In the matter of Quasar Constructions (Commercial) Pty Ltd

By Originating Process filed on 7 March 2025, the Plaintiffs, Mr Alan Walker in his capacity as liquidator (“Liquidator”) of Quasar Constructions (Commercial) Pty Ltd (in liq) (“QCC”) and QCC seek relief against Mr James Crawford, Crawford 6 Pty Ltd (“C6PL”) and Brookhollow Investments Pty Ltd (“Brookhollow”). By way of background, the First Defendant, Mr Crawford, was the sole director of QCC. The Second Defendant, C6PL, is the trustee of the Quasar Commercial Trust and the sole shareholder of QCC and was the holding company of QCC within the meaning in s 9 of the Act, and Mr Crawford was also the sole director and shareholder of C6PL. The Third Defendant, Brookhollow, is the trustee of the Brookhollow Unit Trust; Mr Crawford was a director of Brookhollow until 5 June 2024 when he was replaced by Mr Greg Ross, an executive of QCC. QCC leased premises from Brookhollow and there were also loan arrangements between QCC and Brookhollow. Prior to entering into voluntary administration on 23 September 2024, QCC carried on a commercial construction business, which involved substantial projects. It had a significant number of employees and substantial unpaid employee entitlement claims in respect of those employees.

This hearing concerns the Liquidator’s application for final orders under s 1323(1) of the Corporations Act 2001 (Cth) (“Act”), or alternatively relief in the Court’s equitable jurisdiction, in the nature of freezing orders against Mr Crawford, C6PL and Brookhollow. Section 1323(1) of the Act broadly allows the Court to make an order to prohibit transfer of money, financial products or other property in specified circumstances including, relevantly, where an “investigation is being carried out under [the Act] in relation to an act or omission by a person, being an act or omission that constitutes or may constitute a contravention of this [Act]”. There is a question in issue in this application as to whether that requirement is satisfied here. Section 1323(3) of the Act relevantly provides that, where an application is made to the Court for an order under s 1323(1), the Court may, if in its opinion it is desirable to do so, before considering the application, make an interim order of the kind applied for that is expressed to have effect pending the determination of the application. I will consider the scope of this section further below.

Mr Parrish appeared for the Plaintiffs in this application. Mr McDonald represented all of the Defendants, and made common submissions as to some matters, although Mr Crawford and C6PL on the one hand and Brookhollow on the other were represented by separate solicitors.

I now set out a chronology of events, which I have drawn from the parties’ joint chronology, the affidavit evidence and the documents which were tendered and to which I was taken in submissions.

There is an issue in the application as to whether QCC became insolvent only shortly before it was placed in voluntary administration or at a significantly earlier date. By email dated 13 May 2023 (Ex P3), Mr Paratore, then a construction manager with QCC, sent an email to Mr Crawford, Mr Ross and others titled “Cashflow” which read as follows:

There was a side issue as to the nature of Mr Paratore’s role within QCC in 2023. An organisational chart of QCC effective from 1 February 2019 recorded that Mr Paratore was QCC’s construction director, reporting to Mr Crawford, although lower in seniority than QCC’s operations director, Mr Ross (Ex P5). Mr Paratore’s “LinkedIn” profile also recorded that he had been construction director at QCC from January 2007 until November 2023. I will address Mr Crawford’s evidence in response to this matter below.

On 9 February 2024, QCC was referred to an insolvency practitioner, Mr Arnautovic, by a representative of Alert Loans Pty Ltd (“Referrer”), although there is a dispute as to what was subsequently discussed between Mr Crawford and other officers of QCC and Mr Arnautovic (Ex J1, CB 136). Mr Crawford appears to accept in his affidavit evidence (Crawford 2.5.25 [9a]) that he met with Mr Arnautovic on (ore possibly not long after) 9 February 2024 but says he did not do so out of concern for QCC’s solvency, but “rather to discuss directors’ liability regarding work health and safety, the property investments which were owned by me and by my family trusts and the leveraging of those investments” and those matters were discussed. His evidence is that that meeting was brief, and they did not discuss QCC’s solvency or insolvency. Although I do not reach any credit finding as to Mr Crawford, who was not cross-examined, I am not persuaded by that evidence for the reasons noted below in dealing with his affidavit evidence.

The parties agree that, between 9 February and 5 March 2024, correspondence was exchanged between Mr Arnautovic, the Referrer, Mr Crawford and Mills Oakley Lawyers (“Mills Oakley”), to which QCC was referred on 13 February 2024 (Ex J1, CB 137), although that correspondence is not in evidence. On 10 February 2024, the two ordinary shares on issue in QCC were transferred from Mr Crawford to C6PL, which has been the sole shareholder in QCC since that date (Ex J1, CB 5). On 13 February 2024, Mr Arnautovic met with Mr Crawford and Mr Ghattas of the Referrer, and Mr Arnautovic referred Mr Crawford to Mills Oakley to obtain legal advice (Ex J1, CB 136-137).

On 26 April 2024, Mr and Mrs Crawford and Mr Blake Crawford, who I infer is a family member, transferred their interest in a property on Arthur Street, Forestville NSW to a third party for $2,350,000 (Ex J1, CB 2638).

On 6 June 2024, Mr Crawford transferred his ownership in the 100 ordinary shares on issue in Brookhollow to Mr Honan, who was QCC’s accountant (50 shares) and Mr Ross, who was an executive in QCC (50 shares) (Ex J1, CB 49-51). Between 19 and 25 June 2024, further correspondence was exchanged between Mr Arnautovic, the Referrer, Mr Crawford, Mr Ross, Ms Worth and Mr Honan (Ex J1, CB 137). On 21 June 2024, Mr Crawford transferred his interest in a property in Ryrie Avenue, Cromer NSW, of which he was sole owner, to a third party for $2,450,000 (Ex J1, CB 2628).

On 25 June 2024, Mr Arnautovic met with Mr Crawford, Ms Worth, Mr Ross and Mr Honan (Ex J1, CB 137). Mr Crawford’s affidavit evidence (Crawford 2.2.25 [9.b.]) is that the purpose of this meeting was to discuss Mr Crawford’s concerns “about the building industry as a whole”. Mr Crawford’s evidence is that he “did not have any concern that [QCC] was insolvent” and he wanted “[a]n understanding of why so many building companies were going broke and to understand the impacts that was having on the industry.” Although I do not reach any credit finding as to Mr Crawford, who was not cross-examined, I am also not persuaded by that evidence for the reasons noted below in dealing with his affidavit evidence.

On 17 July 2024, Mr Crawford entered into a Loan Facility Agreement with QCC which provided that he would advance up to $2,000,000 to QCC (Ex J1, CB 2204). On 23 July 2024, Mr and Mrs Crawford transferred their interest in a property in Arabella Street, Longueville NSW to a third party for $14,780,000 (Ex J1, 2633). On 29 July 2024, Mr Crawford registered security interests over the Company on the Personal Property Securities Register (Crawford 2.5.25 [24.e.]).

By a letter dated 6 September 2024 (Ex J1, CB 3352), to which Mr McDonald refers, Bunnings Group Ltd drew Mr Crawford’s attention to information provided by QCC’s then construction director as to the risk to QCC’s viability, a matter on which Mr Crawford relies as a cause of its failure. I will refer to Mr Crawford’s evidence as to that matter below. Mr McDonald also refers to other projects where the principals reassessed the extent of progress by QCC and its entitlement to payment, adversely affecting its financial position in respect of those projects.

Between 9 and 23 September 2024, further correspondence was exchanged between Mr Arnautovic, the Referrer, Mr Crawford, Mr Ross, Ms Worth, Mr Shaw, Mills Oakley and another law firm, Kerrs Law, which is not in evidence (Ex J1, CB 137). On 18 September 2024, Mr Arnautovic met with Mr Crawford and Mr Ross in person and Ms Worth by telephone and also had a telephone call with Mr and Mrs Crawford (Ex J1, CB 137). In Mr Crawford’s affidavit (Crawford 2.5.25 [9c]), he acknowledges that, at this further meeting with Mr Arnautovic, QCC’s solvency and the voluntary administration of QCC were the focus of discussion, including the viability of a deed of company arrangement, loan agreements, bank guarantees and defect rectification works.

On 19 September 2024, immediately after the meeting with Mr Arnautovic on the previous day, QCC paid $400,000 to an account maintained by Mr Crawford (Ex J1, CB 694, 2411) and, on 20 September 2024, QCC paid a further $700,000 to accounts maintained by Mr Crawford and Ms Worth (Ex J1, CB 695, 2411).

Shortly thereafter, on 23 September 2024, QCC was placed in voluntary administration and Mr Arnautovic was appointed as its voluntary administrator (Ex J1, CB 140). In his Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) (Ex J1, CB 136-139) (on which the Plaintiffs rely for their account of Mr Crawford’s dealings with Mr Arnautovic), Mr Arnautovic noted that his appointment to QCC was referred to him by the Referrer about 9 February 2024 and that he had a physical meeting with Mr Crawford and an officer of the Referrer on 13 February 2024 and that he then referred Mr Crawford to solicitors to obtain legal advice; he had a further physical meeting with Mr Crawford, Ms Worth, Mr Ross and Mr Honan on 25 June 2024; and a physical meeting with Mr Crawford and Mr Ross on 18 September 2024 which Ms Worth attended by phone; and a phone call with Mr Crawford and his wife on 18 September 2024. Mr Arnautovic indicates that he then contacted solicitors to inquire whether they had a conflict in acting. Further correspondence was exchanged during the period 9 February 2024 to 5 March 2024 and between 19 and 25 June 2024 and between 9 September 2024 and 23 September 2024, and the voluntary administration of QCC commenced on 23 September 2024.

Importantly, Mr Arnautovic also there set out the matters discussed between 9 February 2024 and 23 September 2024 as follows:

On 24 September 2024, the day after the voluntary administration commenced, Mr Blake Crawford and Mr and Mrs Crawford transferred their interest in a property in Roseville NSW to a third party for $2,400,000 (Ex J1, CB 2644).

On 1 October 2024, at the first meeting of QCC’s creditors, the creditors resolved to replace Mr Arnautovic with Mr Walker as voluntary administrator of QCC (Ex J1, CB 167).

In his Report on Company Affairs and Property dated 18 October 2024, Mr Crawford explained the reasons for QCC’s failure as follows (Ex J1, CB 2227):

By a Deed of Loan dated 18 October 2024 between Mrs Crawford and Mr Crawford (Ex J1, CB 2530), Mrs Crawford agreed (cl 2.1) to advance a Principal Sum, the amount of $1.6 million, to Mr Crawford to be used solely for the “Approved Purpose”, to discharge a mortgage registered over the Port Macquarie property. Clause 3.2 provided that Mrs Crawford was entitled to register a mortgage over the Port Macquarie property and the Additional Secured Property to secure Mr Crawford’s obligations under the Deed. The “Additional Secured Property” was defined as two properties situated in Forestville, including Mr and Mrs Crawford’s residential property, and a property situated in Nowra. The result of that transaction appears to have been, in substance, that a third party lender was paid out in respect of the Port Macquarie property and Mrs Crawford was substituted as lender in respect of that property. The Defendants do not identify the source of the funds which she advanced, and she in turn took security over several other properties in which she and/or Mr Crawford had ownership interests, on which she could rely if enforcement action was taken against Mr Crawford in respect of his interest in those properties.

On 22 October 2024, the voluntary administrator (now Liquidator) issued his first report to creditors (Ex J1, CB 195). The second meeting of QCC’s creditors was then held and adjourned on 29 October 2024 (Ex J1, CB 271). On 16 December 2024, at the adjourned second meeting of creditors, the creditors resolved that QCC should be wound up (Ex J1, CB 507). The Liquidator has received numerous proofs of debts from unsecured creditors with a total value exceeding $59 million (Ex J1, CB 2393) and has identified potential claims by unsecured creditors exceeding that amount by a substantial margin (Ex J1, CB 214).

On 20 December 2024, Mr Crawford appointed (or purported to appoint) Messrs Cathro and Blundell as receivers and managers to QCC (Ex J1, CB 2793). On 31 January 2025, Mr Crawford rescinded (or purported to rescind) the appointment of Messrs Cathro and Blundell as receivers of the Company and appointed (or purported to appoint) himself as mortgagee in possession over QCC’s property (Ex J1, CB 2806).

On 24 February 2025, Mr Crawford resigned as appointor to the C6 Discretionary Trust and Mrs Crawford was appointed by him as the successor appointor of that trust (Ex J1, CB 3476). On 26 February 2025, Mr Crawford sold a property in Port Macquarie for a sale price of $2,370,000, of which approximately $2 million was paid to Mrs Crawford from the proceeds of sale.

On 7 March 2025, the Plaintiffs filed, in a duty application, the Originating Process which sought, by way of interim relief, orders under s 1323(3) of the Act restraining Mr Crawford until further order from, broadly, dealing with several properties and any other assets in which he had an interest and restraining C6PL and Brookhollow until further order from dealing with their assets. The application for interim relief was supported by an affidavit dated 3 March 2025 of the Liquidator. Hammerschlag CJ in Eq then made orders under s 1323(3) of the Act (“7 March Orders”) against Mr Crawford, C6PL and Brookhollow, continuing only for a relatively short period until 24 March 2025, in the nature of freezing orders, and also made orders for disclosure by each of Mr Crawford, C6PL and Brookhollow. I will return to the scope of s 1323 of the Act below.

On 14 March 2025, I made further orders by consent, without admission by any party and without prejudice to the rights of any party, that order 6(a) of the 7 March Orders with respect to Mr Crawford and C6PL by varied in a specified form. The order made against Mr Crawford was varied so as not to prohibit him from paying a specified weekly amount for ordinary living expenses and paying up to a specified amount for his and C6PL’s reasonable legal expenses or, in respect of other matters, dealing with or disposing of any of his assets in discharging obligations bona fide and properly incurred under a contract entered into before the order was made, after giving the Liquidator at least two working days written notice of the particulars of the obligation. The order against C6PL was also varied to permit payment of reasonable legal expenses and certain dispositions of assets in the ordinary and proper course of C6PL’s business. On 18 March 2025, I made further orders, also by consent, varying the orders made against Brookhollow to include similar provisions.

On 21 March 2025, I made further orders by consent which vacated the scheduled listing of the application on 24 March 2025 and, by an order that was neither consented to nor opposed by the Defendants:

On 2 April 2025, I made further orders, again by consent, which provided for the Court to determine the final relief sought in prayers 18-21 of the Originating Process in a separate hearing and noted the agreement of the parties that:

The parties subsequently sought to vacate the hearing listed on 29 April 2025 and, without admission, the orders contained in Annexures A, C and E of the 7 March Orders as varied 14 March, 18 March and 21 March were then extended again until 6pm on 30 May 2025, the date on which this judgment is delivered.

Turning now to the affidavit evidence, the Plaintiffs read Mr Walker’s affidavit dated 3 March 2025, on which they had relied to obtain the 7 March Orders. He there refers to the circumstances in which he was appointed as voluntary administrator of QCC, in place of Mr Arnautovic who had previously been its voluntary liquidator, and to his transition to become the liquidator of QCC. He refers to background information concerning QCC and Mr Crawford; addresses the payroll and accounting software maintained by QCC; and describes the history of the voluntary administration including proposals for a deed of company arrangement which had been put by Mr Crawford in the course of the voluntary administration, before creditors resolved to place QCC in liquidation. He also refers to his entry into a funding agreement and deed of indemnity with the Commonwealth of Australia (acting through the Department of Employment and Workplace Relations) and to steps which he has taken to obtain access to QCC’s books and records. The agreement reached between the parties, to which I referred above, had the consequence that no issue was taken by either party as to the adequacy of the steps taken by the Liquidator to obtain those books and records or the adequacy of the books and records produced by the Defendants in response to those steps.

The Liquidator also sets out matters that had led him to form the view that QCC was insolvent from at least 1 July 2024, probably insolvent from 1 March 2024, and possibly insolvent from an earlier time. He referred to several errors which he considered had been made in QCC’s 2024 draft financial accounts, which required a restatement of aspects of those accounts. He also noted his assessment that QCC then had a substantial excess of current liabilities over current assets and a lesser excess of total liabilities over total assets; a current liquidity ratio of less than one; had payables (excluding retentions) in excess of $15.3m, with debts in excess of $6.9m that were aged for 90 or more days; and that debts that were aged for 90 or more days constituted approximately 42% of QCC’s accounts payable. He also noted that QCC had a trading loss for the financial year ended 30 June 2024 and identified matters which he considered were indicative of QCC’s insolvency. The Liquidator also identified amounts owed to QCC and the potential claims against the Defendants which he wished to investigate, including insolvent trading claims, a voidable transaction claim against Mr Crawford and specific transactions which he considered required further investigation.

The Liquidator also set out the position in respect of ongoing projects at the point of the voluntary administrator’s appointment to QCC and expressed the view (Walker 3.3.25 [85]; admitted with a limiting order under s 135 of the Evidence Act 1995 (NSW) as submission only) that:

The Liquidator in turn referred to information provided by Mr Crawford as to his assets and liabilities and the position in respect of properties in which Mr Crawford and his wife had an interest and referred to evidence of Mr Crawford’s sale of assets, including the sale of four properties between May 2024 and August 2024, in the period immediately before QCC entered into voluntary administration. The Liquidator also there referred to Mrs Crawford having registered a mortgage over a property at Port Macquarie and lodged caveats over other properties and expressed the view (Crawford 3.3.25 [112]–[113]) that:

I recognise that the Liquidator’s evidence did not address the existence of mortgages over the relevant properties or identify the net, rather than the gross, sale proceeds of the properties, and I recognise that the net proceeds of the properties were significantly less than their gross proceeds, as I will note below.

The Liquidator also there addressed potential voidable transactions claims against Brookhollow and addressed dealings between QCC and Brookhollow. He also referred to the circumstances in which, in late December 2024, Mr Crawford appointed joint and several receivers and managers of QCC in his capacity as a secured creditor of QCC and subsequently became a mortgagee in possession of the secured property. Mr Walker also addressed the position in respect of Mrs Crawford and Mr Ross, who was the Operations Manager for QCC, as a contractor to QCC, and was then appointed as director of Brookhollow when Mr Crawford resigned as director of Brookhollow.

Mr Crawford and C6PL in turn read two asset disclosure affidavits dated 14 March 2025 made by Mr Crawford pursuant to the 7 March Orders.

Mr Crawford and C6PL also read a further affidavit of Mr Crawford dated 2 May 2025 which provided a detailed response to the Liquidator’s affidavit. Mr Crawford there addressed his meetings with Mr Arnautovic in the period prior to the appointment of the voluntary administrators, responding to the Plaintiffs’ reliance on Mr Arnautovic’s disclosure of those dealings in his DIRRI. I have referred to aspects of that evidence in the chronology set out above. I recognise that Mr Crawford was not cross-examined, although I also accept that the content of his meetings with Mr Arnautovic was plainly in issue, given the Plaintiffs’ reliance on Mr Arnautovic’s record of the matters that were discussed. I bear in mind the fallibility of human memory, although these events are not long ago, and the fact that memory may be affected where disputes or litigation intervene, and that objective evidence, where available, is likely the most reliable basis for determining matters of credit that arose as to affidavit evidence. Although I have not formed an adverse view as to Mr Crawford’s credit, I am not persuaded of the reliability of Mr Crawford’s evidence as to these meetings: compare Turner v Richards [2025] NSWCA 83 at [58]ff. I am also not persuaded that he met with an insolvency practitioner several times in order to discuss, inter alia, the position of insolvent construction companies other than QCC, given the then circumstances of QCC. However, even if he had done so, I would infer that discussion of the insolvency of other construction companies, and the near-simultaneous sale of several properties by Mr Crawford and his wife, suggest that Mr Crawford then recognised a significant risk that QCC was then, or would shortly become, insolvent.

