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[2025] NSWSC 979
Supreme Court of NSW
2025-09-23
Lonergan J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Xu v Cao & Du Management Pty Ltd (No. 3) [2025] NSWSC 979
Hearing dates: 26 August 2025
Date of orders: 26 August 2025
Decision date: 23 September 2025
Jurisdiction: Common Law
Before: Lonergan J
Decision: (1) The defendants’ application for vacation of the final hearing date is dismissed, with costs.
(2) Disclosure orders, injunctions and freezing orders made in accordance with the plaintiff’s notice of motion filed 21 August 2025.
(3) The defendants to pay the plaintiff’s costs of the plaintiff’s notice of motion filed 21 August 2025.
Catchwords: PRACTICE AND PROCEDURE – late application to vacate final hearing – 8 days set aside – hearing date in place since February 2025 – assertion new solicitor recently retained – some doubt about that assertion – inadequate explanation – possibility second defendant will be declared bankrupt and the plaintiff will need leave to proceed given creditors’ meeting fixed for Friday 29 August 2025 – plaintiff will proceed to the Federal Court for urgent leave to proceed if necessary – possibility 29 August 2025 creditors’ meeting will be adjourned to allow for further investigation by the trustee
CIVIL PROCEDURE – disclosure orders – freezing orders – elements for making freezing orders are satisfied – evidence available that allows an inference that the second defendant has carried out acts inconsistent with previous freezing orders – divesting of assets to company run by second defendant’s mother – extensive casino-based gambling activities by second defendant – alleges mother loaned him money to gamble – know when to walk away and know when to run – alienation of assets to company run by mother – surrounding circumstances and timing support inference that alienation of assets was to defraud current and potential creditors
Legislation Cited: Bankruptcy Act 1966 (Cth)
Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Evidence Act 1995 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Aon Risk Services Australia Pty v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193
Beecham Group Pty Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18
Frigo v Culhaci [1998] NSWCA 88
Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755
Jiaqing Xu v Cao & Du Management Pty Ltd [2024] NSWSC 1474
Jiaqing Xu v Cao & Du Management Pty Ltd (No 2) [2024] NSWSC 1596
Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204
Puglia v Basol [2005] NSWSC 1271
Samimi v Seyedabadi [2013] NSWCA 279
UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77; [2018] HCA 45
Williams v Lloyd (1934) 50 CLR 341; [1934] HCA 1
Xu v Cao & Du Management Pty Ltd; Cao v Tung Chit Real Estate Investment Australia Pty Ltd [2025] NSWSC 136
Category: Procedural rulings
Parties: Jiaqing Xu (Plaintiff/Cross-Defendant)
Cao & Du Management Pty Ltd CAN 143 269 354 (First Defendant/Cross-Claimant)
Howard Hao Ting Cao (Second Defendant/Cross- Claimant)
Representation: Counsel:
A McInerney SC / Dr J Hudson (Plaintiff/Cross- Defendants)
R Notley (Defendants/Cross-Claimants)
Solicitors:
Juris Cor Legal (Plaintiff)
Tzovaras Legal (Defendants)
File Number(s): 2022/00078620
Publication restriction: Nil
Before me for hearing on 26 August 2025 as duty judge were two notices of motion in proceedings that are listed for final hearing next Monday, 1 September 2025, with an 8-day estimate.
On 15 August 2025, the defendants, Cao & Du Management Pty Ltd (“Cao & Du”) and Mr Cao filed an application to vacate that final hearing. The plaintiff opposed that application.
On 21 August 2025, the plaintiff, Mr Xu, filed a notice of motion seeking orders that a nominated company, CHT Aus Holdings Pty Ltd (“CHT”), (the sole director being Mr Cao’s mother, Xiaowen Su) and a person, Xiaowen Su, be restrained from dealing with certain property and that Mr Cao provide certain financial information by affidavit. Mr Cao did not oppose that order. There was no appearance for CHT or Ms Su.
At the end of a day of evidence, argument, and submissions, I made orders dismissing the defendants’ notice of motion with costs, and orders in line with the freezing orders and disclosure orders sought by the plaintiff, with reasons to follow.
These are my reasons for making those orders.
“The plaintiff, Jiaqing Xu, has commenced these proceedings against Cao & Du Management Pty Ltd (the first defendant) and Howard Hao Ting Cao (the second defendant or Mr Cao) in respect of a dispute in which the plaintiff claims repayment of monies owed pursuant to a loan agreement dated 17 October 2016 (Loan Agreement).
The plaintiff alleges in these proceedings that by the Loan Agreement he lent to the first defendant the sum of $3,300,000. It was a term of the Loan Agreement that an amount of $6,600,000 was payable as the Repayment Amount on 31 October 2018. The second defendant guaranteed the first defendant’s obligations under the Loan Agreement.
The plaintiff alleges that the defendants have breached their obligations under the Loan Agreement and claim payment of an amount slightly greater than$55 million, having regard to the default interest rate contained in the agreement.
The defendants have asserted that the Loan Agreement was a sham, the parties not intending by that agreement to create legal relations, rather, the amount of $3.3 million was paid by the plaintiff on behalf of other persons and parties to be an investment in a property development at Greenacre in New South Wales (the Greenacre Project). The defendants submit that the Loan Agreement is therefore unenforceable.
