Plaintiff v Defendant

2 The plaintiff is a distributor of electrical lighting, data communication and renewable energy products in Australia, forming part of the international Sonepar Group.

3 The plaintiff operates a 'Sustainability Solutions' business unit providing lighting solutions for major retail projects. The plaintiff is a registered scheme participant under the Victorian Energy Upgrades (VEU) program established under the Victorian Energy Efficiency Target Act 2007 (Vic). The VEU program serves as an emission trading scheme as part of which participants who can demonstrate they have undertaken energy efficient works are entitled to be granted Victorian Energy Efficiency Certificates (VEECs).

4 The ownership of VEECs is registered digitally on a centrally controlled registry known as the VEU Registry. Each VEEC represents one tonne of greenhouse gas saving. VEECs have a market value and can therefore be traded. In particular, VEECs can be sold to other entities, such as energy retailers, who have a liability under the VEU program to surrender a certain number of VEECs each year.

5 The defendant commenced employment with the plaintiff in September 2015, initially as Business Development Manager. He was appointed Commercial Manager within Sustainability Solutions in July 2023. Throughout his employment, until his resignation on 27 August 2025, the defendant maintained sole oversight and control of the plaintiff's energy certificate processes and VEEC trading, with exclusive access to the plaintiff's VEU Registry account.

6 In around October 2024, the plaintiff became aware of an increasingly high level of aged receivables on its balance sheet relating to VEECs.

7 From March 2025, the plaintiff identified alarming irregularities in VEEC related receivables, totally approximately $3.5m, that could not be explained by normal trading activities. When questioned by finance staff, between October 2024 and June 2025, about aged receivables, the defendant provided false explanations and repeatedly promised resolution by dates that passed without action. On 12 August 2025, the plaintiff engaged forensic accountants, RSM, to conduct a forensic review of the defendant's activities.

8 Those investigations revealed that the defendant had entered into substantial VEEC trading contracts with AGL and Energy Australia without proper authority, contrary to the plaintiff's delegation of authority, which restricts contract execution to directors and the company secretary. On 18 August 2025, AGL issued a default notice claiming 5,000 VEECs were due for transfer under an agreement referred to as 'contract 1111600', with liquidated damages of $122,850 for non-delivery.

9 On 20 August 2025, during a telephone conversation with the plaintiff's managing director, the defendant made critical admissions stating that the plaintiff did not have any VEECs left, that he had misled the plaintiff about its VEEC position, that the plaintiff had 'lost' VEECs, that he had 'probably been aware of the [issues and had] not been transparent' and he agreed that he had been hiding these issues for a long time. Further investigations revealed that the defendant operates a business called SGW Energy Solutions, as a sole trader.

10 Analysis of the plaintiff's VEU Registry account shows systematic unauthorised transfers of VEECs from the plaintiff to SGW Energy Solutions with the forensic accountants identifying transfers as early as February 2020. For the period 6 February 2020 to 21 March 2024, the forensic accountants' estimate that 74,687 VEECs were transferred from the plaintiff to SGW Energy Solutions and that 12,900 VEECs were transferred from SGW Energy Solutions to the plaintiff. This resulted in a net shortfall of 61,787 VEECs, which are valued at approximately $5,931,552 at current market prices.

11 On 27 August 2025, in a meeting with the plaintiff's managing director and HR director, the plaintiff made further admissions stating that he had been 'loaning' VEECs to himself through SGW Energy Solutions, he had taken personal gain and had been moving money to himself, he was holding 'just under $1 million' in misappropriated assets and that he promised to assist with investigations and recovery of the funds.

12 The investigations further revealed that the defendant had systematically altered third-party invoices to conceal unauthorised VEEC transactions. These included changing invoice descriptions from 'VEEC Trading' to 'Installation' or project specific descriptions, processing these altered invoices through the plaintiff's payment system to appear as legitimate business expenses and using funds from these payments to purchase VEECs to cover shortfalls created by his misappropriations. The investigations by RSM are continuing. The defendant has indicated a willingness to meet with RSM, but at present he has not done so.

13 Although he was scheduled to meet with RSM on 4 September 2025, he cancelled that meeting the day before. On 5 September 2025, the defendant indicated that he would attend a meeting with RSM which is scheduled to take place on 11 September 2025.

14 The Court's power to make freezing and ancillary orders is contained in Order 37A of the Supreme Court (Civil Procedure) Rules 2025 (Rules).

15 The principles governing the exercise of the Court's power to make freezing orders under Order 37A of the Rules are well established. They were recently summarised by Nichols J in Re Memon Bros Pty Ltd:

(a) A freezing order by its very nature is a drastic remedy which will not be granted lightly. A court must exercise a high degree of caution before taking a step which will interfere with a party's capacity to deal with his or her assets.

(b) The rationale for freezing orders is to prevent the frustration of the Court's processes and ensure the effective exercise of the jurisdiction invoked, or, in the case of a non-party, to prevent interference with the administration of justice.

(c) Conversely, a freezing order is not designed to provide security for the applicant's claim. It is solely directed to preserving assets from being dissipated, thereby frustrating court processes.

(d) The applicant bears the onus of satisfying the Court that the order should be made, in the monetary amount the subject of the order. An order may only be made on admissible evidence, for which speculation and guesswork are no substitutes. Allowance must be made, however, for the fact that the merits of the case will only be argued in a 'broad brush' way at the hearing of an application for a freezing order.

(e) The applicant must establish that there is a 'good arguable case' against the respondent. This means that it can be seen from the available material that the claim or proposed claim has a real prospect of success.

(f) The applicant must establish that there is a danger of a prospective judgment of the Court being wholly or partly unsatisfied. It must be shown that there is a reasonable possibility, not necessarily more than 50 percent chance, that assets may be disposed of or dealt with or diminished in value if an order is not made. In making this assessment all of the circumstances must be taken into account including the likely amount of the judgment, the circumstances in which the cause of action arose, the conduct of the respondent and the respondent's capacity to take avoidance action.

(g) The exercise of the power is discretionary. Accordingly, other considerations including the balance of convenience may bear upon the Court's decision, but that the balance of convenience favours the making of the order is not a distinct requirement.

(h) The value of the assets covered by a freezing order should not exceed the likely maximum amount of the applicant's claim, including interest and costs. It is recognised that quantification of a claim can be challenging at an early stage. The interests of justice may require a court to place an interim and necessarily imprecise value on the relevant claim that will determine the limits of any putative judgment.

(i) As a condition of a freezing order it will ordinarily be appropriate to require the applicant to give undertakings to the Court, including the usual undertakings as to damages, supported if necessary by the provision of security.[1]

16 In making a freezing order, the Court may also make ancillary orders, which orders relevantly include orders for the disclosure of assets by the defendant.

17 I am satisfied that there is a good arguable case, established by the evidence, that the defendant has breached contractual, equitable, tortious and statutory duties owed to the plaintiff.

18 In this regard, I take into account the following matters:

(a) the defendant's own admissions on 20 August 2025 that he had misled the plaintiff about its VEEC position, that he had not been transparent and had been hiding these issues for a long time;

(b) his further admissions on 27 August 2025 that he had been 'loaning' VEECs to himself, had taken personal gain and was holding almost $1 million in misappropriated assets;

(c) documentary evidence from the VEU Registry showing the systematic transfer of 61,787 VEECs to his personal business, SGW Energy Solutions;

(d) evidence of systematic alteration of invoices to conceal unauthorised transactions; and

(e) the defendant's entry into substantial contracts, without proper authority, contrary to the plaintiff's delegation of authority.

19 I am also satisfied that there is a real risk of dissipation of assets by the defendant if a freezing order is not made. In this regard, I take into account the following matters:

(a) the defendant's admission that he holds almost $1 million in misappropriated assets, but his failure to identify the location of such assets, despite promising to do so;

(b) the defendant's lack of transparency throughout the investigation period;

(c) the defendant's cancellation of the scheduled forensic interview on 3 September 2025, after initially agreeing to cooperate;

(d) the defendant's submission of a resignation letter on 27 August 2025, coinciding with the discovery of the alleged fraud; and

(e) the sophisticated nature of the alleged fraud involving systematic transfers, over multiple years, and invoice manipulation.

20 In reaching this view, I also take into account the following observation of Elliott J in Distinctive FX Pty Ltd v Wright:

The evidence relied upon by a plaintiff in seeking to establish an arguable case against a defendant may also be relied upon to demonstrate that there is a danger a prospective judgment will be wholly or partly unsatisfied as a result of the removal, disposal or diminishing of assets. Where the allegations made against a defendant concern serious dishonesty, that evidence of itself may satisfy the court that the requisite danger exists.[2]

21 I am also satisfied that the balance of convenience favours granting the freezing order for the following reasons:

(a) the plaintiff's potential losses are substantial and may be irrecoverable if the defendant's assets are dissipated;

(b) the defendant can continue to meet reasonable living expenses and legal expenses under the proposed order;

(c) the plaintiff is prepared to give an undertaking as to damages and the associated undertakings required by Order 37A;

(d) the risk that assets will be dissipated is high, particularly having regard to the dishonesty alleged; and

(e) the orders sought are temporally confined, as it is proposed that the matter be made returnable in the near future, at which time the defendant will have an opportunity to be heard.

22 I also consider that it is appropriate and necessary for ancillary orders to be made for the disclosure of assets in circumstances where the defendant has not been forthcoming about the location of the misappropriated assets and what he has done with the amounts he has obtained from the sale of VEECs.

23 For these reasons I will make orders substantially in the form of the orders in Annexure 1 of the originating motion dated 9 September 2025.

[1] [2025] VSC 47, [6] (citations omitted).

[2] [2015] VSC 299, [39] (citations omitted).