Zhang v Woo

Relief sought on application

1. The Court has before it a notice of motion filed on 27 October 2021 by the plaintiff by leave of Slattery J sitting as Duty Judge. The plaintiff presently seeks the following relief: 6. Orders in respect of the First Defendant in accordance with the freezing orders attached and marked 'A'. 7. Orders in respect of the Second Defendant in accordance with the freezing orders attached and marked 'B'. 8. Costs of application for freezing orders be the Plaintiff's costs in the cause.
2. Annexures 'A' and 'B' are in the form required by Practice Note SC Gen 14. The amount inserted as the value of the assets in Australia that must be maintained by the first defendant is $2,430,000.00. The equivalent amount for the second defendant is $1,588,799.16.
3. The application came on for hearing before Slattery J on 5 November 2021. Although his Honour had time to receive the parties' evidence and hear an explanation of the parties' positions, there was insufficient time for his Honour to complete the hearing, and it was accordingly adjourned for hearing by me as Duty Judge on 11 November 2021. The hearing continued on 12 November 2021.
4. At the hearing before Slattery J on 5 November 2021, counsel for the defendants explained to his Honour that by notice of motion filed by the defendants on 30 August 2021, they had sought an order that the plaintiffs provide security for their costs in the amount of $408,959.65. On 12 October 2021, the defendants' notice of motion was fixed for hearing on 9 December 2021. Counsel for the defendants explained to Slattery J that the plaintiff had foreshadowed that she would offer as security for the defendants' costs a charge over a property that she owns in Queensland. Counsel explained that that property would therefore not be available to secure any undertaking as to damages given by the plaintiff to the Court to secure the defendants in respect of the consequences of any freezing orders made by the Court against them.
5. Counsel for the defendants also advised Slattery J of the issues that were raised in opposition to the plaintiff's claim for the making of freezing orders. They were that the plaintiff had not established that she had net assets in the jurisdiction sufficient to support any undertaking as to damages that she may be required to give. There had also been a delay in making the application of a period in the order of six weeks. Further, the circumstances were such in relation to the strength of the plaintiff's case, as disclosed on the interlocutory evidence, that the issue was a neutral factor. Finally, the defendants raised the balance of convenience, as the making of freezing orders would cause them prejudice by preventing them from raising finance on the security of their property to enable them to engage in ongoing business activities.
6. The first point to note about the defendants' response before Slattery J is that they did not suggest that the plaintiff's evidence did not establish a sufficient prima facie case to justify interlocutory relief. However, as I will explain below, that response changed when they came before me.
7. Secondly, in response to the issue of prejudice raised by the defendants, Slattery J advised that it was unlikely that he would act upon general assertions of prejudice, and that the defendants would "have to define what the real problem is".

Revised undertaking offered by plaintiff

1. At the hearing, the plaintiff offered to the Court the following revised undertaking to support any freezing orders made by the Court against the defendants: In addition to the usual undertaking as to damages and the undertakings in schedule A of the standard freezing order, the plaintiff undertakes to the Court as follows: 1. to give security for the undertakings referred to above by: (a) a registrable mortgage over her property at XXXX Hamilton, Queensland (folio identifier XXXX); or (b) if the Court considers such security inadequate, a registrable mortgage over her interest in the property at XXXX Hope Island, Queensland (Lot XX Group Titles Plan of Resubdivision XXXX); and 2. she will not seek to dispose of or further encumber any interest in real property in Australia before giving 7 days' written notice to the defendants.

Relief sought by plaintiff in proceedings

1. The plaintiff filed her statement of claim on 27 May 2021. The plaintiff sought the following relief: 1. Judgment for the Plaintiff against the First Defendant in the amount of $2,350,000 by way of restitution plus interest. 2. Further, or in the alternative, judgment for the Plaintiff against the First Defendant for the amount owing under the Sensation Dance Contract (as defined below) plus interest. 3. Damages against the First Defendant and the Second Defendant at common law and pursuant to s 236 of the Australian Consumer Law.