The defendants are also pursuing a cross-claim against the plaintiff and other parties who are involved in joint venture development at The Entrance, NSW, known as the Magenta Shores Project. The parties to the joint venture are the plaintiff’s son-in-law, Kai-Ming Wong (Daniel), Daniel’s brother Kai-Bun Wong (Henry) through Tung Chit Real Estate Investment Australia Pty Ltd (Tung Chit) as well as Option Funds Management Limited (Option Funds), in which Mr Cao is the director, as well as another company. The defendants say that, as at August 2016, there was an existing relationship between Mr Cao and Option Funds, and the Wong family and Tung Chit in relation to the Magenta Shores Project. In August 2016, it is asserted that Mr Cao informed the Wong family and Tung Chit of the Greenacre Project.
The cross-claim alleges that Daniel, Henry and/or Tung Chit engaged in misleading and deceptive conduct or unconscionable conduct with respect to the provision of the funds in the Greenacre Project, as well as making claims for estoppel, relief under the Contracts Review Act 1980 (NSW) and alleging that the Loan Agreement is void for illegality and the default interest rate is a penalty.
In summary, as I understand it, the cross-claimants assert that Daniel and Henry were acting as the agent of the plaintiff and the $3.3 million was advanced for the purposes of the Greenacre Project and would only be repaid upon completion and sale of the residential aspect of the development. The amount to be repaid was dependent upon the increase in value of units in a trust which was responsible for the development. The cross claimants allege that the Loan Agreement was entered into as a device so that Tung Chit (the entity with the interest in the Greenacre Project) would not be liable for capital gains tax on the anticipated gains from the investment in the Greenacre Project. It is alleged that it was represented that the Loan Agreement would not be enforced.”
The cross-defendants deny all the allegations in the cross-claim. Those allegations effectively mirror the matters raised in the Defence. I was informed by senior counsel for the plaintiff, Mr McInerney, that he has been instructed to act for all the cross-defendants at the hearing on 1 September 2025, and that affidavits have been filed by all of the cross-defendants, denying the assertions made by Mr Cao.
Other background facts are relevant to the current circumstances of the defendants. At the time of the loan agreement, the directors of Cao & Du were Mr Cao and his wife, Ni Du. She ceased to be a director at some point. In early 2023, a Binding Financial Agreement (“BFA”) was made between her and Mr Cao, apparently with the assistance of Mr Tzovaras. According to ASIC records, Mr Cao’s mother, Ms Su, became a director of Cao & Du nominating the commencement date as14 April 2025, although it appears the notice was not filed until May 2025.
There were many case management hearings before the Common Law Registrar and many failures to comply with directions as to the filing and serving of evidence. In April 2024 there was an interlocutory hearing before Schmidt AJ regarding various notices to produce.
On 19 June 2024, affidavits were filed in the proceedings authored by Mr Cao and his then solicitor, Mr Seelenmeyer.
On 15 November 2024, Hamill J made ex-parte interim property preservation orders (freezing orders) in accordance with those sought by the plaintiff on an urgent basis. In making those orders his Honour made two key findings: first, that the plaintiff has a prima facie case that he is owed a substantial sum of money by the defendants, and second, that there is some evidence to suggest that steps may be taken by the defendants, in particular Mr Cao, to dissipate or remove assets: Jiaqing Xu v Cao & Du Management Pty Ltd [2024] NSWSC 1474 at [8] and [9]).
On 29 November 2024, Coleman J heard and determined the now defended application for freezing orders: Jiaqing Xu (No 2*)*. The same counsel who appeared for the defendants before Schmidt AJ in April 2024 appeared for the defendants to oppose this application. Coleman J was satisfied that the orders should be made, expressing particular concern that Mr Cao had entered into a BFA with his wife and had been taking other steps that looked suspiciously like steps to frustrate recovery of judgment in these proceedings:
“73. In my opinion, the entry into the BFA in the circumstances I have described and then the transfer of the Bathurst Street Property to Ms Du when there was no obligation to do so, together with the evidence with respect to the “temporal coincidence” (to use Hamill J’s expression) of the pending liability in the proceedings before Nixon J and the requirement to put on evidence in chief in these proceedings (which expose the defendants to a very significant liability) all objectively lead me to the apprehension that the defendants are embarking on a course to deal with their assets to frustrate the recovery of any possible judgment in these proceedings. This apprehension is re-enforced by the failure of the second defendant to give any, or any coherent, explanation for the entry into the BFA at the time it was signed. The evidence he seeks to rely on shows that there had been marital difficulties for a significant period of time and a draft BFA (in substantially identical terms to the final version) had been ready since January 2023. Yet it was not until August 2023, when the defendants were facing significant potential liabilities in these and other proceedings, that the BFA was finalised. He then transferred his interest in the Bathurst Street Property to Ms Du under cover of the BFA but when not obliged by its terms to do so.
