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[2025] NSWCA 143
respondent. The summons seeking leave to appeal was dismissed with costs.
The Court of Appeal did not grant the Developer permission to appeal the freezing orders. The Developer had repeatedly sold units and passed the proceeds out of the development company. The primary judge could infer that it would do the same with the remaining units, potentially leaving too little in the company to meet a judgment for alleged defects. The Court held that describing this as normal or commercially rational for a special purpose company did not prevent it from supporting a freezing order. The fact that the remaining units had not yet been sold did not make the order premature, given the previous pattern. The decision is grounded in these particular circumstances and does not say that every ordinary business transaction can justify a freezing order.
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2,279 words · generated 06/10/2026
Aqualand North Sydney Lavender Development Pty Ltd (the Developer) was the special purpose vehicle established to develop a mixed commercial and residential building in Milsons Point. The Owners – Strata Plan No. 102081, the building’s owners corporation, brought proceedings against the Developer and another company in the Aqualand group for damages relating to alleged building defects [1]. The underlying claim was not disputed to be a good arguable case at the freezing-order hearing [7].
The owners corporation obtained freezing orders from Stevenson J. The orders restrained the Developer from disposing of, dealing with, or diminishing the value of assets below an unencumbered value of $10,628,123, the amount of the owners corporation’s claim [1]. The issue was whether the evidence supported a danger that any judgment would be wholly or partly unsatisfied if the Developer dealt with its assets before the defects proceedings were resolved [7].
The development was completed in July 2021. From August 2021, the Developer sold residential units. At the primary hearing, 121 units had been sold, with four residential units still held by the Developer. The Developer had not retained the proceeds from the earlier sales. The primary judge inferred that profits had been distributed by dividend or, as financial records suggested, some proceeds had been loaned to other group entities [8]-[10].
The remaining four units were listed for sale online. Although none was then placed with an agent, the primary judge considered it likely that they would be sold before the proceedings concluded. The Developer had not put forward evidence that it had lost interest in selling them [9]. The primary judge inferred that the Developer would deal with the proceeds from those sales as it had with proceeds from the earlier sales [10]-[11].
The Developer sought leave to appeal, arguing principally that ordinary, commercially rational transactions could not justify an extraordinary freezing order. It also argued that the order was premature because the remaining units had not yet been sold and were not actively marketed through an agent [13], [34]. The Court of Appeal dismissed the summons seeking leave to appeal with costs [35].
Mitchelmore JA’s reasons focused on what the primary judge had actually found, rather than on the Developer’s characterisation of the transactions as ordinary. The primary judge’s description of the sales as occurring “in the ordinary course” reflected that the Developer’s only function was to develop the site [18]. The critical finding was not simply that units were sold in the normal conduct of business. It was that the Developer did not retain the proceeds, and that it was likely to distribute or lend proceeds from the remaining sales in the same way [18]-[20].
The Court distinguished those distributions from routine payments that might be made by a trading business, such as wages, taxes, utilities, or other ordinary trading liabilities. The Developer’s dealing with sale proceeds was not, on the primary judge’s findings, an ordinary-course transaction of that kind [19]. That distinction answered the concern that the freezing order would prevent ordinary business payments.
The rules identify the relevant purpose as preventing frustration or inhibition of the court’s process by addressing a danger that a judgment or prospective judgment will be wholly or partly unsatisfied [4]-[5]. The Court considered the evidence about the Developer’s past conduct and the likely effect of repeating that conduct. The primary judge’s findings were sufficient to support the danger finding in the circumstances [20].
The Court also rejected the argument that the rules required proof of an “unjustifiable” disposition. Mitchelmore JA said that relying on that concept would add an unnecessary gloss to the rules’ language [27]. The analysis was not that any payment or distribution is enough to justify a freezing order. Rather, the evidence here connected the Developer’s repeated treatment of sale proceeds to the possibility that a future judgment would go unsatisfied [20], [27], [30].
Ball JA added a related explanation. The Developer’s corporate structure was designed to separate the financial risks of this development from the shareholders’ other business activities. Apart from selling the remaining units and distributing the generated profits, the Developer had served its purpose. Ball JA considered that allowing the remaining profits to be distributed before the defect claims were resolved would leave the claimant without a remedy if its claims succeeded [36]. In that setting, he considered it unhelpful to focus on whether the proposed distribution was ordinary or extraordinary [36]. Free JA agreed with both Mitchelmore JA’s reasons and Ball JA’s additional reasons [37].
The secondary argument concerned timing. Mitchelmore JA held that the units’ not yet having been sold did not prevent the primary judge from finding a danger. The finding rested on the Developer’s conduct in relation to the preceding 121 sales and the inference that the pattern would be repeated [34]. This was a prospective assessment, not a finding that the later sale had already occurred.
Finally, the Court considered the leave threshold. The proposed ground challenged the application of settled principles to the circumstances of this case. It did not demonstrate an injustice that was reasonably clear and went beyond what was merely arguable [3]. The decision therefore determined the leave application, rather than finally deciding the underlying building-defect claims.