Mr Crawford in turn refers to the circumstances in which, he says, the then Construction Manager at QCC told clients of the risk of QCC’s imminent failure in late August 2024 and early September 2024, and attributes QCC’s failure to that matter. I will assume, without deciding, the communication of that matter to clients likely crystallised the issues concerning QCC, but that leaves open the question whether the statements made by QCC’s Construction Manager were true and QCC’s failure reflected its underlying difficulties rather than only the making of those statements. Mr Crawford also refers to the receipt of revised payment schedules in respect of three substantial projects, each of which identified substantial claims against the Company. Mr McDonald rightly accepted that those claims necessarily arose from the factual matters on which the clients relied relating to the period before they were made. Any issue arising from them existed prior to the point at which it was crystallised by the issue of those claims. Mr Crawford also refers to the circumstances in which “rounded” payments were made to particular parties, but it is not necessary to decide that question in order to determine this application.

Mr Crawford also addresses the circumstances of a loan agreement between himself and QCC, which it is also not necessary to address in order to determine this application and explains his treatment of a Forestville property in his earlier asset and liability statement. He also addresses the position in respect of property owned by Brookhollow, as trustee for the Brookhollow Unit Trust, and refers to the position of C6PL as trustee for the C6 Discretionary Trust, as to which he has recently resigned as appointor and Mrs Crawford has taken office as appointor.

Mr Crawford acknowledges that he sold one residential property in 2022 and four residential properties in 2024 for a cumulative value of $23,830,000. His evidence (Crawford 2.5.25 [31]) is that:

Again, while I am conscious that Mr Crawford was not cross-examined and do not reach any adverse credit finding, I am not persuaded by his evidence as to this matter. Even if interest rates had increased over the relevant period, that would not provide an obviously persuasive explanation of why four properties of substantial value were sold within a short period in May 2024, June 2024, March 2024, and August 2024. I am not persuaded that these transactions were unconnected with the issues as to QCC to which I have referred above and the appointment of voluntary administrators to QCC which would shortly follow. I should add, for completeness, that It appears that there was only one increase in the Reserve Bank’s cash rate (of which I am entitled to take judicial notice under s 85A of the Reserve Bank of Australia Act 1959 (Cth)) from 4.10 to 4.35 percent between July 2023 and May 2024; although I have disregarded that matter where the parties did not address it in submissions.

Mr Crawford also addressed aspects of ownership of the Longueville property where he claims, by way of assertion, that Mrs Crawford had a larger interest in the property than was reflected in its joint ownership, arising from her contribution of two-thirds of the purchase price from unidentified assets. Mr Crawford’s evidence is also that the proceeds of sale of the properties were exhausted by repayment of lenders on the properties, legal fees, land tax and other taxes in respect of the sale of the properties. Mr Crawford’s evidence addressed this matter by way of broad assertion, rather than by any attempt to identify particular payments that had been made from the sale proceeds, or identification of documents which recorded those payments. Documents subsequently produced by the Defendants on notice to produce do not support Mr Crawford’s evidence as to this matter. The Plaintiffs have subsequently prepared an aide memoir (MFI 4) which indicates that a substantial portion of the sale proceeds, in excess of $2.88 million, are not accounted for as payments of that character. Mr McDonald accepted the accuracy of that document, subject only to the question whether Mr Crawford should be treated as having an entitlement only to a one-third interest in the Longueville Property (as he claims) or a half interest by reference to the legal title in that property. Even if Mr Crawford was entitled only to a smaller part of the sale proceeds of that property, a significant portion of the sale proceeds of the properties would still not be accounted for.

Mr Crawford also referred to the fact that the 7 March Orders had been made without an exception for payment of his ordinary living expenses and legal fees, and his evidence was that “[t]his caused problems for me including a time where my bank froze all my accounts and prevented me from paying for petrol” (Crawford 2.2.25 [46]). Mr Crawford acknowledged that, on 10 March 2025, changes to the orders had been made to address that difficulty.

By a further affidavit dated 16 May 2025, Mr Crawford referred to Mr Paratore’s email dated 13 May 2023, to which I referred above, and gave evidence that Mr Paratore was not a director of QCC; his role in QCC in May 2023 “was not that of an executive” and his role was as construction manager. Mr Crawford’s evidence was that Mr Paratore was then working on “closing out” projects at Hillsdale and Miranda in respect of defect rectification, and another executive had assumed the role of ongoing management of current projects. Mr Crawford also referred to difficulties in respect of the Hillsdale project and his evidence (Crawford 16.5.25 [9]) was that:

Two significant matters should be noted about this affidavit. First, Mr Crawford makes no attempt to explain the financial position of QCC as a whole, at the time of Mr Paratore’s email, beyond the assertion that it was only in relation to the Hillsdale project that QCC was late in paying its subcontractors. Second, Mr Crawford’s decision that QCC would be “late” in paying subcontractors on that project, which I understand to indicate those contractors would not be paid when payments to them fell due, is arguably an admission of insolvency. It is arguable that, for the purposes of s 95A of the Act, QCC was not able to pay all its debts as when they became due and payable, even if that arose from Mr Crawford’s determination that it would not do so.

Brookhollow reads the affidavit dated 18 March 2025 of Mr Ross, made in response to the disclosure orders made by Hammerschlag CJ Eq, which indicates that Mr Ross is a director of Brookhollow, which is the trustee of the Brookhollow Unit Trust and conducts all of its business operations in its capacity as trustee of the Trust.

Brookhollow also reads an affidavit dated 2 May 2025 of Ms Worth, who indicates that she was then a director of Brookhollow and that Mr Ross was its other director, and that she was previously employed as the Accounts Manager for QCC and had worked for the Quasar Constructions Group for about 28 years until late 2024 when it was placed into administration and then liquidation. She refers to transactions between Brookhollow and QCC and to loans that Brookhollow would make to QCC and also refers to the payment that QCC made to Brookhollow as prepayment on its lease of premises owned by Brookhollow in or around July 2024.

Brookhollow also reads Mr Ross’ affidavit dated 2 May 2025, which again refers to his appointment as a director of Brookhollow; Brookhollow’s ownership of a property and parking spaces at Baulkham Hills; the terms of QCC’s lease of the relevant premises; and the inter-company loan account between QCC and Brookhollow. Mr Ross also addresses a mortgage granted by Brookhollow over the relevant property in favour of National Australia Bank (“NAB”) and expresses the view (in evidence admitted as submission only) that:

The exhibit to Mr Ross’ affidavit included, inter alia, a general ledger recording the loan balance as between QCC and Brookhollow, which Mr McDonald submits shows an account in the nature of a running account and the mortgage in respect of NAB’s loan over the Baulkham Hills property owned by Brookhollow. Mr McDonald submits that an event of default has arisen, or will arise, from the making or continuance of the freezing order, where the Events of Default under the mortgage include that the land is subject to a freezing or confiscation order. I have regard to that matter but also note that an event of default had apparently arisen long ago under that mortgage, where Assetinsure Pty Ltd (“Assetinsure”) had taken steps to wind up Brookhollow, for the purposes of the Events of Default, and a presumption of insolvency had arisen by Brookhollow’s failure to pay or set aside a creditor’s statutory demand issued by Assetinsure.

Brookhollow also reads Mr Crawford’s further affidavit dated 2 May 2025, which records that he was the sole director of Brookhollow from its incorporation in March 2025 until he resigned on 5 June 2024 when Mr Ross and Mr Honan became directors of Brookhollow, and he remained as the sole director of QCC. Mr Crawford refers to an inter-company loan arrangement between QCC and Brookhollow, which he suggests changed from about 2022 so that QCC would borrow money from Brookhollow. He also refers to a substantial payment of rent in advance by QCC to Brookhollow in July 2024 and his evidence is that (Crawford 2.5.25 [13]):

Brookhollow also tendered correspondence from its solicitors to the Liquidator’s solicitors relating to the circumstances in which the freezing order was made by Hammerschlag CJ Eq and also tendered affidavit evidence led by Brookhollow in other proceedings in this Court in which Assetinsure seeks to wind up Brookhollow in insolvency. The present position in those proceedings is that a presumption of insolvency in respect of Brookhollow has arisen from its failure to satisfy a creditor’s statutory demand issued by Assetinsure, and Brookhollow has been declined leave under s 459S of the Act to contend that a genuine dispute exists as to the debt on which Assetinsure relies for the winding up. That winding up application is listed for hearing in June 2025.

Brookhollow also tendered a document headed “loan approval” issued by Engine Capital in respect of a proposed loan of $5 million to C6PL, which would be guaranteed by Brookhollow, subject to conditions including a satisfactory valuation of the Baulkham Hills property, by reference to an estimated value of the property; submission of a range of documents in satisfactory form; the freezing order made against Brookhollow being set aside to the satisfaction of Engine Capital; and Assetinsure providing a deed of release and settlement to the satisfaction of Engine Capital. Three matters should be noted about that “loan approval”. The first is that, as Mr McDonald fairly accepted, the so-called “loan approval” does not include any commitment by Engine Capital to make a loan, even apart from the several conditions to which I have referred above. Second, the proposal contemplates that Assetinsure will provide a deed of release and settlement in respect of the debt that underlies the loan, before the loan is made; but Brookhollow must first raise the loan funds before it can pay out the debt owed to Assetinsure that underpins the winding up application. Third, a payment to Assetinsure that is now made would, if Brookhollow is subsequently wound up, have preferred Assetinsure’s claim to the contingent claims which the Plaintiffs have identified against Brookhollow.

The parties in turn tendered a voluminous joint exhibit (Ex J1) although only a relatively small number of documents contained in that exhibit were relied on in that application.

In the event, three issues were addressed at the hearing. The first, which I will not need to determine on a final basis, is whether there was a non-disclosure at the hearing before Hammerschlag CJ Eq on 7 March 2025 which would warrant an order setting aside the 7 March Orders. The second was whether the Court now has jurisdiction to make, and should make, a final order under s 1323(1) of the Act. The third was whether the Court should make an order other than under s 1323 of the Act, whether continuing until further order or for a shorter period.

