The transfer of almost $50 million into a bank account controlled by Mackay Goodwin director David Hurst might be seen as something worth celebrating, and no doubt the lawyers retained to litigate the subsequent barney that’s erupted are thinking ahead to the day corks pop.
But given the funds were paid out by the Sydney branch of Bank of China seemingly in defiance of a ruling made last month by a court in the People’s Republic of China (PRC), icing the Krug may be premature.
First the law firms engaged, which include ERA Legal and Johnson Winter Slattery, must emerge victorious from the Federal Court of Australia where proceedings were commenced last week by Pinsent Masons on behalf of Shinetec (Australia) Pty Ltd (Shinetec), a lender which swung into action upon learning that the money had dropped.
Hurst, who is receiver and manager of The Gosford, has been waiting for the Chinese court to reach a conclusion for a long time because those deliberations have meant orders made in related proceedings brought in the NSW Supreme Court in 2023 in The Gosford’s favour against Shinetec have been stayed.
Those proceedings pitted The Gosford and Hurst against Shinetec in respect of a Standby Letter of Credit (SLOC) negotiated between the parties requiring payment of $37 million to The Gosford by Shinetec pursuant to a design and construction contract the parties entered into in June 2020.
Shinetec commenced the NSW Supreme Court proceedings seeking a declaration that a demand for payment served on the Bank of China on July 28, 2021 by Hurst and former joint receiver David Sampson of BPS Resolved was invalid.
Shinetec lost and its subsequent appeals were similarly disposed with. With interest and costs the sum deposited in the account Hurst controls on July 2, 2025 amounted to $47,843,889.04c.
But Shinetec and its parent Shanxi Construction Investment Group Co (SCIG) contend that the SLOC was procured through fraud, though they’ve not identified who they believe the purported fraud’s architect to be.
The subsequent stay order put the issue, like the Krug, on ice. But according to documents obtained by iNO, only until the “Taiyuan Intermediate People’s Court concludes, (as it did on June 13, 2025) that the conduct of The Gosford in issuing the Demand dated 28 July 2021 to the Bank of China under the SLOC constituted a fraud and ordered the Bank of China to refrain from making payment of the AUD$37million under the SLOC to The Gosford”.
It’s yet to be revealed why the Bank of China defied the Chinese court’s order and Hurst told us yesterday only that he had instructed lawyers to act in the proceedings brought last week by Shinetec.
A hearing is currently scheduled for July 21. Thanks to freezing orders consented to by Hurst last week he’s restrained – by consent – from dealing with the windfall until the question of entitlement and priority payment is resolved.
For its part Shinetec wants a declaration that the monies “pursuant to the SLOC ultimately falls within the scope of “Secured Money” pursuant to the General Security Agreement between The Gosford and Shinetec dated 26 November 2020 (GSA)” and that “Shinetec’s security interest provided for by the GSA takes priority over any other all present and after-acquired personal property” (Al|PAP) security interests taken over The Gosford, save as for that held by Aquamore Fund 2 Pty Ltd (now known as Aquamore Servicing Pty Ltd) and Aquamore Credit Equity Pty Ltd as trustee for Spring Park Unit Trust“.
Receivers gazumped by superior security
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