The judgment applies the existing statutory and procedural framework. It does not announce a new test for freezing orders. UCPR r 25.11 authorises a freezing order to prevent frustration or inhibition of the court’s process by meeting a danger that a judgment or prospective judgment will be wholly or partly unsatisfied [4]. Rule 25.14(4) addresses orders against a judgment debtor or prospective judgment debtor where, having regard to all the circumstances, the relevant danger exists, including because assets may be disposed of, dealt with, or diminished in value [5].
The primary judge referred to the caution required for an extraordinary remedy and to formulations such as a sufficiently serious risk, a real risk, or a danger sufficiently substantial to warrant an injunction [7]. The Developer did not challenge that summary of the test [12]. The Court of Appeal’s analysis was about how the rules applied to this evidence.
The judgment also addresses the relationship between risk and intention. The Developer accepted that a positive intention to frustrate the court’s process was not necessary, referring to National Australia Bank Ltd v Bond Brewing Holdings Ltd [16]. Mitchelmore JA did not adopt a rule requiring proof that the Developer intended to put assets beyond reach. Instead, the reasons focus on the likely effect of the repeated distributions and their implications for satisfaction of a prospective judgment [18]-[20], [33].
The treatment of “unjustifiable” is significant but should be read narrowly. The Court considered authorities using that expression, including Palmer v Parbery and Organic Grape Spirit Ltd v Nueva IQT, SL [22]-[30]. It concluded that reliance on the label as an additional requirement would add a gloss to the rules [27]. The judgment does not say that the nature or context of a transaction is irrelevant. Indeed, it distinguishes distributions of development proceeds from ordinary trading liabilities [19]. Its reasoning is tied to a special purpose vehicle that had repeatedly passed on unit-sale proceeds and was likely to do so again.
The case therefore clarifies application rather than replacing the existing framework: routine conduct may still be relevant where the evidence shows that, in its particular context, it creates a danger that a prospective judgment will go unsatisfied. The Court did not decide that every ordinary-course transaction can ground a freezing order.
At [19], Mitchelmore JA explained that the unit sales might have occurred in the ordinary course, but that the Developer’s treatment of the proceeds was not equivalent to paying ordinary trading debts. In plain English, the fact that the Developer routinely sold units did not answer the separate question of what happened to the money from those sales.
At [20], the Court said that the primary judge’s findings about the way the Developer ordinarily dealt with profits supplied a sufficient basis for finding the requisite danger. In plain English, the prior pattern mattered because it supported an inference about what the Developer would do with the remaining proceeds and what that could mean for a future judgment.
At [27], Mitchelmore JA said that “unjustifiable” added an unnecessary gloss to the rules. This does not mean that the circumstances of asset dealings are immaterial. It means the Court approached the question through the rules’ stated concern with danger to satisfaction of a judgment, rather than adding a separate verbal hurdle.
At [34], the Court rejected the argument that the order was premature merely because the remaining units had not yet been sold. In plain English, a court can assess a future risk using a party’s established prior pattern, even before the next transaction has taken place.
Ball JA’s reasons at [36] explain the corporate context. He described the Developer as having been established to construct and sell units and distribute the venture’s profits, with the purpose of insulating the shareholders’ other activities from the risks of the development. He considered the remaining profits to be the only source available to meet defect claims. In plain English, the legal significance of the distributions depended on the role of this particular company and the practical consequences for the claim, not simply on whether distributions were normal for the company.
The decision is most directly relevant to an application involving a special purpose development company, a claim arising from the completed development, and evidence that sale proceeds have routinely been moved out of the developer. Here, the primary judge had evidence of 121 prior unit sales and found that proceeds had not been retained. He inferred that the pattern would continue when the remaining units were sold [10], [18].
The decision also concerns the relationship between the assets available to meet a possible judgment and the likely effect of future dealings. Ball JA emphasised that the Developer’s remaining profits were the only source it had to meet claims for defects [36]. That circumstance formed part of the Court’s explanation of why the distribution risk was important.
A further feature was that the expected conduct was not described as unusual for this company. The Court did not treat that description as conclusive. The case shows that a transaction’s routine or commercially rational character, viewed from the company’s perspective, may not by itself resolve whether the rules’ danger requirement is met [18]-[20], [30], [36].
The decision should not be read as establishing that a freezing order follows whenever a company distributes profits, or whenever a claimant alleges defects. The Court addressed a combination of evidence: the company’s special purpose, repeated prior distributions or loans, the likelihood of further sales, the inference that proceeds would again leave the company, and the possible effect on satisfaction of a judgment [18]-[20], [36].
This judgment was decided on 2 July 2025. The supplied judgment text contains no later decisions applying, distinguishing, or otherwise treating this case. It is therefore not possible, on this source alone, to describe subsequent judicial treatment.
Within its own reasoning, the Court considered several earlier decisions. It discussed Riley McKay Pty Ltd v McKay in relation to the purpose of freezing relief and the distinction between ordinary debt payments and dispositions that may frustrate a claimant’s ability to obtain a remedy [14], [25], [33]. It considered Palmer v Parbery on the language of unjustifiable dispositions and ordinary trading debts [22]-[27], and Organic Grape on ordinary business expenditure and the circumstances in which a freezing order may interfere with a legitimate business venture [28]-[30]. It also considered Skyworks v 32 Drummoyne Road, a case involving a development vehicle and transfers of funds within a corporate group [31]-[32].