The parties agreed a regime which narrowed the matters in issue (MFI 2). Elements of that agreement were, broadly, that without prejudice to parties respective rights concerning the relevant matters, the Plaintiffs would not press their contentions concerning a suggested inadequacy of books and records produced to the Liquidator and alleged non-cooperation by Mr Crawford and others in respect of the books and records; the Defendants would not put their contentions in response; the Plaintiffs would not take a Browne v Dunn point in respect of submissions that the Defendants might take in respect of a “failure” by the Liquidator to conduct a bank reconciliation, although that proposition was ultimately not pursued; certain objections to the Liquidator’s evidence would not be pressed and he would not be required for cross-examination; the Plaintiffs would place no reliance on s 588E(4) of the Act, for a presumption arising from a failure to keep financial records; and it remained open to the Defendants to rely on affidavit evidence led in respect of the books and records.

As I noted above, the Defendants seek to raise an issue as to whether there had been non-disclosure by the Plaintiffs at the hearing when the 7 March Orders were made. Mr McDonald relied on a single set of submissions for all Defendants in respect of the claim for non-disclosure in the ex parte application.

Mr McDonald referred to the circumstances in which that order was made and the submissions made by Mr Parrish in respect of that application above, which I will summarise below. Before turning to those matters, I should note that Mr Parrish drew attention to two difficulties in respect of the Defendants’ submissions as to this matter, I raised a third in the course of submissions and a fourth has now arisen from the passage of time. First, Mr Parrish points out that the Defendants bring no application to set aside the orders made by Hammerschlag CJ Eq and, second, he points to a real issue as to the adequacy of notice given by the Defendants that they would seek to raise this issue. As I have noted above, there is a brief reference in Mr Crawford’s first affidavit to the absence of an exception for ordinary living expenses in the terms of the freezing order sought from Hammerschlag CJ Eq and granted by him; there are then references, in Mr McDonald’s outline of submissions served just before the hearing, in a somewhat discursive manner, to submissions which the Defendants might have made before Hammerschlag CJ Eq. A list of the matters which the Defendants say should have been disclosed to Hammerschlag CJ Eq comprising numerous matters (MFI 3) was first made available on the second day of the hearing, pursuant to a direction that I had made requiring identification of those matters.

A third difficulty, to which I drew attention in the course of the hearing, is that the 7 March Orders have since been varied and continued by consent orders subsequently made on the application of the parties which specifically dealt with at least one of the matters on which the Defendants rely as a non-disclosure in respect of the hearing before Hammerschlag CJ in Eq, although expressly without prejudice to the parties’ rights. A fourth difficulty is that, although this judgment has been delivered with two weeks of the hearing of the application, the freezing order made by Hammerschlag CJ in Eq, as varied and extended by consent, will in any event expire today. Any new order will be made on a fully contested basis, and I do not accept that, on the authorities, an order that is shown to be justified on its merits on a contested basis should be withheld by reason of a non-disclosure affecting an earlier ex parte order, still less one that has been since varied and continued by consent.

On balance, I consider that I should briefly address the applicable authorities and the matters raised by the Defendants, but I do not consider it is necessary or appropriate to determine this aspect of the application on any final basis, both because the Plaintiffs were not given fair notice of the matters to be raised or an adequate opportunity to respond to them, and because the 7 March Orders will expire today in any event and any new orders will be made on a contested basis.

I now turn to the applicable authorities, then the submissions made by the Liquidator before Hammerschlag CJ in Eq on 7 March 2025, then the matters which the Defendants contend were material non-disclosures on that date. Mr McDonald draws attention to several authorities which establish the extent of the obligation of disclosure in an ex parte application, and the Court’s power to set aside an order made on that basis where that obligation is not met. He draws attention to Hartwood Architectural Timber and Joinery Pty Ltd v Redchip Lawyers [2009] 2 Qd R 499; [2009] QSC 195, where an order made on an ex parte basis was understandably set aside, where the applicant had omitted an undertaking as to damages from the draft order that it had prepared and had not drawn this matter to the Court’s attention. Mr McDonald also drew attention to the review of those principles by Brereton J in Brags Electrics Pty Ltd v Gregory [2010] NSWSC 1205 at [10]ff and to Henry J’s observations in Tyche Asset Management Pty Ltd v Flyland Development Group Pty Ltd [2021] NSWSC 1283 at [37]-[41] as follows:

Mr McDonald points out that these observations were approved in Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 3) [2024] FCA 822 at [26]. He also refers to the Court’s power to set aside orders made on an ex parte basis under Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 36.16 in an appropriate case, recognised in Ramsay Featherston Resources Ltd [2013] NSWSC 1923 at [14] (“Ramsay”).

Mr McDonald also draws attention to the summary of the applicable principles as to disclosure in Naidenov, Re 30 Denham Pty Ltd (in liq) (2023) FCA 134 at [10]-[11] (“Naidenov”) where Steward J observed that:

Mr McDonald also draws attention to Robb J’s summary of the applicable principles in Direct Flow Pty Ltd t/a Arthur Rubber v Andrew Petersen t/a Maxx Rubber [2023] NSWSC 318 at [44]ff, where his Honour also observed (at [53]) that the better view appears to be that, although an applicant’s failure to make full and frank disclosure will ordinarily entitle a party subject to a search order to its discharge, that remains a matter in the exercise of the Court’s discretion. Mr McDonald also drew attention to the review of the applicable principles by Rees J in Honeywell Ltd v Acciona Infrastructure Projects Australia Pty Ltd [2023] NSWSC 663 at [72]ff and Madsen v Darmali [2024] NSWSC 76 at [12]ff.

Turning now to the submissions made by the Liquidator before Hammerschlag CJ in Eq on 7 March 2025, the Defendants tender the written outline of submissions on which the Plaintiffs relied on that occasion, and I was also taken to the transcript of oral submissions. Mr Parrish had there referred to the applicable principles for an interim order made under s 1323(3) of the Act, which had been considered in Hogan (liquidator) v McCorkell (2023) 169 ACSR 460; [2023] FCA 863 (“Hogan v McCorkell”). He also referred to the Liquidator’s affidavit dated 3 March 2025, which I have addressed above. He identified five matters that the Liquidator sought to investigate in the winding up of QCC, including insolvent trading claims under ss 588G and 588M of the Act in respect of Mr Crawford and under ss 588V and 588W of the Act in respect of C6PL; potential voidable transaction claims and breach of director’s duties claims; the financial capacity of persons against whom claims might be brought; the Company’s dealings with its principal contractors, and a fifth matter which is not in issue in this application. Mr Parrish then addressed each of those claims in turn.

Mr Parrish there also referred to observations of French J in Re Richstar Enterprises Pty Ltd; Australian Securities and Investments Commission v Carey (No 3) (2006) 57 ACSR 307; [2006] FCA 433 at [25]-[27] (“Richstar Enterprises”); the scope of the Court’s power under that section; the availability of interim relief under s 1323(3) of the Act and the observations made by Lee J as to the scope of that power in Hogan v McCorkell; and also addressed other applicable principles. Mr Parrish there drew attention to several matters which he contended submitted the relief sought and, in particular, submitted that:

Mr Parrish there submitted that, in the absence of an explanation as to why this occurred at the time at which it did, it was conduct on the part of Mr Crawford to rearrange his financial affairs in a manner which has the hallmarks of a person who was taking steps to shield his assets from a liquidator; and that these matters demonstrated that there was a considerable risk of Mr Crawford continuing to divest himself of his assets once he became aware that the Liquidator was conducting public examinations. Mr Parrish also there referred to the Plaintiffs’ claims against the several Defendants and a claim that Mr Crawford, Mr Ross and Ms Worth have provided insufficient cooperation in respect of the liquidation. That allegation was not pressed in this application by reason of the agreement between the parties to which I referred above.

At the hearing on 7 March 2025, Hammerschlag CJ Eq asked Mr Parrish whether there was anything not in the written submissions to which it was appropriate to draw his attention as potentially having some material effect on the application and Mr Parrish responded “No”. His Honour then indicated that he would make a freezing order but would not order examinations until the Defendants had an opportunity to be heard.

Turning now to the non-disclosures for which the Defendants contend, Mr McDonald identifies numerous matters which he contends should have been disclosed to Hammerschlag CJ Eq, beyond the matters addressed in Mr Parrish’s written submissions before his Honour. I will briefly address those matters without expressing a final view, where it is not necessary to do so.

First, Mr McDonald submits that Mr Parrish should have drawn Hammerschlag CJ Eq’s attention to the proposition that there was no evidence or submission that Brookhollow acted as a “shadow” director or officer of QCC and Brookhollow could not have breached s 180 of the Act. However, in oral submissions, Mr McDonald fairly recognised that the claim against Brookhollow identified by the Plaintiffs before Hammerschlag CJ Eq was one of involvement in Mr Crawford’s possible contraventions of s 180 of the Act by operation of s 79 of the Act, and that did not depend on any proposition that Brookhollow was a shadow director or officer of QCC. For completeness, it was also a short step from that claim to identify potential claims under s 181-182 of the Act, to which the Plaintiffs now refer in submissions in this application. It does not seem to me that it was a matter that was material for disclosure before Hammerschlag CJ Eq, where any claim against Brookhollow is not put on the basis that it is a shadow director or officer of QCC but by reference to Mr Crawford’s breach of directors duties, arising from payments made to Brookhollow, and an allegation that Brookhollow was involved in that contravention for the purposes of s 79 of the Act. The identification of a case that is not put would not have assisted the determination of the application.

Second, Mr McDonald submits that disclosure should have been made that claims under s 588FA, 588FB, 588FDA and 588FF of the Act do not give rise to a contravention of the Act, which could support relief under s 1323 of the Act. While that proposition is correct, it does not seem to me that that it was material for disclosure before Hammerschlag CJ Eq where, first, those provisions were referred to in Mr Parrish’s submissions as matters that were under investigation by the Liquidator; and, second, there were plainly claims available to the Liquidator, most obviously for breach of director’s duties and knowing involvement, that amounted to potential contraventions of the Act and would support at least interim relief under s 1323 of the Act.

