Xu v Cao & Du Management Pty Ltd

Catchwords: CIVIL PROCEDURE — interim preservation —freezing orders — application for freezing orders against third parties — where third parties are affiliated with the second defendant — where third parties did not oppose freezing orders — whether danger of third parties dissipating assets with a view to avoiding judgment debt
CIVIL PROCEDURE — service — application for short service of subpoenas — where the time elapsed since the motion was filed minimises the effect of short service

Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 25.14

Category: Procedural rulings

Parties: Jiaqing Xu (Plaintiff)
Cao & Du Management Pty Ltd (First Defendant)
Howard Hao Ting Cao (Second Defendant)
Xue Yang c/- Sunfield Chambers (Interested Party 1)
Thyge Trafford-Zhao (Interested Party 2)

Representation: Counsel:
A J McInerney SC (Plaintiff)
Dr J R Hudson (Plaintiff)
A Rizk (Defendants)
Solicitors:
Juris Cor Legal (Plaintiff)
Tzovaras Legal (Australia) Pty Ltd

File Number(s): 2022/78620

Publication restriction: No

ex-tempore JUDGMENT

1. These reasons concern a notice of motion filed by the plaintiff on 28 August 2025, seeking freezing orders and orders for short service of subpoenas.

2. The orders were originally sought on an ex parte basis but since then the notice of motion has been served on the prospective recipients of the orders, and time given to them to consider their positions. None of the respondents to the motion have appeared.

3. A possible exception to what is stated in the previous paragraph is that a person interested in the various entities, Mr Howard Cao, has been giving evidence over the last three days in the current proceedings.

4. There have been previous freezing orders made in the substantive and related proceedings. Hamill J made freezing orders on 15 November 2024, which were extended by Coleman J on 16 December 2024.

5. On 26 February 2024, freezing orders were made in separate proceedings, but including some of the same parties, by Williams J.

6. Restraining orders, including against CHT Aus Holdings Pty Ltd and against Ms Su were made by Lonergan J on 26 August 2025.

7. Excepting the orders made by Lonergan J, there is cogent evidence to suggest that all of the above freezing orders have been breached. For example, following the extension of the freezing orders on 16 December 2024, there is evidence that Mr Cao engaged in significant gambling. He has said that he obtained the funds from his mother, Ms Xiaowen Su, and therefore that he did not believe he had been in breach. It is difficult to see how his view might be maintained, but because the current proceedings remain on foot and I have not heard submissions concerning his actions, in particular his credit, I will not make any final finding about breach.

8. Another asserted breach included the transfer of shares ostensibly in breach of the freezing orders. Mr Cao said that these were the product of errors by a secretary, and he said that as recent as last week shares were transferred back to the first defendant. Again, I will not make any final findings about whether or not there had been breaches.

9. I was also referred to a Deed Poll dated 25 August 2025, in which Ms Su, on behalf of CHT, has given an undertaking to pay her son’s costs in the other proceedings. This was said to raise the possibility that a payment made under the Deed Poll would be a breach of freezing orders made by Lonergan J on 26 August 2025.

10. The freezing orders are sought pursuant to the inherent jurisdiction of the court as well as under r 25.14 of the Uniform Civil Procedure Rules 2005 (NSW).

11. Notwithstanding the absence of resistance to any of the orders, it is still necessary for the court to be satisfied that the orders, in particular the freezing orders, should be made.

12. Although the proceedings are being defended on a number of bases, I think I can comfortably conclude that there is at least an arguable case that the plaintiff might succeed. If successful, the judgment could be in the order of many millions of dollars, and in particular, exceed the $20,685,290.68 referred to in the freezing orders.

13. The plaintiff has submitted that if he was successful in his claim against Mr Cao, so that Mr Cao became bankrupt, then the trustee in bankruptcy might seek contribution from the companies against which the freezing orders are sought. It is also put against Mr Cao that he has sought to distance himself from the assorted Option Group companies in which he was once closely involved, whereas in fact he remains influential. It is also put that he is clearly influential in respect of his mother’s actions. This is said to be highlighted by the fact that she provided him with significant funds to enable his gambling.

14. As I have indicated above, I am very reluctant to make specific findings which could influence my ultimate decision on Mr Cao’s credit, but I do believe there is sufficient material upon which the risk of dissipation of funds might be discerned.

15. I also think the absence of any material, and in fact any submissions or even appearance, by any of the respondents is indicative of their, at least, lack of opposition to the orders. However, in order to protect their position, I will give them leave to apply if they wish to challenge any part of the orders or the orders themselves.

16. The subpoenas are concerned with material ancillary to the freezing orders including the gathering of financial information. I will therefore delete the proposed provisions relating to information in the Annexures (paragraphs 8 and 9).

17. The time that has passed since the notice of motion was filed and served I think alleviates a lot of the effect of the short service. Again, these recipients will have the ability to relist my orders if they wish to set aside or otherwise challenge the subpoenas. I will increase the amount allowed for legal costs in case there is to be further agitation of the orders I make.

18. I make the following orders:

19. Subject to Orders 2 and 3, orders in accordance with the Short Minutes of Order, dated today and initialled by me.

20. The costs order (Order 12) is not made.

21. Annexures “A”, “B” and “C” referred to in the Short Minutes of Order are amended so as to delete paragraphs 8 and 9 and to increase the sum allowed for legal expenses in paragraph 10(b) to $25,000.

22. Each of the respondents to the orders made in the Short Minutes of Order has liberty to apply before me or the duty judge in respect of the terms of any of the orders, either in whole or in part.

23. Notwithstanding the terms of Annexures A, B and C, the orders made in accordance with Order 1 are made until further order and, the freezing orders made on terms in Annexures A, B and C are re-listed before A/Justice Elkaim at 10am on 9 September 2025.

24. The costs of the notice of motion filed on 28 August 2025 are reserved.

25. The usual undertaking as to damages made by the plaintiff is noted.

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