D & A Property Group Pty Ltd v Sonar Investments Pty Ltd (No 2) [2014] NSWSC 1951

D & A Property Group Pty Ltd v Sonar Investments Pty Ltd (No 2) [2014] NSWSC 1951

The company faces an appreciable risk of incurring GST and capital gains tax liabilities from the sale of the Hornsby development, and without extension of the freezing order to account for these potential liabilities, there is a substantial likelihood that the company may not have the assets to satisfy them. Extension of the freezing order is justified to preserve sufficient funds for such liabilities.

Parties
First Plaintiff: D & A Property Group Pty Ltd; Second Plaintiff: Yan Zhang; Third Plaintiff: Qingrong Gu; First Defendant: Sonar Investments Pty Ltd; Second Defendant: Sonar Australia Pty Limited; Third Defendant: Xiaofeng Li; Fourth Defendant: Liming Zhu; Fifth Defendant: Wei Zhu
Jurisdiction
Australia
Judgment Date
15 December 2014
Procedural Posture
Interlocutory Application / Ruling on Extension of Freezing Order
Outcome
Freezing order extended to account for GST and capital gains tax liabilities; orders made accordingly.
Legal Topics
Interlocutory Injunctions, Freezing Orders, Company Taxation Liabilities, Asset Preservation
Equity Interlocutory Injunctions Freezing Orders Company Taxation Liabilities Asset Preservation

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Parties

D & A Property Group Pty Ltd

First Plaintiff

Yan Zhang

Second Plaintiff

Qingrong Gu

Third Plaintiff

Sonar Investments Pty Ltd

First Defendant

Sonar Australia Pty Limited

Second Defendant

Xiaofeng Li

Third Defendant

Liming Zhu

Fourth Defendant

Wei Zhu

Fifth Defendant

Procedural Posture

Interlocutory Application / Ruling on Extension of Freezing Order

Legal Issues

  1. 1 Whether a freezing order should be extended to cover potential GST and capital gains tax liabilities to ensure availability of company funds to meet such liabilities.

Ratio Decidendi

The company faces an appreciable risk of incurring GST and capital gains tax liabilities from the sale of the Hornsby development, and without extension of the freezing order to account for these potential liabilities, there is a substantial likelihood that the company may not have the assets to satisfy them. Extension of the freezing order is justified to preserve sufficient funds for such liabilities.

Court Disposition

Freezing order extended to account for GST and capital gains tax liabilities; orders made accordingly.

Orders

  • Defendants restrained from removing/disbursing proceeds of sale of Hornsby project up to $10,391,631.25, subject to specified exceptions.
  • Defendants at liberty to pay up to $465,382 to creditors of first defendant.