Filippini v Keystone Asset Management Limited

The disputed assets were among a long list of assets — bank accounts, real properties and vehicles — covered by the freezing orders. The assets were frozen to the extent of $158 million, that being the sum of the amounts said by the Respondent (Keystone) to have been misappropriated by Mr Filippini and a company of which Mr Filippini was the sole director, City Built Pty Ltd (City Built). The background to, and nature of, the substantive proceeding was summarised by the primary judge in his Honour’s reasons: Keystone Asset Management Ltd (Receivers and Managers appointed) (in liquidation) v Filippini (No 2) [2025] FCA 1138 (J): J [15]–[27].

Leave to appeal may be granted where the primary judgment is the subject of sufficient doubt and would, if not disturbed, give rise to serious injustice: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400 (Sheppard, Burchett and Heerey JJ). Leave to appeal may also be granted where the appeal raises questions of general importance, as explained in Federal Commissioner of Taxation v Runcity Pty Ltd [2025] FCAFC 152; (2025) 312 FCR 291 at [7] (O’Bryan, Button and Owens JJ):

This Court has the power to make freezing orders pursuant to s 23 of the Act, and also as an incident of the general grant of power to it as a superior court of law and equity: Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 (Jackson) at 617–18 (Wilson and Dawson JJ). Freezing orders are directed to preventing abuse of the processes of the court by its remedies being frustrated by disposition of assets; freezing orders are not made to afford security to any actual or prospective judgment creditor: Jackson at 617, 619 (Wilson and Dawson JJ), 622–23 (Deane J). Where relief is sought against a non-party, the focus must be on the administration of justice: Cardile at [42] (Gaudron, McHugh, Gummow and Callinan JJ).

The same potential breadth of the operation of freezing orders is apparent from the judgment of Brennan J. His Honour likewise recognised that the range of actions that may be taken to frustrate the processes of the court is not limited to actions directly dealing with a legal or beneficial interest of a judgment debtor or prospective judgment debtor in identified property. Rather, Brennan J explained, the power to make a freezing order may be exercised “according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order”: at 621; see also Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 at [35] where Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ referred to Jackson and said “[t]he moulding of an interlocutory injunction must depend upon the circumstances of each case”, as well as quoting this passage of Brennan J’s judgment in Jackson with approval.

The impracticality — if not impossibility — of freezing the expectancy itself informs the construction of r 7.35(5)(a). In particular, once that difficulty is realised, it is apparent that r 7.35(5)(a) is not limited to the making of a freezing order that fixes on and freezes the “expectancy” that is the asset of the judgment debtor or prospective judgment debtor. Rather, it is where a third party has some kind of power of disposition over the expectancy of the judgment debtor or prospective judgment debtor that the power to make a freezing order against that third party arises. In this respect, it is important to recall that freezing orders take effect in personam, and so are distinct from tracing and other remedies protecting proprietary rights: Mercedes Benz AG v Leiduck [1996] AC 284 at 300 (Lord Mustill); the in personam character of freezing orders was confirmed in Cardile at [50] and [55] (Gaudron, McHugh, Gummow and Callinan JJ); and Deputy Commissioner of Taxation v Huang [2021] HCA 43; (2021) 273 CLR 429 at [25] (Gageler, Keane, Gordon and Gleeson JJ).

It is this formulation, including the reference from Jackson to “claims and expectancies”, and the disjunctive “or”, that finds its embodiment in r 7.35(5)(a) of the Rules. Both in Cardile and in r 7.35(5)(a), the disjunctive “or” precedes identification of an enforcement process as an independent basis upon which a freezing order may be made against a third party. Further, and as Beach J observed in Forever Winner International Development Australia Pty Ltd v Shenzhen Xinhe Hongshi Investment and Consultancy Co Ltd [2026] FCA 167, although Cardile “sets out where freezing orders against third parties may be appropriate, it did not expressly set out the exhaustive circumstances”: at [117].

In this appeal, the Appellants sought to emphasise cases they considered expressed doubt about Carey (No 6), or at least sought to confine that judgment. Australian Securities and Investments Commission v Burnard [2007] NSWSC 1217; (2007) 64 ACSR 360 (Burnard) is one such case, as Carey (No 6) was distinguished by Barrett J. In Burnard, ASIC’s application was advanced under s 1323 of the Corporations Act. ASIC sought freezing orders restraining (relevantly) Mr Burnard in respect of his assets (referred to as “Order 1”), and restraining BDI Pty Ltd (BDI) in respect of its assets whether or not owned on behalf of any trust, including named trusts (referred to as “Order 3”). In approaching the question of whether Order 3 could be supported by s 1323(1)(h) of the Corporations Act, as ASIC alleged, Barrett J observed that the order was framed on the basis that all of the property held by BDI was property “of” Mr Burnard, which proposition would only hold if no interests subsisted in the whole of the assets of BDI, other than the interests of Mr Burnard: at [67]–[68].

Carey (No 6) was also considered in Fordyce v Ryan [2016] QSC 307; [2017] 2 Qd R 240 (Fordyce). Fordyce concerned an application by a trustee in bankruptcy to have a receiver appointed to “wind up” three trusts, including a discretionary trust of which the bankrupt was a general beneficiary and who previously controlled the now-deregistered corporate trustee. In that case, Jackson J said at [37] that it was:

The next case considering Carey (No 6) is Pleash v Tucker [2018] FCAFC 144; (2018) 264 FCR 374 (Pleash). That case concerned whether financial documents of a trust ought to be produced on a liquidator’s examination summons where the examinee had no proprietary interest in the trust assets, but the liquidator contended that they may be available to satisfy a prospective judgment debt: at [1] (McKerracher, Farrell and Banks-Smith JJ).

Noting that the liquidators, at whose behest the examination summons had been issued, relied on Carey (No 6), the Full Court (McKerracher, Farrell and Banks-Smith JJ) referred to the consideration, in Fordyce, of the application of the reasoning in Carey (No 6) to individual property rights of a trustee in bankruptcy to gain access to the income and capital of a discretionary trust: at [43]. The Full Court agreed with Jackson J’s analysis and conclusion that a beneficiary’s de facto or legal control of the trustee of a discretionary trust does not “[alter] the character of the interest of the beneficiary such that it will constitute property of the bankrupt if the beneficiary becomes bankrupt”, a conclusion the Full Court also considered to be consistent with Swishette Pty Ltd v Australian Competition and Consumer Commission [2017] FCAFC 45; (2017) 249 FCR 483 (Swishette): at [45]–[46]. But, as we have noted, Jackson J’s rejection of Carey (No 6) in Fordyce was a rejection of a general principle that was not advanced by French J in that case.

In Swishette, their Honours confirmed orthodox trust law, namely that the objects of a discretionary trust have no beneficial interest in the property of the trust, and their only interest is characterised as a mere expectancy coupled with a right to due administration of the trust: at [26]. The Full Court further stated that the fact that a person may control a trust — there both as appointor and director of the trustee company, “does not give him an interest in the trust property amounting to ownership”: at [26], citing DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510; Gartside v Inland Revenue Commissioners [1968] AC 553 at 617–618. But, as we have emphasised, by its terms, and having regard to the genesis of those terms in Jackson and Cardile, r 7.35(5)(a) does not require that “ownership” be demonstrated. Nor does it require that assets of a discretionary trust can be characterised as property of a beneficiary in a way that was doubted in Pleash.

The Appellants referred to Lord Leggatt JSC’s statements (with whom Lords Briggs, Sales and Hamblen JJSC agreed), in Convoy Collateral Ltd v Broad Idea International [2021] UKPC 24; [2022] 2 WLR 703 at [88], that the “ordinary prerequisite” is that the “third party is in possession or control of an asset against which a judgment could be executed” and (citing Cardile among other cases) that “the key question is whether the assets are or would be available to satisfy a judgment through some process of enforcement”. Whatever the qualification “ordinary” might present, it may be accepted that where there is no conceivable prospect that the assets, dealings with which are to be restrained, could be available in satisfaction of a judgment, a freezing order would not serve the requisite purpose. But that is not to embrace any suggestion that a freezing order will never be made unless a clear and strong enforcement pathway is laid out at the stage of applying for the freezing order.

More recently, in Vines, in the matter of the Bankrupt Estate of Mitchell (No 2) [2024] FCA 1378 (Vines), Feutrill J surveyed the authorities (including Carey (No 6), Fordyce and Pleash) in addressing an amendment application. Having noted the similarity between the definition of “property” considered by French J in Carey (No 6) and the definition of that term in the Bankruptcy Act (which then links to the term “property of the bankrupt” in s 58), his Honour concluded as follows in allowing the disputed amendment (at [45]–[46], emphasis added):

It is unremarkable that the ultimate availability of enforcement processes (including through the exercise of the powers of a trustee in bankruptcy) in respect of such claims and expectancies may not be immediately clear and well-established (ie they may not adopt a tried and tested enforcement pathway). In this regard, we note that the actions that a trustee in bankruptcy may take are not necessarily confined to actions dependent on any conclusion that the assets of the trust are property of the bankrupt. That proposition was doubted in Pleash. Rather, the actions that a trustee in bankruptcy may consider may also concern a bankrupt’s power of appointment and/or any property constituted by a beneficiary’s right to due consideration by the trustee, it being widely recognised as a chose in action (or at least an equitable chose in action): Dwyer v Ross (1992) 34 FCR 463 at 466 (Davies J); Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366 at [75] (French CJ); Public Trustee v Smith [2008] NSWSC 397; (2008) 1 ASTLR 488 at [127] (White J); Anchorage at 79–80 (Owen J, Rowland and Ipp JJ agreeing); Vines at [33] (Feutrill J).

It will be clear from our earlier discussion of the Court’s power to make a freezing order, that we do not accept the Appellants’ argument that the object of a freezing order — that which must not be dealt with by the person against whom the order is made — must be the same as the asset that enlivens the power as it is expressed in r 7.35(5)(a). An “expectancy” is not an existing chose in action (Ansett Australia Ltd v Travel Software Solutions Pty Ltd [2007] VSC 326; (2007) 214 FLR 203 at [51] (Hargrave J)); an “expectancy” is not something that can readily be frozen in a clear and effective order of the Court. To give effect to the purpose of a freezing order, it will be necessary for a freezing order to be formulated so that it is effective to prevent the taking of actions that diminish or eradicate the value of the expectancy (see further paragraphs 43–44 and 48 above). In the present case, that supports the primary judge’s making of orders against the trustees specifying the cars and the properties as the objects of the orders.

What will be required of an applicant for a freezing order will depend on the circumstances. The Appellants abandoned their initial position that a positive finding, on the balance of probabilities, that assets the subject of a freezing order would be available to satisfy a judgment is required, but maintained that a “good arguable case” is required. They relied on the characterisation of that standard in Nicols as trustee of the bankrupt estate of Manietta v Manietta, in the matter of Manietta [2022] FCA 39 where Cheeseman J considered the authorities in describing a good arguable case as one that is more than barely capable of serious argument, but not necessarily one the judge considers would have more than a fifty percent chance of success: at [49]. Albeit in respect of various integers of an application for freezing orders, the expression “clearly arguable” was used in Anchorage, “good arguable case” in Vasiliades, and “reasonably arguable” in Vines.

(1991) 33 FCR 397

(2021) 273 CLR 429

(2014) 323 ALR 59

(1992) 34 FCR 463

(2025) 312 FCR 291

(1987) 162 CLR 612

(2008) 238 CLR 366

(1998) 195 CLR 1

(2018) 264 FCR 374

(1993) 10 WAR 59

(2017) 249 FCR 483

(2008) 169 FCR 227

(2012) 209 FCR 428

[2006] FCA 814

[1999] HCA 18

[2013] VSC 346

[2021] HCA 43

[2014] FCA 1250

[2022] FCA 39

[2008] NSWSC 397

[2008] FCA 1931

[2022] FCAFC 96

(2007) 214 FLR 203

(2006) 153 FCR 509

(1999) 198 CLR 380