Sheer v Jeffreys (No 2)

This is a further round in the disputation between the plaintiff, Mr Itshak Sheer and the defendant Mr Bruce Jeffreys. In my judgment in Sheer v Jeffreys [2024] NSWSC 1161, I determined that Mr Jeffreys was liable to pay Mr Sheer approximately $2.9 million. That decision was upheld by the Court of Appeal in Jeffreys v Sheer [2025] NSWCA 31 and an application to the High Court for special leave to appeal was refused. Mr Jeffreys has since made himself bankrupt on his own petition.

While the judgment was reserved, Mr Jeffreys gave an undertaking to the Court that he would not “deal with” specified assets (to which I will refer as the RC Investment and the CS Funds). Mr Sheer has brought a contempt motion filed on 2 June 2025, which is the subject of these reasons, alleging that Mr Jeffreys has breached his undertaking in relation to those assets.

In affidavits both before and after the undertaking was given, Mr Jeffreys referred to the assets as "his" assets. However, the evidence before the Court discloses that the RC Investment was held in the name of PSOAS Holdings Pty Ltd and the CS Funds were held in the name of Harika Holdings Pty Ltd. At all material times, Mr Jeffreys was the sole director and shareholder of these companies.

For the reasons which follow, the Court finds Mr Jeffreys has a complete answer to the motion. In summary, it is that while the assets have been dealt with for the purposes of the undertaking (a point not disputed by Mr Jeffreys), as a matter of fundamental company law, the dealings were not by Mr Jeffreys. The dealings were by PSOAS and Harika.

The motion will be dismissed and I will hear the parties as to costs. Mr D P Robinson of Senior Counsel appeared with Mr M Hazan of Counsel for Mr Sheer. Mr P G Cawthorn of King’s Counsel appeared with Ms M Clarkin of Counsel for Mr Jeffreys.

The undertaking was given on 6 June 2024 to the Court in response to an application by Mr Sheer for a freezing order against Mr Jeffreys. The undertaking was renewed on 2 October 2024 after the judgment was delivered.

The undertaking was:

The motion sought a custodial sentence and included:

There was no dispute that, in a contempt motion alleging breach of an undertaking to the Court, the relevant facts must be established by the applicant beyond reasonable doubt.

The only fact in dispute (although perhaps more accurately a mixed matter of fact and law) was the capacity in which Mr Jeffreys dealt with the assets. The case was otherwise documentary.

From those documents, the Court is satisfied beyond reasonable doubt of, and accordingly finds, the facts set out in [12] to [27] below.

By motion dated 28 May 2024, Mr Sheer sought a freezing order against Mr Jeffreys which included:

On 4 June 2024, Mr Jeffreys swore an affidavit in response to the motion, which he described in the affidavit as seeking “freezing orders over my assets”. As he did in all the affidavits to which I refer in these reasons, he described his occupation as "director".

The affidavit deposed that he had applied funds from a bank account in his name in various ways, including to create the CS Funds and the RC Investment. As to the CS Funds, the affidavit said:

As to the RC Investment, the affidavit deposed:

The undertaking was given to the Court on 6 June 2024. At that time, the Court ordered Mr Jeffreys to provide an affidavit of his assets and liabilities.

On 20 June 2024, Mr Jeffreys filed that affidavit, which began:

Under the heading of “Assets”, it included:

On 2 October 2024, the undertaking was continued at the time the Court’s judgment against Mr Jeffreys was entered. The orders made on that occasion included:

On 8 October 2024, Mr Jeffreys complied with that order by filing an affidavit that again noted the affidavit was provided as “setting out my current assets and liabilities”. Under the heading of “Assets” it included:

The affidavit further disclosed $313,000 as payments from the CS Funds, having been "made as per my ATO payment plan" (emphasis added).

On 11 October 2024, a redemption form was completed in relation to the RC Investment without 7 days’ notice being given to Mr Sheer’s solicitor. The investor is recorded as PSOAS, and the form is e-signed by Mr Jeffreys with his capacity expressly recorded as “director”. The $200,000 investment was redeemed by being paid into a Macquarie Bank account in the personal name of Mr Jeffreys on 6 November 2024.

Based on the redemption form, the Court finds that the absolute legal owner of the RC Investment was PSOAS. In the absence of evidence otherwise, the Court would infer that the beneficial ownership was with the legal owner such that the legal owner had the absolute legal interest. No submission was made that the Court should find that Mr Jeffreys was the beneficial owner. In any event, neither Mr Jeffreys' assertions of ownership in his affidavits (by listing the RC Investment under his assets), nor the fact that the RC Investment was paid out into an account in his name, would be sufficient (individually or together) to satisfy the Court beyond reasonable doubt that Mr Jeffreys was the beneficial owner of the RC Investment.