Third, Mr McDonald submits that the Liquidator should have drawn Hammerschlag CJ Eq’s attention to the fact that Mrs Crawford obtained a mortgage, at least over the Port Macquarie property, after she paid out the existing mortgage secured on that property which, Mr McDonald submits, “in all likelihood, grant[ed] her a caveatable interest in his properties”. It does not seem to me that there was any obligation to make that disclosure. First, the Liquidator had not submitted before Hammerschlag CJ Eq that Mrs Crawford did not have a mortgage over the Port Macquarie property; and, to the extent that any suggestion was made that Mrs Crawford’s lodging caveats over several properties was a step taken to impede the conduct of the liquidation, the existence of the mortgage over the Port Macquarie property did not indicate a basis on which the caveats had been lodged over the several properties, or provide a potential answer to any inference that that step was deliberately taken to impede the Liquidator’s access to those properties within a wider strategy to that end.

Mr McDonald submits that the Liquidator should have disclosed four matters which are said to arise from his reports to creditors or affidavit, including that Mr Crawford was a secured creditor of QCC and there was a record in the Company’s accounts that he had made a loan to QCC and repayments had been made of that loan including an amount said to have been paid, by direction, to Ms Worth. I accept that it is arguable that matter should have been disclosed, as a matter on which Mr Crawford would likely have relied to displace or contextualise criticisms of payments made out of the Company shortly before it was placed in voluntary administration, although I do not reach a final view for the reasons noted above. Fifth, Mr McDonald submits that the Liquidator should have disclosed that Mr Crawford was entitled to exercise his rights as a secured creditor in appointing a receiver to assets of QCC. Again, I accept that it is arguable that matter should have been disclosed, as a matter on which Mr Crawford would rely, without expressing a final view. However, I also recognise that the gravamen of the issue raised by the Liquidator’s application for interim orders was the risk of dissipation of assets by Mr Crawford, C6PL and Brookhollow; Mr Crawford’s entitlement to exercise those rights would not be an answer to any concern that might exist that that right was being used, together with Mrs Crawford’s newly acquired rights as a secured creditor, to frustrate any claim by QCC or the Liquidator against properties owned by Mr and Mrs Crawford and would not provide an answer to any risk of dissipation of Mr Crawford’s, C6PL’s or Brookhollow’s assets.

Sixth, Mr McDonald submits that the Liquidator should have explained or drawn Hammerschlag CJ Eq’s attention to the fact that his supporting affidavit for the application had been signed four days before it was made, and that the application was made some three months after his appointment, which followed a period in which he had acted as voluntary administrator. Again, it does not seem to me that those matters required disclosure on an ex parte application, where the date of the Liquidator’s affidavit and the date of the application would both have been apparent to Hammerschlag CJ in Eq; the Liquidator’s affidavit and Mr Parrish’s submissions both addressed the history of the Liquidator’s appointment; and there was no basis to think there had been any unreasonable delay in bringing the application within a relatively complex voluntary administration and liquidation so as to provide reason not to make the orders sought by the Liquidator.

Seventh, Mr McDonald submits that the Liquidator should have disclosed eight facts that were known to him, or could reasonably have been ascertained by him, as to the sale of properties by Mr Crawford; the mortgage held by NAB over Brookhollow’s property and the terms of that mortgage; the availability of a running account defence in respect of a claim against Brookhollow; and that the insolvent trading claim identified in the application before Hammerschlag CJ Eq was larger than that previously identified in the voluntary administrator’s (and now Liquidator’s) report to creditors. I accept that it is arguable that the Liquidator might preferably have indicated that the amount of the net realisations by Mr Crawford on a sale of the properties would have been significantly less than the gross realisation on those sales, although that may have been self-evident in the relevant circumstances. I do not accept that the security arrangements in respect of the Brookhollow property or any suggestion of a “running account” was material for disclosure, not least because any claim against Brookhollow supporting the relief sought before Hammerschlag CJ in Eq by way of an interim order under s 1323 of the Act did not depend on a preference claim in respect of Brookhollow. I also do not consider the increase in the amount of the Liquidator’s insolvent trading claim to be a matter that was material for disclosure, where that did not impact on whether the current quantification of that insolvent trading claim had an arguable basis.

Eighth, Mr McDonald submits that the Liquidator should have drawn Hammerschlag CJ in Eq’s attention to the fact that the terms of the interim orders sought under s 1323 of the Act differed materially from the standard terms of a freezing order set within Practice Note SC Gen 14, at least in respect of the absence of an exception for ordinary living expenses for Mr Crawford. I accept the proposition is arguable, although the standard form in the Practice Note SC Gen 14 is not applicable to an interim order sought under s 1323(3) of the Act. It is not necessary to reach any final view as to that matter, where the order made by Hammerschlag CJ Eq, as amended and extended by consent, will expire today in any event and any new orders that are made will follow a contested hearing.

Ninth, Mr McDonald submits that the Liquidator should have informed the Court of two matters relating to the winding up application brought by Assetinsure against Brookhollow. He submits that the fact of that winding up application would have been capable of affecting the Court’s decision to exclude a carveout from the freezing order to allow Brookhollow to “discharge obligations bona fide and properly incurred under a contract entered into before this order was made”. I do not accept that submission, where Brookhollow had not paid the debt claimed by Assetinsure for a significant time before the Liquidator’s application was brought and there was no reason to think that Brookhollow then had any intent or capacity to pay the debt claimed by Assetinsure which would be adversely affected by the making of the interim order that was sought under s 1323(3) of the Act. Mr McDonald also submitted, in oral submissions, that Hammerschlag CJ Eq was not told that the Defendants were not offering an undertaking as to damages. This issue was not in the list of non-disclosures on which the Plaintiffs now rely, and I do not address it further, beyond noting (in fairness to the Plaintiffs) that s 1323 of the Act prevents the Court requiring such an undertaking as a condition of relief under s 1323(3) of the Act, although the Court may still have regard to whether it is offered.

In summary, Mr McDonald submits that:

Mr Parris responded briefly to this issue in oral submissions where, as I noted above, the Liquidator had not been given adequate notice of the issues that were sought to be raised.

I have, of course, also considered these matters collectively as well as separately, again without forming a final view about them. In summary, I am not persuaded that the 7 March Orders (as later varied and extended by consent) should be set aside for non-disclosure for several reasons. No application to set aside those orders was made by the Defendants, and that is a matter that ought to have been dealt with by a formal application, so as to give the Plaintiffs fair notice of the fact that they needed to address that application. Second, to the extent that any issue arose as to the exception for ordinary living expenses in respect of Mr Crawford, that issue was addressed by the consent orders to which I have referred above. Third, in any event, there is no utility in now setting aside the 7 March Orders, as varied and extended, by reason of any non-disclosure, where they will expire today in any event and any further orders will result from a contested application between the parties.

Mr McDonald also submitted that any breach of the duty of ex parte disclosure would be a factor relevant to the exercise of discretion now to make any final order under s 1323(1) of the Act and would be relevant to whether the Plaintiffs had “clean hands” in seeking alternative relief in equity. Even if there was an arguable breach of a duty of disclosure in respect of the exception for ordinary living expenses at the ex parte hearing before Hammerschlag CJ Eq, it seems to me that that matter, whether approached as a question of discretion or approached as a question of “clean hands”, does not have sufficient weight to prevail against the reasons to grant the relief that is sought on the basis set out below. For completeness, I recognise that Mr McDonald also foreshadows a potential claim by the Defendants against the Liquidator so far as any disclosure should have been made, but was not, in respect of the ex parte application before Hammerschlag CJ Eq. I do not consider that that is reason for me to reach final conclusions as to the Defendants’ claim as to these matters, where, as I have noted above, no application was here made by the Defendants that raised such a claim; the Plaintiffs were not given fair notice of the basis of that claim; and it is otherwise not necessary to decide it to determine the proceedings. It may or may not be open to the Defendants to pursue such a claim in proceedings in which it is squarely raised, and adequate notice of the claim has been given to the Plaintiffs to allow them a fair opportunity to meet that claim.

Also for completeness, in his submissions for all Defendants as to the scope of s 1323 of the Act, Mr McDonald also addresses the scope of s 1323(3) in respect of the grant of an interim order. He there appears to contest the interpretation given to that section in cases including Naidenov and Hogan v McCorkell, to the effect that the Court may make an interim order under that section if, in its opinion, it is desirable to do so, before considering the application and forming a view as to whether an order would be made on a final basis under s 1323(1). It seems to me that that is the plain effect of the terms of s 1323(3); and it reflects the possibility that an interim order will need to be made urgently, before a regulator or applicant has sufficient time to assemble the evidence necessary to establish a basis for final relief under s 1323(1) of the Act, or where there is not sufficient time for a contested hearing as to that question. It seems to me that the decisions which have proceeded on that basis are plainly correct. I do not accept Mr McDonald’s submission that a power must first exist under s 1323(1) of the Act in order to make an interim order under s 1323(3) of the Act.

I have referred to the terms of s 1323 of the Act above. I summarised the scope of that section in Re Courtenay House Capital Trading Group Pty Ltd (in liq) (2018) 133 ACSR 451; [2018] NSWSC 1918 at [11]ff as follows:

A person is an aggrieved person for the purposes of this section if he or she is one to whom the relevant person either is liable or may be or become liable to pay money: Australian Securities and Investments Commission v Sigalla (2009) 74 ACSR 710; [2009] NSWSC 1205 at [19]. I do not understand there to be any dispute that QCC and likely the Liquidator are persons aggrieved who have standing to seek the relief sought against the Defendants.

