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[2026] NSWSC 563
Supreme Court of NSW
2026-05-15
Richmond J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: The Owners – Strata Plan No 92226 v 1A Eden Pty Ltd [2026] NSWSC 563
Hearing dates: 23 April 2026 with final submissions received on 30 April 2026
Date of orders: 15 May 2026
Decision date: 15 May 2026
Jurisdiction: Equity
Before: Richmond J
Decision: See [3]
Catchwords: CIVIL PROCEDURE — Interim preservation — Freezing orders — Against third parties — No question of principle
EQUITY — Trusts and trustees — Powers, duties, rights and liabilities — Whether trustee may limit its otherwise unlimited liability under a deed of indemnity to only the assets of the trust — Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773, applied
COSTS — Gross sum costs orders — No question of principle
Legislation Cited: Civil Procedure Act 2005 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39
Aqualand North Sydney Lavender Development Pty Ltd v The Owners – Strata Plan No. 102081 [2025] NSWCA 143
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18
Deputy Commissioner of Taxation v Huang (2021) 96 ALJR 43; [2021] HCA 43
Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333
Guan v Li (No 2) [2022] NSWCA 261
Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773
LCC Property Development Pty Ltd (Receiver and Manager Appointed) v Winau Aust Pty Ltd [2026] NSWSC 297
Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185
PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36
The Owners – Strata Plan No 102081 v Aqualand North Sydney Lavender Development Pty Ltd [2025] NSWSC 31
Texts Cited: P Biscoe, Freezing and Search Orders (3rd ed, LexisNexis Australia, 2023)
Category: Consequential orders
Parties: The Owners – Strata Plan No 92226 (Plaintiff and Third Respondent)
1A Eden (First Defendant and Applicant)
Garawin Pty Ltd (First Respondent)
Joesandra Pty Ltd (Second Respondent)
Representation: Counsel:
P F Santucci (Plaintiff and Third Respondent)
M Hazan (Special Purpose Liquidator to the First Defendant/Applicant)
D Weinberger SC (First Respondent)
M Painter SC and A Berriman (Second Respondent)
A Demlakian (sol) (General Purpose Liquidator to the First Defendant/Applicant)
Solicitors:
Thomson Geer (Plaintiff and Third Respondent)
Hegarty Legal (Special Purpose Liquidator to the First Defendant/Applicant)
Dentons (First Respondent)
Walker Hedges Forestville (Second Respondent)
JHK Legal (General Purpose Liquidator to the First Defendant/Applicant)
File Number(s): 2017/362562
Publication restriction: Nil
These proceedings were commenced in 2017 by the plaintiff, the Owners – Strata Plan No 92226 (Owners), which is a strata corporation and the owner of 1A Eden Street, North Sydney, which is a building containing 36 units (the Building). The claim was for damages from first defendant, 1A Eden Pty Ltd (1A Eden) which was the developer of the Building, and other defendants in respect of defects in the construction of the Building. 1A Eden, which is now in liquidation, has at all relevant times been the trustee of a unit trust called the 1A Eden Trust (the Trust), the unit holders of which are Garawin Pty Ltd as trustee for the More Family Trust (Garawin), Joesandra Pty Ltd as trustee for the Sleiman Family Trust (Joesandra) and Zaarour Investments Pty Ltd as trustee of the Zaarour Investments Trust (Zaarour).
Shortly before the final hearing of these proceedings was to commence on 13 April 2026 with an estimate of five days, the Owners and the general purpose liquidator of 1A Eden (SPL) settled the dispute on the basis that 1A Eden would consent to the entry of judgment against it for $2,500,000 with costs. Two matters remained outstanding. The first was whether certain asset preservation orders which had previously been made in the proceedings against Garawin on 11 June 2025 and Joesandra on 21 June 2024 should continue or alternatively new freezing orders should be made against them in connection with a new proceeding to be brought against them by the SPL to enforce the deed of indemnity referred to below. The SPL sought these new freezing orders by its Amended Notice of Motion filed in Court on 16 April 2026. The second was whether the plaintiff should be granted a gross sum costs order.
On 15 May 2026 I made final orders in the proceedings set out below:
Order that judgment be entered in favour of the Plaintiff against the Defendant in the sum of $2,500,000.
Order that the Defendant pay the Plaintiff’s costs of the proceedings in the specified gross sum of $1,067,606.
Upon the Special Purpose Liquidator of 1A Eden Pty Ltd (in Liquidation) by his lawyers giving the usual undertaking as to damages, the Court makes the Freezing Orders set out in the Penal Notice at Annexure A to these orders against Joesandra Pty Ltd as trustee for the Sleiman Family Trust, until 4:00 pm on 25 June 2026.