Breaches of agreements and other claims alleged by plaintiff

1. The plaintiff's pleaded claim was based in substance on two agreements that she claims to have entered into with the first defendant, Mr Woo.
2. The first agreement pleaded by the plaintiff was called the Seadeck Contract. It related to the sea passenger vessel known as Seadeck that was said to be owned by Ozmen Entertainment Group Ltd (Ozmen). A company called Kanki Sea Tourism Hospitality & Entertainment Pty Ltd (Administrators Appointed) (Kanki), with Neptune Hospitality Pty Ltd (Neptune), was alleged to be the joint owner, manager and operator of a venue hire and entertainment business known as Seadeck Australia which operated from the Seadeck. The Seadeck and Seadeck Australia together are called the Seadeck Business. A company called Culture Map Pty Ltd (Administrators Appointed) (Culture Map) has at certain times been the owner of 51% of the issued shares in Ozmen and Kanki.
3. Between the date of incorporation of Culture Map on 26 October 2015 until 15 May 2019 each of the defendants was the beneficial owner of 50% of the issued shares in Culture Map. The second defendant was the sole director of Culture Map from 26 October 2015 to 14 September 2016. Between 14 September 2016 and 28 January 2020, a person named Nguyen Le was the sole director of Culture Map. However, during this period the defendants remained the sole shareholders in that company until 15 May 2019, after which the first defendant and Mr Le were the sole shareholders. A voluntary administrator of Culture Map was appointed on 3 March 2021, and that person became the liquidator of the company on 10 May 2021 under a creditors voluntary winding up.
4. The plaintiff pleaded that in about November 2017 she entered into a contract with the first defendant for the plaintiff to purchase a 30% ownership of the Seadeck Business for $2,550,000 and that, on various dates at the direction of the first defendant, she paid amounts of $470,000, $450,000, $760,000 and $870,000 to Culture Map. The last of these payments is alleged to have been made by direction given by the plaintiff to the first defendant as to how he should apply part of the plaintiff's entitlement to receive payment as a result of the second agreement with the first defendant to which I will refer below.
5. The plaintiff pleaded a claim to be entitled to be repaid the whole of the $2,550,000 on the basis of a total failure of consideration, less an amount of $200,000 repaid by the first defendant to the plaintiff. The plaintiff alleged that the consideration for the contract totally failed because the first defendant had not by February or March 2020 transferred to the plaintiff any shares in Ozmen or Kanki, and there was no prospect that the plaintiff would receive any consideration under the Seadeck Contract because the first defendant agreed that that contract was at an end.
6. The plaintiff's second pleaded claim arose under what she called the Sensation Dance Contract. She alleged that on or about 6 March 2017, the plaintiff and the first defendant entered into a contract pursuant to which the plaintiff agreed to invest $920,000 with the first defendant for the purpose of what was called the Sensation Dance Festival. It was an alleged term of the Sensation Dance Contract that the principal amount of $920,000 was to be repaid on or before 14 December 2017, and that the plaintiff was entitled to 25% of the net profits from the Sensation Dance Event payable within 14 days of the event.
7. The plaintiff pleaded that she paid the money due under the Sensation Dance Contract, but she has not received any payment due to her.
8. The plaintiff alleged that in about December 2017, following the event being held on 25 November 2017, the plaintiff and the first defendant made an agreement to vary the Sensation Dance Contract so that the principal amount the first defendant was required to repay the plaintiff was $800,000 and the profit the plaintiff was entitled to from the event was $150,000. The first defendant would hold the plaintiff's share, being $950,000, pending further instructions from the plaintiff.
9. The plaintiff alleged that on or about 18 December 2018, she instructed and directed the first defendant to pay from the Sensation Dance Contract monies an amount of $870,000 to make up the balance of the amount payable by her under the Seadeck Contract.
10. The first defendant did not pay the $870,000 as directed and has not otherwise repaid to the plaintiff any monies due to her under the Sensation Dance Contract.
11. The plaintiff also pleaded a claim against the first defendant in the tort of deceit. The deceitful representations alleged to have been made by the first defendant were that the purchase price of the Seadeck Business was $8,500,000 and that the Seadeck was licensed and capable of accommodating at least 800 passengers.
12. The plaintiff also pleaded a misleading and deceptive conduct claim against the first defendant based upon s 18 of the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth).
13. That claim was based upon representations alleged to have been made by the first defendant to the plaintiff that he was purchasing the Seadeck Business, that the price was $8,500,000, that he would own the Seadeck Business by April 2018, that he would commence operating the business in April 2018, that the Seadeck could accommodate at least 800 passengers, that he would cause 30% of the shares in the Seadeck Business to be transferred to the plaintiff for $2,550,000, and that the Seadeck Business would return a profit of 50% per annum such that the plaintiff would receive profits in the amount of her investment within two years of its commencement.
14. The plaintiff alleged that those representations were misleading and deceptive and that she is entitled to recover damages from the first defendant under s 236 of the Australian Consumer Law.
15. The plaintiff also pleaded a claim against the second defendant, on the basis that, between November and December 2017, the second defendant represented to the plaintiff and her parents that the first defendant, or the defendants, were purchasing the Seadeck Business, that the purchase price was $8,500,000, that 30% of the shares in the Seadeck Business would be transferred to the plaintiff for $2,550,000, that the Seadeck Business would return a profit such that the investment would be recovered in two years from April 2018, so that the plaintiff and her parents would be able to recoup losses caused by a Mr Su, and that the investment of $2,550,000 was safe and would not be lost.
16. These representations were also alleged to be misleading and deceptive.
17. The plaintiff alleged in the alternative that the second defendant was a person involved in the misleading or deceptive conduct of the first defendant, and the plaintiff sought damages against her under s 236 of the Australian Consumer Law.
18. The plaintiff was given leave by Slattery J on 5 November 2021 to file an amended statement of claim.
19. The principal amendment made to the statement of claim was to introduce a claim that, by reason of the control that the first defendant exercised over Culture Map and by reason of payments made out of Culture Map's bank account into an account held by the second defendant, Culture Map received the payments induced by the first defendant's deceit of the plaintiff on constructive trust, and that the defendants were liable to the plaintiff either for knowingly receiving trust monies or being involved as an accessory because of knowing involvement in a dishonest and fraudulent design by a trustee.
20. The defendants did not challenge the plaintiff's evidence that she paid all of the monies payable under the two contracts, save that they said that the plaintiff had not paid the money directed by the plaintiff to be transferred from the Sensation Dance Contract monies to the Seadeck Business because the Sensation Dance Festival venture had failed and the plaintiff's investment was lost. The defendants accepted that the only repayment that the plaintiff received was $200,000 paid by the first defendant.

Sensation Dance Contract

1. It will be convenient to deal initially with an important aspect of the Sensation Dance Contract.
2. That agreement was evidenced by a written loan agreement dated 6 March 2017 between Xiamen Long Jin Ying Precious Metal Trading Ltd as the lender and Culture Map as the borrower. Those companies were respectively controlled by the plaintiff and the defendants.
3. The statement of claim contained an allegation that the first defendant did not have authority to execute the loan agreement for Culture Map and therefore he entered into it in his own right. It also contained the claim that Culture Map executed the loan agreement as agent for each of the defendants as undisclosed principals.
4. The plaintiff's evidence included a statement given without elaboration that it was a common Chinese business practice for individuals who made agreements to cause the agreements to be entered into by companies that they controlled.
5. During the course of the hearing I raised the significance of the fact that the loan agreement had been entered into by the two companies. That suggested as a matter of Australian law that the plaintiff was not the proper plaintiff to sue on the loan agreement, and that the first defendant was not the proper defendant.
6. As I understand the response of counsel for the plaintiff, he accepted that the consequence of the loan agreement having been entered into between the two companies was that the plaintiff could not establish in respect of the Sensation Dance Contract the prima facie case necessary to sustain the application for the freezing orders to cover the amount paid under that contract.
7. Counsel responded by submitting that the amount protected by the freezing orders should be reduced to $1.48 million in the case of the first defendant and $1.38 million in the case of the second defendant. That would have the effect of removing the amount paid by the plaintiff under the Sensation Dance Contract from the freezing orders.
8. It may be that at a final hearing the plaintiff will be able to establish her claim against the first defendant in respect of the Sensation Dance Contract, but given the evidence concerning the apparent parties to that contract, it would not be appropriate for the Court on this interlocutory application to make a freezing order against the defendants that covered the amount paid by the plaintiff under that contract.
9. The plaintiff's claim based upon the Sensation Dance Contract still has some significance for the purpose of determining the present application.
10. The defendants' response to the plaintiff's claim was as stated in a letter dated 18 May 2020 from their solicitor to the solicitor for the plaintiff. The response was: Sensation 3. In 2017 Mr Woo and your client were part of the consortium of people involved in arranging and promoting a music festival known as 'Sensation'. 4. As part of the arrangement referred to in the preceding paragraph, we are instructed that your client was required to invest the sum of $1 million, however, your client only in fact invested $800,000. More specifically, we are instructed that your client provided an amount of $920,000 to a mutual third party acquaintance however, that third party person retained the amount of $150,000 for their own use and benefit and only provided the amount of $800,000 to Mr Woo. 5. The Sensation music festival was not financially successful. As your client is aware, the investment by Mr Woo and the partial investment of your client were not returned. In any event, the circumstances in which your client expected to receive any return on her investment, despite not having invested the agreed amount, is itself an oddity.
11. The defendants did not suggest that they had provided any response to the plaintiff in respect of her Sensation Dance Contract before this time, or that the first defendant had provided her any account as to how her money had been expended. Although Culture Map was the party to the loan agreement, the solicitor's letter acknowledged that the plaintiff's investment had been paid, in part, to the first defendant.
12. The defendants accepted that the plaintiff had not been repaid any of her money. The first defendant has not provided any explanation or accounting in respect of his receipt, even if limited to the $800,000 acknowledged by the first defendant in his solicitor's letter. Speculative business ventures often lose money, but it is relatively rare for the entire investment to be lost. In such an extreme eventuality, the investor is entitled as a matter of law and commercial morality to an explanation. The first defendant has not given such an explanation, which in my view seriously compromises the first defendant's integrity.

