The parties confirm that they are living separately and apart as at the date of this Deed and the parties confirm that there is no reasonable likelihood of cohabitation being resumed.”
“1) That the husband shall, on and after the date of this agreement, sign all required documents and take all necessary steps to transfer all his right, title and interest in the [Berala property] to the wife with the $270,000.00 mortgage. As the husband had taken $110,000 from the sale of the [Hurstville property] on 14/01/2021.
- That the wife shall, from the date of this agreement, indemnify the husband against all payments and liabilities pursuant to all rates, taxes and outgoings of or with respect to the [Berala property] of whatsoever nature and kind, and keep the husband so indemnified at all times.
- That:-
(a) each party to be solely entitled to the exclusion of the other to all other property in the possession of or name of such party as at the date of this agreement;
(b) each party forgo any claim they may have to the property in the possession of the other party or in the name of the other party.
(c) each party forgo any claims they may have to any superannuation belonging to or earned by the other party; and
(d) each party be solely liable for and indemnify the other against all liability encumbering any item of property to which that party is entitled pursuant to this agreement.
…
- That each party shall be liable for the payment of any debt incurred in their sole name or jointly with any other person or encumbering any property retained by that party in accordance with this agreement and shall indemnify and keep indemnified the other party in relation thereto.
- The husband and wife acknowledge that this agreement will finally determine the financial relationship between them as to spousal maintenance of either of them and that they will make no claim on the other for spousal maintenance now or in the future. This agreement is entered into to avoid further proceedings with respect to spousal maintenance and in reaching the cap agreement as provided herein, the parties have taken into account the contingencies of life insofar as they may affect the financial circumstances, favourable or unfavourable of either of them.” (Emphasis added)
The emphasised portion of the above extract from the financial agreement was handwritten into the document and initialled by the parties. Ms Yu said that she wrote those words; this was not explored with her in cross examination.
There were three annexures attached to the financial agreement. Annexures A and B were tables in which the assets and liabilities of Mr Chen and Ms Yu respectively could have been listed. No assets or liabilities were listed in either table. Annexure C was a table headed “THE JOINT ASSETS AND LIABILITIES”. In this table, the sole asset listed was the Berala property, then said to be valued at $700,000. The sole liability was the mortgage over the Berala property, said to have been valued at $250,000.
As noted above, Ms Sun bore the onus of proving that the financial agreement was entered into by either or both of Mr Chen and Ms Yu “for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor or creditors”.
On its face, the financial agreement suggests that Ms Yu and Mr Chen executed it with the intention of determining how the principal asset of their marriage was to be dealt with in light of their divorce. Nothing on the face of the document points to either party having entered into that agreement for the purpose of defrauding creditors in the relevant sense. In seeking to discharge her onus, Ms Sun submitted that this intention — principally of Mr Chen — can nevertheless be inferred from a series of other facts.
First, Ms Sun said that, in October 2019, she asked Mr Chen where he lived and whether he had property in Australia. This conversation was said by her to have occurred before she agreed to enter into the building contract with Bright Star Construction. She said that this must have put him on notice of her intention to make a claim against him personally — and any property he might have owned — in the event that she was dissatisfied with work carried out by Bright Star Construction.
For the reasons I have given above, I am not satisfied that Ms Sun’s recollection of the conversation she claims to have had with Mr Chen in 2019 is sufficiently reliable for me to be satisfied that she did ask him at that time whether he owned property in Australia. In the case of this purported conversation, it is notable that it was not included in the evidence given by Ms Sun until shortly before the commencement of the hearing when she affirmed her 24 February 2026 affidavit. This is particularly notable in circumstances where no mention was made of this conversation in either of her 24 March 2024 or 30 April 2025 affidavits, each of which set out in some detail a range of conversations which she claimed to have had with Mr Chen in late October 2019 regarding the proposal that Bright Star Construction carry out work on her behalf. In none of those earlier accounts does she refer to having asked Mr Chen where he lived and whether he owned property in Australia.
Even if Ms Sun did ask Mr Chen whether he owned property in Australia in October 2019, I am not satisfied that such a question would have led Mr Chen to conclude — at that time or several years later — that there was any possibility of Ms Sun bringing any claim against any property owned by him in the event of a dispute with Bright Star Construction.
Secondly, Ms Sun pointed to conversations with Mr Chen in January 2022 in which she said the following words were used:
“[Ms Sun]: The construction work is unacceptable; I will claim my losses from you for Bardia properties.
[Mr Chen]: No, our job quality is of good quality, but I have to leave this construction company.
[Ms Sun]: You have done very bad jobs. You know I am suing you.
[Mr Chen]: Yes, I know, but my company is being bankrupted.
[Mr Chen]: My company is in bankruptcy.
[Ms Sun]: How about my loss?