Upon the Special Purpose Liquidator of 1A Eden Pty Ltd (in Liquidation) by his lawyers giving the usual undertaking as to damages, the Court makes the Freezing Orders set out in the Penal Notice at Annexure B to these orders against Garawin Pty Ltd and Garawin Pty Ltd as trustee for the Moore Family Trust, until 4:00 pm on 25 June 2026.
The Defendant is to file and serve a summons commencing new proceedings against each of Joesandra Pty Ltd and Garawin Pty Ltd, being the respondents to the asset preservation orders made on 15 May 2026, by 23 June 2026, seeking the relief sought in the Summons exhibited to the Affidavit of Sule Arnautovic dated 15 April 2026.
The First and Second Respondents are to pay the Applicant's costs of the Amended Notice of Motion filed in Court on 16 April 2026.
The proceedings be listed for directions on 24 June 2026 before Richmond J at 9.30am.
Liberty to apply on 3 days’ notice specifying the relief sought.
Order that these orders be entered forthwith.
The Court notes the indemnity provided by the Owners’ Corporation – Strata Plan 92226 to the Special Purpose Liquidator of 1A Eden Pty Ltd (in Liquidation) referred to in the resolution comprising Annexure “C” to the affidavit of Divya Chaddha dated 23 April 2026.
At the time of making these orders I indicated I would provide reasons subsequently, which are set out below.
On 1 December 2017 the Owners obtained a freezing order against 1A Eden which restrained 1A Eden from dealing with its assets up to an unencumbered value of $1,500,000. These orders were extended on 8 December 2017 until 5 pm on 14 December 2017. On that day the solicitors for 1A Eden sent an email to the solicitors for the Owners attaching a draft deed of indemnity stating that it was designed to overcome a concern which had been previously been raised by the Owners about clause 17 of the trust deed of the Trust which contained a limit on the obligation of the unit holders to indemnify the trustee. The proposed deed addressed this by granting a separate and continuing indemnity by the unit holders to 1A Eden from and against any loss or damage incurred by 1A Eden in connection with any order made in these proceedings, which could only be revoked with the consent of 1A Eden or leave of the Court.
Later that day Garawin, Zaarour and Joesandra entered into the deed in favour of 1A Eden (Deed of Indemnity) and as a result of this and undertakings given by 1A Eden not to sell Lot 27 in the Strata Plan which it owned, the Owners did not seek an extension of the freezing orders. On 14 December and 18 December 2017, Hammerschlag J made a number of orders for the future conduct of the proceedings which noted:
1A Eden’s undertaking to the Court not to sell or otherwise deal with Lot 27; and
that each of the unit holders in the Trust (ie Garawin, Joesandra and Zaarour) had covenanted by the Deed of Indemnity to indemnify 1A Eden from and against any claim in the proceedings.
Around that time a dispute arose between Garawin and Zaarour regarding its entitlement to 3 units in the Building leading to proceedings before Slattery J: Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333. His Honour described the dispute in that judgment at [3]-[9] as follows:
[3] The general objective of the joint venture was that Garawin would supply the capital for the development of the property and Zaarour Investments and Joesandra would supply the building expertise.
[4] In May 2017 the joint venturers agreed to distribute the profits of the joint venture by directing 1A Eden to transfer to them strata units in the property development at agreed values. They began to act upon their May 2017 distribution agreement. But their distribution was incomplete, when six months later, in November 2017, the Owners Corporation commenced the defect proceedings. Although the legal issues are more complex, in overview in these proceedings Garawin seeks to remedy what it claims are inequities arising from the partial distribution of the assets of 1A Eden to the joint venturers, before the resolution of the defect proceedings.
[5] The principal relief Garawin seeks in these proceedings may be shortly described. To facilitate the purchase and development of the North Sydney property, the parties were of the view that it should be purchased by 1A Eden and thereafter developed into 34 apartments and two retail spaces for an expected profit of between $9 million to $10 million. The co-venturers preferred any profits to be distributed to the unitholders in specie.
[6] By 19 May 2016, 26 apartments had been sold, leaving 8 apartments for distribution to the co-venturers subject to agreement as to the market value of these remaining apartments and any consequent financial adjustments. Garawin as the holder of a 50% interest in the Trust saw itself as entitled to claim four apartments. Zaarour Investments as the holder of a 25% interest in the Trust saw itself as entitled to claim two apartments. Joesandra as the holder of a 25% interest in the Trust saw itself as entitled to claim two apartments.