Those discussions explain how the Court positioned the result within the authorities available to it. They do not provide evidence of how later courts have applied the 2025 decision.
The judgment does not define a universal boundary between distributions that are ordinary for a special purpose vehicle and payments that should be treated as ordinary trading liabilities. It distinguishes the Developer’s distributions from examples such as wages, tax, and utilities, but the boundary will depend on the evidence and the company’s circumstances [19].
Nor does the Court set out a complete test for when an otherwise normal business transaction may establish the requisite danger. Mitchelmore JA rejected adding “unjustifiable” as an extra gloss, while still considering the character and consequences of the transactions relevant to the particular facts [19]-[20], [27]. Ball JA’s statement that the ordinary-versus-extraordinary distinction was unhelpful arose from the specific corporate and financial context before the Court [36].
The judgment does not address all possible situations where a developer has substantial assets, where related entities may be able to meet a claim, or where proceeds are used for liabilities arising from the development itself. Its findings concerned this Developer’s asset history and the primary judge’s inferences. It also does not determine the owners corporation’s underlying defect claim or the amount, if any, ultimately recoverable.
Finally, although the case concerned an interlocutory freezing order, the Court of Appeal’s disposition was refusal of leave to appeal. The judgment therefore confirms that the proposed arguments did not establish a basis for leave on this record; it does not provide a final determination of the substantive building-defect proceedings.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Aqualand North Sydney Lavender Development Pty Ltd v The Owners – Strata Plan No. 102081 [2025] NSWCA 143
Hearing dates: 27 May 2025
Date of orders: 2 July 2025
Decision date: 02 July 2025
Before: Mitchelmore JA at [1];
Ball JA at [36];
Free JA at [37]
Decision: The summons seeking leave to appeal is dismissed with costs.
Catchwords: PRACTICE AND PROCEDURE – application for leave to appeal – interlocutory decision – decision to grant freezing orders – whether primary judge erred in determining that the Court had jurisdiction to grant freezing orders against the appellant – whether ‘ordinary course of business’ transactions can ground the requisite danger for the purpose of Uniform Civil Procedure Rules 2011 r 25.14 – whether application raised a point of general principle
Legislation Cited: Supreme Court Act 1970 (NSW), s 101(2)(e).
Uniform Civil Procedure Rules 2005 (NSW), rr 25.11,
25.14
Cases Cited: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18
Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23
Jaycar Pty Ltd v Lombardo [2011] NSWCA 284
National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271; [1990] HCA 10
Organic Grape Spirit Ltd v Nueva IQT, SL [2020] EWCA Civ 999
Palmer v Parbery; QNI Metals Pty Ltd v Parbery [2019] QCA 27; (2019) 136 ACSR 26
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1; [1998] HCA 30
Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264
Skyworks v 32 Drummoyne Road [2017] NSWSC 343
Texts Cited: Steven Gee QC, Gee on Commercial Injunctions (Sweet & Maxwell, 7th ed, 2022)
Category: Principal judgment
Parties: Aqualand North Sydney Lavender Development Pty Ltd (Applicant)
The Owners – Strata Plan No. 102081 (Respondent)
Representation: Counsel:
D T Miller SC / S D Puttick (Applicant)
D S Weinberger / L J McIntyre (Respondent)
Solicitors:
Keystone Lawyers (Applicant)
JS Mueller & Co Lawyers (Respondent)
File Number(s): 2025/00090673
Publication restriction: Nil
[This headnote is not to be read as part of the judgment]
The applicant (the Developer) sought leave to appeal from freezing orders made by Stevenson J on the application of the respondent. The Developer is a special purpose vehicle incorporated for the sole purpose of developing a commercial and residential development in Milsons Point. The respondent is the owners corporation of the development and has brought proceedings against the Developer and a related entity seeking damages for alleged building defects.
The primary judge made orders enjoining the Developer from disposing of, dealing with or diminishing the value of any of its assets below the unencumbered value of $10,628,123.00, being the amount of the respondent’s claim. His Honour noted that the Developer had sold all but four of the residential units in the development in the ordinary course of its business, and had distributed the proceeds of sale either by dividend or through loans to other entities in the corporate group. The primary judge considered it likely that the Developer would sell the remaining four units before the finalisation of the proceedings and, absent restraint, it would distribute the proceeds of sale beyond the reach of the respondent, as it had done with the proceeds of sale from the balance of the units. His Honour described this as the “normal” and “commercially rational” course. His Honour considered that the requisite danger referred to in the rules was established and noted that the Developer did not point to any prejudice it would suffer if it were obliged to retain the figure the subject of the respondent’s claim.
The Developer sought leave to appeal on the basis that the primary judge misapplied the test in r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) and/or to enliven the Court’s inherent jurisdiction to grant a freezing order. The Developer’s primary contention was that the primary judge was not entitled to grant the extraordinary remedy of a freezing order where his Honour found that the Developer sold units “in the ordinary course” of its business and that its conduct in distributing profits by way of dividend or loaning some part of the proceeds to other companies in the group was normal and commercially rational. The Developer’s secondary contention, advanced in oral submissions, was that the orders were premature in circumstances where the remaining units were not yet sold and were not being actively marketed. The application for leave was heard concurrently with the appeal.
The Court held (Mitchelmore JA, Ball JA and Free JA agreeing at [36]-[37]), dismissing the summons seeking leave to appeal:
(1) The Developer’s arguments were directed at the primary judge’s application of settled principles to the particular circumstances of the case. They did not raise an injustice which was reasonably clear in the sense of going beyond what was merely arguable: [3].
(2) As to the Developer’s primary contention, the primary judge did not find that the manner in which the Developer dealt with the proceeds of sale were “ordinary course transactions” akin to paying trading debts and satisfying ordinary trading liabilities, such as might otherwise have immunised them from enjoinder. His Honour’s description of the conduct of the Developer reflected its status as a special purpose vehicle whose only function was to develop the subject site. His Honour’s findings provided a sufficient basis on which to conclude that there was a danger that the prospective judgment would be wholly or partly unsatisfied (in the language of UCPR r 25.11). Reliance upon the notion of an “unjustifiable” disposition of assets places an unnecessary gloss on the language of the rules. The authorities relied upon by the Developer did not call for a contrary conclusion or otherwise demonstrate error on his Honour’s part: [18]-[33].
Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264; National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277; [1990] HCA 10; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18, applied.
Palmer v Parbery; QNI Metals Pty Ltd v Parbery [2019] QCA 27; (2019) 136 ACSR 26; Organic Grape Spirit Ltd v Nueva IQT, SL [2020] EWCA Civ 999; Skyworks v 32 Drummoyne Road [2017] NSWSC 343, considered.
(3) Per Ball JA (Free JA agreeing): The obvious purpose of the Developer’s corporate structure was to insulate the other business activities of the shareholders from the financial risks associated with the venture. The special purpose vehicle having served its purpose apart from the sale of the remaining units, the clear consequence of permitting it to distribute its remaining profits (the only source it had to meet claims for defects) before defects claims were resolved would be to deny the claimant any remedy if its claims succeed. In the circumstances of this case, that was sufficient to satisfy the requirements of UCPR r 25.14(4)(b)(ii) and to justify the grant of a freezing order. It is not helpful in that context to ask whether the distribution of the remaining profits was in the ordinary course of business or was something that was “extraordinary”: at [36].
(4) As to the Developer’s secondary argument, it did not follow from the Developer not having sold the four remaining units that it was not open to his Honour to find that the requisite danger existed, having regard to the Developer’s prior conduct: at [34].
Mitchelmore JA**:** The applicant, Aqualand North Sydney Lavender Development Pty Ltd, sought leave to appeal from freezing orders made by Stevenson J on the application of the respondent, the owners corporation of a mixed commercial and residential development in Milsons Point that the applicant developed (I will refer to the applicant below as the Developer). The respondent has brought proceedings seeking damages against the Developer and another company in the Aqualand group in respect of alleged building defects. The orders which are the subject of the application for leave enjoin the Developer from disposing of, dealing with or diminishing the value of any of its assets below the unencumbered value of $10,628,123.00, being the amount of the respondent’s claim.
The Developer sought leave to appeal on the basis that the freezing orders are interlocutory: Supreme Court Act 1970 (NSW), s 101(2)(e). The draft notice of appeal contained a single proposed ground, alleging that the primary judge misapplied the test in r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and/or to enliven the Court’s inherent jurisdiction to grant a freezing order. The application for leave was heard concurrently with the appeal.
Although the Developer contended that the application raised a point of general principle, its arguments in support of the proposed ground of appeal were directed at the primary judge’s application of settled principles to the particular circumstances of the case, and did not raise an injustice which was reasonably clear in the sense of going beyond what was merely arguable: see eg Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[39]. Accordingly, I would refuse leave to appeal.
25.11 Freezing order
(1) The court may make an order (a freezing order), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.
(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
25.14 Order against judgment debtor or prospective judgment debtor or third party
(1) This rule applies if—
(a) …
(b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(i) the court, or
(ii) in the case of a cause of action to which subrule (3) applies—another court.
(2) …
(3) This subrule applies to a cause of action if—
(a) there is a sufficient prospect that the other court will give judgment in favour of the applicant, and
(b) there is a sufficient prospect that the judgment will be registered in or enforced by the court.
(4) The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur—
(a) the judgment debtor, prospective judgment debtor or another person absconds,
(b) the assets of the judgment debtor, prospective judgment debtor or another person are—
(i) removed from Australia or from a place inside or outside Australia, or
(ii) disposed of, dealt with or diminished in value.
(5) …
(6) Nothing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so.
The primary judge heard and determined the respondent’s application for freezing orders on the same day. His Honour noted that the respondent had filed all of its evidence in the proceedings, including from a quantity surveyor evidencing the amount of its claim: at [5]. At the time of his Honour’s decision, the Developer’s evidence was due in March 2025 (senior counsel for the Developer informed this Court that the due date has since been pushed back).