- I have also taken into account several matters which cause me to question the honesty of the second defendant. Those matters are the fact that, on his own case in answer to the plaintiff’s claim under the Loan Agreement, he is a party to an agreement with the cross-defendants to defraud the Commonwealth of revenue of capital gains tax that may have been payable on realisation by the cross-defendants of their interest in the Greenacre Development. Whilst I make no findings about whether that has occurred or will occur, the very fact that the second defendant says he was willing to enter into such an agreement indicates he is willing to engage in dishonest and possibly unlawful behaviour. There is a not an insignificant level of irony in the defendants now asserting that the Loan Agreement is void for illegality.
- I am also concerned about the failure of the second defendant to disclose until the day of the hearing the proceedings before Peden J which led to the orders made by her Honour on 28 November 2024. Those orders plainly impacted upon the assets of the second defendant and the provisions of the BFA. There was no explanation for the failure to disclose those other proceedings at an earlier time.
- I regard these matters as meaning that the Court is more readily able to infer, and I do infer, that the conduct of the second defendant in acting in the manner he has in dealing with the assets of the defendants in an irregular way can reasonably be interpreted as indicating dishonesty.”
On 26 February 2025, an expedition application filed by the plaintiff and an application by the defendants to have these proceedings heard with 2024 proceedings filed by Mr Cao were heard by Campbell J: Xu v Cao & Du Management Pty Ltd; Cao v Tung Chit Real Estate Investment Australia Pty Ltd [2025] NSWSC 136. His Honour declined to order the matters be heard together because to do so would prolong and delay proceedings and make them unnecessarily complex, particularly given the subject proceedings were ready for hearing and concerned events in 2016. His Honour also declined to make an order for expedition, but instead listed the proceedings for hearing on 1 September 2025 with an 8-day estimate. This date was chosen to accommodate the defendants’ counsel.
At a status review on 11 April 2025, Chen J refused to provide the defendants with a further extension of time to file and serve expert evidence, against a background of previous orders which had not been complied with, including one made on 12 February 2025 by the Registrar, granting a further extension to do so by 28 March 2025.
At a further status review before Chen J on 23 May 2025, his Honour noted the freezing orders in place and the appointment of the Controlling Trustee, the Creditors’ petitions and associated potential hearing dates.
On 4 July 2025 there was a further status review before Chen J. Despite a notice of change of solicitor being filed by Mr Tomaras on 30 April 2025, Mr Tzovaras appeared at the hearing for the defendants, noting developments including stating on the record that given the Creditors’ Meeting then scheduled there may be an application by the defendants to adjourn the 1 September 2025 hearing. Mr Tzovaras did not tell the Court that he was only appearing as agent, or say anything that suggested he was not retained in the proceedings. Nor did he make any reference to difficulties securing counsel or difficulties with complying with the orders and directions made by Chen J in April 2025 by way of pre-trial preparation deadlines.
Despite there being liberty to apply on 2 days’ notice, nothing was raised with the Court regarding difficulties with representation or preparation until the defendants’ notice of motion was filed on 15 August 2025.
Meanwhile, much was happening elsewhere. On 28 November 2024, in proceedings in the Equity Division to which Mr Cao was a defendant, freezing orders were made by Peden J against the same properties the subject of the 15 November 2024 orders made by Hamill J (and confirmed by Coleman J) after a contested hearing.
On 26 February 2025, Williams J made freezing orders affecting property owned by both Mr Cao and Ms Su.
In the Federal Court, Mr Cao made applications to set aside bankruptcy notices 274843 and 274660. Both applications were dismissed by Registrar Morgan on 18 March 2025 and 10 April 2025, respectively.
I have already referred to the two affidavits relied upon by the defendants in support of their application affirmed by Mr Cao and Mr Tzovaras on 15 August 2025, and the inadequacies of those affidavits in explaining the situation with preparation.
The plaintiff relied upon a lengthy affidavit of his solicitor, Zheng Chu, affirmed 21 August 2025 which exhibited a substantial amount of background material addressing both the defendants’ application to vacate the hearing and the plaintiff’s application for disclosure by Mr Cao and freezing orders against Ms Su and her company CHT.
A second affidavit of Ms Chu affirmed 25 August 2025 supplied updated ASIC searches and address details for Ms Su.
Mr Tzovaras and Mr Cao each affirmed a further affidavit on 25 August 2025. Mr Cao’s affidavit sought to explain the transactions identified by Ms Chu as being in breach of the freezing orders. Mr Cao asserted that he did not know the transfer of the Tung Chit debt was transfer of an asset and he blamed his secretary for one of the other transactions. Mr Tzovaras sought to explain why it was that he sent a response to the plaintiff’s pre-proceedings letter of demand – i.e. he sent it but was not retained in the proceedings. He also asserted that he forgot to tell the Court in July 2025 that he was only appearing as agent.
Mr Tzovaras was not required for cross-examination, but Mr Cao was. He stated his occupation to be “Finance Broker”. He admitted that he knew that in the Controlling Trustee Report there was reference to deposits and withdrawals at the Sydney Crown Casino of $30,702,400.00. He admitted that this related to his gambling.
At the request of counsel for the defendants, Mr Notley, Mr Cao was advised of his rights under s 128 of the Evidence Act 1995 (NSW) to claim privilege against self-incrimination. He objected to answering any questions that may tend to incriminate him for contempt by way of breaches of the freezing orders. He was provided with a Certificate under s 128 of the Evidence Act in respect of any evidence that indicated any breach of the freezing orders.