[7] By 14 April 2018, the Sleiman interests and the Zaarour interests had received title to their respective two apartments, and the Moore interests had received the proceeds of sale of one apartment. 1A Eden holds the remaining three apartments designated to the Moore Trust as a bare trustee.
[8] But the defect proceedings intervened in 2017. The Owners Corporation of the North Sydney property commenced those proceedings in the Technology and Construction List, alleging defects in the North Sydney property against ZS Eden, a company associated with the Zaarour interests and Cubic, the building sub-contractors.
[9] On 7 June 2019 and 12 June 2019, the Zaarour interests lodged caveats over the three remaining units held in 1A Eden, namely Lots 3, 5 and 6, to prevent their transfer to the Moore interests. The primary relief that Garawin seeks in these proceedings (sometimes referred to as “the caveat proceedings”) is the removal of these three caveats, allowing 1A Eden to transfer Lots 3, 5 and 6 to the Moore interests. Garawin seeks declaratory relief and that these three caveats be removed. The Zaarour interests oppose that relief and the Sleiman interests take a more nuanced position, not in full opposition to the relief sought.
In that decision, Slattery J made a number of orders including an order requiring Zaarour to remove its caveat over Lots 3, 5 and 6 and an order restraining each of 1A Eden, Garawin, Zaarour, and Joesandra from dealing with Lots 1, 3, 4, 5 and 6 until the conclusion of these proceedings.
The next time the question of freezing orders came up was on 9 May 2024 when the Owners filed a motion seeking freezing orders against Joesandra. On 26 June 2024 orders were made on that motion including an order that upon the Owners through its counsel giving the usual undertaking as to damages, Joesandra undertook until the final determination of the proceedings, to notify the Owners 21 days prior to any intention to sell, dispose, transfer or deal with any interest it has in respect of Lot 1 in the Strata Plan.
On 17 February 2025 Mr Nicholas Wollinski and Mr Roberto Crispino were appointed as the joint and several liquidators of 1A Eden by special resolution of the company. On 12 May 2025 orders were made in these proceedings granting the Owners leave to continue against 1A Eden pursuant to s 500(2) of the Corporations Act 2001.
On 2 June 2025 the Owners filed a notice of motion seeking freezing orders against Garawin. When the motion came before Pike J on 6 June 2025, it became clear from the affidavit of Mr Moore, the director of Garawin, sworn on 5 June 2025 that Lots 3 and 5 in the Strata Plan which had previously been distributed by the Trust to Garawin in its trustee capacity were now owned by Garawin in its own right following a distribution under the terms of the Moore Family Trust and that Garawin held no assets in its trustee capacity. At the hearing before Pike J, Mr Weinberger SC appearing for Garawin submitted that the freezing orders should only extend to Garawin in its capacity as trustee of the Moore Family Trust and not also in its personal capacity because the Deed of Indemnity only bound Garawin in its capacity as trustee of the Moore Family Trust and therefore Lots 3 and 5 were not exposed to a claim against Garawin under the Deed of Indemnity. Pike J indicated at the hearing that the freezing orders he would grant would extend to Garawin in both capacities.
Ultimately, on 11 June 2025 Pike J made freezing orders which provided that Garawin (both in its own right and as trustee of the Moore Family Trust) must not in any way dispose of, deal with, encumber or diminish the value of Lot 3 or Lot 5 in the Strata Plan and must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to an unencumbered value of $3,000,000.
On 13 August 2025 orders were made by this Court appointing Mr Sule Arnautovic as the special-purpose liquidator of 1A Eden and the special-purpose receiver of the 1A Eden Unit Trust, for the purposes of, relevantly, (a) investigating the validity and enforceability of claims available to 1A Eden against Garawin, Joesandra and Zaarour under the Deed of Indemnity; (b) commencing and pursuing any claim against them under or in relation to the Deed of Indemnity, including in relation to the preservation of any of their assets, and (c) adjudicating on any proofs of debt in the liquidation of 1A Eden lodged by Garawin, Joesandra, Zaarour, Robert Moore, Joseph Sleiman and Christopher Zaarour. Mr Zaarour and Mr Moore are the directors of 1A Eden and Mr Zaarour, Mr Moore and Mr Sleiman are the shareholders of 1A Eden.