As I have noted above, the purpose of orders under this section is to protect the interests of aggrieved persons by preserving the relevant person’s assets until, relevantly, an investigation is completed, so that those assets will be available to meet the claims of those persons: Australian Securities and Investments Commission (ASIC) v Sino Australia Oil & Gas Ltd (2014) 101 ACSR 115; [2014] FCA 565 at [12]–[13] (“Sino Australia”); Australian Securities and Investments Commission v Secure Investments Pty Ltd [2020] FCA 639 at [27(a)]. It is sufficient to support an order under that section that a person may have potential liability to the person seeking the order for breach and the applicant need not establish actual liability: Richstar Enterprises at [26]; Sino Australia at [12]. An order under this section may be “necessary or desirable” if it will protect the interests of persons who have claims against a defendant, so as to preserve property that may provide a source of vindication of their rights: Sino Australia at [13]. The Court’s function in granting an order under this section involves an element of risk assessment and management, and the Court must balance the interests of the aggrieved person with the interests of a respondent in avoiding undue interference in his or her affairs: Richstar Enterprises at [26]–[30]; Courtenay House at [11]; Australian Securities and Investments Commission (ASIC) v A One Multi Services Pty Ltd [2021] FCA 1297 at [27].

These matters are uncontroversial and the real question in dispute here is whether the Court has power to make a final order under s 1323(1) of the Act where, rather than ASIC conducting a statutory investigation under the Australian Securities & Investments Commission Act (“ASIC Act”), a liquidator is conducting examinations under ss 596A or 596B of the Act or subsequent investigations with a view to commencing proceedings. Mr Parrish fairly recognises that, in Hogan v McCorkell at [76], Lee J observed that “[i]t has not been settled … whether an ‘investigation’ within the meaning of s 1323(1)(a) includes an investigation conducted by a private liquidator”.

Before turning to the parties’ submissions, I should address the legislative history of this section, to which Counsel paid limited attention. This section originated with cl 273 of the Corporations and Securities Industry Bill 1975 (Cth) and its predecessors were s 573 of the Companies Code, introduced by the Companies Bill 1981, and s 155 of the then Futures Industry Act 1986 and s 147 of the then Securities Industry Act 1980 and s 1323 of the Corporations Law. The predecessor sections also applied, inter alia, when an “investigation” was being carried out under the relevant legislation, then in respect of an act or omission that constituted or may constitute an offence against the relevant legislation. Part VII of the Companies Code than made provision for “special investigations” undertaken by an inspector appointed under that Part; Part II Div 2 of the Securities Industry Code provided for investigations which could be undertaken by the then Corporate Affairs Commissions or National Companies & Securities Commission or by an inspector; and s 573 of the Companies Code only allowed standing to seek such an order to the relevant Commission, suggesting that the section had a narrower application than the Plaintiffs now seek to attribute to s 1323 of the Act. The Explanatory Memorandum to the Companies Code was unilluminating in respect of that section, noting only that “[i]f an investigation, prosecution or proceeding is in progress, the Supreme Court will be able, on application by the NCSC” to make specified orders.

The scope of the term “investigation”, when used in s 573 of the Companies Code (Vic) and s 147 of the Securities Industry Act was considered in Commissioner for Corporate Affairs (Vic) v Guardian Investments Pty Ltd; sub nom Guardian Investments Pty Ltd; Wade v Guardian Investments Pty Ltd (CLC) [1984] VR 1019; (1984) 9 ACLR 162; (1984) 2 ACLC 165 (“Guardian Investments”), to which Counsel did not refer. Ormiston J there observed (at ACLR 164) that:

It is plain that his Honour here understood the concept of “investigation” to be limited to a regulatory investigation under specific provisions of the Companies Code. That decision has been cited in several subsequent cases, but only one of those cases deals with the scope of s 573 of the Companies Code or s 1323 of the Act.

Later cases often typically concern the position where the then Corporate Affairs Commissions or statutory inspectors had commenced an investigation: for example, Corporate Affairs Commission v Walker (1987) 5 ACLC 991; Lone Star Exploration NL v Corporate Affairs Commission (1988) 6 ACLC 1108. However, in Corporate Affairs Commission v ASC Timber (1989) 7 ACLC 467 (“ASC Timber”), Powell J considered whether an investigation under Pt VII of the Companies Code, pursuant to a ministerial direction, founded the power to make an order under s 573 of the Companies Code. His Honour referred to Guardian Investments and arguably took a somewhat wider view than that taken by Ormiston J, observing that:

I allowed Counsel a short opportunity to make further submissions as to the decisions in Guardian Investments and ASC Timber. Unsurprisingly, Mr McDonald submitted those decisions supported a narrower view of the concept of “investigation” in s 1323 of the Act and he pointed to the references to the need for a suspicion of an offence in Guardian Investments, which reflect Ormiston J’s view that the section was directed to a regulatory investigation, and the threshold for a regulator to commence such an investigation.

Mr Parrish rightly recognises that cases concerned s 573(1) of the Companies Code which under which an application could only be brought by the relevant Commission and not by an “aggrieved person”. He submits that:

As I noted above, s 1323 was then introduced in the Corporations Act 1989 (Cth), in place of s 573 of the Companies Code. The Explanatory Memorandum noted that relief could now be sought by an “aggrieved person”, but otherwise did not elaborate on the scope of an “investigation” under the section, as follows:

I recognise that the introduction of a wider standing test in s 1323 of the Act, extending the power to bring an application to a person aggrieved, potentially allows a wider scope for the section’s operation in respect of “investigations” of a wider character. I also recognise that it would be a surprising outcome if this potentially wider application of the section has been available, apparently unnoticed, for more than twenty years; but surprise at an outcome is not a recognised basis for statutory construction.

Cases after s 1323 was introduced also involved the conduct of regulatory investigations or relied on the other bases for relief under the section: for example, Australian Securities and Investments Commission (ASIC) v Allied Financial Pty Ltd [2002] VSC 204; Australian Securities & Investments Commission v Marshall Bell Hawkins Ltd (2002) 43 ACSR 340; [2002] FCA 1511. In Australian Securities and Investments Commission (ASIC), Re; Richstar Enterprises Pty Ltd v Carey [2006] FCA 366 at [31], Siopis J referred to the availability of such an order where an investigation was being carried out by ASIC, in a manner that did not recognise but also did not exclude a wider operation of the section, as follows:

The scope of s 1323 was also considered in academic commentary after its introduction: see P Von Nessen, “The Section 1323 Injunctive Power of the Australian Securities Commission: Its Operation and Shortcomings” (1996) 22 Monash University Law Review 140, where the author appears to have assumed, without full analysis, that the section was only available in respect of an investigation conducted by the then Australian Securities Commission.

Turning now to the parties’ submissions as to this issue, Mr Parrish refers to and I have regard to, uncontroversial principles of statutory construction, which I need not repeat. Mr McDonald did not take issue with Mr Parrish’s summary of those principles. Mr Parrish also addresses the statutory history of s 1323 of the Act to which I also have regard. He refers, importantly, to the text of s 1323(1)(a) which relevantly provides that:

Several aspects of the scope of this section were not in contest between the parties. Mr Parrish addresses the phrase “is being carried out” in this section but Mr McDonald did not suggest that that requirement of the section would not be satisfied, if the element(s) of “investigation … under this [Act]” were satisfied. It seems to me plain enough that, if a liquidator’s examinations constitute an “investigation”, that the Liquidator is presently carrying out such an investigation. Mr Parrish also refers to the term “under” in the section, and refers to commentary suggesting that things done “under” a statute include things done by bodies authorised by the statute. I accept that a step, including liquidator’s examinations, is taken “under” the Act where the Act provides the authority by which it is done. Mr McDonald did not contend to the contrary. Mr Parrish also recognises that s 1323 of the Act appears in Chapter 9 whereas the statutory methods of investigation appear in Chapter 5, including Pt 5.9 which concerns public examinations. He submits, and it seems to me plain, that the ordinary and natural expression of the phrase “under... this [Act]” means the whole of the Act, thereby picking up a liquidator’s powers conferred by Ch 5, to the extent that the exercise of those powers is properly characterised as an “investigation”. Mr McDonald did not contend to the contrary.

Mr Parrish also addresses the language “in relation to”, but it is not necessary to address that concept further. It is here plain that any investigation being undertaken by the Liquidator is in relation to acts by Mr Crawford, C6PL and Brookhollow that at least may constitute contraventions of the Act. Mr Parrish submits and I also accept that the term “a contravention of the Act” is not limited to a contravention of a civil penalty provision of the Act, where provisions of the Act (including s 588V(1)) that are not civil penalty provisions refer, in terms, to a contravention of the section. Mr McDonald again did not contend to the contrary.

The real issue that was in contest between the parties was whether a liquidator’s conducting liquidator’s examinations with a view to potential proceedings was an “investigation under the [Act].” Mr Parrish rightly points out that the word “investigation” in this section is not defined in either the Act or the ASIC Act. He submits that the term “investigation” is the noun corresponding to the verb “investigate”, which by its ordinary meaning means, in effect, to carry out an inquiry to discover certain facts. He recognises that the relevant “investigation” must be “carried out under the ASIC Act or this Act” and likely requires one that arises pursuant to a statutory power, or that finds some statutory expression.

Mr Parrish in turn submits that liquidator’s examinations under ss 596A and 596B of the Act are an “investigation” and draws attention to the submissions made in Hogan v McCorkell at [82] and [84] that:

Mr Parrish also submits that:

Mr Parrish also submits that:

Mr Parrish also submits that:

I accept the proposition put in the first sentence of this submission. I do not accept the balance of the submission, where an investigation under the ASIC Act will generally, if not always, meet the threshold requirements under s 13 of the ASIC Act, and a liquidator may conduct examinations, at least under s 596A of the Act, without any higher level of formality and potentially without having first formed a suspicion of a contravention of the Act which is a prerequisite to an investigation under s 13 of the ASIC Act.

