Robert Xie's bail has been overturned by a court concerned over allegations he may have coached family members about what to tell police.
A covert surveillance operation of Xie produced conversations that suggested he may have told his wife Kathy Lin and a relative what to tell police following the five murders, a court heard in Sydney on Monday.
Xie, 48, sat in the dock without emotion when Justice Stephen Rothman overturned a local court decision from last week to grant him bail.
He said the taped conversations 'suggests a significant degree of collusion in the evidence that is to be given, and a degree of coaching as to what could and should be said.'
'Those conversations give me serious concern,' Justice Rothman said as he read his draft judgment to the court.
Xie's wife Kathy Lin sobbed outside court where she declined to speak to a throng of journalists who attended the proceedings.
He is charged with murdering his brother-in-law, Min 'Norman' Lin, 45, Mr Lin's wife, Yun Li 'Lily' Lin, 43, her sister, Yun Bin 'Irene' Yin, 39, and two boys, aged nine and 12, who cannot be named for legal reasons.
The bodies of the victims were found in a house in North Epping, in Sydney's northwest, on July 18, 2009.
They had been beaten to death with a hammer or similar object, as they slept, while the cause of death for four of the victims also included asphyxia.
One of the boys may have awoken during the attack, the court heard previously, since his body was found some distance from his bed.
Justice Rothman also noted that the type of weapon used was not made known to Xie or the public before he was charged in May 2011.
'Yet the evidence before me indicated that the applicant discussed with his wife the evidence she should give as to his ownership of a toolbox,' he said.
The crown's case was a circumstantial one, Justice Rothman said, which a jury would have to consider when Xie faced trial likely in late 2013.
He considered that the electricity to the Lin's home had been cut just prior to the murders, there was no forced entry and the crown's proposition that someone familiar with the premises went from bedroom to bedroom killing the victims without a torch so as not to awake anyone.
Bloody shoe prints found at the scene were consistent with the size and type of five models of popular ASICS running shoes.
Xie owned a pair of ASICS at the time of the murders but was not wearing them the morning he and his wife discovered the bodies.
Justice Rothman also considered the drop of DNA found in Xie's garage 10 months after the murders.
It contained the profiles of at least four people who may have been related to each other.
But tests have been unable determine if it was blood or another human substance, which a jury would question, the court has heard.
Xie will be arraigned in February.