By his affidavit dated 15 April 2026 Mr Arnautovic estimates that (a) if the claims of creditors are admitted in full and assuming judgment in favour of the Owners in the sum of $2,500,000 and costs are quantified in the sum of around $1,300,000, the total creditor pool will be $7,631,391; (b) the total value of the assets of 1A Eden (including lots 6 and 27 in the Strata Plan) is $1,448,775; and (c) the total of the present and future remuneration and costs of himself as special-purpose liquidator and the general purpose liquidator will be $829,414. Based on these estimates, and assuming that each proof of debt is admitted in full and each creditor is on an equal footing in the liquidation, Mr Arnautovic then estimates that the amount potentially available for distribution among 1A Eden’s creditors is $619,362, and that as the Owners would represent 49.79% of the creditor pool, the owners estimated dividend is $308,406 and the amount claimable pursuant to the Deed of Indemnity will be approximately $3,491,593.
The estimated amount claimable under the Deed of Indemnity was revised to $3,541,387 by Mr Peter Hegarty, the SPL’s solicitor, in an affidavit dated 21 April 2026 to take account of a foreshadowed challenge by the unitholders of their liability under the Deed of Indemnity to take into account the resulting legal costs which that will involve for 1A Eden.
Mr Arnautovic also gives evidence about his enquiries regarding the assets of the unit holders in the 1A Eden Trust. He deposes that he has been provided with a valuation of Lot 1 in the Strata Plan owned by Joesandra of between $700,000-$750,000 and also a valuation of Lots 3 and 5 in the Strata Plan owned by Garawin of between $500,000-$550,000 for each Lot, but as those Lots are subject to mortgages in favour of Perpetual Corporate Trustee Ltd, the equity available to Garawin is between nil and $46,300. Therefore Mr Arnautovic calculates that there is a shortfall between the quantum of any claim by 1A Eden and the value of the unit holders’ property the subject of the freezing orders and the undertaking previously given by Joesandra in the proceedings of between $2,695,293 and $2,791,593. This does not take into account the revised estimate in Mr Hegarty’s affidavit.
Mr Arnautovic also gives evidence that Joesandra is the registered proprietor of 8 units in a strata title building at Manly Vale which at the time Mr Sleiman swore an affidavit in these proceedings on 22 May 2024 had an estimated value of $7 million and that based on internet searches conducted on his behalf Joesandra has advertised those units for sale and is in the process of selling them. He deposes that he is concerned based on those advertisements that Joesandra is selling its properties at Manly Vale and that when it does so the funds received may be distributed from the Sleiman Family Trust with the result that those funds would not be available to pay any claim he may make under the Deed of Indemnity. In correspondence between the solicitors for the SPL and Joesandra, the latter stated its refusal to agree to the continuation of the existing undertaking it had given in these proceedings and a new undertaking to preserve its net asset position, although at the hearing the position changed in relation to the former and Ms Painter SC who appeared for Joesandra stated that it agreed to the continuation of the existing undertakings in place against it in the proceedings.
Mr Arnautovic stated in his affidavit that he intends on entry of final orders in these proceedings to commence proceedings by a summons in the form annexed to his affidavit against the unitholders to enforce the Deed of Indemnity.
Also relevant to the present application for freezing orders is the history of delays on the part of 1A Eden in the conduct of these proceedings which is recounted in the affidavit of Ms Divya Chaddha dated 21 April 2026, the solicitor who has acted for the Owners since the commencement of the proceedings, to which no objection was taken at the hearing. In summary:
The orders made by Hammerschlag J on 18 December 2017 included a regime for identifying and rectifying defects in the Building, including the appointment of Mr John George as a jointly retained expert to assess defects and the adequacy of rectification works. In order to facilitate Mr George’s role, the solicitors for the Owners prepared Scott schedules for this purpose based on the existing expert reports it had obtained nd Mr George produced a report identifying defects and the scope of proposed rectification works and procedures. While the costs of Mr George’s engagement were shared equally by the parties, 1A Eden failed to carry out the rectification works in accordance with the rectification procedure set out by Mr George.
On 26 July 2021 Stevenson J ordered that the parties depart from the rectification procedure and rely on independent expert reports. The Owners were required to obtain four separate expert reports on liability and a quantity surveyor’s report to assess the cost of the rectification work. The plaintiff’s expert evidence was filed in February 2022.
After obtaining extensions of time to file its expert evidence, in May 2022 1A Eden objected to the Owners’ reliance on its expert evidence, contending that the Owners were bound by the earlier joint expert process under the rectification procedure. Although ultimately not pressed this dispute led to further delays and unnecessary costs.
In August 2022 1A Eden changed its solicitor who then also made the same objection to the Owners’ relance on its expert evidence contending that it was bound by the earlier joint expert process under the rectification procedure. This led to Stevenson J making a guillotine order requiring 1A Eden to serve its evidence by 27 January 2023.
1A Eden served six expert reports on 27 January 2023 and the Owners served six expert reports in reply in April 2023. In the meantime, a freezing order was made on 1 March 2023 against 1A Eden, despite its opposition, in respect of Lot 6 in the Strata Plan.
On 5 May 2023 Ball J listed the matter for hearing on 22 April 2024 for five days and directed the liability and quantum experts to confer in joint conclaves.
Between May 2023 and early 2024 the Owners attempted to facilitate the conclaves but without any substantive co-operation by 1A Eden and no conclaves were held.
In March 2024 1A Eden indicated its preparedness to rectify the defects pursuant to arrangements with the NSW Building Commission and on that basis applied to vacate the hearing dates. The plaintiff consented to that proposal provided an enforceable undertaking to carry out the proposed rectification work was provided. The NSW Building Commission informed the Owners that no undertaking could be entered into due to 1A Eden’s lack of co-operation.
In April and May 2023, the Owners became concerned that the unitholders were taking steps to sell their units in the building and, following a contested motion, on 21 June 2024 Hammerschlag J made a further freezing order over Lot 1 owned by 1A Eden.
On 15 August 2024, Ball J listed the proceedings again for final hearing on 3 March 2025 for five days, and directed the experts to hold joint conclaves. In October 2024 the Owners sought to facilitate joint inspections and conclaves but 1A Eden’s experts did not attend inspections and no progress was made.
In December 2024, the Owners served two supplementary experts reports detailing further deterioration in the condition of the building.
Between December 2024 and February 2025 the Owners progressed the matter for hearing including preparing the court book and following up 1A Eden on the joint expert conclave process and ultimately in February the conclaves occurred and joint expert reports were produced.
However, on 17 February 2025 1A Eden’s solicitors filed a notice of ceasing to act and on the following day Ms Chaddha became aware from doing an ASIC search that 1A Eden had been placed into voluntary liquidation on 17 February 2025. That was the first time the Owners and their solicitors became aware of 1A Eden’s financial difficulties.
The Owners took urgent steps to notify the Court and on reviewing the liquidator’s report to creditors (which disclosed large proofs of debt by the directors of the company and concerns about its net assets) retained separate solicitors to provide advice on the insolvency issues.
On 11 April 2025, the Owners filed a notice of motion seeking leave to proceed against 1A Eden and leave to proceed was granted on 12 May 2025 and liquidator indicated an intention to defend the proceedings, the matter was relisted for hearing on 13 April 2026.
The proceedings were subsequently resolved shortly before the hearing date following the liquidator’s acceptance of an offer of compromise.
I regard this history of delay and obfuscation on the part of 1A Eden and those controlling it prior to its liquidation as a pattern of conduct by them to delay for as long as possible the crystallization of the amount payable by the unitholders under the Deed of Indemnity. The Deed of Indemnity had been put in place by the unitholders to avoid freezing orders being made against 1A Eden and as a means of providing security to the Owners, even though they are not named as a party to the deed, for any damages liability of 1A Eden in these proceedings reflecting the fact that 1A Eden was a special purpose vehicle with no significant assets other than a few remaining units in the Building which it held for distribution to the unitholders. Any delay in the crystallization of 1A Eden’s damages liability would allow the unitholders to reduce their net assets and thereby diminish the amount recoverable by the Owners under the Deed of Indemnity.
Consistent with this conclusion are three matters. The first is that 1A Eden was a joint venture vehicle for the three unitholders to conduct the development of the Building: see Garawin at [3]. I do not accept the submission of Ms Painter SC who appeared for Joesandra that it was a mere passive investor in the Trust; it was an associated entity of the builder and, along with the other unitholders, was intimately involved in the conduct of the joint venture through the Trust.
Secondly, it appears that Garawin has distributed Lots 3 and 5 formerly held by it in its capacity as trustee of the Moore Family Trust to itself in its personal capacity, and has told the SPL (and maintained this position at the hearing) that its liability under the Deed of Indemnity is limited to its trustee capacity and it has no personal liability. I infer that Garawin made the distribution of those two units to itself with the intention, or at least the expectation, that they will no longer be exposed to a claim under the Deed of Indemnity. For reasons explained below, I do not accept that this is the correct construction of the Deed of Indemnity.
Thirdly, Joesandra which is currently only subject to an undertaking not to dispose of Lot 1 and not to a freezing order, adopted the position in correspondence with the SPL that it would not renew that undertaking following the making of final orders in these proceedings or provide an undertaking to preserve its net asset position. At the hearing, Joesandra relented in relation to the former but continued its refusal to provide an undertaking to preserve its net asset position.
The Deed of Indemnity was entered into on 14 December 2017 between 1A Eden and the three unitholders described as: (1) Garawin Pty Ltd ACN 074 380 715 as trustee for the Moore Family Trust; (2) Joesandra Pty Ltd ACN 130 126 206 as trustee for the Sleiman Family Trust; and (3) Zaarour Investments Pty Ltd ACN 132 262 205 as trustee for the Zaarour Investments Trust.
The relevant provisions of the Deed are as follows:
Introduction
A. The Trustee is the trustee of a unit trust, the 1A Eden Unit Trust (the Trust). The units in the Trust are held by Garawin, Joesandra and Zaarour Investments, in each case as trustee of a separate trust as set out in the “Parties” section of this deed (collectively “The Unit Holders”). The Trust was established, and dealings with the property of the Trust (the Trust Fund) are governed, by a trust deed dated 12 March 2013 between the Trustee and the Unitholders (the Trust Deed).
B. Pursuant to clause 17 of the Trust Deed, the right of the Trustee to be indemnified in respect of liability incurred by the Trustee is “limited always to the assets of the Trust Fund in the hands of the Trustee for the time being and shall not extend to enable the Trustee to recover any loss or obtain reimbursement for such liability from any Unit Holder”.
C. On 14 December 2017, in connection with litigation between the Owners -Strata Plan No 92226 and the Trustee (being Supreme Court proceedings no. 2017/00362562) (the Proceedings), the Trustee and the Unit Holders determined that the Unit Holders would indemnify the Trustee on the terms of this deed in connection with the Trustee’s alleged liability the subject of the Proceedings. The parties have executed this deed in order to give effect to that determination.
Operative clauses
- Grant of indemnity
Each of the Unit Holders hereby agrees to indemnify and keep indemnified the Trustee against any loss or damage incurred or suffered by the Trustee in connection with or arising from an order made in the Proceedings, to the extent such liability is not otherwise met by the Trustee from the Trust Fund.
- Indemnity is separate and continuing
The indemnity given by this deed is a separate and continuing indemnity and inures for the benefit of the Trustee separately from and in addition to any indemnity to which the Trustee may otherwise be entitled pursuant to the Trust Deed, at law or in equity.
- Trust Deed does not limit indemnity
Nothing in the Trust Deed, including the provision of clause 17 of the Trust Deed, shall abrogate or limit the scope of the indemnity granted by this deed.
In the execution clauses of the Deed, each trustee is expressed to be executing the Deed ‘as trustee’ of the trust of which it is trustee.
In Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773, Glass JA (with whom Samuels JA agreed) said at 774:
Mr A M Gleeson QC, counsel for the appellant, relied upon the following propositions:
- A trustee who enters into a contract will normally incur unlimited personal liability unless by appropriate language or express stipulation such liability is restricted.
- A mere description of the capacity in which he contracts as that of trustee is insufficient to exclude full personal liability.
- Upon the proper construction of the guarantee no language could be found in it which sufficed to limit the normal unlimited liability of the contracting trustee.
There is ample support for the first two propositions to be found in Lumsden v Buchanan (1865) 4 Macq 950 ; Muir v City of Glasgow Bank (1879) 4 App Cas 337 and Re Anderson ; Ex parte Alexander (1927) 27 SR (NSW) 296 and Mr Meagher QC, for the respondent, accepted them both. The controversy before us was whether upon the proper construction of the guarantee it evinced an intention as required by proposition 3 to limit the normal unlimited liability. Mr Meagher relied upon the description of the contracting party as “the John Knight Family Trust” and the execution of the guarantee by “the John Knight Family Trust” under which words were added the signature “J Knight Trustee”. The description and execution were inserted by hand in the spaces made available in a printed document. According to the submission these additions constituted language no less apt for the purpose of restricting the trustee's liability than the words “as trustee only”, Gordon v Campbell Court Sess Ca (2nd) 643), or “as trustee and not otherwise” (Re Robinson's Settlement [1912] 1 Ch 717 ). Such language went beyond a mere description of the capacity in which the trustee contracted and amounted to a stipulation that “the promise was backed by the trust ie by the assets of the trust”.
Mr Gleeson, however, disputed the efficacy of the words used for the purpose in hand and contended that they were at best equivocal. As such they were to be construed as against the trustee who not only proffered them but who also had the task of excluding the liability which he would ordinarily incur. In my opinion the words are not apt to have an exclusory effect and go no further than a description of the capacity in which Mr Knight contracted as guarantor. Language which asserts that Mr Knight executed the instrument because he was the trustee of the trust falls short of stipulating that he contracted only in that capacity.
The Court has a broad power to make an asset preservation (or freezing) order under both its inherent jurisdiction and Part 25 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Rule 25.11 confers power to make an order “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”. Rule 25.11 does not prescribe the form of the order; rather, the power to make the order is defined by reference to its purpose, consistently with its juridical basis which is the Court’s inherent and statutory jurisdiction to make such orders as it considers appropriate to prevent the abuse or frustration of its processes in relation to matters coming within its jurisdiction: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [41]-[42]; PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [43]. It is accepted that r 25.11 confers a broad and flexible power with the form of the order being crafted to meet the exigencies of the case: Cardile at [41]; Deputy Commissioner of Taxation v Huang (2021) 96 ALJR 43; [2021] HCA 43 at [31].
While the power conferred by r 25.11 is broad, it is a drastic remedy and must not be granted lightly: Cardile at [51].
Three requirements must be satisfied for the grant of an asset preservation order under r 25.11 read with r 25.14: P Biscoe, Freezing and Search Orders (3rd ed, LexisNexis Australia, 2023) at [2.52]:
The applicant must have a good arguable case on an accrued or prospective cause of action that is justiciable in the Court, or a judgment of the Court. A “good arguable case” is one which is more than barely capable of serious argument, and yet not necessarily one the judge believes to have a better than 50% chance of success: Guan v Li (No 2) [2022] NSWCA 261 at [30].
The Court must be satisfied, having regard to all the circumstances, that there is a danger that the actual or prospective judgment debt will be wholly or partly unsatisfied because any of the events set out in r 25.14(4) or (5), as applicable, might occur. In relation to that issue, Stevenson J said in The Owners – Strata Plan No 102081 v Aqualand North Sydney Lavender Development Pty Ltd [2025] NSWSC 31 at [10] (footnotes omitted):
There is no shortage of verbal formulations as to the test to be applied when considering [whether] 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". 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. 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, or a "real risk of the dissipation of assets", or whether the danger is "sufficiently substantial to warrant the injunction". 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.
On appeal these observations were referred to with apparent approval by Mitchelmore JA (Ball and Free JJA agreeing): see Aqualand North Sydney Lavender Development Pty Ltd v The Owners – Strata Plan No. 102081 [2025] NSWCA 143 at [7]. Her Honour said at [27] that this is not a requirement that the applicant for a freezing order show that there has been an unjustified distribution of assets. As Slattery J observed in LCC Property Development Pty Ltd (Receiver and Manager Appointed) v Winau Aust Pty Ltd [2026] NSWSC 297 at [40], a plaintiff (or prospective plaintiff) seeking a freezing order does not have to show that the purpose of the defendant’s conduct, occurring or apprehended, is to prevent recovery of the amount of any judgment which might be obtained in the plaintiff’s action, only that there is a danger of the defendant relevantly disposing of assets so that the plaintiff, if successful, will not be able to have a judgment satisfied.
I will deal with each of the three requirements for the making of a freezing order in turn.
The freezing orders are sought in connection with a prospective cause of action, being a claim by the SPL against Joesandra and Garawin under the Deed of Indemnity for the judgment debt, costs and interest to the extent not otherwise met from the assets of the Trust. Given what I have said earlier regarding Garawin’s argument concerning the proper construction of the Deed of Indemnity, the SPL has a good arguable case that each of the unitholders is liable under the Deed of Indemnity in both its personal capacity and in its capacity as trustee of the trust under which it holds its units in the Trust.
As regards the risk of dissipation of assets, I am satisfied that there is a danger of each of Joesandra and Garawin disposing of assets so that 1A Eden will not be able to have a judgment resulting from its enforcement of the Deed of Indemnity satisfied.
In relation to Joesandra, it is actively marketing the units in a property at Manly Vale which it co-owns with a third party. Joesandra has estimated its equity in those units at $7 million. The sale of the units is not prevented by the proposed freezing order as that is a transaction in the ordinary course of Joesandra’s business which includes property development (see cl 7(b) of the freezing order). In my view there is a danger that Joesandra will deal with the net proceeds of sale, eg by distribution to beneficiaries of the trust, in a manner which will diminish its net assets and thereby its ability to discharge its liability under the Deed of Indemnity due to (a) the relative ease with which a trustee of a discretionary trust can distribute income and capital to beneficiaries; (b) the history of delay in these proceedings referred to earlier and (c) the refusal of Joesandra to give an undertaking not to diminish the net assets of the Sleiman Family Trust.