There was no dispute that the respondent had a good arguable case in terms of its underlying claim for damages: at [8]. The issue between the parties was whether the respondent had shown that there was “a danger that any judgment it obtains will be wholly or partly unsatisfied because the Developer will or may dispose of its assets”: at [9]. As to that issue, the primary judge stated at [10]:
“There is no shortage of verbal formulations as to the test to be applied when considering there is such a ‘danger’. Any attempt to derive a bright-line test from those formulations will only add to what has been described as a ‘sea of semantics’ [citing Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 327 (Meagher JA)]. What is clear is that a freezing order is to be regarded as an extraordinary remedy which requires a high degree of caution on the part of the Court invited to make the order [citing Cardile v LED Builders (1999) 198 CLR 380; [1999] HCA 18 at [50] (Gaudron, McHugh, Gummow and Callinan JJ)]. It is for the applicant to show, from the evidence before the Court, that there is the requisite ‘danger’. The test is then applied in various ways, such as whether there is a ‘sufficiently serious risk’ of dissipation of assets [Skyworks v 32 Drummoyne Road [2017] NSWSC 343 at [24] (McDougall J)], or a ‘real risk of the dissipation of assets’ [citing Patterson at 327(Meagher JA)], or whether the danger is ‘sufficiently substantial to warrant the injunction’ [citing Patterson at 325 (Gleeson CJ)]. The applicant does not need to establish that the dissipation of assets is ‘more likely than not’ or that the dissipation would occur on the balance of probabilities [citing Patterson at 325 (Gleeson CJ, Meagher JA and Rogers AJA agreeing)].”
Turning to the facts of the present case, his Honour noted that the development was completed in July 2021, and “[s]ince August 2021, the Developer has been selling the residential units in the ordinary course”: at [11]. Four units, with a total value of some $23.8 million, remained unsold and in the Developer’s name: at [12]. The Developer also retained the two commercial lots, which were valued at some $5.3 million and were subject to leases with third parties expiring in 2031: at [14].
His Honour noted that the four remaining residential units were listed for sale on the Domain.com and Aqualand websites: at [12]. Although none of the units was placed with an agent for sale at the time of his Honour’s decision (one of the units has since been sold), there was “no reason to think the Developer has lost interest in selling those units and every reason to think that, in due course and very likely before the finalisation of these proceedings, it will sell them”: at [13]. The Developer had adduced no evidence to suggest otherwise: at [13]. In relation to the commercial lots, his Honour noted that their combined value would be insufficient to meet the respondent’s claim if successful: at [14].
The primary judge then made the following findings:
“[15] The Developer is a special purpose vehicle whose only function was to develop the subject site. Its financial records show that as it has sold the 121 units in the building it has not retained the proceeds of sale of those units. I would infer that, as might be expected of a special purpose vehicle within a large development group such as Aqualand, it has either distributed the profit by way of dividend or, as its financial records suggest, from time to time, loaned some part of the proceeds to other members of the group.
[16] It appears to me reasonable to infer that, absent restraint, the Developer will act in the same way in relation to the remaining four units once they are sold. That would be the normal and commercially rational course for the Developer to follow.”
The primary judge recognised, in [9], that the purpose of the power to make a freezing order is, as expressed in r 25.11, to prevent “the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied”. The Developer did not take issue with his Honour’s summary, in [10], of the test to be applied when considering whether there is such a danger.
At the outset of his oral submissions, senior counsel for the Developer submitted that what was unusual about the present case was that the primary judge granted the respondent’s application “when there were no facts found suggesting something in the scheme of circumstances that would give rise to a frustration of the assets to abuse the court's processes”: Tcpt, 27 May 2025, pp. 1(47)-2(2). As articulated at the hearing, the Developer’s primary contention was that his Honour was not entitled to grant the extraordinary remedy of a freezing order where his Honour found that the Developer sold units “in the ordinary course” of its business and that its conduct, in distributing profits by way of dividend or loaning some part of the proceeds to other companies in the group, was normal and commercially rational.
Senior counsel’s invocation of the language of frustration and abuse of process reflected that used in cases addressing applications for orders of this nature, a number of which he took the Court to during oral submissions. In Riley M**cKay Pty Ltd v McKay [1982] 1 NSWLR 264 (“Riley McKay”), which concerned an application for a Mareva injunction, in explaining its conclusion that the Court had jurisdiction to make such an order deriving from s 23 of the Supreme Court Act or the Court’s inherent power, the Court (Street CJ, Hope JA and Rogers AJA) stated at 276:
“The basis of jurisdiction is founded on the risk that the defendant will so deal with his assets that he will stultify and render ineffective any judgment given by the Court in the plaintiff's action, and thus impair the jurisdiction of the Court and render it impotent properly and effectively to administer justice in New South Wales. As has appeared, the jurisdiction to grant the injunction is not to be exercised simply to preclude a debtor from dealing with his assets, and in particular to prevent him from using them to pay his debts in the ordinary course of business. It is directed to dispositions which do not fall within this category and which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject.”
The Developer also highlighted the general principles that Gaudron, McHugh, Gummow and Callinan JJ endorsed in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 (“Cardile”) at [41] by reference to the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 32-33; [1998] HCA 30. Relevantly for present purposes, the joint judgment in Cardile stated at [42] that where relief is directed against parties to the proceedings and against whom final relief is sought, the focus is “the frustration of the court’s process”. By contrast, if relief is available against non-parties, their Honours said that “the focus must be the administration of justice”.
The Developer accepted that it was not necessary for an applicant for freezing orders to establish a positive intention on the part of their opponent to frustrate the court’s processes, consistently with National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277; [1990] HCA 10. Nonetheless, it submitted that there needed to be something about the identified conduct to justify the remedy in the circumstances, given its extraordinary character. Without drawing the precise limits of that “something”, the Developer submitted that it was absent from the present case. The primary judge’s finding that the conduct the Developer was likely to engage in (with the effect of diminishing its assets below the amount of the claim) was expected, ordinary and commercially rational was not sufficient to constitute the requisite danger to which r 25.11 of the UCPR refers.
The Developer submitted that in proceeding on the basis that the matters on which his Honour relied were sufficient, the primary judge significantly lowered the jurisdictional threshold for the grant of a freezing order. On his Honour’s approach, freezing orders could effectively be used as security for judgments, contrary to authorities that have warned against such orders being used for that purpose: see eg Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 621, 625; [1987] HCA 23, and the passage from Riley McKay at 276 that I have extracted at [14] above.
The Developer’s submissions focused on particular descriptions the primary judge applied to aspects of its conduct at the expense of a broader (and fairer) reading of his Honour’s ex tempore reasons. His Honour’s finding that the Developer was selling units “in the ordinary course” (at [11]) reflected its status as a special purpose vehicle “whose only function was to develop the subject site”: at [15] (emphasis added). Of the 121 units it had sold, the Developer had retained none of the proceeds of sale. Instead, it had distributed the profit by way of dividend or, from time to time, loaned some part of the proceeds to other members of the Aqualand group. His Honour found, as a matter of reasonable inference, that absent restraint the Developer would act in the same way in relation to the four (now, three) remaining units once sold.
“There must be a real risk, judged objectively, that a future judgment would not be met because of unjustifiable dissipation of assets. But it is not every risk of a judgment being unsatisfied which can justify freezing order relief.”
(Emphasis added.)
“…Not every disposition of a defendant’s property might be unjustifiable so that the payment of ordinary trading debts, which might affect ultimately the recovery of the plaintiff’s judgment, would not be an unjustifiable disposal in this sense. But that is not to say that an applicant must prove that the purpose of a likely disposition is to put the defendant’s assets beyond the plaintiff’s reach.”
“The purpose of the Mareva jurisdiction is sometimes referred to as the prevention of the ‘dissipation of assets’. Without explanation that phrase is, itself, obscure. As Colman J stated in Gangway Ltd v Caledonian Park Investments (Jersey) Ltd (2001) 2 Lloyd’s Rep 715 the underlying purpose of the jurisdiction is not to provide a claimant with security for its claim but to restrain a defendant from evading justice by disposing of assets otherwise than in the ordinary course of business so as to make itself judgment proof with the result that any judgment or award in favour of the claimant goes unsatisfied. The purpose is not to provide security for the claimant in respect of his claim. It is well established that it is not necessary to establish that the defendant is likely to act with the object of putting his assets beyond reach. What has to be shown is that there is, absent an injunction, ‘a real risk that a judgment or award in favour of the plaintiffs would go unsatisfied’: The ‘Niedersachsen’ [1983] 2 Lloyd’s Rep 600. That formulation cannot, however, be regarded as a complete statement of the law. A defendant may be likely to make perfectly normal dispositions, such as the payment of ordinary trading debts, the effect of which may be that, when any award is made, it is, in whole or in part unsatisfied when, absent those payments, it might have been satisfied or satisfied to a greater extent. Something more than a real risk that the judgment will go unsatisfied is required.”
(Emphasis in original.)
McMurdo JA considered the passage from Riley McKay at 276 that I have set out at [14] above to be to the same effect: at [56].
The Developer sought to emphasise the focus in these passages, and in Palmer v Parbery itself, on the nature of the dispositions in question. The transactions and attempted transactions that formed the basis for the relief sought in Palmer v Parbery were, as McMurdo JA described them at [57], “extraordinary by any measure”. The Developer submitted that by contrast, on the primary judge’s findings, its sale of the units took place in the ordinary course and its payment away of profits in the form of dividends or loans was normal and commercially rational, the implication being that they provided an insufficient basis on which to find an unjustifiable disposition of its assets.
Reliance on the notion of an unjustifiable disposition of assets places an unnecessary gloss on the language of the rules. Ultimately, senior counsel for the Developer returned to the policy behind r 25.11, submitting that its purpose was not to provide a plaintiff with security but rather to prevent a frustration of the court’s processes, and that this “looks at whether something exists in the factual spectrum that takes this out of the ordinary into the extraordinary”: Tcpt, 27 May 2025, p. 14(15)-(18). For the reasons I have already explained, the primary judge’s findings as to the Developer’s “ordinary” activities met that threshold, and are not to be equated with the satisfaction of ordinary trading liabilities.
The Developer also referred to Organic Grape Spirit Ltd v Nueva IQT, SL [2020] EWCA Civ 999 (“Organic Grape”) in support of the proposition that ordinary course business transactions do not ordinarily ground jurisdiction to make a freezing order (although senior counsel did not submit that such transactions were incapable of giving rise to the requisite danger). Newey LJ (Arnold LJ and Richards LJ agreeing) stated at [17]:
“Expenditure on business need not be regarded as unjustified, either. A freezing order against a trading company should normally include a provision stating that it does not prohibit dealing with or disposing of assets in the ‘ordinary and proper course of business’. In Halifax plc v Chandler [2001] EWCA Civ 1750, the Court of Appeal approved at paragraphs 19 and 20 a passage from what is now Gee on Commercial Injunctions, 6th ed., in which it is said that ‘there can be no objection in principle to the defendant's dealing in the ordinary way with his business and with his other creditors, even if the effect of such dealings is to render the injunction of no practical value’. Clarke LJ observed in paragraph 18:
‘In cases of what may be called ordinary business expenses the court does not usually consider whether the business venture is reasonable, or indeed whether particular business expenses are reasonable. Nor does it balance the defendant’s case that he should be permitted to spend such monies against the strength of the claimant’s case, or indeed take into consideration the fact that any monies spent by the defendants will not be available to the claimant if it obtains judgment.’
In a similar vein, Christopher Clarke J said in Perry v Princess International Sales & Services Ltd at paragraph 28:
‘The court will not restrain a person from dealing with his assets in the usual or ordinary course of business, provided of course that that business is a lawful one. I do not think that the position is different because that business involves a degree, even a substantial degree, of risk or speculation. Each case must of course depend on its own facts. I can envisage circumstances in which the use to which a defendant’s assets might well be put is so speculative or so different from his ordinary or usual activities that a freezing order should be made. If it should transpire that transactions are being entered into, whose apparent purpose is to ensure that funds are not available to satisfy any judgment, an order would equally be made in those circumstances.’”
“…As I have said earlier in this judgment, I do not think that a business should be prohibited merely because it carries even a substantial degree of risk and I do not see the Harrison case as representing the law in this jurisdiction. ‘Question marks’, ‘real risk’ and the fact that the business could be described as ‘speculative’ do not provide adequate reasons for preventing trading.”
(Emphasis added.)
These parts of the reasons of Newey LJ in Organic Grape serve to highlight the differences with the present case. True it is that the Developer sold units as a matter of course, and dealt with the proceeds of those sales in the same way each time, and its conduct in that respect was, as his Honour found, common and expected of a special purpose vehicle. Far from assisting the Developer, however, that is precisely what gave rise to the requisite danger.
The Developer also referred to the decision of McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343, in which his Honour granted freezing orders in respect of a risk of dissipation of assets by a special purpose vehicle incorporated for the purpose of developing property, which had a pattern of loaning proceeds to other entities within its corporate group. The Developer sought to emphasise what it submitted were the exceptional circumstances on which McDougall J relied in that case, being:
There were no grounds for considering the respondent would be able to meet any claim: at [32]; and
the appointment of a new Superintendent (without apparent explanation), replacing a Superintendent who had demonstrated some support for the applicant’s claims, in respect of which McDougall J stated that “(a)bsent some explanation, this could be viewed as a ruse or, at best, tactical manoeuvre” which gave rise to an inference that the respondent might not wish to pay the claim: at [33]-[34].
These matters do not relevantly distinguish this case in the manner contended by the Developer. So much is apparent from McDougall J’s conclusion. Ultimately, his Honour was satisfied that the jurisdiction to grant a freezing order was enlivened because the evidence demonstrated that the respondent’s assets in that case, if available, would be used to pay down debt owed to other companies in the corporate group, and it was not relevant that this dissipation might be for “legitimate business purpose[s]”:
“[50] Putting all the evidence together, I conclude that if the amount of $1.9 million presently held in trust is made available to the defendants to use as they wish, it will be utilised to pay down debt owed by other companies in the HIGA Group. Although that could well be a legitimate business purpose (and perhaps one not properly described by the somewhat pejorative word ‘dissipation’), it will nonetheless lead to a situation where:
(1) the primary debtor, the developer, will be bereft of assets from which it could pay any judgment in favour of the builder (indeed, would be even more hopelessly insolvent than at present it appears to be); and
(2) there is no basis in the evidence for concluding that secondary debtors (the guarantors) would be able to pay any such judgment (accepting, as I do, that their financial position is not in any way hopeless, let alone as hopeless as that of the developer appears to be).
[51] In short, if the sum of $1.9 million is paid away as the defendants wish, there is a very real likelihood that none of the defendants would have available assets from which the builder could satisfy any judgment that it might recover.
[52] Mr Giles submitted that the order sought to do what is not permitted: namely, to put the builder in the position of a secured creditor. I do not agree. The order is certainly unusual, because it fastens on a particular asset rather than upon the assets of the developer (or for that matter, the directors) generally. However, if the builder recovers a judgment, it will be an unsecured creditor, although one with an identified fund to which it could have recourse. But in the likely event (on the hypothesis presently under consideration) that the developer then went into liquidation, any payment in favour of the builder would be preferential, and one that it would be liable to disgorge for the benefit of creditors generally. And it must be at least open to question, whether the court would permit the builder to garnishee the deposit when the effect might be to give it a preference, properly so called. See Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd [[2017] NSWCA 53].
[53] In those circumstances, I conclude that if the defendants are released from their undertaking to the court and an equivalent order is not made, there is a very real likelihood that the amount presently held in trust will be paid away, beyond the reach of the builder, and a very real risk that if the builder recovers judgment against the defendants, that judgment will go unsatisfied.”
As was raised with the Developer during the hearing, the logical conclusion of its submission that this conduct was no more than ordinary was that if it sold the four units and paid any remaining expenses, the Developer would be justified in distributing the net proceeds of sale to the shareholders of the company (or loaning it to other entities in the corporate group) even though it faced claims of defective workmanship. Taking the argument to its logical conclusion, which would, in the words of Riley McKay, have “the necessary effect of frustrating” the respondent in its attempt to seek a remedy, highlights the difficulty with the Developer’s primary contention that “something more” was required than what the primary judge found.
The Developer also submitted, as a secondary point, that the primary judge granted the freezing order prematurely (accepting, implicitly, that the conduct that the Developer sought to characterise as ordinary could ground the requisite danger). The point advanced in this context was that it was not open to the primary judge to find that there was the requisite danger at the time his Honour heard the application when the four units remained unsold and were not being actively marketed (although listed for sale online). As senior counsel put it, the primary judge made the determination “at a point far removed from getting to the point in time where that evaluative exercise might be undertaken”: Tcpt, 27 May 2025, p. 9(20)-(25). I do not accept the submission. His Honour found that there was a pattern of conduct on the part of the Developer that would be repeated when it sold the four remaining units. That finding was based on the sale of the previous 121 units. It did not follow from the Developer not having sold the four remaining units at the time of his Honour’s orders (one having since been sold) that his Honour could not find that the requisite danger existed, having regard to what had gone before. This secondary point, which only crystallised during oral submissions, does not warrant a grant of leave to appeal.
I propose the following order:
The summons seeking leave to appeal is dismissed with costs.
BALL JA: I agree with Michelmore JA. The language used in other cases to explain when it may and when it may not be appropriate to grant a freezing order should not be permitted to obscure the facts of this case. Here, the Developer was established as a special purpose vehicle to construct and to sell units in a mixed residential and commercial development and to distribute the profits of the venture to its shareholders. The obvious purpose of the structure was to insulate the other business activities of the shareholders from the financial risks associated with the venture. Apart from the sale of the remaining units and the distribution of the profits generated by those sales, the special purpose vehicle has served its purpose. The clear consequence of permitting it to distribute its remaining profits before defects claims were resolved would be to deny the claimant any remedy if its claims succeed. It is not helpful in that context to ask whether the distribution of the remaining profits was in the ordinary course of business or was something that was “extraordinary”. The only source the Developer had to meet claims for defects were the profits it generated from the venture and it was reasonable to infer that unless restrained it would continue to distribute those profits on the sale of the remaining units. In the circumstances of this case, that was sufficient to satisfy the requirements of UCPR r 25.14(4)(b)(ii) and to justify the granting of a freezing order.
FREE JA: I agree with Mitchelmore JA, and with the additional reasons given by Ball JA.
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Aqualand North Sydney Lavender Development Pty Ltd
The Owners �e" Strata Plan No. 102081 [2025] NSWCA 143
(1999) 198 CLR 380
(1987) 162 CLR 612
(1990) 169 CLR 271
(1998) 195 CLR 1
(1989) 18 NSWLR 319
The summons seeking leave to appeal was dismissed with costs.
As the respondent submitted, the Developer’s sale of the units might have occurred in the ordinary course, but the manner in which it dealt with the proceeds of sale were not “ordinary course transactions” such as might otherwise have immunised them from enjoinder. They were not akin to the payment of trading debts and satisfaction of ordinary trading liabilities, such as paying wages, tax liabilities or utilities. Contrary to the complexion that the Developer sought to place on how his Honour described its activities in his reasons, the primary judge did not treat them as such.
His Honour’s findings as to how the Developer ordinarily dealt with the profits it received from the sale of the units provided a more than sufficient basis for the conclusion that, with only four units remaining, the requisite danger to which r 25.11 refers existed, namely, that the prospective judgment “will be wholly or partly unsatisfied”. Considered together with the absence of prejudice to the Developer in the event that freezing orders were made (which his Honour found at [18]), his Honour made the order in the exercise of the discretion.
The Developer referred to a number of cases to support that the primary judge made the error for which it contended and that his Honour’s findings should have marked the beginning and not the end of an evaluative exercise. Those authorities do not call for a contrary conclusion to that which the primary judge reached in the present case or otherwise demonstrate error on his Honour’s part.
The first of these was Palmer v Parbery; QNI Metals Pty Ltd v Parbery [2019] QCA 27; (2019) 136 ACSR 26 (“Palmer v Parbery”), which involved the equivalent rules to rr 25.11 and 25.14 in the Uniform Civil Procedure Rules 1999 (Qld) (rr 260A and 260D). McMurdo JA (Fraser and Gotterson JJA agreeing) considered at [54] the following statement of Gloster LJ in Holyoake v Candy [2017] 3 WLR 1131 at [34]: