FEDERAL COURT OF AUSTRALIA

Brentwood Village Limited (in liq) v Terrigal Grosvenor Lodge Pty Ltd [2014] FCA 1203

THE COURT ORDERS THAT:

1.    Pursuant to r 7.33 of the Federal Court Rules 2011 (Cth), by 5 pm on Tuesday 18 November 2014, the first defendant serve an affidavit:

(a)    Deposing to all assets of the first defendant worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the first defendant’s interest in the assets;

(b)    Exhibiting all sale contracts or agreements, bank statements and other documents recording any transfer or dealing with any property of the first defendant of a value exceeding $50,000 from 1 July 2007 to date;

(c)    Exhibiting its audited or (if not available) signed financial statements for the financial years ended 30 June 2008 to date;

(d)    Exhibiting all bank statements for bank accounts in its name for the period 1 July 2007 to date;

(e)    Exhibiting all annual prudential compliance statements prepared by, for or on behalf of the first defendant and or in relation to the Veronica Nursing Home in accordance with prudential requirements of any Commonwealth legislation for the financial years ended 30 June 2008 to date;

(f)    Exhibiting all independent audit reports prepared in respect of any such annual prudential compliance statements;

(g)    Exhibiting all documents recording or referring to the liability of the first defendant or any other person or entity to each of the payee parties recorded on the draft settlement sheet attached to Mr Balog’s email to Danielle Funston dated 5 November 2014;

(h)    Exhibiting all valuation reports or appraisals prepared for the purpose of the sale of the Veronica Nursing Home pursuant to the agreement at page 294 of exhibit GIL-1;

(i)    Deposing to how the amount of $16,707,279.77 on the draft settlement sheet attached to the email from Mr Balog to Danielle Funston dated 5 November 2014 was calculated, and exhibiting supporting documents.

2.    Pursuant to r 7.33 of the Federal Court Rules 2011 (Cth), by 5 pm on Tuesday 18 November 2014, the second defendant serve an affidavit:

(a)    Deposing to all assets of the second defendant worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the second defendant’s interest in the assets;

(b)    Exhibiting all sale contracts or agreements, bank statements and other documents recording any transfer or dealing with any property of the second defendant of a value exceeding $50,000 from 1 July 2007 to date;

(c)    Exhibiting its audited or (if not available) signed financial statements for the financial years ended 30 June 2008 to date;

(d)    Exhibiting all bank statements for bank accounts in its name for the period 1 July 2007 to date.

3.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The first plaintiff (“BVL”) owned, operated and developed a retirement village at Kincumber, New South Wales.

2    On 19 December 2013, the second plaintiff (“liquidator”) was appointed liquidator of BVL pursuant to winding up orders made on the application of the Deputy Commissioner of Taxation. The Australian Taxation Office (“ATO”) has lodged a proof of debt in BVL’s liquidation for an amount of over $74 million, comprising outstanding income tax including interest and penalties, a running balance deficit debt and superannuation guarantee charge. According to the ATO’s proof of debt, the income tax is owed for the income years ending 30 June 2000, 2001, 2002, 2003 and 2007. The ATO is BVL’s most substantial creditor.

3    BVL’s winding up was preceded by a tax audit conducted by the ATO. The tax audit commenced in the income year ended 30 June 2008. The ATO filed an application in the Supreme Court of New South Wales to wind up BVL on 10 September 2013.

4    John Klumper is the current director and secretary of BVL. He is believed to be terminally ill and residing in the Netherlands. Mr Klumper has failed to complete a report as to affairs in relation to BVL, provide any books and records of the company to the liquidator or otherwise assist the liquidator in his investigations.

5    There is a factual issue about whether Paul Klumper, one of John Klumper’s children, is or was a director of BVL. He is not recorded as a director in an Australian Securities and Investments Commission search for BVL. However, he described himself as a director of BVL on a caveat over the Veronica Nursing Home land lodged in July 2013. Counsel for TGL, Mr Johnson, submitted that Paul Klumper was a director of BVL.