In relation to Garawin, I note that proposed freezing order is consistent with the one made by Pike J previously. Garawin did not oppose an order against it in its trustee capacity only. In my view, it should apply to it in both its trustee and personal capacities. There is a danger of a dissipation of assets arising from its distribution of Lots 3 and 5 to itself in its personal capacity in the context of maintaining that this takes those assets outside the scope of the Deed of Indemnity.
In my view, the balance of convenience strongly favours the grant of the freezing orders. The only complaint on this aspect made by Joesandra or Garawin was an alleged inadequacy of the undertaking as to damages given by the SPL, supported as it is by an indemnity from the Owners. However, I do not regard the undertaking as inadequate and note two points: first, the case of 1A Eden under the Deed of Indemnity is strong which makes the adequacy of the undertaking as to damages less significant in considering the balance of convenience; and second, in so far as complaint is made that it has not been shown that the financial position of the Owners is adequate to support the undertaking, the history of delays in these proceedings indicates that the unitholders have significant responsibility for the predicament the Owners now find themselves in.
It is not in dispute that the 1A Eden is required to pay the Owner’s costs of the proceedings. The Owners seek a gross sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) in the amount of $1,067,606 (inclusive of GST), out of a total amount of $1,272,749.07 (inclusive of GST) that would be claimable and subject to assessment. The Owners rely on the affidavits of Ms Divya Chaddha dated 21 and 22 April 2026. Ms Chaddha is a solicitor employed by Thomson Geer, who has worked on the matter since it commenced in 2017 and has over nine years of experience in commercial and construction litigation. The general purpose liquidator of 1A Eden did not oppose the making of the lump sum costs order sought.
The principles concerning the making of a gross sum costs order were summarised in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 by the Court of Appeal (Meagher, White and Brereton JJA) at [14]-[18], as follows (see also Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 at [30]-[38] per Free JA, McHugh and Ball JJA agreeing):
[14] The principles relevant to the Court’s exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]–[820] (Beazley JA) (Hamod). Her Honour noted at [813]:
[813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]–[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]:
The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available.
[15] The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]–[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]:
The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute” (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about “non-essential issues” which should be resolved with as little technicality and expense as reasonably practicable. [footnotes omitted]
[16] Primary considerations relevant to the exercise of the s 98(4)(c) discretion include “the relative responsibility of the parties for the costs incurred; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability”: Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22] ; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30] .
[17] The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213 at [22]. The power may be exercised where a party’s conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod at [818].
[18] If it considers it appropriate to make the order, the Court may adopt a “broad brush” approach to quantification, as to require the Court to undertake a detailed examination of the kind carried out in a formal costs assessment would defeat the purpose of the order: Harrison v Schipp at 743 ; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7] . The costs ordered should be “based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)”: Hamod at [820]. Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court: Hamod at [814].
The plaintiff submits that a gross sum costs order is appropriate for essentially two reasons. First, a costs assessment is likely to be expensive and protracted, in light of the extensive history of delays in the matter recounted earlier. While I accept Ms Chaddha's evidence regarding the prior history of delays, that is perhaps less of an issue now given 1A Eden’s liquidation. Nevertheless, the long and complicate procedural history of the matter does make it likely that the assessment process will not be straight forward and hence involve significant cost. Secondly, 1A Eden is in liquidation and the claims of its creditors currently exceed its assets and so it should be treated as being presumptively unable to pay the costs order. In light of these two matters it is submitted that the just, quick and cheap resolution of the costs issue is best achieved by the Court making a gross sum costs order.
I agree that this is an appropriate case for a gross sum costs order to avoid the unnecessary and likely wasted expense of the assessment process, provided that the evidence is sufficient to enable the Court to determine an appropriate sum acting fairly between the parties in accordance with the principles stated above.
In her two affidavits Ms Chaddha explains in detail, with supporting invoices, how the total claimable costs of $1,272,749.07 is derived and the basis for applying a discount of 25% in respect of solicitor/client costs and a further discount of 5% to reflect the contingencies that would be relevant in a costs assessment process, leading to a lump sum costs amount of $1,067,606. I accept the submission of Mr Santucci, counsel for the plaintiff, that in all the circumstances, this is an appropriate gross sum for the plaintiff’s costs.
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Amended parties' representation At [2] - changed 'special' to 'general'
At [41] - change 'his' to 'Ms Chaddha's' At [43] - change 'his' to 'her'
The Owners – Strata Plan No 92226
1A Eden Pty Ltd
[1999] HCA 18
(1999) 198 CLR 380
(2021) 96 ALJR 43
(2015) 258 CLR 1
(2002) 54 NSWLR 734