Emergency Flood Response Pty Ltd v Flood Emergency Services Group Pty Ltd [2026] FCA 357

1. The substantive dispute between the parties relates to a "Joint Business" or "Joint Venture" that was said to have been conducted by the applicant and the respondent from about 18 November 2023 to 10 August 2025 (for convenience, the Joint Venture).
2. Following the cessation of the alleged Joint Venture, the applicant commenced proceedings in this Court seeking, amongst other things, a determination of the financial accounts of that Joint Venture for the purposes of a final determination of the respective parties' interests. The applicant also pressed for interlocutory relief, seeking the appointment of an interim receiver to manage the financial affairs and outgoing aspects of the Joint Venture.
3. In the result, the necessity for the determination of the applicant's interlocutory relief fell away, largely due to a consent position reached between the parties involving, amongst other things, the referral of certain questions relating to the financial accounts of the alleged Joint Venture to a referee, Mr David Mansfield of Deloitte SRT (the Referee). Another reason why it became unnecessary to determine the applicant's interlocutory relief is that the respondent (through its Counsel) proffered an undertaking to the Court as recorded in my orders dated 20 November 2025 which proposed that income received from the business operated by the Joint Venture would be held in a controlled monies account.
4. By an interlocutory application filed on 22 December 2025, the respondent now seeks to be released from the undertaking that was proffered to the Court and its substitution with a different form of undertaking. The respondent also seeks orders for a limited category of discovery.
5. For the reasons that follow, the application should be dismissed.

1. The proceedings were commenced by the applicant on 9 October 2025 by way of an Originating Application and supporting affidavit. Amongst other things, the applicant seeks declarations as to the existence of the Joint Venture and a determination of the accounts of that Joint Venture for the purpose of an orderly distribution of the respective parties' interests or entitlement to profit.
2. As adverted to above, the Originating Application also claimed interlocutory relief by way of the appointment of an interim receiver to the assets and undertakings of the Joint Venture. The applicant advanced this claim in circumstances where it claimed, and it was not substantially in dispute, that the alleged Joint Venture had come to an end, but the applicant was not in control of the receipt of income generated by the work performed in furtherance of that Venture.
3. It is common ground that the income generated from the work performed in furtherance of that Joint Venture was received by the respondent, and continues to be received for work performed in the past (ie, before the cessation of the Venture).
4. Without descending into the procedural history, the applicant's claim for interlocutory relief came before me for hearing on 13 November 2025. As already mentioned, the necessity for the determination of the interlocutory application fell away due to productive discussions between the parties, who agreed that there should be a reference of certain questions relating to the accounts of the Joint Venture (referred to as the "Relevant Questions") to a referee pursuant to ss 37P(2) and 54A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 28 of the Federal Court Rules 2011 (Cth) (FC Rules). Another aspect of the agreement reached between the parties included an undertaking which was proffered by the respondent through its Counsel and which I refer to below. The parties did not reach agreement as to the identity of the referee but invited me to make a determination of that question on the papers from amongst two proposed candidates. In the result, I determined that Mr David Mansfield of Deloitte SRT should be appointed as the Referee.
5. Ultimately, on 20 November 2025, I made orders (which were largely by consent) as follows (20 November 2025 Orders):

THE COURT ORDERS THAT:

Appointment of referee

1. Pursuant to s 37P(2) and s 54A of the Federal Court of Australia Act 1976 (Cth) and r 28 of the Federal Court Rules 2011 (Cth) (FCR):

(a) the questions set out in the Annexure to this Order (Relevant Questions) be referred to a referee (Referee) for the purposes of the Referee conducting an inquiry into the Relevant Questions (Reference) and providing a report in writing to the Court on the Relevant Questions referred to the Referee stating, with reasons, the Referee's findings on the Relevant Questions (Report);

(b) the Reference will commence within 7 days of the making of this order or on such other date as ordered by the Referee;