Mr Cao admitted that he last gambled at Sydney Crown Casino in early January 2025 and had gambled at a casino in Singapore in the past six months, “in February”, but he was not sure whether it was before or after 25 February 2025. He asserted that the source of his money for gambling was money borrowed from his mother. He said that she had made investments in China a long time ago.
Mr Cao claimed that although he knew there was a freezing order in place affecting his mother, he did not believe the transfer back to him by her of the two shares in Cao & Du in the last few days was a breach of the freezing order because “it’s not her asset”, and it was “just to rectify a mistake”.
Mr Cao also admitted that he had been talking with Mr Tomaras fortnightly, there were emails between them and that he had spoken to him on the phone that morning. He also admitted that there had been meetings about “his legal matters” in the last three months where Mr Cao, Mr Tomaras and Mr Tzovaras all spoke together, including about strategy for his various pieces of litigation.
In respect of the Deed of Assignment of the Tung Chit debt, Mr Cao said that he did not believe it was an asset because there is no judgment, and he does not know whether “my $1.6 million claim is going to be granted”.
Mr Cao was asked about the transfer recorded on 3 March 2025 of his 100 shares in Option Capital to CHT. He asserted that those shares were actually transferred in August 2024, but the acknowledgment form was not lodged until March 2025. He said that there were meetings and discussions about transfer of shares involving him and his mother, but the meetings were not documented, and he cannot recall if there is any document supporting the date of the transfer that he alleges.
Mr Cao was asked about the transfer of his two shares in Cao & Du to CHT, and in that context was examined about seeking to control things through his mother and so avoid the effect of the PIA. He insisted that his secretary “Julie”, aka Li Fang Zhu, made the transfer by mistake. He denied instructing her to do so.
I was assisted by detailed written submissions from counsel and in particular, counsel for the plaintiff, who provided a very helpful chronology and explanation of the persons involved in the litigation and its background. Those submissions remain on file, and I will not recount them in detail. There were time constraints with making the necessary orders, given the approaching hearing date.
Oral submissions were made. The basis for the vacation of the hearing date was submitted by Mr Notley to be a concern that if certain action was taken at the Creditors’ Meeting set down for Friday 29 August 2025, there would be impediments to the plaintiff proceeding with the whole of the hearing against Mr Cao and Cao & Du because if bankrupt, Mr Cao would not be allowed to prosecute his cross-claim, and the Court should not sever the cross-claim to allow the hearing to proceed in that way. It is more appropriate, he submitted, to adjourn the whole matter so that there would not be conflicting evidentiary findings and assessments of witnesses. Whilst reliance on the “new” retainer of Mr Tzovaras was not abandoned, little emphasis was placed on this.
Mr Notley placed emphasis on the difficulties that would be created for proper advancement of the proceedings should any of the approaching, or “frankly inevitable”, outcomes occur on or after Friday. One option is that the creditors accept the PIA which could mean that a stay of proceedings would apply in respect of Mr Cao, at least in his personal capacity.
Mr McInerney submitted that the Creditors’ Meeting was not a basis to vacate the hearing. It was not clear what would occur at the meeting and possible outcomes included an adjournment of the meeting to further investigate Mr Cao’s true financial situation.
Mr McInerney gave an undertaking on behalf of the plaintiff that if all that could proceed on 1 September 2025 was the proceedings on the statement of claim and defence, with the cross-claim to be severed for hearing later, the plaintiff, (and the cross-defendants for all of whom he also acts), would undertake to be bound by the findings of the trial judge, which are, he submitted, effectively determinations of the same issues raised in the Defence.
In reply to Mr Notley’s oral submissions, Mr McInerney argued that there was an air of unreality about the asserted impediments to the trial proceeding next week based on some perception that if a trustee is appointed, he or she would take a different approach to the litigation. The reality is that Cao & Du is a company and would need to call Mr Cao to support the defences that have been pleaded in the Defence. Irrespective of whether it is counsel, or a solicitor, or someone else who is acting for a party in proceedings, any other defendant or cross-claimant is bound by the conduct of the person who conducts the defence. It is not realistic to suggest that the Trustee would not be bound by the conduct of the Defence.
66 Adjournment of proceedings
(1) Subject to rules of court, the court may at any time and from time to time, by order, adjourn to a specified day any proceedings before it or any aspect of any such proceedings.
…
The exercise of that discretion is governed by the overriding purpose of delivering the just, quick and clear resolution of the real issues in the proceedings: s 56 Civil Procedure Act.
The Court must also bear in mind the factors referred to in s 57 Civil Procedure Act including, relevantly, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, and the timely disposal of the business of the court.
The dictates of justice require that the court to consider, amongst other things, the position of both the parties, not simply the applicant for vacation. Attention must be paid to the degree of injustice that would be suffered by both parties as a result: s 58(2)(vi) Civil Procedure Act.
The degree to which the respective parties have fulfilled their duties under s 56(3) must be considered. This includes compliance with directions and court orders: s 58(2)(iv) Civil Procedure Act.
The object of “elimination of delay” between the commencement of proceedings and final determination is an important consideration in the context here of a contract made in 2016, an alleged default in 2018, and a 2022 statement of claim: s 59 Civil Procedure Act.