On 18 February 2025, Mr Jeffreys emailed someone at UBS (the successor to Credit Suisse) to transfer some of the CS Funds. As a result of instructions given by Mr Jeffreys and without 7 days’ notice being given to Mr Sheer’s solicitor:

Credit Suisse records produced on subpoena record that the bank's client in relation to the CS Funds was Harika, and that the transfers referred to in the preceding paragraph were effected "by order of" Harika.

Based on the Credit Suisse records, the Court finds that the legal owner of the CS Funds was Harika. In the absence of evidence otherwise, the Court would infer the beneficial ownership was with the legal owner. However, there is evidence that Harika was the trustee of a family trust, of which the Court finds Mr Jeffreys was a discretionary object. While no submission was made that the Court should find that he was the beneficial owner, the Court nevertheless finds that Mr Jeffreys was not the beneficial owner of the CS Funds.

At all material times, Mr Jeffreys was the sole director and shareholder of PSOAS and Harika. Neither of those companies has at any time been a party to these proceedings.

There was no dispute that, by the redemption referred to in [22] above and the transfers referred to in [24] above, the assets had been dealt with for the purposes of the undertaking (the dealings) without the requisite prior notice having been given to Mr Sheer’s solicitor. The parties were, to the extent it is relevant, also in agreement that the definition of "deal with" in the undertaking was that which appears in the Macquarie Dictionary, online ed, accessed 15 December 2025 of "to take action with respect to". The Court finds this is the meaning of “deal with” in the undertaking.

The first element in each of the charges set out in the Amended Schedule to the motion (see [8] above) is the allegation that Mr Jeffreys dealt with the assets. Mr Sheer's motion fails at the outset because the Court accepts Mr Cawthorn KC's submission that the application of the orthodox company law principle that a company is a separate legal person compels the conclusion that the legal persons who engaged in the dealings were the legal owners of the respective assets, being PSOAS and Harika, and not Mr Jeffreys. In deciding to undertake, and in giving effect to, those dealings, Mr Jeffreys was not acting as a legal person in his own right, but was acting on behalf of and in right of those companies. Therefore, Mr Jeffreys did not breach the undertaking.

This conclusion accords with authorities to which Mr Cawthorn KC referred the Court. Although they all concern freezing orders, the basic principle of company law must apply equally to the undertaking (which is in the nature of a self-imposed freezing order).

A convenient starting point is the decision of the English Court of Appeal in Lakatamia Shipping Company Ltd v Su [2014] EWHC Civ 636; [2015] 1 WLR 291. That case concerned a freezing order which included orders based on a standard form of freezing order according to the then English practice (and from which the standard form in this Court is derived):

The issue before the trial judge was whether the order froze the assets of three companies that were not parties to the proceedings but of which one of the defendants was, directly or indirectly, the 100% shareholder and a director. The trial judge answered that question in the affirmative (Lakatamia at [8]):

The English Court of Appeal (Rimer and Tomlinson LJJ, Sir Bernard Rix) held paragraph [16] of the trial judge’s decision to be in error. In the leading judgment (the other judges agreeing with his Lordship on this point but delivering separate judgments), Tomlinson LJ approved the judgment of Hildyard J in Group Seven Ltd v Allied Investment Corporation Ltd [2014] 1 WLR 735; [2013] EWHC 1509 (Cth) in which, like the present case, the alleged contemnor had listed the relevant asset – a debt – as one of his assets, when it belonged to a non-party company (referred to as “Wealthstorm”) controlled by him.

Tomlinson LJ said:

In considering an application for a post-judgment freezing order against third parties, Lakatamia was accepted as stating the relevant law by Nichols J in SK Developments (Aust) Pty Ltd v Vansan Construction Pty Ltd [2025] VSC 402. Her Honour said:

The case cited as authority for the last sentence in paragraph [18] of SK Developments is the decision of Cooper J in Resort Lifestyle Developments Pty Ltd v NGI Savannah Living Communities Pty Ltd (2022) 12 QR 67; [2022] QSC 194. In that judgment, his Honour said:

In my respectful opinion, it is clear from the authorities to which I have referred, as applied to the undertaking on its proper construction, that the Court is unable to find that it was Mr Jeffreys who, in his own right as a natural legal person, engaged in the dealings. In other words, that essential fact has not been established beyond reasonable doubt. Had he engaged in the dealings in his own right, then he would have breached the undertaking. However, the Court finds that insofar as Mr Jeffreys caused or effected the dealings, the evidence establishes that he did so in right of and on behalf of PSOAS and Harika. Putting it another way, at the very least, the evidence of the role of PSOAS and Harika means the Court cannot be satisfied beyond reasonable doubt that it was Mr Jeffreys who engaged in the conduct prohibited by the undertaking.