(c) the Referee is to consider and implement such manner of conducting the Reference as will, without undue formality or delay, enable a just, efficient, timely and cost-effective resolution of the Reference to allow completion of the Report including, if the Referee thinks fit:

(i) the making of enquiries electronically, by telephone or in writing;

(ii) direct communication without intervention of lawyers of any expert retained on behalf of a party and/or any person whom the Referee believes may have information relevant to the Reference;

(iii) in order to facilitate the Referee implementing the just, efficient, timely and cost-effective resolution of the Reference, the Referee is to make such directions as the Referee considers appropriate as to the conduct of the Reference;

(iv) without limiting (i), (ii) and (iii), to the extent the Referee considers it is necessary or appropriate for the Referee to obtain any submission from any party, the Referee may make any direction the Referee considers appropriate in relation to such submissions including that any submissions be provided wholly in writing and be limited in length and topic;

(v) without limiting (i), (ii) and (iii), to the extent the Referee considers it is necessary or appropriate, the Referee may require a party to cause a Subpoena to be issued for the attendance of any person and the production of documents; and

(vi) the parties to the Reference are to participate in the Reference without the involvement of legal representatives (except to the extent the Referee wishes to obtain the assistance of any lawyer) and the laws of evidence will not apply in relation to the Reference.

1. The Referee submit the Report to the Court in accordance with FCR 28.66 addressed to the District Registrar, on or before 12 December 2025 and also provide a copy of the report to the chambers of Shariff J and to the parties.

2. The Referee, in the Report:

(a) shall, to the extent it was necessary for the Referee to make any findings of fact in order to express his/her opinion on the Relevant Questions, make a statement of the facts found by the Referee from which the Court may draw such inferences as it thinks fit; and/or

(b) may submit any question arising on the Reference for the decision of the Court and provide alternative opinions on the Relevant Questions which depend upon how the Court determines any question submitted to the Court.

1. The Referee appointed is David Mansfield of Deloitte SRT on the condition that Deloitte reduce their hourly rates to match those quoted by Cor Cordis in the document emailed to the Court by Mr Ayliffe, the Respondent's solicitor, at 2.16 pm on 13 November 2025.

2. The parties shall deliver to the Referee forthwith a copy of this order, together with a copy of FCR 28.

3. Within 3 business days from the date of this order, the parties shall deliver to the Referee a copy of:

(a) invoices issued in the period 18 November 2023 to 10 August 2025 (relevant period), save for invoices relating to sales which occurred prior to 18 November 2023;

(b) receipts for expenses incurred during the relevant period relating to services provided during the relevant period;

(c) Business Activity Statements and taxation returns filed by either party for the relevant period; and

(d) bank statements for the relevant period;

(e) unaudited end-of-year accounts for the periods ending 30 June 2024 and 30 June 2025 and management accounts for the period from 1 July 2025 to 10 August 2025.

1. The parties are to provide the Referee with access to their Xero accounting software within 3 business days of these orders.

2. Any amendments to the Annexure, whether by agreement or on a contested basis, are to be the subject of an order made by the Court.

3. If for any reason the Referee is unable to comply with the order for delivery of the Report to the Court by the date in this order, the Referee is to provide to the Court an interim report setting out the reasons for such inability and an application to extend the time within which to deliver the Report to the Court to a date when the Referee will be able to provide the Report.

4. The Referee and the parties have liberty to seek directions with respect to any matter arising in the Reference upon application made on 24 hours' notice or such other notice ordered by the Court.

5. Without affecting the powers of the Court as to costs, the parties are, in the first instance, to be jointly and severally liable to the Referee for the fees payable to the Referee.

6. The parties are to raise any objection to the prospective adoption of the Report by 21 January 2026.

7. The proceeding be adjourned for a further case management hearing (including as to directions for any application to adopt the Report) on 16 December 2025 at 9.15am.

Other

1. The Applicant's interlocutory application is adjourned to 16 December 2025.

2. Liberty to apply

3. Costs reserved.

(Original emphasis.)

1. The 20 November 2025 Orders record the undertaking that the respondent had proffered to the Court (the Undertaking) as follows:

1. The respondent through its counsel undertakes to pay:

(a) the sum of $1,000,000; and

(b) 100% of the proceeds of any invoices for sales made during the relevant period and received after it, net of GST,

within 7 days into an interest bearing controlled-money account (CMA), in the name of KHQ Lawyers and New South Lawyers, to be held without release pending agreement between the parties or order of this Court.

(Original emphasis.)

1. The respondent now seeks to be released from subparagraph (b) of the Undertaking and that it be substituted with an undertaking on the following terms:

The respondent, through its solicitors, undertakes to pay into, and maintain in, the interest bearing controlled-money accounts in the name of Moray & Agnew Lawyers and held on trust in equal amounts for the applicant and respondent respectively (CMAs) a total amount equivalent to the sum of:

...

(b) 50% of the total proceeds of any invoices for sales made during the relevant period and received after 20 November 2025, net of GST less 5% on account of debt collection/recovery costs and external legal costs.

1. There was no dispute between the parties as to the applicable principles. Both parties relied upon the decision in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 where Gibbs CJ, Aickin, Wilson and Brennan JJ stated at 177-178:

Considerable argument was directed to the question whether a court has power, otherwise than in the case of mistake operative at the time of giving it to release a party from an undertaking, at least in the absence of the consent of the other party. But in our opinion a court undoubtedly has such a power. Just as an interlocutory injunction continues "until further order", so must an interlocutory order based on an undertaking. A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust: cf Woods v Sheriff of Queensland (1895) QLJ 163 at 165; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447; Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485 at 492; [1981] 1 All ER 745 at 751. Of course, the changed circumstances must be established by evidence: Cutler v Wandsworth Stadium Ltd [1945] 1 All ER 103.

(Original emphasis retained in italics and additional emphasis added in bold.)

1. The parties accepted that in determining whether the respondent should be released from the Undertaking, it was necessary for the respondent to establish that (a) there was a mistake that was operative at the time of giving the release, or (b) new facts have come into existence or have been discovered which render its enforcement unjust.
2. The respondent advanced two arguments in support of its contention that it should be released from the undertaking:

(a) first, the respondent contended that it had not given instructions for the Undertaking to be given in the terms that were ultimately proffered and therefore it had been proffered to the Court by mistake; and

(b) second, the respondent submitted that new facts had come into existence that rendered it unjust for the respondent to be bound by the Undertaking, being that although the 20 November 2025 Orders required the Referee to provide his report on or before 12 December 2025, this has not come to pass.

1. In support of its contention that there had been a mistake, the respondent read an affidavit from its then solicitor on the record, Mr Adam Nahum Ayliffe dated 26 November 2025 (Ayliffe Affidavit). In that Affidavit, Mr Ayliffe deposes to the circumstances in which the parties had respectively put forward different positions as to the content of the Undertaking to resolve the interlocutory dispute then before the Court.
2. Mr Ayliffe deposes that he first received instructions in the matter on 24 October 2025. He says that on 10 November 2025, after taking detailed instructions, he sent the applicant's solicitors an open offer to resolve the interlocutory dispute (pending further order) on the basis that the respondent would make a payment of:

(a) $1,000,000 into a controlled monies account; and

(b) 50 cents in each dollar collected by the respondent in the future, which would be paid into the controlled monies account within 14 days of receipt.

1. The relevant aspect of the respondent's proposal was set out in the letter of 10 November 2025, as follows:

1. We also refer to the discussion between our clients' respective counsel this morning. As canvassed between Counsel, our client proposes, on an open basis but without prejudice to its claims in the proceeding, to make a payment into an interest bearing (currently 3.9 percent per annum) controlled-money account (CMA), in the name of KHQ Lawyers and New South Lawyers, in the following amounts:

(a) $1,000,000; and > > (b) 50c of each dollar of proceeds of any invoices for work during the Relevant Period on which our clients worked jointly, which our client would undertake to provide within 14 days of receipt;

(collectively, the Fund).