[Mr Chen]: I can’t help you. I also suffered from bankruptcy. The company also [owes] me a lot of money in wages.”
“[Ms Sun]: You have left me with big problems and now your company is bankrupt. Do you have property under your name?
[Mr Chen]: No, I only had property in China. I recently sold the property in Hai Nan province in China, so I can get money to keep going, but I cannot use any of this money for with your property. I sold that property and got about $200,000.
[Ms Sun]: What about property in Australia
[Mr Chen]: I have no property in Australia
[Ms Sun]: What about your home
[Mr Chen]: It is only under my wife’s name
[Ms Sun]: Who is your liquidator?
[Mr Chen]: Don’t worry, my construction company will notify you.”
Ms Sun’s account of these conversations also appeared for the first time in her 24 February 2026 affidavit. For the reasons I have given above, I am again not satisfied that Ms Sun’s recollection of any conversation she might have had with Mr Chen in early 2022 is sufficiently reliable for me to have any confidence that the precise words she has attributed to herself were actually used. Precision, here, matters. There is a subtle but important difference between an express or implicit assertion that Ms Sun may have been contemplating a claim against Bright Star Construction and any suggestion that she was contemplating a claim against Mr Chen personally.
Even if Ms Sun’s recollection of the January 2022 conversation is accurate, it would not necessarily have been clear to Mr Chen that, in using the word “you”, she was seeking to convey an intention to bring a claim against him personally, as distinct from the company he was representing. The March 2022 conversation is similarly ambiguous.
I am not satisfied that Ms Sun has established that the words she used in any conversation with Mr Chen in early 2022 would likely have put him on notice of an intention on her part to bring a claim against him personally as distinct from any claim she might have been considering bringing against Bright Star Construction.
Thirdly, Ms Sun claimed that, on 23 March 2023, she attended the Berala property and had a conversation with Ms Yu during which she claimed to have informed Ms Yu that she intended to bring a claim against Mr Chen. Ms Yu denied ever having a conversation with Ms Sun. Ms Sun’s account of these events sat most uncomfortably with the contemporaneous objective evidence and was repeatedly adjusted in her attempt to overcome this fact.
Ms Yu acknowledged that, on 15 March 2022, she returned home to the Berala Property and found that some envelopes addressed to Mr Chen had been left outside the front door. Ms Yu said that she did not pick up or open the envelopes but informed Mr Chen that they were there and left it to him to collect them if he wished to. The evidence included video footage captured by a surveillance camera at the front door of the Berala Property on 15 March 2022. Ms Sun can be seen in this footage in and around the front door area of the Berala property. The footage does not depict any interaction between Ms Sun and Ms Yu on this occasion.
Further surveillance camera footage tendered by Ms Yu makes clear that Ms Sun again attended the Berala Property on 24 March 2022. The parties were in conflict as to what occurred on this date. Ms Yu agreed that a man and a woman attended the Berala property on that date; that much is evident from the footage. Ms Yu claims that she was too scared to answer the door because someone was forcefully knocking on the front door shouting, in Mandarin, “open the door!” She observed a man and a woman outside the door, but did not open it, and later alerted Mr Chen to the incident.
As noted above, Ms Sun initially claimed that it was on this occasion that she had a conversation with Ms Yu at the property, and that this was witnessed by her friend, Mr Mao. The surveillance camera footage captured on 24 March 2022 does not depict any interaction between Ms Sun and Ms Yu on that occasion. Mr Mao was not called to give evidence.
In cross examination, Ms Sun suggested, for the first time, that her conversation with Ms Yu took place on 15 March 2022. There was no reference in any of Ms Sun’s affidavits to a conversation between herself and Ms Yu on 15 March 2022. In fact, Ms Sun made no reference in her affidavits to having even visited the Berala property on that date; instead referring to a single visit to that property on 23 March 2022, later revised to 24 March 2022. This omission is significant.
Ms Sun’s 28 November 2025 affidavit responded directly to evidence served by Ms Yu which made clear — through the surveillance camera footage captured at the Berala property — that Ms Sun had attended the property on 15 March 2022 and 24 March 2022. In that affidavit, Ms Sun adjusted her earlier claim to have attended the Berala property and spoken to Ms Yu on 23 March 2022 by asserting that she had instead attended that property on 24 March 2022.
It is clear that this adjustment to her evidence was made to accommodate the contemporaneous, objective evidence provided by the surveillance footage. She similarly sought to withdraw an earlier claim that, when she attended the Berala property on 23 March 2022 (or 24 March 2022) she rang the doorbell, instead saying that she had knocked on the door. This change to her evidence was made in response to evidence served by Ms Yu which stated that the Berala property had never had a doorbell.
Yet, Ms Sun’s affidavits made no reference to her having attended the property on 15 March 2022, let alone to having had a conversation with Ms Yu on this occasion.
Ms Yu did concede in cross examination that the footage captured on 15 March 2022 does not show Ms Sun leaving the property. It was suggested to her that this indicated that the video footage had been in some way edited. However, this suggestion appeared to ignore Ms Yu’s unchallenged evidence to the effect that the surveillance camera, when activated by a movement sensor, would capture 8 to 10 seconds of video footage.
On its face, the surveillance camera footage in evidence was entirely consistent with the mode of operation described by Ms Yu. I am comfortably satisfied that the video footage exhibited to Ms Yu’s affidavit had not been edited in any way. To the extent that there might have been further footage captured by the surveillance camera at the time of either of Ms Sun’s visits to the Berala property, it was not suggested that any attempt had been made by her — or those acting for her — to obtain it from Ms Yu.
In the above circumstances, I do not accept that Ms Sun had any conversation with Ms Yu at the Berala property on either 15 March 2022 or 24 March 2022. However, this is not the end of the matter. Ms Sun also claims to have left letters at the Berala property.
Two issues arise in relation to these letters. First, the content of the letter or letters Ms Sun left at the Berala property. Secondly, whether those letters came to the attention of Ms Yu or Mr Chen.
As to the content of the letter or letters left by Ms Sun at the Berala property, she annexed to her 8 August 2025 affidavit a letter dated 23 March 2022 which she claimed to have left at the Berala property. The version of the letter annexed to Ms Sun’s affidavit is clearly a draft. It contains text which is in various colours and is clearly a work in progress. The coloured text supplements the text contained in an earlier letter sent by Ms Sun to which I will return in a moment. None of these issues were adequately addressed by Ms Sun in her evidence. I do not accept that this letter was ever finalised and sent or left by Ms Sun at the Berala property.
Annexed to Ms Sun’s 4 March 2024 affidavit were three letters — dated 14 March 2022 and addressed to Mr Chen and “Bright Star Constructions Pty Ltd” — which she said she had sent to an address in Bella Vista. The evidence establishes that Mr Chen never lived in Bella Vista and is unlikely to have received mail addressed to him at that address. However, as noted above, Ms Yu gave evidence of having found three letters left at the front door of the Berala property following Ms Sun’s attendance on 15 March 2022. It is likely that the letters Ms Sun recalls delivering to the Berala property were in fact copies of her three letters dated 14 March 2022.
Although there were three letters, their content was identical save that they addressed separately each of the three houses in Bardia that were constructed by Bright Star Construction. The text of each letter relevantly read as follows:
“We are greatly concerned by your conduct and defective workmanship in the construction of our new house at the above-mentioned address.
Works are not in accordance with the approved plans and the building is not weatherproof nor completed.
Be advised as you have left the site and not returned since 25th December 2021, you are in breach of your contract Clause 6; Clause 8 and Clause 24.
As the builder of these works, be advised you must return to the site and rectify the defective works as well as complete the construction in a continuous manner.
Under Clause 28, I am giving you notice that your tardiness and delay have defaulted on the contract construction time of 50 weeks.
Again, be advised failure to attend the site within the next seven (7) days and complete the works in a timely manner will leave me no alternative other than to enact Clause 25.”
I accept Ms Yu’s evidence that she did not open or read these letters. However, I consider it likely that they did come to the attention of Mr Chen in March 2022. Ms Yu had told him that he could collect them from the front door of Berala property and she did not suggest in her evidence that he had failed to do so.
The letters were addressed to Mr Chen at Bright Star Construction. It was Bright Star Construction which had entered into the contract with Ms Sun for the construction of the three houses and was said by Ms Sun to have breached that contract. In this context, I do not accept that any aspect of Ms Sun’s letter put Mr Chen on notice of any intention she might have had to bring a claim against him personally arising out of those building works.
Finally, Ms Sun points to the fact that, on 23 March 2022, she caused a conveyancer to lodge a caveat on the title of the Berala property. I will return to consider what can be inferred from knowledge of this fact when I consider Ms Sun’s attack on the later transfer of Mr Chen’s intertest in the Berala property to Ms Yu.
For immediate purposes, it is sufficient to note that there is no evidence which points to either Mr Chen or Ms Yu having any knowledge of Ms Sun’s caveat when they executed the financial agreement. To the contrary, Ms Yu’s unchallenged evidence was that she did not become aware of the caveat until 29 September 2023. In these circumstances, Ms Sun’s caveat has no bearing on my assessment of Ms Yu and Mr Chen’s respective intentions in executing the financial agreement in May 2023.
