ADG Digital Pty Ltd v Trigon Trading Pty Ltd

1. Pursuant to r 41.03 of the Federal Court Rules 2011, order 1(b) of the orders made 1 December 2022 is stayed until the date that is two weeks after the date of the second creditors' meeting under s 439A of the Corporations Act 2001 (Cth) of Trigon Trading Pty Ltd (Administrators Appointed) (the Company) unless, at the second creditors' meeting, the creditors vote to end the voluntary administration of the Company and return control of the Company to its director, in which case the stay of order 1(b) is to conclude on the date on which control of the Company is returned to its director.
2. Liberty to apply.
3. The costs of the Administrators of the Respondent of and incidental to their interlocutory application dated 15 February 2023, as amended on 15 March 2023, to the extent not paid by the Applicant pursuant to a costs order, be costs in the administration of the Respondent.
4. Costs otherwise reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background 1 The respondent (Trigon, also referred to as the Company) was in the business of digital asset trading including cryptocurrency, blockchain-based currency and fiat currency. Voluntary administrators were appointed to Trigon on 16 December 2022. At the first creditors' meeting, held on 28 December 2022, the initial administrators were replaced with the present administrators, Marcus William Ayres and Brett Stephen Lord (the Administrators). The Administrators, with leave under s 440D(1)(b) of the Corporations Act 2001 (Cth) (the Corporations Act) (which leave was not opposed), brought an interlocutory application seeking a stay of order 1(b) of the orders made by this Court on 1 December 2022 (the December Orders). That order provided for the payment out to the applicant (ADG) of an amount from funds held in Court. 2 Orders made by consent on 25 November 2022 provided for Trigon to give instructions to its bank in the Bahamas, Deltec Bank & Trust Limited (Deltec), to transfer AUD11,009,992.00 into Court, and to transfer a separate sum of USD988,905.30 into ADG's account, also held with Deltec. The orders made on 25 November 2022 provided that, upon those transfers being made, an interim freezing order made on 21 November 2022 would be discharged. The interim freezing order made on 21 November 2022 was in place of an initial ex parte freezing order obtained by ADG on 18 November 2022. The December Orders provided for an amount of AUD5,100,000 to remain in Court (the Retention Amount) (order 1(a)) and the balance to be transferred to ADG (order 1(b)) (the Balance Amount). At the time those orders were made, no funds had yet been transferred to the Court. The transfer was only received on 6 February 2023, by which time Trigon was in administration. The convening period for the second meeting of creditors was extended by orders made on 19 January 2023 to conclude on 29 March 2023. 3 ADG bought the present proceeding against Trigon on 18 November 2022. It commenced the proceeding with a Concise Statement and sought an ex parte freezing order. According to the description in its Concise Statement, ADG is a company incorporated in Australia which provides advisory and wealth management services to clients in respect of digital assets, including cryptocurrency and other blockchain-based assets. ADG says that, in September 2022, it requested that Trigon assist it with transferring funds from the Bahamas to Australia. ADG says it instructed Deltec in the Bahamas to transfer AUD16 million from ADG's account with Deltec into Trigon's account with Deltec, for forwarding on to ADG's account with Westpac in Australia. I will refer to the sum of AUD16 million as the Transfer Amount. It appears that this request came about due to difficulties that ADG was experiencing in transferring funds to Australia from the Bahamas. 4 There was also some delay in Trigon being able to effect the transfer. At one point, it offered ADG the choice of having Trigon transfer the AUD16 million back to ADG's Deltec bank account or waiting until Trigon's daily wire withdrawal limit was increased to facilitate the withdrawal request to send funds to Australia. ADG opted for the latter option. 5 In mid-November 2022, Trigon informed ADG that it had sent a portion of the funds via FTX Trading Ltd (FTX), a cryptocurrency exchange. FTX filed for bankruptcy protection in the United States shortly after the funds were transferred to it. At that point, Trigon advised it was placing a hold on further withdrawals by ADG. For the purposes of the present application, the funds transferred to FTX are regarded as effectively lost. ADG says that it did not authorise Trigon to use FTX to transfer a portion of the funds. 6 By its Concise Statement, ADG contends that the Transfer Amount and the further sum of USD1 million were funds held by Trigon on trust for ADG. ADG also advances claims of misleading or deceptive conduct under the Australian Consumer Law. The USD amount was successfully transferred back to ADG by Trigon pursuant to the orders made on 25 November 2022 and is only relevant to the present application insofar as ADG points to the Administrators' failure to challenge the propriety of that transfer or to otherwise raise any argument concerning whether that payment potentially constitutes a voidable transaction.