(Original emphasis.)

1. On 12 November 2025 at 11.48 am, Mr Ayliffe received a counter-offer from the applicant's solicitor. The effect of that counter-offer was to take issue with the second component of the respondent's offer. Instead of 50 cents in the dollar, the applicant proposed that the entirety of the proceeds from the alleged Joint Venture be paid into a controlled monies account.
2. Mr Ayliffe says he became busy on the afternoon of 12 November 2025 as the matter was listed for hearing the next day. As a result, he directed his staff to prepare a response to the applicant's solicitor. Mr Ayliffe deposes as follows:
   1. During the afternoon on 12 November 2025, my staff prepared the letter, and I sought instructions by telephone with William Pilarinos, who is also known as Bill Strong. Specifically, I sought and obtained instructions to increase the future component of the offer to match that of the applicant, being 100c in the dollar.
   2. The letter incorporated what I thought was a clear outline of the offer, being $1,000,000 on account of amounts already collected, and 100 percent of any amounts collected in future. On reflection, this secondary component was not as clear as it could have been in paragraph 8 of the letter, but it was clear from paragraph 9, in which our client had signalled an intention to seek the applicant's approval to deduct debt recovery expenses from amounts (plural) to be paid into the CMA.

1. The letter that was sent by the respondent's solicitor contained the following "Updated Proposal":

Updated Proposal

1. It appears to us that your client is agreeable to $1,000,000 being the amount of funds that ought to be put aside pending the determination of the issues in dispute. We do not see why any of those funds should be held by either our client or your client.

2. In addition to placing $1,000,000 into a CMA, our client hereby offers to place 100% of the proceeds of any invoices for sales made during the relevant period and received after it, net of GST only, into the controlled monies account within fourteen days of receipt.

3. The reason our client proposed to hold back 50c was to make provision for our client's costs associated with recovering funds from outstanding debtors. Our client proposed to present any invoices for legal costs of debt recovery to your client to confirm these costs, upon reasonable notice, can be deducted from the amounts to be paid into the CMA.

(Original emphasis.)

1. As will be self-evident, the Updated Proposal reflected an offer made by the respondent to place the entirety of the proceeds into a controlled monies account. The explanation in paragraph 9 of the Updated Proposal did no more than explain why the respondent had earlier taken a different position and also proposed that the respondent would present invoices for the legal costs for any debt recovery for deduction.
2. Mr Ayliffe says that the Updated Proposal was prepared "very quickly" and "under some time pressure", and that it is "regrettable but unsurprising that the drafting was not as clear as it could have been with more time". It is not clear what aspect of the drafting was unclear, and Mr Ayliffe did not explain what he meant by this statement.
3. In any event, the Updated Proposal came to reflect the Undertaking that was proffered to the Court by the respondent's (then) Counsel.
4. Mr Ayliffe then says that on the afternoon of Friday, 21 November 2025, he received a call from Mr Dale Watkinson, an employee of the respondent, who informed him that the Undertaking did not reflect the respondent's instructions. Mr Ayliffe says that this was the "first time this had been raised with [him], despite a significant amount of correspondence over the intervening days". Mr Ayliffe says that later that afternoon, he spoke to Mr William Pilarinos (the respondent's sole director) who said that he had not read any of the emails which Mr Ayliffe had sent him about the matter.
5. Mr Ayliffe says that had he understood that Mr Pilarinos was not reading his emails, he would have confirmed his instructions in a different way.
6. In summary of these events, Mr Ayliffe says that there has been a mistake. He deposes as follows:

That the form of the undertaking in the Orders does not accurately reflect the instructions provided by the respondent is the result of miscommunication and is an honest error for which I sincerely apologise.