The object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute is also a factor: s 60 Civil Procedure Act.
Cases applying these principles to an application for a vacation or adjournment highlight the need to consider and balance the applicant’s position with that of the other party and the prejudice suffered by the other party and other litigants by delay to resolution of the matter. Such delay may not be compensable by costs orders. This is relevant here in circumstances where there is a serious question mark over Mr Cao’s liquidity.
Cases have also highlighted the impact of a vacation or adjournment on other litigants’ access to justice, and the efficient use of court resources, an object expressed in s 57 of the Civil Procedure Act. In Aon Risk Services Australia Pty v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at 182, French CJ explained that the time of the court is a publicly funded resource and “[l]nefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system”.
In UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77; [2018] HCA 45, Kiefel CJ, Bell and Keane JJ at 92 stated:
“The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the [Federal Court Act] [corresponding to s 56 of the Civil Procedure Act]. As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the “just resolution” of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the [Federal Court Act]. Integral to a “just resolution” is the minimisation of delay and expense. These considerations inform the rejection in Aon of the claimed “right” of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate.”
The plaintiff has been waiting some years to meet the serious allegations made about him in the Defence. I accept that significant preparation for trial has been undertaken prior to the service on 15 August 2025 of the defendants’ notice of motion. I am satisfied that those preparations include drafting and filing and serving the outline of opening submissions dated 1 August 2025 (which are on the court file), the drafting of the notices to admit facts and authenticity of documents served on 5 August and 12 August 2025 (exhibited to Ms Chu’s affidavit), the issuing of subpoenas, the preparation and service of notices to produce, arrangements for and conduct of witness conferences, booking for flights and interpreters for overseas witnesses and drafting objections to evidence and written submissions in support of those objections.
In relation to the defendants’ arguments about division of proceedings, if the Trustee in Bankruptcy subsequently decided to pursue proceedings on the cross-claim, it could be pursued by a case-managed trial, utilising the fact that the Court has heard and made findings regarding the witnesses called by the plaintiff and the defendants in the proceedings on the statement of claim. That evidence can be taken next week and used later in any proceedings on the cross-claim.
I also bear in mind that the fourth option proposed for the Creditors’ Meeting on Friday 29 August 2025 was that the Meeting be adjourned to allow the Trustee to carry out more investigation regarding the true financial situation of Mr Cao, given that a number of matters about which information had been requested have not yet been answered.
The affidavit evidence relied upon does not adequately explain the circumstances in which Mr Cao, and Cao & Du find themselves. The affidavits are silent as to whether counsel is or was briefed for the hearing and/or whether or why counsel who was previously briefed is no longer available to conduct the hearing on dates that were actually fixed to suit his availability.
It has been left unacceptably vague as to what role Mr Tzovaras has actually been playing in the litigation before 15 August 2025.
There has been a failure to file expert evidence in accordance with Court’s orders that have been extended on a number of occasions. That cannot now be used as a reason to adjourn.
Nothing at all has been said about fresh efforts made to retain counsel, or to retain an expert to provide the report referred to, or to prepare to conduct the hearing.
I hold a significant concern that Mr Cao has acted in breach of previous freezing orders. Given that fact, he may continue to divest himself of assets, thus frustrating any judgment the plaintiff may be able to obtain. The manner in which he answered, and avoided answering, questions in cross-examination, did nothing but add to that concern.
25.2 Order in urgent case before commencement of proceedings
(1) In an urgent case, the court, on the application of a person who intends to commence proceedings, may do any of the following—
…
(c) it may grant any injunctive relief, including relief in the nature of a freezing order under Division 2 (Mareva relief) or a search order under Division 3 (an Anton Piller order),
…
(f) it may make an order for the detention, custody or preservation of property under rule 25.3,
to the same extent as if the applicant had commenced the proceedings and the application were made in the proceedings.
…
25.3 Preservation of property
(1) In proceedings concerning property, or in which any question may arise as to property, the court may make orders for the detention, custody or preservation of the property.
…
Rule 25.13 provides that the respondent to such an application need not be a party to the proceedings.
A freezing order is an exceptional or drastic remedy which should not be granted lightly: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 (“Cardile”) at [51] per Gaudron, McHugh, Gummow and Callinan JJ.
An applicant for a freezing order in advance of judgment must establish two elements:
(a) that there is a prima facie or good arguable case on the cause of action which is asserted; and (b) having regard to all the circumstances, there is a danger that a prospective judgment will be wholly or partly unsatisfied because the prospective judgment debtor absconds or the assets of the prospective judgment debtor are removed from Australia or disposed of, dealt with or diminished in value.
The first element requires the plaintiff's case to be “more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 percent chance of success”. Determination of this element is a preliminary appraisal of the plaintiff’s case, rather than a premature trial of the action: Samimi v Seyedabadi [2013] NSWCA 279 at [68]-[72].
The second element requires the plaintiff to show, by evidence and not mere assertion, that there is a “real danger” that, by reason of (here, Mr Cao), removing assets out of the jurisdiction, or disposing of assets within the jurisdiction, the plaintiff will not be able to have the judgment satisfied if successful in the proceedings: Frigo v Culhaci [1998] NSWCA 88 at [8].
To make out this second element, the plaintiff must show that the course on which Mr Cao embarks, objectively speaking, is calculated to evade or frustrate a judgment. In Atlanta Building Pty Ltd v Abela [2024] NSWSC 1193 at [84]-[89], McGrath J described the minimal requirement as being that:
“A freezing order is only warranted if there has been conduct on the part of the defendant which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments, or of being intended to do so, or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the defendant have been or will be dealt with in an irregular way ... [citations omitted]”.
The plaintiff does not need to prove Mr Cao has an actual or positive intention to evade or frustrate a judgment. In Cardile, Kirby J stated that the plaintiff must show that there is a "real risk" that any prospective judgment will go unsatisfied.
The Court’s discretion will be guided according to where the balance of convenience lies having regard to considerations such as the expedition or delay with which the application was made, evidence of prejudice to the respondent subject to the freezing order, and whether the usual undertaking as to damages is given. The applicant must show that the inconvenience and injury he would likely suffer if interlocutory relief were refused, outweighs the injury the respondents will likely suffer if the relief sought is granted.
The plaintiff has a good arguable case against the defendants for repayment of the debt owed pursuant to the loan agreement. The Court has the relevant evidence appended to Ms Chu’s affidavit which exhibited the signed and witnessed declaration by Mr Cao as guarantor, and evidence the money was transferred to a bank account titled “Cao & Du Management Pty Ltd ASFC C & D Family Trust”.
The Defence admitted the execution of the loan agreement and receipt of $3.3 million from Mr Xu and that repayment was demanded, and that the defendants repaid $300,000.00 to Tung Chit (the Second Cross-Defendant).
The allegations of fraud and sham outlined in the Defence and cross-claim are inadequately pleaded and particularised, and require proof to the Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 standard, being very serious allegations that require a cautious approach: Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204 at [63].
The defendants’ position is reliant on Mr Cao’s evidence of conversations with two of the cross-defendants and Yuan Zhao. Those conversations are denied by those cross-defendants. The defendants have no documentary evidence that corroborates the alleged representation, or corroborates Mr Cao’s allegation that the plaintiff or any other cross-defendant was involved in the Greenacre Project.
The plaintiff discharges his onus of establishing a real and genuine risk of the defendants further dealing with their assets by the evidence demonstrating the repeated breaches of the December 2024 freezing orders and the freezing orders made by Williams J in February 2025, the timing of which, relative to Mr Cao’s personal insolvency, demonstrates the risk of dissipation. Also demonstrated is the receipt and transfer of shares by CHT, as facilitated by Ms Su, against whom freezing orders are sought pursuant to UCPR 25.13 and the Court’s inherent jurisdiction.
There is a close familial relationship between Mr Cao and the sole shareholder and director or CHT, Ms Su, (his mother), overlaid by the network of associated companies, the effect of which is to give Mr Cao a degree of control over assets he has transferred out of his direct ownership and legal control. This relationship, coupled with the temporal coincidence of the share transfers complained of, demonstrates the real danger that Mr Cao has transferred, or caused associated companies and persons to transfer assets to quarantine the effects of his personal insolvency, all while undertaking significant gambling activity.
The plaintiff submitted that discretionary considerations support the freezing orders sought by the plaintiff against CHT and Ms Su for the following reasons:
First, the evidence clearly discloses the defendants’ asset dissipation to and by CHT with the involvement of Ms Su, and the Court should infer this was done with an intent to frustrate these proceedings, in breach of the December 2024 freezing orders and the freezing orders made by Williams J, all while Mr Cao undertook further gambling activities.
In my view the inference that Mr Cao is exercising a degree of control over Ms Su and CHT is demonstrated by the evidence, and I draw that inference.
Mr Cao’s assertion in cross-examination that he has been loaned money for gambling by his mother, and his admissions that he gambled money at a time that post-dated the freezing orders that affected him and possibly those that affected his mother, adds to my concern that assets will be dissipated by Ms Su and CHT, either by providing them to Mr Cao, or being party to their movement away from potential attachment in satisfaction of any judgment the plaintiff may obtain.
Rule 25.2(1)(f) of the UCPR allows the court to make a preservation of property order under UCPR 25.3 against a party against whom the applicant intends to commence proceedings.
A key difference between this type of order and a freezing order is that an injunction to restrain a person dealing with property has a threshold requirement that the substantive claim, even if prospective, is one concerning a question in relation to property: UCPR r 25.3(1). This is because an injunction against dealing with an asset is usually granted where there is an arguable case that the court will ultimately find that the plaintiff has proprietary interest in it.
In addition to having a proprietary claim, the plaintiff must meet two elements for an injunction. First, the plaintiff must make out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at trial the plaintiff will be held entitled to relief: Beecham Group Pty Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 (“Beecham”) at 622-623. The notion of a "prima facie case" does not mean that the plaintiff must show that it is more probable than not, (or that there is a more than an even chance), that at the trial the plaintiff will succeed. A likelihood of success at trial is sufficient to justify the preservation of the status quo pending the trial: Beecham at 622-623.
Second is that the balance of convenience favours an injunction being granted on the basis that the prejudice the plaintiff would be likely to suffer if an injunction were refused, outweighs, or is outweighed by the injury which the respondent would suffer if an injunction is granted. Relevant to assessment of the balance of convenience are factors such as the timing of the application, the availability and utility of other remedies and the undertakings offered by the plaintiff.
I accept Mr McInerney’s submission that the plaintiff satisfies the threshold requirement of a claim in relation to property under UCPR r 25.3(1) as the plaintiff's prospective claim is for recovery of property under s 37A of the Conveyancing Act 1919 (NSW):
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.
(a) An alienation in the sense of the transfer of value from one person to another. It is ordinarily understood as applying only to a transfer of property effected by the action of the transferor; and (b) The alienation must be made with an intention of defrauding creditors, which excludes property alienated to a purchaser in good faith, not having at the time of alienation notice of the intent to defraud creditors.
The plaintiff bears the onus of proving intent to defraud: Williams v Lloyd (1934) 50 CLR 341; [1934] HCA 1 at 372. While an “intent to defraud” is suggestive of fraud or deceit, the plaintiff does not need to prove all the elements of the tort of deceit: Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755 at [31]-[32] per Meek J. The intention of the transferor may be gathered from the surrounding circumstances as disclosed by the evidence: Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26 at [12]; Puglia v Basol [2005] NSWSC 1271 (“Puglia”) at [7] per Barrett J. The plaintiff does not need to prove the actual content of the relevant person’s mind: Puglia at [12].
The requirement of an “alienation” is in my opinion satisfied by the evidence of the share transfers:
(a) 3 March 2025 - Mr Cao’s transfer of 100 shares in Option Capital to CHT for $100.00; and (b) 9 May 2025 - Mr Cao’s transfer of 2 shares in Cao & Du to CHT for $2.00.
The recorded consideration is $1.00 per share for both transfers. I accept the plaintiff’s submission that these are not transactions for “valuable consideration”: Conveyancing Act s 7.
The intention to defraud can be inferred from the fact of the transfers occurring in breach of the December 2024 freezing orders as well as the timing of those transactions. The notification to Mr Cao that his applications to set aside bankruptcy notices in March and April 2025, lodgement of a creditors’ petition, and the appointment of a Controlling Trustee on 8 May 2025 all occurred around the time of these transactions. The effect of these transactions was to transfer assets away from Mr Cao to a company, CHT, wholly owned and controlled by his mother, Ms Su, quarantining the effects of his impending insolvency.
These transfers, their temporal coincidence with Mr Cao’s bankruptcy, the family and corporate connections between the transferors and transferees, coupled with the nominal value of these transfers and the fact that they have occurred in breach of the December 2024 freezing orders, all supports the inference that these transfers have occurred with an intent to defeat or delay the claims of creditors.
The third requirement I must consider is the balance of convenience. In this case, the prejudice that the plaintiff would be likely to suffer if the injunction sought was refused, outweighs any injury which CHT and Ms Su would suffer if the injunction was granted. In this regard I accept the following submissions made on behalf of the plaintiff:
(a) The strength of the plaintiff's prima facie case; (b) CHT’s receipt of property as a result of the defendants' breaches of the December 2024 freezing orders, and Ms Su’s apparent knowledge of and/or involvement in that process; (c) The plaintiff's undertaking as to damages; (d) The futility of other remedies such as damages against Mr Cao, given his financial situation as revealed the Controlling Trustee’s report; and (e) The fact that the plaintiff has made this application less than 10 days after receipt of the report from the Controlling Trustee advising of Mr Cao’s extensive gambling activities and the Creditors’ Meeting on 29 August 2025.
Mr Cao’s strained explanations attempted in his 25 August 2025 affidavit and in his oral evidence were unsatisfactory and I doubt they are truthful.
For the reasons explained at pars [98]-[100], I infer that the transactions set out at [97] were made with the intent to defraud creditors.
The balance of convenience favours the granting of the orders. The position will become irremediable if property is further transferred away from CHT or Ms Su, but given the undertaking as to damages, any damage incurred by Ms Su and/or CHT will be covered by the plaintiff as a condition of the Court making these orders.
In all the circumstances the property preservation orders should be made.
To the extent that Ms Su or CHT are of the view those orders should be revisited, revised, or altered in any way, such application can be made to the duty judge or the trial judge hearing the matter on and from 1 September 2025 and/or on the following days allocated for trial.
As is evident in this judgment, I have concluded that Mr Cao was involved in the movement away from himself and Cao & Du, assets that could potentially be used to satisfy a judgment against him in these proceedings. He has, despite his dire financial situation, gambled significant sums of money, and admitted in cross-examination that at least some of that gambling activity occurred at a time after the December 2024 freezing orders that applied to him. He claimed that he used money for gambling loaned to him by his mother. It is at least possible that some of this money was provided to him at a time or times when she too was subject to freezing orders made by Williams J in February 2025.
The Creditors’ Meeting on 29 August 2025 was presented as a kind of “fait accompli” to justify the vacation of the hearing date and delay of the trial. The 26 August 2025 hearing was taken up with analysis and debate about the extent to which Mr Cao’s financial situation and the upcoming Creditors’ Meeting meant that the hearing date must be vacated and the hearing adjourned. This argument failed.