Mr Parrish also submits, and I accept, that s 1323(1) of the Act is framed by reference to what is being done, rather than by whom, and is not limited to an investigation that is carried out by ASIC, provided that a private party can establish the other necessary elements that it is carrying out “an investigation … under … this [Act]”. I expressed the same view in Ramsay at [15], in noting that the limitation in the section is that the investigation be one carried out under the ASIC Act or the Act. I also accept that, as Mr Parrish submits, that reading is consistent with the purpose of the section, although that reinforces a conclusion that would be drawn from the plain words of the section. I do not find it useful to ask, as Mr Parrish does, whether a contrary reading of the section would “deny” liquidators the opportunity to obtain freezing orders under the section, where the construction of the section answers the question whether they should have access to such orders, which is not advanced by any a priori assumption that they should or should not have such access.

Mr McDonald, in submissions made for all of the Defendants, responds that investigations, which he acknowledged were being carried out by the Liquidator, did not engage s 1323 of the Act and the Liquidator was not able to seek an order under that section, because the Liquidators’ investigations do not constitute an “investigation [that] is being carried out under … this Act”. Mr McDonald submits that only investigations within the scope of s 1323 are limited to those “which are defined as being investigations (or inquiries) under the [Act], which in all instances involved the control of the Court”. I cannot accept that proposition, where investigations by ASIC under s 13 of the ASIC Act are not under the Court’s control in any immediate sense. Mr McDonald also points out that there are other provisions in the Act which create express duties to carry out an investigation, including s 438A in respect of a voluntary administrator’s investigation of a company’s business, property, affairs and financial circumstances. He submits that:

I also do not accept that submission, where the Court is required to construe s 1323(1)(a) in accordance with its terms and without any preconception as to the scope that it should have, independent of its terms. There is no particular reason to be concerned if a voluntary administrator’s investigation under s 438A of the Act also falls within the scope of that section, where the fact that the Court has power to make an order under that section does not have the consequence that it will do so in every or any particular case. Mr McDonald also submits that there would be “inconsistency” in finding that s 1323 applies upon the appointment of a voluntary administrator, where there is no similar express obligation for a liquidator to investigate “under the [Act]”. No such inconsistency would arise on the Liquidator’s case, namely that the Liquidator’s conduct of examinations under s 596A or s 596B of the Act also amounts to an investigation that satisfies the jurisdictional threshold for s 1323 of the Act.

Mr McDonald also rightly points to the absence of a discretion as to whether to summons an eligible person for examination under s 596A of the Act. Again, that does not seem to me to be a reason not to accept the construction of s 1323 for which the Liquidator contends since, where there was no identifiable contravention of the Act that is the subject of a liquidator’s examination, then the Court would not have power to and would not make orders under s 1323 of the Act. Mr McDonald also submits that it would be “self-serving” for a liquidator to decide to conduct an examination under s 596A of the Act which empowered the Court to grant relief under s 1323 of the Act in favour of a liquidator. I also do not accept that submission. First, that position is little different from a decision by ASIC to conduct an investigation under s 13 of the ASIC Act, albeit after it has formed the relevant suspicion, which then empowers the Court to grant relief under s 1323 of the Act. Second, and importantly, the fact that the Court has power or jurisdiction to grant that relief again does not have the consequence that it will do so generally or in any particular case.

Mr McDonald also draws attention to the fact that the Court has power to direct an investigation under s 423(3) of the Act relating to the conduct of a controller; has power to order an “inquiry” under several provisions in the Insolvency Practice Schedule (Corporations); and can appoint an independent person to investigate matters in a derivative action under s 241 of the Act. I accept that these matters may also potentially provide a basis for an order under s 1323 of the Act; but it seems to me that provides no reason why an investigation conducted by reason of liquidator’s examinations may also not support such an order. Mr McDonald also rightly draws attention to the more extended structure for an “investigation” under Part 3 of the ASIC Act and I have had regard to the fact that a liquidator’s examination may take place without satisfying the threshold for an investigation under s 13 of the ASIC Act. Mr McDonald also points to the potentially “drastic” effect of a freezing order but that takes matters no further where the Court will have regard to that effect in determining to make that order, if it has power to do so under s 1323 of the Act.

In summary, I recognise that liquidators’ examinations under ss 596A and 596B of the Act are different in character from an investigation carried out by ASIC under s 13 of the ASIC Act, including because there is no statutory requirement that a liquidator suspect a contravention of the Act before commencing an investigation or conducting examinations, at least under s 596A of the Act. I also accept that a liquidator’s conduct of statutory examinations with a view to potential proceedings is properly described, as a matter of general usage and for the purposes of s 1323 of the Act, at least as having an “investigative” character, although that may not be sufficient for it to be described as an “investigation”. I also recognise that it is at least arguable that any such “investigation” is carried out under the Act where the statutory examination powers under ss 596A and 596B of the Act are invoked by a liquidator. However, it seems to me that the decision in Guardian Investments, although concerned with the predecessor section to s 1323 of the Act, is contrary to the wide view of s 1323 of the Act for which the Liquidator contends; and the decision in ASC Timber, although it arguably takes a somewhat wider view than Guardian Investments, also falls well short of the width of the Liquidator’s contention. With considerable hesitation, I am not persuaded that Guardian Investments is plainly wrong or that the expansion of standing under s 1323 of the Act to a person aggrieved was intended to significantly expand the circumstances in which an order could be made under the section, where the Explanatory Memorandum to the Corporations Bill did not identify such an intention; and, again with hesitation, I do not consider that I should reverse a position that has been accepted in the (albeit limited) case law where I am not satisfied that it is plainly wrong. I recognise that an appellate court may well take a different view and that this issue may well warrant an appellate court’s consideration.

It is strictly not necessary to consider this question, where I have concluded that I do not have power, under s 1323(1) of the Act, to make the order sought on a final basis. I will nonetheless address this question in case an appellate court does take a wider view of the scope of the section that I have taken. It is convenient to deal with the claims against Mr Crawford and C6PL together, where they have common elements, and Mr McDonald took that approach in submissions for Mr Crawford and C6PL.

Mr Parrish identified the claim made against Mr Crawford on which the Plaintiffs rely for an order under s 1323 of the Act as follows:

Mr Parrish submits that, in respect of Mr Crawford:

Mr Parrish also notes that the relief sought against Mr Crawford amounts to “final” asset preservation orders which will:

Mr Parrish in turn identified the claim made against C6PL on which the Plaintiffs rely for an order under s 1323 of the Act against it as being compensation under s 588W for contravening s 588V (insolvent trading), in the same amount as the insolvent trading claim against Mr Crawford.

Mr McDonald responds, in reliance on Mr Crawford’s evidence, that Mr Crawford’s co-owners chose to reduce their exposure to secured debts at a time when interest rates rose unexpectedly and materially. I have noted above that, while I do not form adverse view as to Mr Crawford’s credit, I am not persuaded by his evidence in that respect. I therefore cannot accept the submissions made by Mr McDonald which depend on that evidence. Mr McDonald also submits that Mr Crawford’s affidavit evidence should be believed. I have not formed any view, positive or negative, as to Mr Crawford’s credit, although I have not been persuaded of the correctness of some aspects of his evidence.

Mr McDonald submits that the Plaintiffs have not proven to the necessary degree of satisfaction that QCC was insolvent and that the particulars of a claim for breach of directors’ duty are scant. It is not necessary for the Plaintiffs to establish that they will succeed in these claims, on a final basis, in order to obtain an order under s 1323 of the Act, and I have addressed the applicable principles and the evidence that supports an arguable case above. Mr McDonald also submits that Mr Crawford had no obligation to explain the disbursements of funds from the realisation of assets within the information provided as to his assets and liabilities in response to the orders made by Hammerschlag CJ in Eq., but his evidence “does explain the disbursement of the sale proceeds, being payments to secured creditors”. However, the apparent inconsistency between Mr Crawford’s evidence that the proceeds of sale of the properties were exhausted by the liabilities, costs and expenses discharged on their sale, and the documents produced by the Defendants on notice to produce, which I have noted above, highlights a risk that surplus funds realised from that sale will be dissipated by Mr Crawford so as to defeat a judgment against him.

Mr McDonald also submits that the orders sought by the Liquidator would limit Mr Crawford’s and C6PL’s ability to deal with their assets as they chose. I recognise that consequence, although that would be the result of any order made under s 1323 of the Act and any freezing order made by the Court. Mr McDonald also submits that there is no justification for the “relevant amount” of the freezing order being $22.575 million, but it seems to me that that amount is supported by the Plaintiffs’ seriously arguable insolvent trading claim against Mr Crawford and C6PL.

Had I considered that I had power to do so, I would have made final orders under s 1323 of the Act against Mr Crawford and C6PL, although extending only until a date after the Liquidators’ examinations. I should explain why I would have done so in summary form, where I have reached relevant factual findings above, although only to the extent necessary for this application, and recognising this is not the substantive hearing of the claims against Mr Crawford or C6PL. I would have been satisfied that QCC and likely the Liquidator had standing to seek a final order under s 1323 of the Act against Mr Crawford; and I would have been satisfied that there is an arguable case for a contravention of s 588G of the Act by Mr Crawford in respect of QCC giving rise to a claim for compensation against him, for at least the period for which the Liquidator contends. It would be unnecessary to determine whether Mr Crawford also has a potential liability for lesser amounts to QCC arising from breach of director’s duty in respect of this relief, although I will return to that question in respect of Brookhollow below.

I would have been satisfied that there is here sufficient reason to seek to preserve Mr Crawford’s assets until, relevantly, the Liquidator’s investigations are completed, so that those assets would be available to meet the claims of QCC, the Liquidator and ultimately QCC’s creditors, where there is reason to think that Mr Crawford has dissipated or transferred to his use at least a surplus realised from the sale of the several properties to which I referred above. I would have been satisfied that, consistent with the risk management purpose of the section, it is necessary or desirable to continue the relief against Mr Crawford, at least for a limited period to the end of August 2025, to allow a further assessment of the position after the anticipated completion of the Liquidator’s examinations. I will not make that order only because, with hesitation, I have concluded that I do not have power to do so.