6    The directors of the first defendant (“TGL”) are Paul and Veronica Klumper. Veronica Klumper is another child of John Klumper. They are two of the three shareholders of TGL. The third, John Timothy Murray, holds shares non-beneficially.

7    The sole shareholder and director of the second defendant is Paul Klumper.

Recent events

8    On about 14 August 2014, contracts were exchanged for the sale by TGL to an unrelated third party of the land and the business comprising the Veronica Nursing Home located at Kincumber, New South Wales (“Veronica Nursing Home”) together with the sale of other assets. The sale price for the Veronica Nursing Home was approximately $15 million, comprising $5 million for the land and approximately $10 million for the business.

9    In late October 2014, the second defendant sold land located at Henry Parry Drive Gosford, New South Wales (“HPD land”) to an unrelated third party for $3.85 million.

10    On 30 October 2014, the ATO issued garnishee notices to the purchaser of the Veronica Nursing Home relating to tax debts of TGL and some other entities. On 31 October 2014, the garnishee notices appear to have been withdrawn pursuant to an agreement between TGL, six other entities associated with TGL and the Deputy Commissioner of Taxation by which TGL agreed to pay the ATO $5,907,603 from the settlement proceeds of the Veronica Nursing Home sale.

11    On Friday 31 October 2014, the plaintiffs commenced these proceedings seeking to impugn two transactions under s 588FE(5) of the Corporations Act 2001 (Cth) (“Corporations Act”) or alternatively s 37A of the Conveyancing Act 1919 (NSW) (“Conveyancing Act”). The two transactions are:

(1)    the purported sale by BVL in 2012 or 2013 to TGL of the land and the business comprising the Veronica Nursing Home;

(2)    the purported sale by BVL in June 2013 to the second defendant of the HPD land.

12    That day, on an application made ex parte, the court ordered TGL to deposit the sum of $15 million from the proceeds of the sale of the Veronica Nursing Home into Court or such other account agreed between the parties.

13    Between 2 and 5 November 2014, TGL’s solicitors provided various iterations of a settlement sheet for the sale to the plaintiffs’ solicitor.

14    On Monday 3 November 2014, the orders were varied and TGL was required instead to deposit the net proceeds to which it was entitled on completion of the sale of the Veronica Nursing Home into Court or such other account agreed between the parties.

15    At that time, the anticipated net proceeds were approximately $1.59 million.

16    By mid-morning on 4 November 2014, the anticipated net proceeds recorded in a draft settlement sheet were approximately $766,000.

17    On the morning of 5 November 2014, the anticipated net proceeds were $0.

18    On 5 November 2014, the plaintiffs’ solicitor wrote by email to the defendants’ solicitor, Mr Balog, disputing the proposed payment to the ATO, and saying that this amount should be included in the net proceeds of the sale, the subject of the Court order. The email noted that it should not be construed as an acceptance “as genuine” of any other proposed payments from the settlement proceeds.

19    The settlement of the sale occurred on 5 November 2014. Despite, the plaintiffs’ contention concerning the proposed payment to the ATO, no amount was paid into Court or any other account agreed between the parties.

20    TGL says that there were no net proceeds from the sale.

21    The liquidator is not satisfied that TGL has complied with the 3 November 2014 order. In the light of the events of the past week, and the available evidence concerning the disputed transactions, the plaintiffs seek orders pursuant to rule 7.33 of the Federal Court Rules 2011 (Cth) (“Rules”) (“ancillary orders”) for verified production of documents and information in order to test TGL’s compliance with the order, to elicit information (from both TGL and the second defendant) relating to assets that might be the subject of a further freezing order and to determine whether any further freezing order should be sought against TGL or the second defendant.

Legal framework

22    Rule 7.33 of the Rules provides:

(1)     The Court may make an order (an ancillary order) ancillary to a freezing order or prospective freezing order as the Court considers appropriate.

(2)     Without limiting the generality of subrule (1), an ancillary order may be made for either or both of the following purposes:

(a)    eliciting information relating to assets relevant to the freezing order or prospective freezing order;

(b)     determining whether the freezing order should be made.

23    Rule 7.35 provides relevantly:

(1) This rule applies if:

…

(b)     an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in:

(i)     the Court; …

…

(4)     The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur:

(a)     the judgment debtor, prospective judgment debtor or another person absconds;

(b)     the assets of the judgment debtor, prospective judgment debtor or another person are:

(i)    removed from Australia or from a place inside or outside Australia; or

(ii)     disposed of, dealt with or diminished in value.

…

(6)    Nothing in this rule affects the power of the Court to make a freezing order or ancillary order if the Court considers it is in the interests of justice to do so.

24    The threshold for a “good arguable case” is a very low one: Curtis v NID Pty Limited [2010] FCA 1072 at [6] (“Curtis”). A good arguable case is one ‘which is more than barely capable of serious argument, and yet not necessarily one the judge believes to have a better than 50% chance of success’: Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG; The Nidersachsen [1984] 1 All ER 398 at 404 (affirmed on appeal: [1984] 1 All ER 398 at 413) (“Ninemia”); Errigal Ltd v Equatorial Mining Ltd [2006] NSWSC 953; Pure Logistics Pty Ltd v Scott [2007] NSWSC 595; Westpac Banking Corporation v McArthur [2007] NSWSC 1347.

25    As to the requirement of a “danger” that a prospective judgment will be wholly or partly unsatisfied for one of the reasons set out in rule 7.35, in Curtis, at [9] and [10], Edmonds J said:

…In some cases, judges have employed the phrase ‘real risk’ to identify the degree to which a plaintiff must demonstrate that a prospective judgment will go unsatisfied: see, for example, [Cardile v LED Builders Pty Ltd (1999) 198 CLR 380] at [122] per Kirby J; Ninemia [1983] 1 WLR 1412 at 1422 per Kerr LJ. In others, it has been said that an applicant must establish ‘a sufficient likelihood of risk which in the circumstances of a particular case justifies an asset preservation order’: Lifetime Investments Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2005] FCA 226 at [14] per Kiefel J, approving Victoria University of Technology v Wilson [2003] VSC 299 at [36] per Redlich J. There is even a third view, namely, that the plaintiff establishes ‘a sufficient apprehension of dissipation of the … assets’: Vaughan v Duncan [2007] NSWSC 811 at [5] per Hamilton J.

What is settled, however, is that solid evidence of a danger of dissipation or disposal of assets be produced. The relevant test was enunciated by Brereton J in Finn v Carelli [2007] NSWSC 261 at [4], where his Honour referred to the NSW Court of Appeal’s decision in Frigo v Culhaci [1998] NSWCA 88:

‘It is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment, and it is sufficient to show that the course on which the respondent proposes to embark is, objectively speaking, calculated to have that effect. But as the Court of Appeal made clear in Frigo v Culhaci, an applicant must establish, by evidence and not mere assertion, that there is a real danger that by reason of the respondent absconding or otherwise dealing with assets, the applicant will not be able to have its judgment satisfied. While acknowledging that there has been much debate as to the precise degree to which that has to be shown, the Court emphasised that mere assertion that the defendant was likely to put assets beyond the plaintiff’s reach was inadequate, for which the Court cited Ninemia Maritime Corp v Trave GmbH & Co Kg (The Niedersachsen) [1984] 1 All ER 298 as well as Patterson v BTR Engineering.’

26    Section 37A(1) of the Conveyancing Act provides relevantly that, save as provided in that section, every alienation of property, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.

27    By s 588FE(5) of the Corporations Act, a transaction is voidable if:

(1)    it is an insolvent transaction of the company; and

(2)    the company became a party to the transaction for the purpose, or for purposes including the purpose, of defeating, delaying, or interfering with, the rights of any or all of its creditors on a winding up of the company; and

(3)    the transaction was entered into, or an act done was for the purpose of giving effect to the transaction, during the 10 years ending on the relation-back day.

28    By s 588FC, a transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:

(a)    any of the following happens at a time when the company is insolvent:

  (i)     the transaction is entered into; or

(ii)     an act is done, or an omission is made, for the purpose of giving effect to the transaction; or

(b)     the company becomes insolvent because of, or because of matters including:

  (i)     entering into the transaction; or

(ii)     a person doing an act, or making an omission, for the purpose of giving effect to the transaction.

Disputed transactions

Veronica Nursing Home

29    In May 2014, BVL’s accountant told the liquidator that TGL purchased the land and business beneficially in 2009. He said:

…my understanding is that the property was incorrectly titled in Brentwood’s name. TGL was always the beneficial owner. The directors became aware of this error shortly after the purchase and a request was made to NAB to assist in providing title documents etc.

This took considerable time and the TGL solicitor advised that the company should enter into a ‘lease’ with Brentwood in the interim until the issue could be resolved…

30    The accountant provided documents that included an (unstamped) contract for sale of the land to TGL, a contract for sale of the business to TGL, and bank statements purporting to evidence the flow of funds in connection with the purchase.

31    However, documents obtained by the liquidator seem to show that BVL acquired the relevant land and business in about September 2009 for $8.5 million. In particular, there is:

(1)    A signed agreement for the sale of the Veronica Nursing Home to BVL. The agreement identifies Veronica Klumper as the person to whom notices are to be sent for BVL. TGL is a signatory to the agreement as “nominee…being the party that is the transferee for the purposes of the Commonwealth Department Transfer Application form”. The agreement appears to have been signed by each of John, Veronica and Paul Klumper;

(2)    The front page of a signed contract for the sale of the Veronica Nursing Home land for $4.5 million to BVL;

(3)    A stamped transfer dated 9 September 2009 for the transfer of the Veronica Nursing Home land to BVL, by which the transferor acknowledged receipt of $4.5 million;

(4)    A tax invoice from Prime Retirement & Aged Care Property Trust to BVL dated 8 September 2009, for the sale of the property and business at Veronica Nursing Home for $9.350 million inclusive of GST;

(5)    An ATO activity statement which appears to record capital purchases by BVL of $9.350 million for the quarter ended 30 September 2009 and a claim for the GST of $850,000 paid on the sale;

(6)    A registered lease of the Veronica Nursing Home property from BVL to TGL for 5 years commencing 9 September 2009, also apparently signed by each of John, Veronica and Paul Klumper;

(7)    A document recording National Australia Bank’s consent as mortgagee to the lease from BVL to TGL.

32    Further, documents appear to record the transfer by BVL to TGL of the relevant land for $3 million in about September 2013, with a caveat lodged on the title by TGL in July 2013 on the basis that “the proprietor has agreed to transfer the property to the caveator for consideration”. The transfer is signed by each of John, Veronica and Paul Klumper. Interestingly, a notice of sale or transfer of the land dated 18 September 2013 signed by Paul Klumper specifies the date of the contract for sale of the land to TGL as 28 June 2012.

33    The documents provided by BVL’s accountant to the liquidator in May 2014 may record a transaction that was not concluded. The contract for sale of the business to TGL is dated 12 June 2009. By its terms, it appears to have been created before the contract for sale of the business to BVL. In early August 2014, Mr Livingstone, who works under the supervision of the liquidator, had a conversation with an ATO officer to the following effect.

Livingstone: I have two conflicting agreements. Are you sure Brentwood purchased the assets?

ATO officer: I have investigated this and obtained documents from Madgwicks which confirm that Brentwood was the true purchaser of the Veronica Nursing Home, including the land and the business. The other agreements were rescinded.

34    The liquidator has not received any documents which satisfactorily explain or record a sale of the Veronica Nursing Home business by BVL to TGL.

35    TGL’s solicitors were first asked to provide documents to the liquidator concerning the transfer of the Veronica Nursing Home from BVL to TGL in May 2014. It is fair to say that TGL has not responded cooperatively to the liquidator’s requests for information.

36    These matters raise very serious concerns about the correctness of the statement made by BVL’s accountant to the liquidator in May 2014 and, if it is incorrect, the basis on which it was made. On the face of the documents, the directors of TGL can be expected to know the true position as to the ownership of the Veronica Nursing Home land and business from time to time.

37    In saying this, I appreciate that there may be an innocent explanation. TGL has not yet provided a response to the matters put to the Court in support of the application for ancillary orders and, although its lawyers had the relevant documents for some days, it is possible that they did not appreciate their significance until the Court was taken through the documents last Thursday.

HPD land

38    A document purporting to be a balance sheet for BVL as at 31 October 2011 records the HPD land as an asset for the previous year (but not as at 31 October 2011) with a value of $11,214,101.

39    There is a transfer dated 28 June 2012, stamped in January 2013 and registered in June 2013, recording the transfer of the HPD land from BVL to the second defendant for $2.5 million. As noted above, the sole shareholder and director of the second defendant is Paul Klumper, and the HPD land has recently been sold to an unrelated third party for $3.85 million

Other matters

40    To the extent that there were dealings involving the Veronica Nursing Home and the HPD land in 2009, 2012 or 2013, they all occurred against the background of the ATO audit which led to assessments and then, presumably, a judgment debt and statutory demand and, ultimately, the placing of BVL in liquidation in December 2013.

41    Apart from the familial relationships between the directors of BVL, TGL and the second defendant, there is evidence of substantial inter-company loans between BVL and TGL.

42    A document purporting to be a balance sheet for BVL as at 31 October 2011 records as an asset, a loan to TGL of $23,272,503. The loan balance for the previous year is $20,475,687.

43    The financial statements for BVL for the year ended 30 June 2008 record as an asset, a loan to TGL of $53,748,536. The loan balance for the previous year is $20,595,647. A document purporting to be a balance sheet for BVL records similar amounts.

44    The agreement with the ATO, pursuant to which garnishee notices were withdrawn, adds to the impression that BVL formed part of a relatively complex group of companies whose affairs were intertwined. The agreement, recorded in a document entitled “heads of agreement”, also states that TGL is the owner of various parcels of land located at The Entrance, New South Wales that are subject to an agreement for sale due to complete in August 2015.

Defendants’ contentions

TGL

45    Mr Johnson for TGL questioned the strength of the plaintiffs’ case but did not attempt to explain the documents identified by the liquidator, beyond submitting that there was a flow of funds in 2009 which evidenced TGL’s acquisition of the Veronica Nursing Home at that time. He observed that there was no evidence as to when BVL may have become insolvent and questioned the current claim in the light of previous contentions that the Veronica Nursing Home was held by TGL on trust for BVL. However, he did not submit that there was not a “good arguable case” against TGL. As noted above, the documents had been provided to TGL’s lawyers but the plaintiffs’ case had not been articulated prior to the hearing on Thursday 6 November 2014.

46    Mr Johnson seemed to explain away TGL’s lack of responsiveness to the liquidator’s previous requests for information on the basis that the liquidator had not properly articulated its potential claim. It is not necessary to decide whether that approach was defensible: the important fact is that TGL could have supplied the liquidator with information relevant to his investigations about a transaction that is plainly suspect, and appears to have supplied the liquidator with information about it that is, at best, incomplete.

47    Mr Johnson questioned whether the liquidator had obtained information about the affairs of TGL in breach of the privacy requirements of the Taxation Administration Act 1953 (Cth). He also contended that the plaintiffs had breached the Rules by failing to file a genuine steps statement. Mr Johnson also submitted that the plaintiffs ought to have tendered the bank statements provided to the liquidator by BVL’s accountant in May 2014. None of these matters are relevant to whether the requirements of rule 7.35 are satisfied and none of them are of great significance to the question whether the Court’s discretion should be exercised in the plaintiffs’ favour.

48    Mr Johnson complained about the scope of the request and complained that the time for production was insufficient. He submitted that the relevance of the documents sought to the issues in the proceedings was not apparent, but did not submit that the documents were not relevant to the issues identified by Mr Newlinds SC, for the plaintiffs. He argued that the plaintiffs’ failure to seek to set aside the sale of the Veronica Nursing Home meant that documents relevant to that sale price were not relevant. I do not accept that latter submission in all of the circumstances set out above which, in my view, warrant a high index of suspicion about TGL’s dealings.