Before leaving this issue and its perhaps surprising and unsettling conclusion, I should observe that more expansive drafting could have brought the assets of PSOAS and Harika within the terms of the undertaking. However, given Mr Jeffreys’ evidence that the assets were “his”, Mr Sheer and his advisers understandably accepted the undertaking in the form in which it was proffered. I was not invited to, and do not, make any finding about Mr Jeffreys’ evidence.

Furthermore, where the standard form of freezing order in this Court is made (see [12] above), which prohibits diminution in the value of assets, Lakatamia is authority for the proposition that where a defendant is restrained from diminishing the value of any of the defendant’s assets and where those assets include a shareholding in a company, it would restrain the defendant from procuring the company to make a disposition of its assets which was likely to result in such a diminution. Of this analysis Tomlinson LJ said:

In deference to the care with which Mr Sheer’s case was put by Mr Robinson SC, I will briefly deal with the steps in the argument that was advanced.

The starting point was the submission that the undertaking restrained the conduct of Mr Jeffreys and no-one else. So much is true. However, with great respect, Mr Robinson SC was unable to offer a persuasive analysis that would depart from that which I have set out in the preceding section of these reasons.

There can be no real doubt that it was Mr Jeffreys whose conduct was restrained, but the point for present purposes is that it was Mr Jeffreys in his personal legal capacity. To overcome this, Mr Robinson SC sought to draw a distinction between the initiation of the dealings and their execution. He submitted that “dealing” was not the same as “disposing”, such that Mr Jeffreys dealt with the assets by initiating the dealings, even if the disposal was by the two companies.

At the heart of Mr Robinson SC's submissions was the contention that, whatever may have happened at the end of the process, it was sufficient for Mr Jeffreys to have initiated the dealings. The initiation of the process of the transfers was sufficient to satisfy the meaning of “to deal”. That again may be accepted. However, it also does not overcome the fundamental question of the capacity in which Mr Jeffreys was initiating the dealings.

I rejected this argument because, in the present context, it made a distinction without a difference. At every stage from conception of the dealings to their execution, Mr Jeffreys was not acting in his own right but as the human manifestation of the companies.

Next it was submitted that the undertaking was limited to the two specific assets. Again, that is perfectly true. However, contrary to the submission put by Mr Robinson SC, the ownership of those assets is relevant to the determination of the issues in this case. Such evidence as is available has satisfied the Court that the assets were legally owned by Harika and PSOAS and that Mr Jeffreys did not have a beneficial interest in them.

Mr Robinson SC next accepted that there was no dispute between the parties about what the “dealing with” meant. However, he then proceeded to make several submissions which went to the issue of what he described as "context". Those matters included:

To these contextual matters I would add the fact that Mr Jeffreys described himself in his affidavits as “director”. However, as to this, I accept Mr Cawthorn KC's submission that Mr Jeffreys’ self-description is not sufficient for the Court to find, to any standard, that Mr Jeffreys was swearing his affidavits in his capacity as a director of either Harika or PSOAS or on behalf of those companies.

An appeal to context suggests that there is some ambiguity in the undertaking. I have considered whether it can be said there is any relevant ambiguity, notwithstanding that the parties agreed on the definition of “to deal”.

It could, for example, be suggested that there was ambiguity about who was giving the undertaking. While in my view it is clearly the case that the undertaking was given by Mr Jeffreys in his personal capacity, there are some indicators (such as his self-description as “director”) that might suggest that he was giving the undertaking in some other capacity. However, such indicators are decisively overcome by the facts that he is a party in his own right to the proceedings, and was, at the time the undertaking was renewed, the subject of a judgment against him in his personal capacity. Clear words in his affidavits or the undertaking would be required to establish that he was giving the undertaking in some capacity other that in his own right.

Similarly, I have considered whether there could be ambiguity about "dealing", notwithstanding the parties' acceptance of a common definition. As to this, it might be said that there was an argument that dealing would include the concept of procuring or causing someone else to do something. In my respectful opinion, that argument is simply not available as the proper construction of the simple word “deal” in the context in which it appears in the undertaking.

However, assuming for the sake of argument that there was ambiguity about either of these matters (or anything else in the undertaking), then the motion would nevertheless fail by reference to the principles referred to by the Court of Appeal in Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69 at [52] (per Beazley JA (as her Honour then was), McColl JA agreeing), to the effect that, where there is genuine ambiguity as to the meaning of an order or undertaking, a person cannot be committed for contempt of that order or undertaking.

While I have given careful attention to the arguments advanced on behalf of Mr Sheer, none of them overcome the fundamental point upon which Mr Jeffreys has succeeded today.

The motion will be dismissed.

The Court having invited argument as to costs, Mr Robinson SC accepted that costs should follow the event. The orders of the Court are as follows: