Federal Court of Australia Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (No 3) [2024] FCA 882 File number: NSD 32 of 2022 Judgment of: JACKMAN J Date of judgment: 31 July 2024 Catchwords: PRACTICE AND PROCEDURE – application to vary freezing orders – where applicant estimates $900 per week for groceries in circumstances where he has no dependants and the groceries are for his own meals – application dismissed Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 7 Date of hearing: 31 July 2024 Counsel for the Plaintiffs: Mr D Meyerowitz-Katz Solicitor for the Plaintiffs: SHL & Associates Lawyers Counsel for the Second Defendant: Mr WR Chan Solicitor for the Second Defendant: MistryFallahi Lawyers & Business Advisors ORDERS NSD 32 of 2022 IN THE MATTER OF GOLD STONE CAPITAL PTY LTD ACN 167 931 026 BETWEEN: HONG CHU First Plaintiff XUEPING XU Second Plaintiff AND: LOUISE CAROL LIN First Defendant HAI ZONG CAI Second Defendant DAVID DARMALI (and others named in the Schedule) Third Defendant order made by: JACKMAN J DATE OF ORDER: 31 July 2024 THE COURT ORDERS THAT: 1. The order made on 15 July 2024 against Mr Cai be varied so as to state that Mr Cai is entitled to pay his lawyers the total amount of $85,322.74 in respect of fees accrued to date. 2. Mr Cai's application to vary the orders of 15 July 2024 otherwise be dismissed. 3. Mr Cai pay the costs of the application made today. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT Delivered ex tempore, revised from transcript JACKMAN J: 1 I gave judgment in these proceedings on 15 July 2024 in Chu v Lin, in the matter of Gold Stone Capital Pty Ltd (Trial Judgment) [2024] FCA 766. On the same day, I made a freezing order against the second defendant, Mr Cai, on the standard terms adopted in this Court, with exceptions in relation to spending up to $1,500 per week on account of ordinary living expenses, and paying an amount not exceeding $50,000 on account of reasonable legal expenses. Mr Cai now seeks a variation of those orders, such that those monetary caps be removed and replaced by the concept of reasonable expenses, and in the alternative, that the amount for ordinary living expenses be increased to a figure in the range of $2,500 to $3,000 per week. 2 Mr Cai relies on an affidavit which he made on 26 July 2024, which contains evidence of his estimated current weekly expenditure, amounting to a figure of $2,243.43. However, the largest item in that estimate is a figure of $900 per week for groceries, which strikes me as inordinately high. Against the background of the adverse credit findings which I have made against Mr Cai, I do not accept that he spends $900 per week on groceries in circumstances where he has no dependants and the groceries are for his own meals. 3 In the absence of any other evidence on the point, I proceed on the basis that a reasonable figure for groceries per week would be about $200, being $700 less than Mr Cai's estimate. If one takes $700 off the weekly estimate of $2,243.43, then one gets very close to the current order, which is capped at $1,500 per week on ordinary living expenses. In those circumstances, I do not think that Mr Cai has shown sufficient cause for varying the current cap of $1,500 per week on ordinary living expenses. Further, I would not be prepared to vary order 10(a) so as to refer simply to reasonable living expenses, given that such formulation in the case of Mr Cai would be too uncertain and may well lead to a significant diminution in his assets beyond what really is reasonable for his maintenance. 4 As to the question of legal costs, Mr Cai gives evidence that he has unpaid and accrued legal costs, including disbursements of $85,322.74. It seems to me likely that that amount could be paid pursuant to the exception in order 10(d), which pertains to the discharge of obligations bona fide and properly incurred under a contract entered into before the order was made. However, out of an abundance of caution, it seems to me desirable to expressly provide that Mr Cai can pay his outstanding legal fees of $85,322.74. 5 Mr Cai also says in his affidavit that he has retained solicitors and counsel to consider and advise on any potential prospects of appeal and to appear in any appeal should one be available. Mr Cai, through his counsel, has estimated that the likely cost of obtaining advice on the prospects of an appeal is about $40,000. As the reasonable legal fees are currently capped at $50,000, that figure seems to me to be adequate for Mr Cai to obtain advice on his prospects of appeal and also to have any notice of appeal drafted and filed. In those circumstances, there is no cause shown at this stage for varying the orders which I made on 15 July, other than in respect of making it clear that Mr Cai can pay the accrued and unpaid fees in the amount which I have stated. 6 The plaintiffs have relied on an affidavit of Mr Lacey of 30 July 2024, which indicates that the Eastwood property owned by Mr Cai is now the subject of four caveats. One of them was lodged on 28 June 2024, about a week after the hearing was completed. The second was lodged on the day that I delivered judgment on 15 July 2024. And the other two were lodged within a week of that date. I am not in a position to form a view as to the legitimacy of those caveats at this point. I do note, however, that the Eastwood property is the subject of an exchange of contracts made on 7 July 2024, for a total price of $3,102,000. 7 It is not necessary for me to make any findings in relation to the evidence given by Mr Lacey concerning the state of the Eastwood property, as Mr Cai's evidence itself falls short of justifying the variation to the orders which he seeks. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman. Associate: Dated: 7 August 2024 SCHEDULE OF PARTIES NSD 32 of 2022 Defendants Fourth Defendant: FIDUCIA ASSET MANAGEMENT PTY LTD Fifth Defendant: JOSEPHINE DARMALI