1. The respondent submitted that based on this evidence, I should be satisfied that there was a mistake made and further that new circumstances have come to light that establish that the Undertaking was given without instructions.
2. I reject the respondent's submissions. I am not satisfied that the respondent has established that there was a mistake that was made at the time the Undertaking was proffered or that any new facts have come to light that point to such a mistake having been made.
3. First, Mr Ayliffe's evidence is inconsistent. He deposes that during the afternoon of 12 November 2025, his staff prepared the letter containing the Updated Proposal, whilst he sought instructions by telephone with Mr Pilarinos. He says that he "[s]pecifically" sought and "obtained instructions to increase the future component of the offer to match that of the applicant, being 100c in the dollar." Without more, that is direct evidence that Mr Ayliffe obtained instructions from Mr Pilarinos as to the terms of the Updated Proposal, not by email but via telephone discussions with him. This evidence is inconsistent with Mr Ayliffe's evidence that he was subsequently told by Mr Watkinson and Mr Pilarinos that the Undertaking did not reflect the respondent's instructions.
4. Although not addressed in Mr Ayliffe's evidence, the suppressed premise of the respondent's contention is that Mr Pilarinos had not given instructions for the entirety of the incoming proceeds from the alleged Joint Venture to be placed into a controlled monies account without deduction for costs. The point being that the respondent is now footing the costs incurred by the alleged Joint Venture without deduction from the income (which is being transferred into the controlled monies account).
5. Whilst the conundrum is readily apparent, I am not satisfied that the evidence establishes that there has been any mistake or miscommunication of instructions. It will be recalled that the respondent made an earlier offer on 10 November 2025. That offer (which was based on a proposal of 50 cents in the dollar) did not make provision for the deduction of any costs from the income to be transferred into the controlled monies account. There was no evidence that this offer was a mistaken one, or that it reflected anything other than the instructions given by the respondent. The Updated Proposal maintained the same structure, save that it increased the offer to 100 cents and otherwise indicated that the respondent would make a claim for deductions from any costs incurred in recovering debts from clients. Thus, the objective course of communications between the parties is inconsistent with there having been any mistake made.
6. Second, I have no evidence from either Mr Pilarinos or Mr Watkinson as to the instructions they gave before the Undertaking was proffered to the Court. Nor do I have evidence from the Counsel who proffered the Undertaking on behalf of the respondent. The only evidence of any mistake is that Mr Ayliffe says that Mr Pilarinos and Mr Watkinson have told him after the Undertaking was proffered that it did not reflect their instructions. That evidence is post fact.
7. I accept that Mr Ayliffe now believes that he made a mistake due to miscommunication. However, this does not establish that there was objectively a mistake at the time that the Undertaking was proffered.
8. Third, I am not satisfied that the respondent has established any new circumstances to justify a release from the Undertaking. All that has occurred is that after the Undertaking was proffered, Mr Ayliffe has been told that there was a mistake. Without more, I am not satisfied that this this a new circumstance as to an operative mistake made at the time that the Undertaking was proffered.
9. Accordingly, I reject the respondent's contentions as to a mistake.

1. The respondent submits that new circumstances have come to pass that change the position such that it would be unjust to hold the respondent to the Undertaking.
2. The respondent's primary argument in this respect is that the Undertaking was given in circumstances where the Referee's report was intended to be provided by 12 December 2025. The time for service of that Report has been extended on two occasions, first, to 18 February 2026, and then to 13 March 2026. As it stands, the Referee's report has not been delivered. While the time for its service has not been formally extended, the Referee (via his solicitor) requested a further extension until 17 April 2026, and order 1 of my orders dated 20 March 2026 (20 March 2026 Orders) require an interim report to be provided by 27 March 2026.
3. Whilst I accept that there have been delays occasioned in the completion of the Referee's report due to the complexity and quantity of the materials involved, and the further inquiries that have needed to be made about the applicant's accounts, it remains unacceptable that not even an interim report has been filed to date. It is for this reason that I have directed an interim report be filed by 27 March 2026.
4. However, I am not satisfied that the delay in the production of the Referee's report is reason enough at this stage to vary the Undertaking. There are three reasons for this.
5. First, I have no evidence that the Undertaking was proffered on the basis that the Report would be completed by 12 December 2025. Mr Ayliffe did not give that evidence. Nor has any other representative of the respondent. The respondent's submission sought to tie the giving of the Undertaking with the timing of the service of Referee's report, but without any evidence to support that submission.
6. Second, I am not satisfied that there is any direct connection between the Undertaking and the production of the Referee's report. The purpose of the report is to answer the Relevant Questions which the parties have formulated. The purpose of the Undertaking is to preserve a position in relation to the income of the alleged Joint Venture pending determination of the proceedings. The Undertaking was not expressed to be time limited or otherwise conditional upon the occurrence of any event. As a matter of ordinary construction, the Undertaking operates until further order and/or the final determination of the proceedings.
7. That is not to say that the production of the Referee's report will not quell some or all of the disputes between the parties. It may be that the report discloses new information which may provide the moment for a re-consideration of the Undertaking or release from it. I had intimated these matters at a case management hearing on 5 February 2026. However, at this stage, no such circumstances exist.
8. Third, I am not satisfied that the enforcement of the Undertaking visits an unjust outcome upon the respondent. The essence of the respondent's contention is that by being required to place 100% of the proceeds from the Joint Venture into the controlled monies account, it is being deprived of the receipt of its 50% share. It further contends that the position is made worse because the costs incurred by the applicant are not being deducted from the income and the applicant has not provided verified invoices as to those costs.
9. Whilst it may be understandable that the respondent perceives there to be such an injustice, the position is exactly the same for the applicant. Neither party presently has use of the proceeds from the receipts. What the respondent seeks is for it to have access to its alleged share, without the applicant being able to do so. Nor do I have any evidence as to the prejudice that arises to the respondent as a result of not having access to its alleged share. There is no evidence of any financial difficulty at present. As to the issue of the verification of the invoices for the applicant's costs, that appears to be one of the many matters in dispute between the parties and it is the one being addressed by the Referee.
10. It follows that I do not accept the respondent's second contention.

1. For the abovementioned reasons, I am not satisfied that the respondent should be released from the Undertaking.

1. By its interlocutory application, the respondent also sought orders for the following categories of discovery:
   1. copies of receipts provided to the referee pursuant to the orders of 20 November 2025;
   2. copies of the relevant Xero accounting entries relied upon by the applicant to evidence expenses claimed by the applicant; and
   3. copies of any other documents relied upon by the applicant to evidence expenses claimed by the applicant including invoices and payment records.

1. Pursuant to r 20.11 of the FC Rules, a party must not apply for an order of discovery unless the making of the order sought will "facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible". This is consistent with the overarching purpose of the civil practice and procedure provisions as outlined in s 37M of the FCA Act.
2. I was taken to no evidence to demonstrate that, contrary to the evidence of Mr George Bazouni, solicitor for the applicant, the applicant has not provided the respondent with all documents provided to the Referee to date. I am satisfied that by providing the respondent with access to all documents provided to the Referee to date, the applicant has provided the respondent with the documents that are responsive to Category A. Order 3 of the 20 March 2026 Orders formalises the parties' obligation to provide access for the other party to all documents and records provided by it to the Referee (with limited exceptions) such that any further documents provided to the Referee by the applicant are required to be furnished to the respondent.
3. Further, the respondent conceded that the Referee's report is likely to address Categories B and C. I am not satisfied that putting the applicant to the further expense of complying with the proposed discovery orders would facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible in circumstances where the respondent is either already in possession of the documents sought or where this process is likely to be duplicated by the Referee. Additionally, the terms of discovery are ordinarily determined by the issues in the pleaded case. Given that pleadings are yet to close, I am not satisfied that it is in the interests of justice to make the discovery orders sought by the respondent.

1. The interlocutory application dated 22 December 2025 be dismissed.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Shariff.