Agreement regarding the transfer amount, Court orders and the payment of funds into and out of court 7 The parties' factual investigations are not exhausted. An application for a stay is not a forum in which findings of fact should be made on contested matters, where those matters may affect the substantive dispute. With that overarching caveat, it is relevant to refer to further events and the evidence adduced on the present application concerning the Transfer Amount and the subsequent payment of funds into Court. 8 There was no first-hand witness evidence from ADG regarding interactions with Trigon concerning the Transfer Amount. 9 The evidence available on the present application was limited to: (1) messages sent between ADG and Trigon on the messaging platform Telegram between September and November 2022 concerning the Transfer Amount; (2) various emails and letters between the parties' current and former solicitors, which comprised Kingsford Lawyers, Salerno Law, Deutsche Miller and now Clifford Chance for Trigon and its Administrators, and Neo Legal and now Robert James Lawyers for ADG; (3) a copy of a "Master Purchase Agreement" (MPA) signed in early February 2022 (the parties are also purported to have entered into a "Master Trading Agreement" (MTA) in around October 2022; however, the parties did not provide a signed copy of this agreement); (4) documents relating to the voluntary administration of the Company, including copies of the appointment of voluntary administrators, correspondence evidencing the Administrators' attempts to seek further information from various banks (including Deltec), and correspondence with ADG regarding their proof of debt or claim; (5) a copy of the transaction history for the period of 15 May to 15 November 2022 for Trigon's Deltec bank account and worksheets entitled "Balance sheet (NOFTX)" and "Open CS" which (in the Administrators' preliminary view) is not a true balance sheet but instead forms a "contemporaneous summary (as of 5 December 2022) of the client accounts and liquid assets"; and (6) correspondence concerning, and a copy of, the DOCA proposed by Mr Salerno, Trigon's sole director. 10 The parties adduced contemporaneous evidence of the dealings between ADG and Trigon in relation to the Transfer Amount in the form of various messages on the Telegram messaging platform. 11 On 5 September 2022, Tony Fan (who was employed at ADG as a trader) messaged Emily Curino (an employee of Trigon responsible for treasury management) and Jaiden May (also of the Company): Fan: Hey guys, the last transaction we did for roughly 15m was deposited to deltec. Just wondering are we able to send it back for it to be deposited into our westpac account? Apologies it was deposited to an inconvenient account May: Hey @Toneez Let me check with the team on that one. Fan: Thanks mate Curino: Just to clarify, you are wanting to send the 15m (approx) back to our Deltec account, then you want us to then send that back to your Westpac account? @Toneez Fan: Yes that's correct Curino: Just checking with compliance on this one - will circle back @Toneez Confirming your Westpac account is in the same name @Toneez? Curino: Ok great - we can do this for you. Please confirm once you have send [sic] the AUD back to our Deltec account via internal transfer Fan: Hey guys quick one, in the spirit of time, are we able to send it to the client instead of our account? Happy to provide any compliance info required and also use of fund requirements etc May: Will check with compliance team Fan: Thanks mate 12 On 6 September 2022, Laurence Dowling (of the Company) messaged Tony Fan: Dowling: Hi Tony, we've spoken to our Compliance team and the client will need to onborad [sic] directly with TrigonX to support this transaction. Please provide further information (including email contact), as to the client and the team can send through our onboarding steps. Thanks. Fan: Makes sense, all good I'll discuss internally and revert thanks guys Dowling: Thanks @Toneez 13 On 7 November 2022, AUD16 million was paid by ADG to Trigon's Deltec bank account. 14 There was then a delay in Trigon paying the amount to ADG in Australia. On 9 November 2022, Emily Curino messaged Tony Fan: Curino: Morning @Toneez In regards to your current AUD withdrawal, as your [sic] know we would normally go via FTX because that enables us to settle your AUD faster however due to us not using FTX currently we have 2 options: l) We can return your AUD funds back to your Deltec account or; 2) You can wait till [sic] we increased our daily wire withdrawal limits at Deltec and would do an external withdrawal - our estimate for this is 1-2 days. Let us know how you would like to proceed. Thanks! Fan: Hey Emily let's go with number 2 Curino: Okay great - once we have our limits increased we will let you know @Toneez Fan: thanks Emily hope you guys are staying safe during these times :) Hey Emily are you able to send parts of the fund at a time rather than the full amount together? Curino: Yes that may be an option - we will know more once we have confirmation on our wire withdrawal limit increase - we should have an answer first up tomorrow morning after NY close, Asian open @Toneez Fan: Ok thanks Emily please keep me posted Curino: Will update you as soon as we know anything further 15 Between 10 and 16 November 2022, Tony Fan and Mr Salerno followed up the transfer of funds from Trigon to ADG several times on Telegram. 16 On 16 November 2022, Amy Thompson (of the Company) informed Tony Fan that It has come to our attention that a portion of your funds were sent by Deltec to FTX shortly before FTX stopped all withdrawals. These funds were unable to be withdrawn. As you are aware, FTX announced on l l November that it is under administration. We have been instructed by our Legal Department to place a hold on any further withdrawals on your account until further notice to allow for a complete review to take place and to ascertain with surety the extent of the Adarx exposure. 17 Turning, then, to the payment of funds into Court, the relevant background is as follows. 18 As mentioned, ADG obtained an ex parte freezing order against Trigon on 18 November 2022. That order was discharged by further order on 21 November 2022, in place of which there was a further interim freezing order. 19 On 24 November 2022, ADG filed an Interlocutory Application, by which it sought orders in the following terms (the November Interlocutory Application) (emphasis in original): 2. An interlocutory order pursuant to s 23 of the Federal Court Act 1976 and/or pursuant to rule 14.13 of the Federal Court Rules 2011 compelling the Respondent to forthwith taking all steps to transfer, including causing Deltec Bank & Trust Limited Bank (Deltec Bank) to transfer, the sum of $11,009,992 AUD currency and $988,905.30 USD currency of the Applicant's funds ("Remaining Funds"), currently held in the Respondent's Deltec Bank account: (a) to the Applicant's nominated bank account; alternatively (b) into Court. 20 Further orders were made on 25 November 2022 requiring Trigon to instruct Deltec to transfer AUD11,009,992.00 into the Federal Court of Australia Litigants' Fund Account, and a further sum of USD988,905.30 into another Deltec account, nominated by ADG. The interim freezing order made on 21 November 2022 - which froze Trigon's Deltec bank account - was only to be discharged once the transfers of funds into Court had been made. The present application is concerned only with the transfer of AUD11,009,992, which I will refer to as the Court Fund. 21 Further orders were then made on 1 December 2022 (the December Orders) which provided relevantly as follows (emphasis in original): 1. Without prejudice to either parties' rights or claims, upon confirmation of receipt of the funds that are expected to be paid into the Federal Court of Australia Litigants' Fund Account pursuant to the direction referred to in paragraph 1 of the orders made on 25 November 2022 (Court Funds): (a) an amount of AUD $5,100,000 (Retention Amount) is to remain deposited in the Federal Court of Australia Litigants' Fund Account until further order of the Court; and (b) the balance, being the difference between the Court Funds and the Retention Amount, is to be transferred by the Court to the applicant's following nominated bank account, as soon as reasonably practicable: [Account details]. 22 The present application concerns whether order 1(b) ought to be stayed. 23 In broad terms, the compromise reflected in the December Orders was brokered on the basis that Trigon considered that it may have a cross-claim against ADG and considered that it was inappropriate that all of the funds to be paid into the Court Fund be released to ADG. In a letter from Trigon's then-solicitors to ADG's solicitors dated 30 November 2022, Trigon indicated that it was willing in principle to agree to a further release of funds to ADG provided that, without prejudice to either parties' rights or claims, the Retention Amount was to remain deposited in the Federal Court of Australia Litigants' Fund Account and the balance was to be transferred by the Court to ADG's bank account as soon as reasonably practicable. The Retention Amount reflected Trigon's estimate at the time of its past and future loss and damage arising from its foreshadowed counterclaim, based on ADG's alleged breaches of the MTA and its liability to indemnity Trigon for any losses, costs and expenses arising from its alleged breaches of the MTA. 24 At an unknown time, but before 6 December 2022, Ms Curino of Trigon instructed Deltec to make the transfer of funds to the Court. She followed up on this request by email to Deltec on 6 December 2022, by asking whether Mr Capron of Deltec had "any confirmation on whether the AUD that was sent from our Deltec account into the Courts [sic] last week has been sent successfully?" Accordingly, it appears that the instruction to Deltec was given before the Company went into administration on 16 December 2022. 25 Ms Curino followed the transfer up with Deltec on 22 and 23 December 2022. Those follow-up emails were sent while the Company was in administration, but before the appointment of the current Administrators on 28 December 2022. There is no indication that these follow-up emails were sent without the imprimatur of the then-incumbent administrators. 26 On 28 December 2022, Deltec advised by email that there had been a request for additional information on the transfer from the remitting bank. 27 On 12 January 2023, the present Administrators sent a letter to Deltec which said "I also understand there is $11m that was transferred to the Federal Court of Australia, can you please confirm the status of this". 28 On 18 January 2023, the Administrators' office received an email from Ms Curino with a screenshot appearing to show that the $11 million in funds were still in the Deltec account. This then prompted the Administrators to write to Deltec on 19 January 2023 to instruct them to transfer the $11 million (and any other) funds to the Administrators' bank account. No explanation was given by the Administrators as to why they issued an instruction countermanding compliance with an order of this Court and in disregard of the then-continuing interim freezing order in place pursuant to the orders made on 21 and 25 November 2022. The only explanation given for this instruction to Deltec was the Administrators' desire to get the funds out of the Bahamas and into Australia in an account under their control. 29 The Court Fund was received by the Court on 6 February 2023. There is no evidence explaining how or why the transfer ultimately occurred when the funds were still with Deltec on 18 January 2023 and a fresh instruction had been given to Deltec by the Administrators on 19 January 2023. In any event, once the funds were received by this Court, the Administrators indicated their intention to apply urgently for a stay to prevent the distribution occurring in accordance with order 1(b).

the administrators' APPLICATION 30 The Administrators filed an interlocutory application on 15 February 2023 and proceeded on the basis of an amended interlocutory application filed 15 March 2023 (but which was provided prior to the hearing on 10 March 2023, and on which basis the hearing was conducted). By the interlocutory application, the Administrators sought an interlocutory order that order 1(b) of the December Orders be stayed pursuant to r 41.03 of the Federal Court Rules 2011 (Cth) (the Rules) "until further order". The Administrators sought, further or alternatively, an order pursuant to s 447A of the Corporations Act that Part 5.3A of the Act operates in relation to the Respondent Trigon Trading Pty Ltd (Administrators Appointed) as if, for the purposes of s 440D(1) of the Act, a "proceeding in a court…cannot be begun or proceed with" includes the releasing of any funds held in Court in relation to the proceeding. 31 At the Court's direction, the Administrators filed a statement of the grounds on which they contended that order 1(b) be stayed. The grounds are as follows: 1. There is a proper basis for the stay which is fair to the parties. The administration of the Respondent intervened in these proceedings, staying them: s 440D. The payment into Court ought not have occurred. The stay sought preserves the status quo for a relatively short time, pending completion of the administration. 2. The stay would give due effect to s 440D of the Act, as payment out of the Court's Fund by the Court during administration ought constitute a step in the proceeding and contravene the stay on the proceeding imposed by s 440D. 3. Alternatively, even if s 440D would not apply to a payment out of the Court's Fund, the stay would give due effect to the moratorium which the statutory scheme imposes during administration including by ss 440D, 440F and 440G, honour the objectives of Part 5.3A of the Act, and prevent dissipation of assets until the matter is dealt with in the proper way. 4. There has been no final adjudication or judgment as a basis for the order to be stayed, including as to whether or not some form of trust was established. 5. If the Respondent shortly goes into liquidation the payment into Court may be voidable, and if the liquidators (appointed by creditors' resolution) seek and obtain an order that it be wound up by the Court it will be void pursuant to s 468 of the Act. 6. The Court's discretion to grant a stay is broad, and it is not necessary for the applicant for a stay to demonstrate special or exceptional circumstances. It is sufficient that the applicant demonstrates a reason or an appropriate case to warrant the exercise of discretion in its favour. Here, there is good reason for the preservation of the status quo as to the large sum of Court Funds drawn from the Respondent's bank account in the Bahamas without authority, pending resolution of the administration. 7. There is a real risk that the Respondent and its creditors will suffer prejudice or damage, if a stay is not granted. If the Court Funds are released to the Applicant, it appears they may then be dissipated to their clients, and their recoverability upon liquidation will be significantly in doubt. This would be to the serious prejudice to the other unpaid creditors of the Respondent. 8. The balance of convenience and the interests of justice weigh in favour of the Court exercising caution in this case and staying the order.

Principles governing staying orders or judgments 32 Rule 41.03 of the Rules provides: 41.03 Application for stay of judgment or order A party bound by a judgment or order may apply to the Court for an order that the judgment or order be stayed. Note: The party may rely on events occurring after the judgment or order takes effect. 33 The authorities have set out a number of well-established principles in determining whether a Court should order the stay of a judgment or order pursuant to r 41.03. There are two, overlapping, lines of authority (see, eg, Stefanovski v Digital Central Australia (Assets) Pty Ltd [2017] FCA 1121 at [4] (Derrington J) and Flight Centre Limited v Australian Competition & Consumer Commission [2014] FCA 658 at [9] (Rangiah J)); however, both identify common principles and draw on the principles set out by the New South Wales Court of Appeal in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694-695 (Kirby P, Hope and McHugh JJA). 34 These principles were developed in the context of applications to stay orders pending an appeal. However, with some necessary modifications, these principles are suitable to be applied to applications for staying interlocutory orders. The principles which are relevant to an application under r 41.03 to stay interlocutory orders include the following: (1) The onus is on the applicant to demonstrate a proper basis for a stay that will be fair to all parties. (2) The Court has a broad discretion whether to grant a stay, and it is not necessary for an applicant for a stay to demonstrate special or exceptional circumstances. It is sufficient that the applicant demonstrates a reason or an appropriate case to warrant the exercise of the discretion in its favour. (3) A stay will usually be granted if there is a real risk that the applicant will suffer prejudice or damage, if a stay is not granted. (4) In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it.

The statutory regime 35 Section 440D of the Corporations Act imposes a statutory stay on beginning or proceeding with a proceeding against a company in administration, except with the administrators' written consent or leave of the Court. 36 This section forms part of the broader scheme in Pt 5.3A of the Corporations Act concerning the administration of the business, property and affairs of an insolvent company. The objects of Pt 5.3A are two-fold: to maximise the chances of the company, or as much of its business as is possible, continuing in existence; or if that is not possible, to provide for the business to be administered in a way that results in a better return to creditors and members than would result from the immediate winding up of the company: s 435A. 37 In Foxcroft v Ink Group Pty Ltd (1994) 15 ACSR 203 at 204, Young J described the provisions in Pt 5.3A, including s 440D, as providing for a "complete freeze of proceedings against the company in administration" so that a creditor who continues proceedings is not given some advantage over other creditors or potential creditors. Further, in Rodgers v Radly; Re Capital General Corporation Ltd [2000] VSC 570; (2001) ACSR 158 at [20], Warren J held that the purpose of s 440D was to "prevent the creation of preferences and interferences in the disposition of the property of the subject company prior to the completion of the administration". Her Honour observed (at [22]) that it was "the intention of the legislature to set in place a scheme such that while a company was subject to administration the property and affairs of the company were quarantined pending actions and decisions by the administrator and the creditors". See, also, Chen v Blockchain [2022] VSC 93 at [14] (Attiwill J); Buurabalayji Thalanyji Aboriginal Corp v Onslow Salt Pty Ltd (No 7) [2020] FCA 572; (2020) 144 ACSR 621 at [77] (McKerracher J); Hur v Samsun Logix Corp (2015) 238 FCR 483 at [23] (Rares J); Larkden Pty Ltd v Lloyd Energy Systems Pty Ltd (2011) 285 ALR 207; [2011] NSWSC 1305 at [38] (Hammerschlag J). 38 The statutory stay under s 440D operates only while the Company is in administration. If the Company's creditors decide to wind up the Company under s 439C(c), s 500(2) will impose a stay in similar terms. Similarly, if there is a Court-ordered winding up of the Company at any point, then a stay will be imposed by s 471B. If the Company goes into liquidation, any application for leave to proceed with the present litigation would be determined in light of the well-established factors recognised in the case law: see, eg, DSG Holdings Australia Pty Ltd v Helenic Pty Ltd (2014) 86 NSWLR 293 at [55]-[57] (Leeming JA, with whom Bergin CJ and Meagher JA agreed); Commissioner for Consumer Protection v Unleash Solar (in Liq) Pty Ltd [2015] FCA 348 at [22]-[23] (McKerracher J). 39 As is well known, the Corporations Act also includes provisions enabling various transactions entered into by a company that goes into liquidation to be avoided. If the company is wound up by order of the Court, s 468(1) renders any disposition of the property of the company made after the commencement of the winding up by the Court void (unless it is an exempt disposition or the Court otherwise orders). Relevantly to Trigon, it should be noted that, pursuant to ss 513A and 513C, the commencement of a Court ordered winding up is taken to be the day the administration began. 40 However, s 468(1) does not apply where a company is in a voluntary (cf Court-ordered) winding up: Re Carter (as liquidator of New Tel Ltd (in liq)) [2003] NSWSC 128; (2003) 44 ACSR 66 at [16] (Austin J). In the event that Trigon's creditors resolve to wind up the Company under s 439C(c), then the Company is taken to have been voluntarily wound up: ss 446A and 491. If Trigon's creditors decide to wind up the company, then any liquidator would not be able to rely on s 468(1), but would have recourse to Pt 5.7B Div 2 of the Corporations Act concerning voidable transactions (such as unfair preferences), or may apply for an order under s 459P for the company to be wound up by the Court: Re Antqip Hire Pty Ltd (in liq) [2021] NSWSC 1122 at [59] (Brereton JA). 41 In my view, the disposition of the Administrators' application for a stay of order 1(b) should be approached having regard, not only to the statutory "standstill" applying while the Company is in administration, but also having regard to the fact that the Corporations Act imposes a statutory stay should the Company go into liquidation (by whichever route that may occur) and provides mechanisms by which dispositions of Company assets may be examined and recovered by a liquidator. As the Administrators observed, there is every prospect the Company will shortly go into liquidation, and the interests of the Company's creditors at large are relevant.

Consideration 42 In my view, order 1(b) should be stayed until the date that is two weeks after the date of the second creditors' meeting in respect of Trigon under s 439A of the Corporations Act unless, at that meeting, creditors vote to end the administration and control of Trigon is returned to its director, in which case the stay of order 1(b) should end when control of Trigon is returned to its director. 43 Once the second creditors' meeting has been held, the Company's fate will be clearer. Either the DOCA proposed by Mr Salerno (Trigon's sole director) will have been accepted, or the Company will have been placed into a creditors' voluntary winding up. In theory, there is a chance (although it appears to be common ground that it is rather improbable) that the administration of the Company will end and control of the Company will return to its director. 44 The DOCA proposes that all of the Court Fund be paid over to ADG, and will not form part of the Fund to be established pursuant to the DOCA. Accordingly, if the DOCA is accepted, ADG will have been made whole (to the extent of approximately $11 million), and issue concerning whether or not Trigon held the Transfer Amount as trustee for ADG (referred to as the trust issue) will not need to be determined, save to the extent that ADG wishes to pursue the case in relation to the FTX transfer. While it is obviously not for me to speculate on the fate of the DOCA, it is relevant to note that the Administrators' estimate of the Company's liabilities is in the order of $78 million, the known assets of the Company comprise the Court Fund (approximately $11 million), another fund of about $800,000 and a further account held with Signature Bank holding USD10,910,045.31 (which has yet to be verified by the Administrators), leaving a significant shortfall, even if related party creditors of about $27 million are discounted. The DOCA also proposes that the Court Fund and the amount in the Signature Bank account not form part of the DOCA Fund. 45 If the Company enters into liquidation, it will be necessary (in order for the liquidators to undertake their statutory task) for the trust issue to be determined so that the assets of the Company, available for pari passu distribution to unsecured creditors, are known. 46 ADG urged that the indefinite nature of the stay sought prejudices it, as no concrete proposal has been put forward by the Administrators for determination of the trust issue. From ADG's point of view, the Transfer Amount constitutes trust funds, and, in any case, it has an order of the Court that the Balance Amount be paid to it from the Court Fund. ADG contended that the stay sought by the Administrators lacks utility because it fails to make any provision for bringing the trust issue to a head. Without clarity on whether or not the Court Fund (or the Balance Amount) are trust funds, or otherwise subject to equitable rights held by ADG, it says that the asset position of the Company will remain unclear. Until the asset position is resolved, ADG contends that the Company's creditors cannot make informed decisions and the Administrators cannot make useful recommendations to the creditors. 47 I have some sympathy for ADG's position on that point, insofar as ADG contends that the trust issue needs to be resolved so that the asset position of the Company is clear. That said, the position taken by the Administrators is that they are not satisfied that the Transfer Amount was held on trust, and, not being satisfied that there is a trust, take the position that the Court Fund is still within the ambit of the Administration; the Administrators accept that, if the Transfer Amount was held by Trigon as trustee, those funds, and hence the Court Fund, would not constitute property of the Company. 48 While, on one view, it would have been preferable for the issue to have been brought to a head earlier, ADG's trust claims have not been the subject of formal adjudication and it is not feasible for that to occur (even if ADG made an application and leave to proceed on the issue were granted) before the end of the Administrators' convening period. Accordingly, it appears inevitable that the issue will not be resolved before the second creditors' meeting. Further, it is obviously not for the Administrators to speak for the putative future liquidators of the Company; while they may be appointed liquidators, it remains open for creditors to propose and appoint others. 49 Granting a stay for a limited period of time will allow the liquidators (if they be appointed) to consider their position as to how and when the trust issue should be determined. If ADG remains concerned that determination of the trust issue will continue to be deferred, it would be open to ADG at that point to apply for leave to proceed with the present litigation so as to have the trust issue determined. Alternatively, if the liquidators make a determination on the trust issue in the course of determining ADG's proof of debt, and if that determination is adverse to ADG, it could bring a proceeding challenging that decision under s 90-15 of the Insolvency Practice Schedule (Corporations). It may also be the case that the liquidators will seek to extend the stay (noting that the question of whether s 471B or s 500(2) would preclude effect being given to order 1(b) has not been determined). 50 In my view, allowing a period of two weeks following the second creditors' meeting best balances the interests of ADG in the trust issue not being deferred indefinitely, while preserving the statutory "standstill" while the Company is in administration. It also prevents entry into transactions which may be voidable in a liquidation and avoids what may later be confirmed to be assets of the Company becoming incapable of being recouped if, as appears likely, funds remitted to ADG from the Court Fund would be paid over by ADG to its clients. I am satisfied that the Administrators have demonstrated a proper basis and a sufficient reason for the exercise of the Court's discretion under r 41.03 to stay order 1(b). The grant of a stay, which is not indefinite, will ensure that the risk of ongoing prejudice or damage to either party, and Trigon's other creditors, is minimised. 51 Of course, in the (apparently unlikely) event that control of the Company is returned to its director, the statutory stay of the proceeding under s 440D will be lifted, and there would then be no occasion for any stay to continue. Likewise, if the DOCA is accepted, ADG will have been made whole so far as the portion of the Transfer Amount reflected by the Court Fund is concerned and, for practical purposes, the balance of the proceeding may lack utility given the proposed treatment of the balance of ADG's claim under the DOCA (cll 3.8 and 11.5). 52 It was common ground that the question of whether or not order 1(b) should be stayed is informed by the strength of the parties' position on the trust issue. Much of the parties' written and oral submissions were devoted to putting their positions on why the Transfer Amount was or was not held by Trigon on trust for ADG. 53 The Administrators, like Trigon before them, did not dispute that Trigon is indebted to ADG for the Transfer Amount. While not foreclosing the possibility that ADG may yet advance evidence to satisfy them of its trust contention (or that the trust issue may subsequently be decided in ADG's favour by future liquidators, or by the Court), their present position is that they are not satisfied that the Transfer Amount was held on trust, and they intend to conduct the administration on that basis. 54 The Administrators accepted that the funds were transferred by ADG to Trigon for a known and clear purpose: namely to be transferred on to ADG's Westpac account. The Administrators stressed, however, that there was no other restriction placed on Trigon's use of the funds and that they were deposited into Trigon's usual trading account, mixed without other client funds. For its part, ADG emphasised the content of the communications between Trigon and ADG, including communications post-dating the transfer, in which Trigon was seeking and acting on ADG's instructions about what to do when hurdles were encountered in transferring the funds quickly, which included Trigon asking whether ADG wanted the funds returned to its Deltec account. ADG also emphasised the language in many of Trigon's communications, including language used in solicitors' correspondence after the proceeding had been commenced. 55 Nevertheless, despite their focus in submissions on the trust issue, both parties took the position that I need not, and ought not, determine the trust issue on this application. I agree. The application before me is for the stay of order 1(b), which was made without prejudice to the parties' rights in the litigation. Moreover, the present interlocutory stay application is not the occasion to determine complex and contested issues lying at the heart of the underlying proceeding. 56 While I am satisfied that ADG has a credible claim that the Transfer Amount was held on trust, its trust claim is not without its challenges, to which the Administrators drew attention. That is to say, there are points both ways and I do not consider either party's position on the substantive trust issue to be so strong as to affect what I otherwise consider to be the appropriate course of ordering a stay, given the intervention of the administration. 57 As has been set out above, s 440D imposes a statutory stay on proceedings against the Company while it is in administration, except with the Administrators' written consent or with leave of the Court. The statutory stay serves a number of purposes, one of which is to ensure that certain creditors do not obtain an advantage over other creditors. This extends to the preservation of the property of the Company so that it can be dealt with appropriately, without the creation of preferences in favour of certain creditors prior to the completion of the administration. 58 Given the apparent deficiency in the Company's assets, relative to its liabilities, unless the Transfer Amount was held by Trigon on trust for ADG, there is every possibility that, if Trigon goes into liquidation, payment of the Retention Amount to ADG would constitute an unfair preference or would otherwise be subject to action on the part of the liquidators to recoup monies. The Administrators, in their grounds for the stay, have foreshadowed that the liquidators may seek an order under s 468(1) to void any non-exempt dispositions of the property of the Company made after the commencement of the winding up (which ss 513A and 513C deem to be the day on which the administration began). Although, as noted, s 468(1) is only available in a Court-ordered winding up, under a voluntary winding up, the liquidator may apply to avoid the transaction under Pt 5.7B Div 2 of the Corporations Act. While liquidation is not, of course, a foregone conclusion, it is far from a remote possibility on the evidence. Further, as noted above, in either of the alternative eventualities (a successful DOCA, or the return of the Company to the control of its director) ADG will either receive the entire amount of the Court Fund, or will otherwise have the benefit of effect being given to order 1(b) when the stay is lifted. In the meantime, the Court Fund will remain secure. 59 ADG did not put on any evidence that a delay in access to the Balance Amount prejudices its business operations or its ability to meet any obligations it has to its clients or third parties. This is a relevant matter going to the balance of convenience. Nor did ADG put on any evidence of its financial capacity to avoid any prejudice to other creditors on the basis that it could readily repay any amount if the trust issue is ultimately determined against it and it is only an unsecured creditor. As such, I accept the Administrators' contention that other creditors may ultimately be prejudiced if order 1(b) is not stayed, and that this is a matter of significance to the exercise of the Court's discretion. 60 Here, it was common ground that, if Trigon held the Transfer Amount on trust for ADG, ADG's interest as beneficiary would continue to attach to the funds in Court. That is consistent with Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 at 273 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ) (Harmer) which confirms that funds paid into court remain subject to any pre-existing trust. However, whereas the Administrators took the position that ADG's position was not improved by payment of funds into court, or by order 1(b), ADG contended that its position was improved such that it still sought to have the Balance Amount even if the trust issue were determined against it. In the course of oral argument, ADG advanced, for the first time, the proposition that even if Trigon did not hold the Transfer Amount as trustee for ADG, when the funds were paid into Court, or if not then, when an order for payment out was made, ADG acquired equitable rights in respect of the Court Fund. While ADG's argument was principally advanced as a reason why no order ought to be made under s 447A of the Corporations Act (being the Administrators' alternate case), the proposition is also relevant to whether or not there ought to be a stay under r 41.03. 61 It is clear from the Victorian Court of Appeal's decision in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (2014) 49 VR 86 (Dura) that the parties' rights and interests in funds in court can be affected by the payment of those funds into court, and orders made for payment out. Much depends on the context in which those orders and payments were made. Here, the parties paid little regard to the detail of the circumstances in which the orders made on 21 and 25 November 2022 and the December Orders were made, to the point where neither party had even obtained the transcript of the hearings on 25 November 2022 and 1 December 2022. It is clear from Dura that, ordinarily, where funds are paid into court in lieu of a freezing order, the party who obtained the freezing order does not obtain any rights in the court fund. There is also no general rule that, upon payment into court, the payer necessarily loses all interest in the funds, although that can be the result in some circumstances: Dura at [63], [67], [86(a)], referring to Harmer at 272-3 and Dwight v Commissioner of Taxation (1992) 37 FCR 178 at 186 (Hill J). In many circumstances, a party may obtain an equitable charge over funds paid into court: Dura at [86(b)]. Various examples of cases in which the non-paying party obtained an equitable charge were discussed by Santamaria JA in Dura, with whose analysis Maxwell P and Whelan JA agreed. 62 In argument, ADG emphasised a number of passages of Hill J's judgment in Re Lovering; Galladin Pty Ltd v Jackson (1994) 50 FCR 587 (Galladin), quoted in Dura at [70]-[71]. In Galladin, funds were paid into court following the sale of bales of wool and livestock. Following trial, orders were made that the funds be paid out, by way of equitable execution, to Galladin Pty Ltd. Before the order was effected, the Lovering family members became bankrupt. In finding that the court funds did not vest in the trustee in bankruptcy absolutely, Hill J considered that, upon the order for payment out, either the beneficial interest was in Gallandin Pty Ltd, or, if the order merely perfected its status as a secured creditor, then the trustee would only have the money vested in it subject to the equities of the company. ADG sought to draw an analogy between the payment of the funds into Court by Trigon with the payments made in Galladin, and to liken the order for payment out in Galladin with order 1(b). 63 It is not necessary for me to decide whether, as it contended, ADG acquired an equitable charge over the fund paid into Court when that ultimately occurred. Not only did the submission only emerge in oral argument (and was not the subject of considered submissions taking account of the full factual picture concerning the relevant orders made), but the Administrators submitted that, even if ADG obtained an equitable charge over the Court Fund, a stay would still be appropriate. I agree. 64 In Dura, Santamaria JA (with whom Maxwell P and Whelan JA agreed) engaged in a detailed survey of the authorities, and then summarised the principles to be distilled from that survey. His Honour's summary included the principle that "the interest acquired by the party other than the party making the payment in remains subject to the rules relating to void or voidable dispositions in insolvency": at [86(d)] (citing Commercial Banking Company of Sydney Ltd v Colonial Financiers of Australia Pty Ltd [1972] VR 702; WA Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] 1 QB 1038 at 1056 (Oliver LJ)). The short point is that, even if the payment into Court resulted in ADG obtaining an equitable charge, the objects of Pt 5.3A of the Act and the preservation of the position pending the potential appointment of liquidators are still served by ensuring that ADG does not enjoy an advantage over other creditors by having Trigon's debt to it satisfied to the extent of the Balance Amount by those funds being remitted to it. If the Balance Amount is remitted to ADG, not only would a future liquidation be made more drawn out and expensive (by the need to pursue repayment as a voidable transaction if the liquidators decide the trust issue adversely to ADG) but the funds may not be capable of recoupment at all. The evidence suggests that any funds ADG obtains from the Court Fund will be paid over to its clients. The Administrators submitted this is what would happen (based on indications in correspondence) and ADG did not dispute this. 65 Nor do I accept that the making of order 1(b) had the effect that the Balance Amount was held entirely for ADG (by analogy with the first alternative Hill J referred to in Galladin). In this case, order 1(b) was made in anticipation of the funds coming into court - no fund in court yet existed. Further, and by contrast with Galladin, where the order for payment out was made by way of equitable execution after trial, order 1(b) of the December Orders was expressly stated to be "without prejudice to either parties' [sic] rights or claims…". 66 It remains to address some of the further arguments advanced by the parties. 67 Given that an instruction was given to Deltec to effect the transfer in accordance with orders of this Court, which instruction was apparently pursued with the imprimatur of the former administrators, I am not prepared to find at this point (as was contended by the Administrators) that the transfer of the funds into Court was unauthorised. While the countermanding instruction was given by the Administrators to Deltec on 19 January 2023, the Court has no insight into the back office operations of Deltec, whether it was too late to change the instruction, or whether the instruction to send the funds to the Administrators' account instead was overlooked. Nor is it necessary to determine whether the statutory stay under s 440D operated such that the transfer of funds into Court should not have occurred. On its face, it appears a doubtful proposition that an instruction, already issued to a third party bank overseas, should be automatically halted by force of a statutory stay on steps being taken in a proceeding in Australia. 