The plaintiff’s notice of motion filed on 21 August 2025 was a responsible step taken in circumstances where there was evidence available that Mr Cao was acting in breach of the December 2024 freezing orders and had been transferring things of value to Ms Su and CHT for nominal sums. The freezing orders and property preservation orders were not opposed by CHT or Ms Su. They did not appear, or instruct any legal representative to appear.
Section 98 of the Civil Procedure Act provides a wide discretion to the Court to determine by whom, to whom, and to what extent costs are to be paid. The general rule is that costs follow the event: UCPR 42.1. The plaintiff’s notice of motion has been entirely successful, and the defendants’ notice of motion entirely unsuccessful.
In all the circumstances, the plaintiff should have his costs of both notices of motion paid by the defendants and so I order that the defendants pay the plaintiff’s costs of both notices of motion.
**********
Xu
Cao & Du Management Pty Ltd
(2009) 239 CLR 175
(1968) 118 CLR 618
(1938) 60 CLR 336
(1998) 192 CLR 557
(1999) 198 CLR 380
(2013) 85 NSWLR 99
(2018) 265 CLR 77
(1934) 50 CLR 341
On 7 May 2025, Mr Cao appointed a Controlling Trustee under s 188 of the Bankruptcy Act 1966 (Cth) and executed the proposed Personal Insolvency Agreement (“PIA”), apparently drafted by Mr Tzovaras. A Report of the Controlling Trustee was sent to the plaintiff’s solicitors on 8 May 2025.
In the period 7 May to 15 May 2025, the plaintiff alleges, and, in my view, the records support, that Mr Cao was involved in a number of transactions that are in breach of the freezing orders that apply to him. The context and timing of those breaches is suggestive of deliberate attempts to divest himself of assets to a corporation or person over which or whom he probably is exerting indirect or direct control.
First, Mr Cao, via a Deed, assigned the Tung Chit debt of $1.6 million allegedly owed to him, (and the subject of litigation commenced by Mr Cao), to his mother’s company CHT for $400,000.00 on 7 May 2025.
On 9 May 2025, Mr Cao was involved in a Form 484 showing a transfer of Mr Cao’s two shares in Cao & Du for the sum of $2.00 to his mother.
On 15 May 2025, Mr Cao was involved in a Form 484 showing a transfer of CHT’s 100 shares in Option Wealth to Jiahong Gu for $100.00. (Jiahong Gu is listed as a former director of a company associated with Mr Cao).
On 12 August 2025, Mr Cao alleged in his affidavit that he replaced his solicitor Mr Tomaras with Mr Tzovaras because Mr Tomaras was overseas. This appears to be offered as the reason the defendants could not be ready for hearing, although why that was so and what the situation was with counsel’s availability, preparation and involvement, was not explained at all.
On 14 August 2025, the Controlling Trustee issued the Notice of Creditors’ Meeting, setting it down for 29 August 2025, the last business day before the date set for the hearing to commence.
The next day, 15 August 2025, the affidavits executed by Mr Cao and Mr Tzovaras included assertions that the upcoming Creditors’ Meeting was an additional reason why the hearing could not proceed on 1 September 2025.
Mr Cao was asked about meetings by Cao & Du since 14 April 2025, the time at which his mother was appointed a director. He said that there had been a board meeting with his mother about changing solicitors on “about 9 or 10 August” but there were no minutes taken of that meeting. He confirmed that his mother was aware of the defendants’ application to adjourn the hearing, but “was not sure” if she knew of the application for freezing orders.
Later in his cross-examination Mr Cao asserted that he had borrowed money for gambling from “other friends” and that they were all in his list of creditors. When shown the list of creditors he was not able to identify them but insisted the Controlling Trustee had been given a list. He said that the $30 million referred to in the Controlling Trustee’s Report is not the total money borrowed from his mother; “its a turnover figure”. Finally, Mr Cao said that he is repaying his mother whenever there are funds available, and that there were repayments happening between him and her in the past to her personal bank account.
Although the defendants’ notice of motion rather glibly includes an agreement to pay the plaintiff’s costs thrown away by the vacation of the hearing date and the adjournment, such payment seems unlikely given the matters in the Controlling Trustee’s report. Further, the serious allegations of fraud made in the Defence and the issues that arise on the agreement made in 2016, should not be further delayed. The inevitable consequence of vacation of the hearing date, given the hearing length, would inevitably be some 12 months, if not more.
The application to vacate the hearing date must be refused.
Second, the plaintiff has a strong prima facie case for final relief.
Third, the plaintiff has offered to the Court the usual undertaking as to damages.
Fourth, the freezing orders sought by the plaintiff in prayers 4 and 6 of the plaintiff’s notice of motion, ought to be made to prevent the risk of abuse of the Court’s process by CHT and Ms Su.
Mr McInerney also submitted orally that despite Mr Cao denying in cross-examination that he was exercising control over his mother or CHT, the history of transactions and their timing, and the sudden restoration of the two shares that had been transferred to CHT in May 2025 when the impropriety was pointed out in Ms Chu’s August 2025 affidavit, all suggest Mr Cao is exercising control over CHT and/or his mother.