Seadeck Contract

1. In relation to the Seadeck Contract the plaintiff gave evidence that was sufficient for the purposes of an interlocutory hearing of conversations with the defendants to establish a prima facie case supporting the allegations made by the plaintiff in the statement of claim. That evidence extended to the deceit and misleading and deceptive conduct claims made in the statement of claim.
2. Both defendants filed evidence that was read at the hearing. The evidence principally concerned the net asset position of the defendants and was intended to dispel any appearance that the defendants had taken steps to dissipate their assets, or that they were likely to do so in the future to prevent the plaintiff enjoying the fruits of any judgment she might obtain against them in these proceedings. The defendants also gave evidence that they were likely to engage in business ventures in the future that would be prevented if a freezing order was made against them which stopped them from raising finance against the security of their property.
3. The defendants did not provide any evidence in response to the positive evidence given by the plaintiff concerning her conversations with the defendants and the circumstances in which she made the investments under the two contracts pleaded in the statement of claim.
4. The first defendant went no further than to make the following statement in his 4 November 2021 affidavit: 4. In broad terms, I deny the allegations made against me by the plaintiff which are contained in the Statement of Claim, or the draft Amended Statement of Claim, in the proceedings.
5. The second defendant made a similarly worded denial in par 3 of her 4 November 2021 affidavit.
6. Counsel for the defendants submitted that the Court should act upon the basis that the defendants' response to the plaintiff's Seadeck Contract claim was as set out in the following extract from the defendants' solicitor's 18 May 2020 letter that I have referred to above: 11. In early 2018 an agreement was reached between Mr Woo, [Culture Map] and your client whereby your client agreed to invest the amount of $2.55 million into the business of Kanki and in consideration of such investment your client was to acquire a 30% shareholding in Kanki. 12. The timing of the granting of shares in Kanki to your client was not the subject of any specific agreement between our respective clients. 13. Moreover, it was at all material times known by your client that: (a) Kanki did not own the Seadeck; (b) Kanki was involved in Federal Court of Australia proceedings NSD 1424 of 2017 (Proceedings) with Neptune Hospitality Pty Ltd in relation to the operation of the business aboard the Seadeck and the acquisition of an interest in the business of Kanki by your client was dependent on the outcome of those proceedings; and (c) The fact the investment of $2.55 million by your client was to be utilised to fund the conduct of the Proceedings on behalf of Kanki. 14. Judgment in the Proceedings at first instance was delivered in favour of Kanki on 3 April 2019. Subsequently, Neptune Hospitality Pty Ltd appealed the judgment at first instance and on 19 March 2020 the appeal was dismissed. 15. We are instructed that notwithstanding the terms of the agreement referred to at paragraph 11 above, your client has in fact failed to pay the agreed amount of $2.55 million. Rather, your client has only paid an amount totalling $1.68 million as follows: (a) $470,000 on 1 February 2018; (b) $450,000 on 20 March 2018; and (c) $760,000 on 5 July 2018. 16. In the circumstances whereby your client failed to comply with the terms of the agreement, namely, to pay the amount of $2.55 million, it is curious that your client alleges that she is entitled to a 30% shareholding in Kanki. …
7. Counsel for the defendants submitted that on an interlocutory application the Court was required to accept the assertions in the defendants' solicitor's letter as a statement of their position. I do not agree. While it is not usual for the Court to decide contested issues of fact on an interlocutory application, it is still entitled to have regard to the admissible evidence tendered by the parties. There may sometimes be good forensic reason for a defendant not to go into evidence in defence of an interlocutory application, but that decision may have consequences. In the present case, the plaintiff's evidence has been met by bare denials, and the defendants have not responded by giving evidence as to what they say happened at the time the Seadeck Contract was made.
8. Evidence on that subject has not been given on information and belief, and it is significant that the defendants have given evidence on subjects that they considered were important to their defence of the interlocutory application.
9. The first thing to be said about the stance taken by the defendants in their solicitor's letter is that it is inherently extremely improbable that the plaintiff would have risked her money by entering into a contract with the terms suggested by the defendants. Those terms are to the effect that the plaintiff would pay her money to obtain a 30% interest in the Seadeck Business on the basis that performance of the contract by the first defendant was entirely contingent on the success of the Federal Court proceedings, and that the money paid by the plaintiff would be used to pay the costs of those proceedings.
10. The plaintiff denied having any knowledge of the Federal Court proceedings. For the purposes of this interlocutory application, I am satisfied that the Court should accept the plaintiff's position given the commercial improbability of the alternative.
11. It is also appropriate for the Court to accept for the purposes of this interlocutory application that the Seadeck Contract was between the plaintiff and the first defendant alone, and that Culture Map was not a party to the contract. The plaintiff paid her money to Culture Map by direction of the first defendant.
12. That finding is supported by the fact that the defendants did not provide any positive evidence of an agreement to which Culture Map was a party.
13. Although the defendants in effect acknowledged to Slattery J that they did not contest that the evidence established a prima facie case against them, at the hearing before me their counsel asserted that there was no prima facie case because the Court should find on the evidence that the plaintiff was not the proper party and that the Seadeck Contract had been entered into by the plaintiff's parents. I reject that submission, as there is ample evidence that the plaintiff was the contracting party and her parents were only the source of part of the money that the plaintiff paid under the contract.
14. The plaintiff and the first defendant regularly communicated by WeChat concerning the plaintiff's investments.
15. In October 2019, the plaintiff sent a number of messages pressing the first defendant for information as to when the Seadeck Business would commence. The first defendant responded by saying that debts had been incurred in making the vessel ready, and on 15 November 2019 said: "I will be sending monthly reports from accountant but we haven't passed 1 month yet, this is our 3rd weekend." No such accounts have ever been sent to the plaintiff.
16. On 15 November 2019, the plaintiff said: I have 30% holder of this business. we are partners. right? I have right know everything and the process. two years ago in the beginning I trust you never ask any details about it and immediately wire you money even I sales Macau house lose money but I keep the reputation. how can now like this. you didn't inform me anything.
17. The first defendant responded on 15 November 2019: "I know but we have only traded for 2 weeks I will be sending you monthly reports but I need to get past 1 month at least".
18. On 18 March 2020, the plaintiff sent a number of WeChat messages to the first defendant that included the following three messages: and then you invited me investment the seadeck business. say it total value 8.5 mil. ask me invest 2.55 mil have 30% shares you can help me do the Australian ID through 188A. and promise about two years all investment money back (means each year benefit above 50%) all because trust you. I agree and sell my house even lose money Seadeck business. during the three years I ask many times you just say have lawsuit and problems no yet fix. even last year June you get the Seadeck back running you keep quiet to me no inform me anythings. and told me this business lose money. did this business really lose money you know it. if the Seadeck value 8.5 mil please show me all documents you buy it and payment list. then I accept 30% shares. but you escape this topic. I choose try forgive all your lie and sit down to settle. you say this business lose money want return all my investment total 2.73 mil money back. the first money is today return. right?
19. After a number of intervening WeChat exchanges, the first defendant sent the following messages to the plaintiff on 20 March 2020: I'm really sorry, I know how bad it must be, sorry sis I will try my best to make it up to you. It wasn't my intention but I know you're upset and I can only try to make things right for you ASAP, that I promise, Pls stay safe that's the most important thing, money we can always make but we only have 1 life and health now it's number 1… I will do my very best to make things right and hope to restore the our friendship with you and Vic.
20. For the purposes of this interlocutory hearing, these exchanges provide substantial corroboration for the plaintiff's claim and appear to involve a relatively candid admission by the first defendant.
21. Further, in March 2020, the first defendant sent to the plaintiff a draft loan agreement to be entered into by those parties under which the first defendant would become indebted to the plaintiff for a loan of $2,730,000. Clause 2 contained a statement that the plaintiff had advanced the first defendant $1,050,000 on 1 December 2017, $470,000 on 1 February 2018, $450,000 on 20 March 2018 and $760,000 on 5 July 2018. The draft loan agreement provided for repayment of instalments between 18 March 2020 and 18 October 2022.
22. The plaintiff did not accept the offer.
23. As also mentioned above, the first defendant made two payments of $100,000 to the plaintiff on 19 and 20 March 2020.
24. I am satisfied that the plaintiff has established that her case against both defendants is sufficiently strong for the Court to proceed to determine whether there is a sufficient risk that the defendants will dissipate their assets to justify the making of freezing orders against them, and also whether the balance of convenience favours that course being taken.

Risk of dissipation

1. The bank statements for Culture Map's Australia and New Zealand Banking Group Ltd bank account were in evidence. So were the bank statements of a bank account at the same branch of the Bank that was in the name of the second defendant. The evidence established that the second defendant was the sole signatory on her bank account.
2. In relation to the second defendant's bank account, she claimed that only the first defendant had ever operated on that account as she gave him the means to do so. The first defendant claimed that he thought the second defendant's bank account was in reality a sub-account of Culture Map's bank account. The first defendant's claim is implausible.
3. The first defendant apparently gave this evidence because the bank statements show that almost immediately after the plaintiff made each of the payments at the direction of the first defendant into Culture Map's account, substantially the whole of the payments were paid out into the second defendant's account. The first defendant claimed that these transactions were made by him because another person who had access to Culture Map's account had been making unauthorised withdrawals of its money.
4. Even at the interlocutory level the Court is entitled to proceed upon the basis that the first defendant's explanations are improbable.
5. The first defendant gave evidence that he made a significant number of repayments from the second defendant's account to the Culture Map account. This evidence is borne out by an analysis of the bank statements.
6. However, as the plaintiff pointed out in submissions, between 7 March 2018 and 30 July 2018, nine payments were made out of the second defendant's account in the total sum of $440,000 in favour of the first defendant. The first defendant has not given a credible and substantiated explanation of why he was entitled to receive those monies. Nor has he accounted for them.
7. Payments out of Culture Map's account to the first defendant were made as to $10,436.56 on 2 February 2018 and two payments of $25,000 on 5 February 2018.
8. The first defendant in his evidence sometimes claimed that payments were made to him as wages, but he said in relation to many payments that they were "used by me to pay expenses of, or relating to, Culture Map, as referred to at paragraphs 24 and 27 to 31 below". Those payments included $371,750 to solicitors for their costs in respect of the Federal Court proceedings. The first defendant also claimed to have paid amounts out of his own bank account totalling $258,097.50 "into the Seadeck business for, or for the benefit of, Culture Map".
9. Even given that the Court may not be able to expect comprehensive accounting for the payments at this interlocutory stage of the proceedings, the evidence provided by the first defendant was incomplete and wholly unpersuasive.
10. It is clear that the monies paid by the plaintiff at the first defendant's direction into the bank account of Culture Map were not held for the purpose of acquiring the Seadeck Business, but instead were used in a way that is substantially unexplained save for the apparent payment of some amounts for the legal costs of the Federal Court proceedings.
11. In outline, the evidence established the following in relation to the Seadeck Business and the Federal Court proceedings: 1. On 6 January 2016, Ozmen, Kanki and Neptune entered into a charter agreement for the Seadeck to be operated by the Kanki and Neptune joint venture. 2. On the same date, Kanki and Neptune entered into a joint venture agreement to operate the Seadeck Business. 3. On 14 August 2017, Ozmen and Kanki commenced Federal Court proceedings NSD 1424 of 2017 against Neptune claiming termination of the joint venture and charter agreements. 4. On 7 September 2017, Ozmen, Culture Map and the first defendant entered into a management agreement for Culture Map and the first defendant to operate the Seadeck Business under licence and to carry on the Federal Court proceedings for Ozmen and for the parties to pursue a joint venture after the proceedings had successfully been completed. By clause 3.3 of that agreement, Ozmen granted to the first defendant a right to give all necessary instructions to the lawyers conducting those proceedings on behalf of Ozmen. By clause 9, the parties recorded their commitment to proceed with assessing the merits of some form of commercial joint venture arrangement within a reasonable period after regaining possession of the Seadeck. 5. On 9 July 2018, after the plaintiff had made all of her payments under the Seadeck Contract, Culture Map entered into an agreement with the individuals who apparently owned all of the shares in Ozmen and Kanki to sell those shares to Culture Map. By clause 3, the price was $3,400,000, and by clause 4 the contract was to be completed on 12 September 2018. 6. On 31 December 2018, proceedings were commenced in the Federal Court NSD 2423 of 2018 by a Mr Ozmen and Ozmen against Culture Map and the first defendant concerning the Seadeck Business. By the proceedings the applicants sought either specific performance of the purchase of business agreement made on 9 July 2018, or the return to them of assets transferred under that agreement. The Court was informed that these proceedings have not yet been determined by the Federal Court. 7. Rares J decided the claim commenced by Ozmen and Kanki on 14 August 2017 in favour of the applicants and made orders on 9 May 2019. It was not until this date that the defendants had any certainty that the Seadeck Business could be operated free of Neptune's rights under the 6 January 2016 joint venture agreement.
12. It is significant for the purposes of the present application that the management agreement made on 7 September 2017 provided for the parties to try to negotiate a "commercial joint venture arrangement within a reasonable period after regaining possession of the Seadeck", which suggests that the parties had lost possession of the Seadeck. The Seadeck Contract was made in about November 2017, at a time when the first defendant had no basis for knowing that he could provide to the plaintiff the agreed consideration under that contract.
13. There was no evidence on the present application that either of the defendants had ever informed the plaintiff of the agreements that were entered into before the date of the Seadeck Contract or of any proceedings that were commenced before that date. In par 23 of his 4 November 2021 affidavit, the first defendant stated: "It was at all times known by the plaintiff in these proceedings that the funds that she agreed to invest in Culture Map were to be utilised to fund the conduct of the Federal Court proceedings." That evidence was only admitted as evidence of the first defendant's belief.
14. There was some evidence in the WeChat messages that the first defendant informed the plaintiff that some legal proceedings were preventing him from performing the Seadeck Contract, but the sense of those messages was that unexpected litigation had intervened - not that the litigation was the subject of the contract and the plaintiff had agreed to fund it.
15. The first defendant said in par 34 of his 4 November 2021 affidavit that in around late September 2018, as a result of a dispute with a person who was apparently in control of Culture Map, the second defendant ceased being able to access the Culture Map bank account.
16. The evidence that I have considered above justifies the Court in making a tentative finding, even at this interlocutory stage of the proceedings, that the first defendant acted dishonestly in the circumstances in which he entered into the Seadeck Contract with the plaintiff and as to how he applied the plaintiff's money after it was paid to Culture Map at the first defendant's direction.

Sale of the first defendant's property

1. On 22 June 2020, the first defendant listed a property owned by him in St Ives for sale. The first defendant had purchased this property on 4 March 2015. Completion of the sale took place on 1 September 2020 at a price of $2.37 million. The first defendant paid the net surplus proceeds of $521,000 to the second defendant.
2. On 3 February 2020, the plaintiff had a WeChat conversation with the first defendant in which she asked him for his email address as "the lawyer want to mail you document", and the first defendant provided his address. The plaintiff's former solicitors sent an initial letter informing the first defendant of their instructions that the plaintiff had been told by him that the estimated value for the Seadeck Business was $8.5 million, that the Seadeck was licensed for 800 passengers, and that the project would break even in two years on 3 February 2020. This letter also sought the provision of financial information concerning the Seadeck Business.
3. The first defendant relied on evidence that he had caused the tenant to the property to be given a notice of termination in January 2020; that is, before the plaintiff gave him notice that she intended to make a formal claim against him, to answer the suggestion that he had dissipated some of his assets to put the property beyond the reach of any judgment of this Court.
4. The first formal letter of demand was not sent to the first defendant until the plaintiff's present solicitor's letter to the defendants' solicitor dated 2 April 2020.
5. The first defendant's evidence was that from the net proceeds of sale of his property he paid $206,820 to the second defendant in repayment of the $200,000 that he had paid to the plaintiff, which he claimed he had borrowed from her. The first defendant claimed that he paid an additional amount of approximately $129,310 to the second defendant "in relation to various amounts that she loaned to me during the period during October 2018 to June 2020". An amount of $100,000 was transferred to an account belonging to the second defendant "for future everyday living expenses". As to the balance of the payment to the second defendant, the first defendant said: "I believe that this amount was loaned or advanced to me by my wife however given the timeframe in which I have had to prepare this affidavit I have not yet had a chance to review all of my records."
6. The defendants did not provide any objective evidence to support the first defendant's assertions that payments were made in repayment of debts owed to the second defendant.

Sale and purchase of properties by second defendant

1. In early 2020, the second defendant settled on the sale of a property owned by her at St Ives for $2.35 million, from which she received $96,475.04 plus the balance of the deposit after deduction of the agent's commission. In October 2020, the second defendant settled on the purchase of a property in her sole name at East Linfield for $2.999 million. The second defendant said that she borrowed approximately $2.3 million from Westpac to fund the purchase. She accepted that she had used $330,000 "repaid to me by my husband" following the sale of his property at St Ives to purchase the East Linfield property. There is evidence that this property was the subject of significant renovation works in mid-2021 and the second defendant gave evidence that both defendants had participated in the renovation.

Assets and liabilities of the defendants

1. Both defendants swore affidavits as to their assets and liabilities as at 10 November 2021. The first defendant said that he had two properties in his own name in Queensland with values of $500,000 to $550,000 in one case and approximately $495,000 in the other. These properties were subject to mortgages in the aggregate amount of about $790,000. The first defendant acknowledged a small amount of cash at bank and shares in a number of Australian companies with a relatively small value. He said that he owed his parents approximately $110,000, and that a claim of $706,000 had been made against him by what appears to be a law firm, and that he had received demands from a former director of Culture Map claiming $900,000 to $1.78 million. The first defendant said that he disputed liability in respect of the latter two claims.
2. The second defendant annexed to her affidavit a selling proposal from a real estate agent for the East Linfield property that estimated a selling price of between $5,450,000 and $5,995,000. The amount secured on mortgage over the property is $2,399,104.47. The second defendant said that she owed her parents approximately $460,800. She acknowledged holding shares in companies in Australia, cash at bank and personal effects worth a couple of hundred thousand dollars. The second defendant acknowledged a claim against her by the law firm referred to above in the amount of $473,000 but disputed that she owed this debt.

Effect on the defendants of freezing orders

1. Both defendants claimed that the making of a freezing order against them that applied to their real estate was likely to cause them to lose a significant amount of money.
2. The defendants said that they did not want to be prevented from being able to sell the East Linfield property as, although the property was not presently for sale, it was in a very sought-after location which could prompt an off market offer at an above-market price. This is not by itself a good reason for the Court to refrain from making a freezing order against the second defendant, as the order could be formulated in a way that permitted the second defendant to sell the property provided that the proceeds of sale were dealt with in a way that would maintain the effectiveness of the freezing order.
3. The first defendant also gave evidence, supported by the second defendant's evidence, that the second defendant has recently started a marketing/events business that will operate at a venue in the Sydney CBD. The defendants have some capital but expect that they will in the near future require additional capital to operate the business. The defendants will need to refinance their existing real estate to raise future capital. The first defendant said that on the basis of his experience in the marketing/events industry he anticipated "the turnover of the new business to be anywhere between $50,000 to $70,000 per week."
4. Additionally, the first defendant said that he was assisting the second defendant in a new business conducting media advertising that she had started at the end of 2019, but which had remained dormant until recently due to COVID-19. The defendants were in the process of re-establishing the business and the first defendant estimated that the business will require operational capital of approximately $150,000 to $200,000 or more over the next 6 to 12 months. If the business does not generate sufficient revenue at the start, the defendants may need to refinance their existing properties in order to inject capital into the business.
5. Finally, the first defendant said that he is in the process of looking at other businesses to start up post COVID-19 including for example a recording label business. Any such business will require an amount of working capital which the first defendant would normally seek to finance from any existing equity in his properties in Queensland.
6. Notwithstanding the observation made by Slattery J to the defendants' counsel that the defendants needed to "define what the real problem is" in relation to the interference with their proposed business activities that may result from the making of the freezing orders sought by the plaintiff, the defendants have only described those activities in the most general terms and have not been specific as to what the business activities would involve. On the information provided by the defendants, the Court can make no practical assessment of the risks of loss that engaging in those businesses will create.
7. The defendants did not provide any evidence that would enable the Court to assess the quantum of any losses that the defendants may suffer as a result of the making of the freezing orders sought by the plaintiff. That makes it difficult for the Court to determine the value of the security that should be required to be provided by the plaintiff to support the undertakings that she would be required to give.

Plaintiff's assets and liabilities in Australia

1. The plaintiff gave evidence that she purchased the property at Hamilton in Queensland in November 2017 for $478,000 and that there is no mortgage or charge on it. She receives a weekly rental of $400. The plaintiff said that she had obtained an estimated value range for the property of $350,000 to $465,000 from the Domain website estimator. The defendants complained about the inadequacy of this form of valuation evidence, but the Court is entitled to have regard to the evidence of the purchase price as a general guide to value.
2. The plaintiff is the owner of two houses at Hope Island in Queensland jointly with her father in one case and her mother in the other. The first was purchased in November 2014 for $1.845 million and a mortgage of $1 million. A house was built on the property in 2016. By agreement with her father, the plaintiff receives rent of $1,250 per week on the basis that she is responsible for the mortgage and outgoings. The plaintiff tendered an appraisal of the property by the company that manages the rental at between $2 million and $3 million. On that basis, the plaintiff's 50% share of the equity is worth between $900,000 and $1 million.
3. The second property at Hope Island was purchased in November 2014 for $1.755 million and a mortgage of $1 million. A house was built on the property in 2015. The plaintiff has the same arrangement with her mother as she has with her father in respect of the first property and she receives rental income of $1,300 per week. The appraisal tendered by the plaintiff for this property gives a current market value between $2.65 million and $2.8 million. The value of the plaintiff's 50% share of the equity is worth between $825,000 and $900,000.
4. The plaintiff gave evidence that between April and June 2020 she purchased 30% of the shares in a company called Federation Technology Institute Pty Ltd for $900,000. This company engages in business as a training institution in Melbourne, which offers English, business, commercial cookery and hospitality management courses to domestic and overseas students. The plaintiff acknowledged that the business of the company has been affected by COVID-19 but said that it has neither made a loss or a profit. The plaintiff has not in the time available been able to obtain financial statements or management accounts for the company.
5. The plaintiff had as at 9 November 2021 $420,539.39 in one bank account and approximately $16,000 in another bank account. For reasons that the plaintiff did not explain the second account is locked.

Relevant legal principles

1. Kunc J has recently set out the principles that are applicable in the case of applications to the Court for the making of freezing orders in Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961. I respectfully adopt his Honour's observations (which I have abbreviated to focus on the principles that are most relevant to the present application): [73] The Court has the power to make asset preservation orders, and ancillary orders in relation thereto, pursuant to rr 25.11, 25.12 and 25.14 of the UCPR and the Court's inherent jurisdiction "to take such steps as may be necessary in order to ensure that its orders are not frustrated": Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 (Patterson) at 328 per Rogers AJA; see also Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1 at 32; [1998] HCA 30 per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ; Cardile v LED Builders Pty Limited (1999) 198 CLR 380; [1999] HCA 18 at [42] per Gaudron, McHugh, Gummow and Callinan JJ (Cardile). Rules 25.11. 25.12 and 25.14 of the UCPR provide: 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. … (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. … [74] As the High Court explained in Cardile, different considerations apply to the Court's disposition of an asset preservation order application directed at a non-party than those that apply to a party against whom final relief is sought. Where asset preservation orders are sought against a party to the proceedings, the Court's focus is upon "the frustration of the court's process": Cardile at [42]. An asset preservation order directed at a non-party, by contrast, is directed at "the administration of justice": Cardile at [42]. … [79] The criterion of a "good arguable case" requires proof "of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success": Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH &Co KG, The Niedersachen [1983] 1 WLR 1412; [1984] 1 All ER 398 (Ninemia) at 404 per Mustill J. In the Court's assessment of a "good arguable case", the Court "should not be drawn into a premature trial of the action, rather than a preliminary appraisal of the plaintiff's case": Ninemia at 404; see also Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [69] and [70], where McColl JA approved the observations of Mustill J in Ninemia. [80] The second relevant criterion is whether there is a risk that the defendant will, either by absconding or dissipating its assets, render itself "judgment proof". In satisfying the Court of this criterion, it is not incumbent on the plaintiff to establish this risk or danger on the balance of probabilities: see Patterson at 325 per Gleeson CJ; see also Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 at [57]-[60] per Bathurst CJ, with whom Beazley P and Barrett JA agreed. Rather, it is incumbent on the plaintiff to satisfy the Court that there is a danger that the prospective judgment will not be satisfied if the asset preservation order is not made, notwithstanding that the risk of that occurrence may be less probable than not. There is no requirement that evidence of the real risk that a defendant may abscond or dissipate its assets be direct; it may, and often will, be adduced by evidence that calls for inferences to be drawn. Additionally, there is no requirement imposed upon the plaintiff to adduce evidence of a positive intention by the defendant to frustrate any judgment: National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277; [1990] HCA 10 per Mason CJ, Brennan and Deane JJ. [81] Although the second criterion does not need to be established on the balance of probabilities, the plaintiff is nevertheless required to adduce "solid evidence" that there exists a real risk that the defendant will abscond or dissipate its assets; mere assertion of that risk or proof that a company is incorporated abroad and does not have assets within the jurisdiction is insufficient: Ninemia at 406; Frigo v Culhaci [1998] NSWCA 88; Deputy Commissioner of Taxation v Hua Wang Bank Berhad (2010) 273 ALR 194; [2010] FCA 1014 at [12] per Kenny J. As Lawton LJ explained in Third Chandris Shipping Corporation v Unimarine SA [1979] 1 QB 645, there must be facts from which the Court, "like a prudent, sensible commercial man, can properly infer a danger of default if assets are removed from the jurisdiction": at [56]. I would respectfully add to his Lordship's observations that there may be evidence, inferential or otherwise, demonstrating a sufficient danger of default if the defendant's assets are dissipated within the jurisdiction. [82] In its assessment of the purported risk or danger posed by a defendant absconding or dissipating its assets, the Court may also have regard to the nature of the allegations raised against the defendant, particularly in circumstances where the "good arguable case" is one involving serious dishonesty or fraud. In Patterson, Gleeson CJ relevantly said (at 325-6): … the evidence as to the nature of the scheme in which the appellant was allegedly involved, which established a prima facie case against him, was such as to justify the conclusion that there was a danger that the appellant would dispose of assets in order to defeat any judgment that might be obtained against him and that such danger was sufficiently substantial to warrant the injunction. There is no reason in principle why the evidence which is relevant to the first of the issues earlier referred to might not also have a bearing on the second, and this will especially be so where the prima facie case that is made out against a defendant is one of serious dishonesty involving diversion of money from its proper channels. The present is not a case in which a plaintiff who claims simply to be an unsecured creditor seeks to prevent a dissipation of assets which have no particular connection with the claim in question. This is a case in which the plaintiff claims that the defendant, making use of a corporation controlled by him, fraudulently misappropriated a large sum of money which, if it is still under the control of the appellant, would be quite likely to constitute, directly or indirectly, the bulk of his assets. As Giles J held, the nature of the scheme in which, on the evidence to date, the appellant appears to have engaged, is such that it is reasonable to infer that he is not the sort of person who would, unless restrained, preserve his assets intact so that they might be available to his judgment creditor. … [85] Also of relevance to the Court's exercise of its discretion in applications of the present kind is the issue of whether the plaintiff has proffered an undertaking as to damages and, consequentially, the adequacy of that undertaking. An undertaking as to damages will be required in applications of the present kind unless exceptional circumstances exist justifying departure from that rule, including where the plaintiff establishes an unarguable case of fraud: see, eg, De Boer v Williams [2004] NSWSC 351 at [20] and [23] per Einstein J; Southern Tableland Insurance Brokers Pty Ltd (in liq) v Schomberg (1986) 11 ACLR 337 (Southern Tableland) at 340 per Young J (as his Honour then was), quoting Kerridge v Foley (1968) 70 SR (NSW) 251 at 255 per Sugerman JA with approval. The failure of a plaintiff to proffer an undertaking as to damages, although not ipso facto fatal to an application for an asset preservation order, weighs heavily against an order of that nature. [86] The Court will also take into account, in the exercise of its discretion, the adequacy of that undertaking. Akin to the absence of an undertaking, the Court will be less inclined, in the exercise of its discretion, to grant an asset preservation order in circumstances where it is satisfied that a plaintiff does not have the wherewithal to honour its undertaking, either because of practical difficulties the defendant is likely to encounter in enforcing the undertaking or on account of the plaintiff's want of sufficient funds: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing (NSW) Ltd (1987) 76 ALR 633 at 640; Southern Tableland at 342-3. If the Court is not satisfied that the undertaking proffered by the plaintiff would be sufficient to satisfy losses caused by the Court's order preserving the defendant's assets, then the Court may require security to support that undertaking: Southern Tableland at 343; Re DPR Futures Ltd [1989] 1 WLR 778 at 786.

Consideration

1. Even without relying on the concession made by the defendants, I am satisfied that the evidence on the application establishes that the plaintiff has at least a "good arguable case" that the defendants have committed the breaches that she alleges, and indeed it is reasonable to judge her case to be a relatively strong one.
2. In relation to the Seadeck Contract claim there is no issue about the plaintiff having paid $1.68 million to Culture Map at the direction of the first defendant and that the plaintiff has received no part of the agreed consideration (although a repayment of $200,000 has been made). Although the Court is not required on this application to decide the matter, it is commercially improbable that the plaintiff entered into an agreement on the terms claimed by the defendants. It is probable that the first defendant accepted the plaintiff's money through Culture Map knowing that, because of the dispute the subject of the Federal Court proceedings, he was not then able to perform the Seadeck Contract and that his ability to do so in the time contemplated by the agreement was completely contingent on the outcome of the Federal Court proceedings.
3. As matters stand, the plaintiff has given evidence of statements made by each of the defendants which, if established at trial, would constitute deceit on their part. That is so where the evidence suggests that the Seadeck Business was not purchased for $8.5 million and the Seadeck was not licensed to accommodate at least 800 passengers.
4. In the circumstances, the plaintiff's claim involves allegations of serious dishonesty against the first defendant, not only in relation to the alleged deceit, but also in relation to his capacity to perform the Seadeck Contract and his use of the monies paid by the plaintiff into the Culture Map account, as has been described above.
5. The defendants have not provided any real account of the dealings with the monies paid by the plaintiff under the Seadeck Contract, which the evidence demonstrates were disbursed by the first defendant (on the defendants' case) or by the second defendant (to the extent that the monies were paid into an account over which the second defendant had sole legal control). The first defendant has not given any accounting of the $800,000 that he acknowledged receiving from the plaintiff under the Sensation Dance Contract.
6. The plaintiff's case against the second defendant is less strong and relies primarily on the plaintiff's evidence that the second defendant translated the first defendant's deceitful representations for the benefit of the plaintiff's parents. However, on the evidence almost all of the monies paid by the plaintiff under the Seadeck Contract were paid into the second defendant's account and $440,000 was paid out to the first defendant. It will be a matter to be determined at the trial whether the second defendant's assertion that she gave the first defendant sole actual control of that account is true.
7. I am satisfied in the circumstances that there is a sufficient danger that any judgment that may be given by the Court in favour of the plaintiff will not be satisfied to warrant the making of freezing orders against the defendants. That flows from the circumstance that the plaintiff has established a "good arguable case" that involves dishonesty on the part of the defendants. The manner in which the plaintiff's monies were disbursed suggests that there is a risk that the defendants will dissipate their assets.
8. Although it is uncertain whether the first defendant decided to sell his St Ives property before it became completely clear that the plaintiff would institute proceedings to recover her investments, it is clear that the first defendant divested himself of the whole of the net proceeds of sale. No evidence has been provided that the payments were made to the second defendant in repayment of genuine debts owed to her.
9. It is material that, if the plaintiff's claim in deceit succeeds, then Culture Map would have received the plaintiff's monies as a constructive trustee and, because of their involvement in and knowledge of the transaction, the defendants may be found to have received trust monies or have been knowingly involved in the misappropriation of trust monies. Although the issue is necessarily unclear at present, the plaintiff may have proprietary claims against the defendants' assets.
10. The first defendant has an equity in his two Queensland properties of between $200,000 and $250,000. He has disclosed debts claimed against him of between $1.716 million and $2.596 million, although he only admits the $110,000 debt to his parents.
11. The second defendant claims to have an equity in the East Linfield property of between $3.11 million and $3.655 million. She acknowledges a debt of $460,800 to her parents but contests a claim apparently made by a law firm for $473,000.
12. Although it is no part of the purpose for making a freezing order to give a plaintiff a preference over the other creditors of a defendant, the evidence in this case supports a finding that there is a risk that the defendants may be pressed by their creditors to apply their available assets to meet claims other than those of the plaintiff. The appropriate way for the Court to deal with the potential competition between the defendants' creditors is to include a term in the freezing orders that gives the defendants leave to apply, if it becomes necessary for them to do so, to deal properly with the claims of creditors other than the plaintiff.
13. As I have explained above, the defendants have not provided sufficient detail of their potential future business activities to enable the Court to determine whether, or to what extent, any freezing orders will unfairly prejudice the defendants. As the evidence stands, I consider that the prospect of the defendants employing their assets in indefinite future business activities should be treated as a potential means of dissipation of the defendants' assets, on the basis considered by Brereton J (as his Honour then was) in Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2005] NSWSC 1225; (2005) 225 ALR 369.
14. However, as the plaintiff has not established an entitlement to the protection of freezing orders for any amount greater than the amount of her payments under the Seadeck Contract that has not been repaid, which is $1.48 million, the second defendant should be able to retain a sufficient equity in the East Linfield property, after allowing for the freezing order against her, to raise funds for future business ventures.
15. The defendants should be given leave to apply to vary the freezing orders on the basis of specific and articulated future business proposals, if the presence of the freezing orders prevents the defendants from engaging in commercially justifiable business ventures.
16. I do not accept the defendants' submissions that the plaintiff should be disentitled to freezing orders being made against them on the basis of her delay. The defendants have made no suggestion that they have suffered any forensic or other prejudice as a result of the delay. I accept the plaintiff's submission that such delay as has occurred has been substantially justified by the plaintiff proceeding cautiously and taking the forensics steps necessary to establish that her application was justified. This caution has manifested in the plaintiff being able to tender the bank statements relating to the Culture Map account and the second defendant's account, as well as the transaction documents relevant to the joint venture involving the Seadeck that provided the context for the Federal Court proceedings.
17. I am satisfied that the limit that should be inserted in the freezing orders should be the revised amounts suggested by counsel for the plaintiff, being $1.48 million in the case of the first defendant and $1.38 million in the case of the second defendant. (I am not sure that I understand the reason for the difference, and if this gives rise to any issue that cannot be resolved by agreement the application may be relisted).
18. I am satisfied that the revised undertakings and security offered by the plaintiff are satisfactory, with the plaintiff at this stage being required to provide the security in par 1(a) rather than par 1(b). The plaintiff is the sole owner of the property referred to in par 1(a) and it is unencumbered. As the defendants have not established the amount of any loss they may suffer as a result of the making of the freezing orders, the Court does not have any basis to consider the value of the property the subject of par 1(a) to be inadequate.
19. As the intent of this decision is that the whole of the value of the Hamilton, Queensland property will secure the plaintiff's undertakings, that property will not be available to provide security for the defendants' costs if the Court makes an order for security for costs against the plaintiff.
20. The orders made should include a grant of leave to the defendants to apply to seek an order that the plaintiff provide additional security for her undertakings if they can demonstrate by sufficient evidence that the value of the Hamilton, Queensland property has ceased to be adequate.
21. If it becomes necessary for the plaintiff to offer as security either of the properties that she owns jointly with one of her parents, that offer may not be satisfactory unless the plaintiff provides adequate proof binding the relevant parent that they acknowledge that the plaintiff is beneficially entitled to half of the ownership of the property.
22. It may be that some variation of the standard freezing orders provided to the Court by the plaintiff may be appropriate. At least in the case of the second defendant, as the value of her equity in the East Linfield property is substantially higher than the limit in the freezing order that may be made against her, the limit on her payment for ordinary living expenses stated in draft order 9(a) may not be justifiable.
23. The parties should confer and provide to my Associate appropriate draft short minutes of order to be made by the Court. If there is an issue about whether the Court should make the costs orders sought by the plaintiff in her notice of motion, I will hear the parties on costs.
24. I order that order 1 made by the Court on 12 November 2021 restraining the defendants from disposing of or encumbering any interest in real property owned by them pending the delivery of judgment on this interlocutory application shall continue in effect until the Court makes the orders necessary to give effect to these reasons for judgment.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 November 2021