68 ADG's arguments also focused on the circumstances by which the orders made on 25 November 2022 and the December Orders were made. It submitted that Trigon (through its Administrators) should be estopped from taking a position that is inconsistent with the December Orders. ADG submitted that Trigon's proposal to resolve the November Interlocutory Application by keeping the Retention Amount in Court, and disbursing the Balance Amount, induced an assumption by ADG that the balance of the Court Fund was no longer in dispute and would be returned to ADG. ADG submitted (but did not file any witness evidence to state that) it acted on the induced assumption by consenting to the December Orders. 69 In a linked submission, ADG contended that it was irrelevant that the trust issue had not been finally determined as the December Orders were made to give effect to an agreement between the parties to partially resolve ADG's claims and the November Interlocutory Application. 70 There are a number of difficulties with these arguments. First, the December Orders did not finally dispose of the November Interlocutory Application. Paragraph 3 of those orders stood over the November Interlocutory Application, with liberty to apply. Subject to the statutory stay, it remains open to ADG to pursue it. 71 Secondly, the consent orders first made on 25 November 2022, and then supplemented by the December Orders, granted ADG one of the alternate forms of relief it sought by the November Interlocutory Application. One of the forms of relief sought (in the alternative for payment of all the remaining funds directly to it) was payment into Court. It obtained that relief, albeit that it may not have been ADG's preferred option. 72 Thirdly, in proffering the compromise that was reflected in the December Orders, Trigon's solicitors stated in their correspondence that it would dispose of ADG's November Interlocutory Application; they did not say it would resolve, in ADG's favour, issues raised in the proceeding concerning whether the Transfer Amount was held on trust. 73 Fourthly, the December Orders were made "without prejudice to either parties' [sic] rights or claims". Accordingly, ADG did not adopt a position on the strength of any representation by Trigon by which it finally compromised its rights. 74 Finally, and importantly, ADG's submissions overlook the significance of the interposition of the administration, other than to characterise it as an event that should not be allowed to stand in the way of ADG receiving payment from the Court Fund in accordance with the December Orders. 75 What ADG's submissions fail to grapple with is that the position Trigon took did not dispute its indebtedness to ADG in respect of at least the portion of the Transfer Amount not (most likely lost) via the transfer through FTX. The Administrators have not sought to have the Company, under their control, depart from that position. But the Administrators take the view, as they must, that they cannot simply accede to a contention that the Transfer Amount was held on trust by Trigon, and is therefore not the property of the Company. The Administrators are alive, as they must be, to the consequences for the unsecured creditors of Trigon as a whole of the payment out of a significant portion of the Court Fund to an entity (ADG) which may be nothing more than an unsecured creditor of Trigon. Once Trigon entered into administration, the question of the fate of the Court Fund ceased to be a purely inter-partes matter; fidelity to the statutory scheme for companies in administration, and the interests of the creditor body, have come into view. 76 The Administrators also contended that the payment out of the Balance Amount from the Court Fund would constitute a step in the proceeding for the purposes of s 440D. The Administrators located no case law dealing with that point, but pointed to conflicting authorities on whether s 440D prevents a court from delivering a reserved judgment. ADG contended that the Court is not a person bound by s 440D, and giving effect to pre-administration orders does not constitute a step taken in proceedings, as it is not an action which carries the proceeding forward to final judgement. 77 Given that I have concluded that order 1(b) ought to be stayed, whether or not payment out from the Court Fund is precluded by s 440D, it is not necessary to determine this issue. 78 As noted, the Administrators' Amended Interlocutory Application sought an alternative order under s 447A of the Corporations Act. Given that I have determined that order 1(b) is to be stayed, it is not necessary to consider the Administrators' alternate application for an order under s 447A. 79 Finally, I do not consider that ADG's submissions concerning the Administrators' failure to criticise the transfer of the US dollar sum to ADG pursuant to the orders made on 25 November 2022 to have any merit. The thrust of the Administrators' present application was to prevent further sums being paid out, for reasons already stated. There would have been no utility in the Administrators criticising the transfer of the US dollar amount, which had already occurred.

Disposition 80 I will order, pursuant to r 41.03 of the Rules, that order 1(b) of the December Orders is stayed until the date that is two weeks after the date of the second creditors' meeting, unless, at that meeting, the creditors vote to end the administration and control of Trigon is returned to its director, in which case the stay of order 1(b) is to end when control of Trigon is returned to its director. 81 Subject to any submissions the parties may make, I propose to reserve the costs of the interlocutory application as the appropriate disposition of costs may well be affected by the ultimate outcome of the trust issue. I will further order that the costs of the Administrators, to the extent not paid by ADG pursuant to a costs order, be costs in the administration of the Company. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Button.