The position as to the claim against C6PL is the same as that in respect of Mr Crawford. It seems to me that there is a real risk that C6PL would put its remaining assets at risk by the proposed borrowing from Engine Capital to which I referred above, the proceeds of which would potentially (but not necessarily) be applied for the benefit of Brookhollow. If I had power to make the order sought, I would have been satisfied that, consistent with the risk management purpose of the section, it would be necessary or desirable to continue the relief against C6PL, although I would also have done so for a limited period, to the end of August 2025, rather than until further order, to allow a further assessment of the position after the anticipated completion of the liquidator’s examinations.

I should address the question of relief against Brookhollow, in case an appellate court does take a wider view of the scope of the section that I have taken. Mr Parrish identified the claim made against C6PL on which the Plaintiffs rely for an order under s 1323 of the Act against it as follows:

Mr Parrish submits, in respect of Brookhollow, that:

Mr McDonald, in submission for Brookhollow, outlines the applicable principles in respect of an order under s 1323 of the Act, in the nature of a freezing order, which I have addressed above. He rightly points out that, although the statutory regime does not apply the approach adopted in an application for interlocutory relief, with reference to the existence of a serious question to be tried, the insufficiency of damages as a remedy and the balance of convenience, those matters remain relevant to the exercise of the Court’s jurisdiction.

Mr McDonald, in submissions for Brookhollow, contests any finding that QCC was insolvent prior to August 2024. It is not necessary for me to reach any finding as to that matter on any final basis, and it is sufficient to recognise that the Liquidator has a seriously arguable case that QCC was insolvent at least for the period for which the Plaintiffs contend. Second, although Mr Crawford, C6PL and Brookhollow are all represented by Mr McDonald, Mr McDonald submits that Brookhollow “distances itself from Mr Crawford”, where Mr Crawford resigned as a director of Brookhollow in June 2024 and Brookhollow has since been under the control of Mr Ross, who is a unitholder in the Brookhollow Unit Trust through his superannuation fund. Brookhollow also contests the merit of the Liquidator’s claim in respect of the payments made to Brookhollow until up to July 2024, in repayment of amounts allegedly owing by QCC to it. Mr McDonald fairly accepts that the pre-payment of rent “warrants consideration” by the Court but submits that Brookhollow has a satisfactory response to that claim, presumably in his submission that the relevant loan account was a “running account”. Mr McDonald also refers to the evidence of Mr Ross, Mr Crawford and Ms Worth filed on behalf of Brookhollow, to which I have referred above, and submits that a claim for accessorial liability against Brookhollow does not have sufficient strength to warrant the relief sought and that there is insufficient evidence that Brookhollow has dissipated any assets to warrant that relief. Mr McDonald also refers to Brookhollow’s debt to Assetinsure and the steps that it is taking to seek to pay that debt, if it (or, more precisely, C6PL) can obtain finance to do so. Mr McDonald submits that the orders sought are not necessary or desirable as against Brookhollow in these circumstances.

Had I considered that I had power to do so, I would also have made final orders under s 1323 of the Act against Brookhollow, although extending until late August 2025, after the Liquidators’ examinations had taken place and the position could be reviewed. I should again explain why I would have done so in summary form, where I have reached relevant factual findings above, although only to the extent necessary for this application; this is also not the substantive hearing of the claims against Brookhollow; and a winding up application in respect of Brookhollow is listed in June 2025. I would have been satisfied that QCC has standing to seek a final order under s 1323 of the Act against Brookhollow; and it seems to me that there an arguable case for a breach of s 181 or s 182 of the Act by Mr Crawford in respect of the repayments of the loan made by QCC to Brookhollow, which arguably preferred the interests of a company or trust from which Mr Crawford and his family could benefit to those of other creditors of QCC at a time when QCC was arguably in the vicinity of insolvency. It seems to me that there is also an arguable case that the payment of rent in advance to Brookhollow amounted to a breach of ss 181-182 of the Act on the same basis. It seems to me that there is an arguable case that Brookhollow, through Mr Crawford and at least Ms Worth and Mr Ross as its subsequent directors, knew the essential facts of those arguable contraventions and participated in them for the purposes of s 79 of the Act, and an arguable case that it contravened ss 181 and 182 of the Act on that basis. It is not necessary to address Mr Parrish’s further identification of voidable transaction claims against Brookhollow, which Mr McDonald rightly points out do not involve a contravention on the Act for the purposes of relief under s 1323 of the Act.

I would have been satisfied that there is here sufficient reason to seek to preserve Brookhollow’s assets until, relevantly, the Liquidator’s investigations are completed, so that those assets were available to meet the claims of QCC, the Liquidator and ultimately QCC’s creditors. There is reason to think that Brookhollow proposes to dissipate those assets, at least by giving a guarantee for the proposed borrowing by C6PL from Engine Capital to which I referred above, the proceeds of which would potentially (but not necessarily) be applied for its benefit. I would have been satisfied that, consistent with the risk management purpose of the section, it is necessary or desirable to continue the relief against Brookhollow, although I would presently do so for a limited period, to the end of August 2025 rather than until further order, also to allow a further assessment of the position after the anticipated completion of the Liquidator’s examinations.

I would not accepted that this order should be qualified, as Mr McDonald submits, by an exception to allow the discharge of earlier liabilities, including but possibly not limited to Assetinsure’s claim. It seems to me that, in order to establish a basis for that exception, Mr McDonald would need to have addressed the apparent risks that (1) Brookhollow’s assuming a liability as guarantor to C6PL and granting any applicable security, so as to allow a payment now to be made to Assetinsure, would prefer Assetinsure’s interests to those of other creditors of Brookhollow, including QCC’s as a contingent creditor; (2) the director(s) of Brookhollow may not have a proper purpose in entering that transaction, unless he or they could reasonably conclude that its benefit to Brookhollow exceeded its risks, after taking into account the interests of Brookhollow’s creditors (including QCC as a substantial contingent creditor), where Brookhollow is presently presumed to be insolvent and may shortly be wound up; and (3) unless a proper purpose was established, the transaction would be a further breach of the Act; compare Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 225 FLR 1;(2008) 70 ACSR 1; [2008] WASC 239; on appeal, Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 89 ACSR 1; [2012] WASCA 157. Mr McDonald did not, or did not sufficiently, address these matters to establish this exception was warranted.

I also recognise that Brookhollow offered an undertaking (MFI 6) not to dispose of its assets, including its Baulkham Hills property, without providing one week’s notice to the Plaintiffs. That undertaking had exceptions including to permit Brookhollow to enter any loan to pay the debt due to Assetinsure, including the costs of borrowings, now or through any future refinance. Brookhollow did not press a requirement for an undertaking as to damages as an element of that undertaking, where that undertaking was not offered by the Plaintiffs. Mr McDonald, for Brookhollow, contended that the Court should accept that undertaking rather than make the order sought by the Plaintiffs against Brookhollow. I am not persuaded that I should accept that undertaking. First, so far as transactions would not be within the scope of the relevant exceptions, that undertaking has a real risk that the matters which have been in dispute in this application would have to be reagitated if and when Brookhollow provided a week’s notice to the Plaintiffs of a proposed transaction. Second, it seems to me that the scope of the exceptions expose the Plaintiffs to unreasonable risk, including as to the terms of any lease which Brookhollow may enter with a tenant for the property and how they may impact upon any subsequent sale of the property to meet a judgment against Brookhollow; that a borrowing to finance the debt due to Assetinsure is not on reasonable commercial terms, where Brookhollow would plainly be a high risk borrower in the relevant circumstances; and that payment of the debt due to Assetinsure, at a time Brookhollow is already presumed to be insolvent (by reason of an unsatisfied creditor’s statutory demand) and faces a substantial contingent claim by the Plaintiffs, would be a preference to Assetinsure to the disadvantage of other creditors or contingent creditors of Brookhollow, including the Plaintiffs.

I have not neglected the fact that the Liquidator does not offer an undertaking as to damages in support of the relief that he seeks under s 1323 of the Act, and I proceed on the basis that I may take that matter into account in determining whether to grant that relief, on a final as well as on an interim basis: compare Ramsay at [21], Naidenov at [32]. If I had power to make the orders sought, having regard to the basis on which the relief was sought, the conclusions that I have reached above as to the risk of dissipation of assets and whether that relief is necessary or desirable, the exceptions to the orders and the limited period for which I would have made the orders at this point, I would have been satisfied that they were properly made, as s 1323 would permit (if it were available) without an undertaking as to damages in respect of each Defendant.

I do not consider that I can now continue orders on an interim basis under s 1323(3) of the Act where the Plaintiffs sought but have not obtained final relief under s 1323(1) of the Act, subject to any indication that the Plaintiffs may bring an appeal from this judgment.

However, the Plaintiffs indicated that, if they were not successful in obtaining final orders under s 1323 of the Act, they would alternatively seek interim freezing orders under UCPR rr 25.11 and 25.14. In PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [47], the High Court referred to Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 as authority for the Court’s role in making a freezing order, as a process contingent on factors additional to the outcome of a substantive proceeding in the Court, and recognised that such an order can be made against a third party where no present cause of action exists and where no present proceeding has been commenced. I took the same approach in Re HPAC Investments Pty Ltd [2020] NSWSC 1638 at [36]ff, where I undertook an extensive review of the applicable authorities and found that, in that case, a freezing order could be made on the application of the Australian Tax Office (“ATO”), in order to protect the prospects of recovery in a claim which might in future be brought by a liquidator appointed on the ATO’s application. I again took that approach in Re Keybridge Capital Ltd [2024] NSWSC 1215.

It seems to me that the matters to which I have referred above would support the making of an interim freezing order under UCPR rr 25.11 and 25.14, extending to the end of August 2025, to allow a further assessment of the position after the anticipated completion of the Liquidator’s examinations, subject to hearing the parties as to whether an undertaking as to damages should be required and is offered by the Plaintiffs.

For these reasons, I will not make the orders sought by the Plaintiffs under s 1323(1) of the Act, but will hear the parties as to the question of interim relief under UCPR rr 25.11 and 25.14 or, pending any appeal from this judgment, under s 1323(3) of the Act.