For the reasons given above, I am not satisfied that either Ms Yu or Mr Chen were aware that Ms Sun had any intention of bringing a claim directly against Mr Chen when they executed the financial agreement. Ms Sun did not dispute that Ms Yu and Mr Chen’s marriage had reached its natural end by this point and that their separation was genuine. In these circumstances, Ms Sun has not established that either Ms Yu or Mr Chen entered into the financial agreement for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor in the sense contemplated by s 90K(1)(aa) of the Family Law Act.
The principles relating to the application of s 37A of the Conveyancing Act are well established. While each of Ms Sun and Ms Yu relied on articulations of these principles found in different authorities, there was no material dispute between them as to their content and effect.
Ms Sun bore the onus of proving that Mr Chen’s interest in the Berala Property was transferred to Ms Yu “with intent to defraud creditors” in the sense contemplated by s 37A(1): Wentworth v Rogers & Anor [2004] NSWCA 430 at [62].
Where used in s 37A(1), the term “creditors” includes future, contingent or prospective creditors: Cannane v J Cannane Pty Ltd (in liq*)* (1998) 192 CLR 557; [1998] HCA 26 at [10]; Trustees of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [30]-[32]. I am satisfied that at the time of the 5 March 2024 transfer Ms Sun was a prospective creditor.
In Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3, the High Court held (at [32]) that it is:
“ …unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss: it [is] necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly.” (Emphasis in original).
“If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it, or its worth, beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor”.
"Although the party impugning the disposition of property must show an actual intent to defraud creditors at the time of the disposition, the intent may be inferred from the making of a disposition which, to adopt the words of Lord Hatherley LC in Freeman v Pope [(1870) 5 Ch App 538 at 541], 'subtracts from the property which is the proper fund for the payment of [the] debts, an amount without which the debts cannot be paid'."
"(1) the 'natural and probable consequence' of the disposition is the defeat or delay of creditors;
(2) the alienation is made voluntarily;
(3) the alienation is made, relevantly, for no consideration by a person in financial difficulties;
(4) the alienation is made in favour of a family member; and
(5) the alienation is made in haste or proximately to one or more events indicating financial stress on the part of the disponor."
(Citations omitted).
It was Ms Yu’s unchallenged evidence that she understood that she would need to refinance the loan over the Berala property in order for Mr Chen’s interest in that property to be transferred to her as contemplated by the financial agreement. As the loan — then held jointly by Ms Yu and Mr Chen with Westpac in relation to the Berala property — was secured by a first ranking mortgage over the property, there is no reason to doubt that Ms Yu’s understanding of this situation was correct.
On 16 July 2023, Ms Yu was informed by a mortgage broker that she would not be able to secure finance from any lender due to certain dishonoured payments referred to in recent account statements issued by Westpac in relation to the joint loan. Thereafter, she set about borrowing sufficient money from her extended family in China to enable her to discharge the mortgage over the Berala property.
In late July 2023, Ms Yu, Mr Chen, and the solicitor who had provided independent advice to Mr Chen in connection with the financial agreement, each signed a “Client Authorisation” form, pursuant to which that solicitor was authorised to give effect to a transfer and discharge/release of mortgage in relation to the Berala property.
By September 2023, Ms Yu had gathered sufficient funds from her family to pay out the Westpac loan.
On 22 September 2023, Ms Yu and Mr Chen formally requested that Westpac close their joint loan account and provide a discharge of its mortgage over the Berala property. In this form, the “Security status” is noted as “Discharge”. The document contains no reference to any other lender and does not identify a proposed settlement date.
Documents were also filed with NSW Revenue, which referred to a proposed transfer of the Berala property to Ms Yu having been executed on 27 September 2023.
Ms Sun has not established that, when taking each of the steps referred to in the above paragraphs, either Ms Yu or Mr Chen were aware that she intended to make a claim against Mr Chen.
As I have noted above, Ms Yu accepted that she became aware of the caveat Ms Sun had caused to be lodged on the title of the Berala property on 29 September 2023 when she was notified of this fact by the conveyancer retained in relation to the transfer of Mr Chen’s interest in the Berala property to her.
The caveat described Ms Sun’s asserted interest in the Berala property as an equitable interest arising by virtue of an agreement between herself and Mr Chen. In fact, Ms Sun had no interest in the Berala property. She had not entered into any agreement with Mr Chen, let alone one which gave her an equitable interest in the Berala property; although Ms Yu is unlikely to have been aware of this fact on 29 September 2023.
Ms Yu said that, after being informed about the caveat, she contacted Mr Chen and had the following conversation:
“[Ms Yu]: Why is there a caveat on the property?
[Mr Chen]: Really? I don’t even know.
[Ms Yu]: What do we do now?
[Mr Chen] Let me deal with it.”
Despite the views I have reached regarding the evidence given by Ms Yu about conversations, I accept that she is likely to have had a conversation about the caveat with Mr Chen at around this time. The objective evidence of what occurred after 29 September 2023 suggests that she did and that Mr Chen had also been unaware of the caveat prior to that date.
Ms Yu said that throughout October 2023, she asked Mr Chen multiple times when the caveat would be removed, and was told that he would speak to Ms Sun. Little turns on whether — or on what terms — such conversations took place. The objective evidence establishes that, on 6 November 2023, Ms Yu and Mr Chen exchanged the following messages (noting that the messages were sent in Mandarin) via a messaging app:
“[Ms Yu]: This is really unclear – I can’t see it clearly either.
[Mr Chen]: I just called her. She told me to bring the keys over.
[Ms Yu]: Well, once you bring the keys over, ask him to cancel it himself. Say you have a lawyer – if you don’t, just tell him you do.
[Mr Chen]: She understands it herself.”
“This is the company’s repayment record. I personally don’t owe you any money, so please remove the CAVY from my property.
The insurance company has already been compensated. If you use false evidence to seize and mortgage my personal assets, you will be held legally responsible.
I’ll have the keys delivered to your house later tonight, so please remove the CAVY from my property. I need to deal with my house.”
Mr Chen then sent Ms Yu a further message in which he said “[i]t didn’t really concern me personally in the first place”.
Following this text exchange, Ms Yu said that she had the following conversation with Mr Chen:
“[Mr Chen]: Don’t worry. I don’t owe her any money. The insurance company has paid her claim.
[Ms Yu]: Then you can get rid of the caveat?
[Mr Chen]: I will have my lawyer to get rid of the caveat. You will have to sign.
[Ms Yu]: Ok.”
Once again, nothing turns on whether this conversation occurred, or its precise terms.
During same afternoon, Mr Chen received a letter from solicitors acting for Ms Sun. The letter recounted the history of Ms Sun’s dealings with Bright Star Constructions and asserted — referring to s 37 of the Design and Building Practitioners Act — that Mr Chen owed Ms Sun a duty of care to avoid economic loss caused by defects, and had breached that duty of care. The letter went on to assert that Ms Sun was entitled to recover loss from Mr Chen and demanded confirmation that he would reimburse her when her losses were quantified.
On 10 November 2023, Ms Yu and Mr Chen signed an “Application for Preparation of a Lapsing Notice” in relation to Ms Sun’s caveat. Their signatures on this document were witnessed by the solicitor who had provided independent advice to Mr Chen in connection with the financial agreement. For reasons which are not explained in the evidence, the document does not appear to have been lodged by that solicitor until 23 January 2024. A lapsing notice was issued in response to that application and was served on Ms Sun — via her conveyancer, Icy Fan — on 1 February 2024.
No application was made by Ms Sun to extend the caveat and, in late February 2024, it lapsed.
On 26 February 2024, lawyers acting for Ms Sun sent an email to Mr Chen attaching a further letter, which relevantly stated that:
“Although our Client does not propose to apply to the Court to extend the operation of the Caveat, our Client is considering applying to the Court for a freezing order to restrain you from, inter alia, disposing of your interest in the [Berala property] as it appears you are attempting to sell or transfer your interest in the [Berala property] for the purpose of ensuring any judgment obtained by our Client against you is unable to be satisfied and in that way frustrates the process of the Court.” (Emphasis in original).
“please sent email to Bright star construction .
The Compnay respons for the Contract .nothing to do with my personal.”
The following day, Ms Yu and Mr Chen both signed a “Property and Security Request Form” by which they requested that Westpac close their joint loan account and discharge its mortgage over the Berala property. This form is the same as that which they had signed on 22 September 2023, save that:
The “Security status” is noted as “Refinance out”.
Next to the heading “Other lender” it records “CHANGE OF OWNERSHIP BY DEED OF FINANCIAL AGREEMENT AND DISCHARGE OF MORTGAGE AT THE SAME TIME”.
It identifies a proposed settlement date of 1 March 2024.
On 1 March 2023, a “Source Account Deposit Form” was lodged by the solicitor who had provided independent advice to Mr Chen in connection with the financial agreement with PEXA. That form related to the proposed transaction and noted a “Scheduled Settlement Date” of 5 March 2024. On 5 March 2024, the same solicitor prepared “Lodgement Instructions”, which proposed the lodgement of a Discharge of Mortgage, Notice of Sale, and Transfer; in that order.
A draft version of the Notice of Sale was in evidence. Under the heading “Transaction Details” it identified the “Type of Acquisition” as a “Deed of Assignment” and the “Date of Acquisition” as 17 July 2023. Although described imperfectly, it clear that this was a reference to the financial agreement.
On its face, the transfer would appear to have been lodged by the same solicitor on 5 March 2024. Under the heading “CONSIDERATION”, the following appears:
“Without Monetary Consideration And As Regards A Deed Of Assignment”
At 3.20PM on 5 March 2024, lawyers acting for Ms Sun sent an email to Mr Chen which attached the Summons by which these proceedings were commenced in the District Court, two affidavits, and orders which had been made by Judicial Registrar Howard earlier that day. Those orders relevantly included a freezing order, which prevented Mr Chen from in any way disposing of, or dealing with, any of his assets in Australia up to the unencumbered value of AUD$1,000,000. A sealed copy of those orders was attached to an email sent to Mr Chen at 3:38PM on the same afternoon.
In support of her claim that the transfer was made with the intent to defraud creditors, Ms Sun pointed to the circumstances identified by Gilmour J in Oswal (No 6) at [66], from which it was said I could readily infer the existence of the requisite inference, and implicitly suggested that each were present in the case of the transfer. I am not persuaded that this is the case.
The evidence does establish that Mr Chen’s interest in the Berala property was, at the time of the transfer, his only substantial asset. In those circumstances, it may be accepted that the “natural and probable consequence” of the disposition of that interest would have been that he was left with little assets from which to satisfy claims made by any creditors, including Ms Sun. However, the evidence does not reveal what that interest in the Berala property might ultimately have meant insofar as meeting the claims of any creditors was concerned. It was purchased in 2010 for $310,000. At the time Mr Chen transferred his interest in the property to Ms Yu, Westpac held a mortgage over it which secured a debt in the order of $255,000. The only evidence of the actual value of the Berala property at the time of its transfer is the figure attributed by Ms Yu and Mr Chen in the financial agreement.
Moreover, Mr Chen was contractually bound by the financial agreement to transfer that interest to Ms Yu. While the above extract from Super Vision Resources makes clear that the disposal of his legal interest in the Berala property was still an alienation to which s 37A of the Conveyancing Act might apply, it cannot be assumed that this legal interest was of significant value in circumstances where Ms Yu, at least arguably, held an equitable interest in Mr Chen’s share of the property, consummate with the availability of specific performance: Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [53].
In assessing whether the disposal of Mr Chen’s interest in the Berala property was “voluntary”, it again cannot be ignored that he was contractually obliged by the financial agreement to transfer that interest to Ms Yu and had been obliged to do so since July 2023. For the reasons I have given above, I have found that Mr Chen did not take on that obligation with the intention of defeating any creditor.
Whilst Mr Chen’s interest in the Berala property was not strictly made to “a family member” — he having divorced Ms Yu almost 9 months prior to the transfer and been separated from her for a considerable period before that — I accept that the transfer to Ms Yu warrants closer scrutiny than would a transfer to a complete stranger.
Ms Sun placed significant reliance on the fact that the transfer was expressly said to have been made “without monetary consideration”. For reasons analogous to those given by Nixon J in Grapple Pay Pty Ltd v Conroy [2025] NSWSC 64 at [135], I give little weight to the fact that these words were used in the transfer to describe the consideration provided by Ms Yu.
No actual money was paid by Ms Yu to Mr Chen for his interest in the property. In this sense, it was correct to note that there was “no monetary consideration”. However, prior to transferring his interest in the Berala property to Ms Yu, Mr Chen was liable to Westpac for the outstanding portion of the joint loan secured by a mortgage over that property. Consistent with what had been agreed in the financial agreement, Ms Yu refinanced that loan (using funds she had obtained from her family in China) and thereby relieved Mr Chen of this significant financial obligation. I am satisfied that this alone amounted to valuable consideration for the transfer: Wise Investments Pty Ltd v Ruddy Tomlin’s & Baxter, Solicitors [2019] QCA 271 at [59].
Under the financial agreement, Mr Chen was also released from any further claims that Ms Yu might have had against him arising out of their marriage in exchange for his interest in the Berala property. The compromise of a potential Family Court property settlement can amount to good consideration: Saba v Plumb (2018) 97 NSWLR 278; [2018] NSWCA 60 at [99]-[104]. In this case, I am satisfied that it did.
The matters identified in the above two paragraphs were not “merely nominal or trivial or colourable” in the sense described in Barton v Official Receiver (1986) 161 CLR 75 at 86; [1986] HCA 44, and I am satisfied that Mr Chen did receive valuable consideration from Ms Yu for his interest in the Berala property.
Ms Sun contended that it cannot have been a coincidence that Ms Yu and Mr Chen signed the Westpac form the day after Mr Chen had received the 26 February 2024 letter from her solicitors or that the transfer was lodged on the same day as these proceedings were commenced in the District Court. By this, I understood her to suggest that these steps must have been taken in response to that letter and the commencement of these proceedings, and to circumvent any freezing order and defeat the claim she had foreshadowed. Even if Ms Yu and Mr Chen had entered into the financial agreement without the requisite intention and the transfer was merely a step taken in execution of that agreement, Ms Sun said that I ought nevertheless find that the timing of that step was influenced by an intent to defraud creditors and, on that basis, it engaged s 37A of the Conveyancing Act. I disagree.
The transfer of Mr Chen’s interest in the Berala property was not made “in haste”. The evidence makes clear that he and Ms Yu had been attempting to finalise that transaction for several months. In doing so, they had signed a materially identical version of the Westpac form on 22 September 2023. Since that time, Ms Sun’s caveat had been the only thing preventing the transfer from occurring.
Ms Sun’s caveat lapsed only days before the Westpac form was signed by Ms Yu and Mr Chen. It is unsurprising that, several days after that occurred, Ms Yu and Mr Chen would renew their efforts to finalise that transaction.
While it is true that, by this time, Mr Chen had been given notice of Ms Sun’s intention to bring a claim against him arising out of the work carried out by Bright Star Construction, he disputed that claim. The evidence does not suggest that he did not genuinely believe that he had no personal liability for the works conducted by Bright Star Constructions. There is also no suggestion in the evidence that the timing of the transfer was brought forward in response to Ms Sun’s 26 February 2024 letter.
I do not infer that the letter received from Ms Sun’s lawyers on 26 February 2024 was, in any relevant sense, a catalyst for the request he and Ms Yu made of Westpac on 27 February 2024 or the subsequent transfer of his interest in the Berala property.
I also do not accept that the timing of the transfer was in any way influenced by the commencement of these proceedings. The evidence does not disclose at what time on 5 March 2024 the transfer was lodged or whether Mr Chen or Ms Yu had any involvement in the lodgement of that document on that day; the document having been lodged by a solicitor.
The orders of Judicial Registrar Howard on that date were obtained by Ms Sun on an ex parte basis. The evidence does not disclose when on 5 March 2024 this occurred. The first notice that Mr Chen was given of the fact that the proceedings had been commenced or the orders obtained was through the email sent to him by Ms Sun’s lawyers at 3.20PM that afternoon. The evidence does not reveal when that email was read by Mr Chen.
In these circumstances, Ms Sun has not established that these proceedings had even been commenced when the transfer was lodged nor that Mr Chen had any awareness of the proceedings at whatever time that might have occurred. In these circumstances, I do not infer that the fact that the transfer was lodged on the same day as these proceedings were commenced by Ms Sun in the District Court was anything other than a coincidence.
For the reasons given above, Ms Sun has failed to establish that Mr Chen transferred his interest in the Berala property to Ms Yu with intent to defraud creditors in the sense contemplated by s 37A of the Conveyancing Act.
As Ms Yu sought to rely on the protection afforded by s 37A(3) of the Conveyancing Act, she bore the onus of proving the facts required to enliven that protection: Super Vision Resources at [95], citing Wentworth v Rogers at [66]-[68]. Although strictly unnecessary given the view I have reached on the threshold question of whether the transfer was made with an intent to defraud creditors, I am satisfied that she has discharged that onus.
Ms Yu was required to demonstrate that she acquired Mr Chen’s interest in the Berala property as a purchaser in good faith, and that at the time of the transfer she did not have notice of any intent to defraud creditors.
The term “purchaser” is defined in s 7 of the Conveyancing Act as “a purchaser for valuable consideration”. For reasons I have outlined at [163]-[166], I am satisfied that Ms Yu gave good consideration for the transfer.
I am further satisfied that, at the time of the transfer, Ms Yu was not on notice of any intent to defraud creditors. The only relevant circumstance Ms Yu was aware of was the caveat which had been lodged on the title of the Berala property by Ms Sun. She had been told by Mr Chen that Ms Sun had no claim against him. There is nothing in the evidence from which I would infer that Ms Yu did not genuinely believe what she had been told by Mr Chen in relation to this issue. The confidence which she might have placed in the assurances given by Mr Chen could only have been reinforced by the fact that the caveat was allowed to lapse without any opposition. There is no evidence to suggest that Ms Yu was told about the 26 February 2024 letter sent to Mr Chen by Ms Sun’s lawyers. Having regard to the state of Ms Yu and Mr Chen’s relationship at that point in time, I do not infer that he is likely to have spoken to her about this letter.
Viewed through the eyes of Ms Yu, the transfer was merely a final — and much delayed — step taken in execution of the financial agreement. I am satisfied that, at the time it occurred, she was acting in good faith and had no notice of any intention by Mr Chen to defraud creditors.
In light of the views I have reached in relation to Ms Sun’s claims for relief under s 37A of the Conveyancing Act and s 90K of the Family Law Act, it is not strictly necessary for me to determine whether — before the transfer — Mr Chen held his interest in the Berala property on trust for Ms Yu. However, in case I am found to be wrong in the views I have reached in relation to these aspects of Ms Sun’s claim, I will explain briefly why I would have concluded that Mr Chen did not hold his interest in the Berala property on trust for Ms Yu.
Ms Yu’s principal contention was that Mr Chen held his interest in the Berala property for her pursuant to an express trust that arose out of an agreement between them at the time it was purchased to the effect that it was always to be her property but would be held in their joint names. I have set out my reasons for rejecting this contention at [53]-[61] above.
In the alternative, Ms Yu said that a constructive trust or resulting trust arose out of the fact that she:
paid the money required upfront to purchase the Berala property in 2010;
paid property related expenses including council rates, water rates and strata fees; and
paid over $30,000 to renovate Berala property.
In his written submissions, counsel for Ms Yu referred to Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 and Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 in support of this proposition.
In this instance, while the evidence that Ms Yu paid the sums outlined is largely unchallenged, it cannot be ignored that these payments were made in the context of her marriage to Mr Chen and in relation to what was their matrimonial home.
Further, there is simply no evidence of what other family living expenses were incurred throughout this period or how they were funded. There is evidence that Mr Chen made regular mortgage payments equal to Ms Yu for a period, and later made lump sum payments to assist with payments for the Berala property. In these circumstances, I am unable to accept that payments made by Ms Yu to which reference is made above reflect anything more than arrangements made between them for the funding of their collective living expenses.
The position may be different insofar as the $255,291.07 paid by Ms Yu to discharge the mortgage over the Berala property is concerned. However, the question of whether any trust arose out of the payment of this sum by Ms Yu will arise only if I am wrong in my view that she has established a defence under s 37A(3) of the Conveyancing Act. This would require a finding that she was not acting in good faith and/or had notice of an intent to defraud creditors at the time of the transfer. Without knowing what might underpin such findings on either issue, I am unable to address this aspect of Ms Yu’s cross-claim by reference to any relevant counterfactual. In these circumstances, there would seem to be no utility in me expressing a view on how I might have approached the $255,291.07 payment made by Ms Yu had the factual findings I have made been different in any material respect.
For the above reasons, I am satisfied that:
Ms Sun has not established that the financial agreement was entered into for the purpose, or for purposes that included the purpose, of defrauding or defeating a creditor in the sense contemplated by s 90K(1)(aa) of the Family Law Act.
Ms Sun has failed to establish that the transfer was completed with the intent to defraud creditors in the sense contemplated by s 37A of the Conveyancing Act.
In any event, Ms Yu was, at the time of the transfer of the Berala property, acting in good faith and had no notice of any intention by Mr Chen to defraud creditors, thus enlivening the defence in s 37A(3) of the Conveyancing Act.
In relation to Ms Yu’s cross-claim, Mr Chen did not hold his interest in the Berala property on trust for Ms Yu.
The conclusions I have reached on the first three of these issues effectively dispose of the claims made by Ms Sun in prayers 2, 3 and 3A of her further Amended Statement of Claim. This is the only relief sought against Ms Yu. The conclusion I have reached on the fourth issue disposes of Ms Yu’s cross-claim its entirety.
In the outcome, Ms Sun has failed in her attack on the transfer of Mr Chen’s interest in the Berala property. In these circumstances, it is my preliminary view that:
Ms Sun’s proceedings can be dismissed as against Ms Yu.
Ms Yu’s cross-claim can also be dismissed.
Ms Sun should be ordered to pay Mr Chen and Ms Yu’s costs of this preliminary hearing.
However, it is appropriate that the parties be given an opportunity to respond to these preliminary views and address the question of what further orders should now be made in the wider proceedings.
This judgment was delivered on 1 July 2026, and I published the above reasons. On that occasion, all parties agreed that the proceedings should be dismissed against Ms Yu and that her cross-claim should also be dismissed. The parties asked to be heard further in relation to costs.
Accordingly, I make the following orders:
Proceedings are dismissed as against Ms Yu.
Ms Yu’s cross-claim is dismissed.
The parties are to file and serve submissions, along with any supporting evidence, on the question of costs, by 10 July 2026.
The parties are to respond to the submissions, and provide evidence in reply, on the question of costs by 15 July 2026.
The issue of costs will thereafter be determined in Chambers.
**********
Typographical error in coversheet remedied.
[2003] FamCA 1114
[1998] HCA 26
[2003] HCA 22
(1986) 161 CLR 75
(1987) 164 CLR 137
(1998) 192 CLR 557
(2003) 214 CLR 118
(1999) 196 CLR 101
(2011) 242 CLR 546
(2018) 97 NSWLR 278
(2003) 217 CLR 315
(2006) 227 CLR 278
(1995) 49 NSWLR 315
(1984) 155 CLR 474