49    I accept that the timeframe proposed by the plaintiffs is unreasonable, as Mr Newlinds SC ultimately did.

50    Mr Ireland, for the second respondent, submitted that there was no sufficiently arguable case to warrant the exercise of the power to make the orders sought. He submitted that the strength of the case would depend on valuation questions, about which there was presently no evidence. Mr Ireland also complained that the scope of the request was excessive.

Consideration

51    The most common example of an order ancillary to a freezing order or prospective freezing order is an order for disclosure of assets. The information now sought by the liquidator is more extensive.

52    On the available evidence, I am satisfied that the applicant has a good arguable case against TGL on an accrued cause of action that is justiciable in this Court, under s 37A of the Conveyancing Act or s 588FE of the Corporations Act. That case arises from the documents which appear to record BVL’s ownership of the Veronica Nursing Home between about 2009 and 2013 and its disposal to a related entity, in the context of the ATO tax audit and subsequent debt recovery and winding up proceedings. It arises from the inconsistency between the version of events given on behalf of TGL to the liquidator in May 2014 and the available documents, recognising that TGL has not yet provided a substantive response to this apparent inconsistency.

53    I am also satisfied that, on the available evidence, the applicant has a good arguable case against the second respondent on an accrued cause of action that is justiciable in this Court, under s 37A of the Conveyancing Act or s 588FE of the Corporations Act. The available documents are inconsistent in that BVL’s records apparently disclose a disposal of the HPD land before 31 October 2011, while the transfer of the land was dated 28 June 2012 and was not registered until July 2013. I accept the submission that the BVL balance sheet as at October 2011 is evidence of the belief of the director or directors of BVL as to the value of that land at the time of its disposal. The transfer records the sale of the HPD land to a related entity at a significantly lower value than that reflected in BVL’s accounts. Further, there is evidence of a sale of the HPD land in the last month at a significantly higher price than that recorded on the transfer.

54    The evidence concerning the dealings in the HPD land and the Veronica Nursing Home business and land in 2012 or 2013, and recent events set out above, causes me to believe that there is a real danger that a judgment against TGL or the second defendant will be wholly or partly unsatisfied because the assets of TGL or the second defendant are disposed of, dealt with or diminished in value. In particular:

(1)    There is evidence of non-payment of tax liabilities by BVL, TGL and, possibly, other related entities;

(2)    There is evidence of the transfer of substantial assets from BVL to TGL and the second defendant that may have been intended to defeat the rights of the ATO to recover BVL’s tax liabilities;

(3)    Mr Klumper, has apparently moved to the Netherlands and there is therefore an opportunity for the Klumpers to take steps to move assets of TGL or the second defendant overseas;

(4)    Mr Klumper has not cooperated with the liquidator to date. I take into account the information that he is gravely ill, but note that his son, Paul Klumper signed the June 2013 caveat on behalf of BVL as a director of that company. In the light of the caveat, it seems reasonable to assume that Mr Klumper could have given instructions to Paul Klumper to assist the liquidator or, alternatively, Paul Klumper may himself be in a position to assist the liquidator;

(5)    TGL has not cooperated with the liquidator to date in the provision of information of obvious relevance to the liquidator’s investigations;

(6)    TGL has been taking steps to dispose of major assets. It has now sold the Veronica Nursing Home and another nursing home, which appear to have comprised the largest assets which TGL recorded in its financial statements. According to the heads of agreement signed with the ATO, TGL is selling other properties and those sales are due to be completed in August 2015;

(7)    The last minute changes in the distribution of the proceeds of the settlement of the Veronica Nursing Home sale produced the result that, instead of receiving net proceeds of approximately $1.59 million, after an ex parte order was obtained requiring the net proceeds to be paid into account, the net proceeds received were $0. These changes raise a question as to whether these changes were made to defeat the rights of the plaintiffs in these proceedings.

55    In those circumstances, in my view, it is in the interests of justice to require TGL to provide the liquidator with information, verified by affidavit, that will enable the liquidator to test TGL’s compliance with the order made on 3 November 2014, to elicit information (from both TGL and the second defendant) relating to assets that might be the subject of a further freezing order and to determine whether any further freezing order should be sought against TGL or the second defendant.

56    In my opinion, the following information and documents should be provided:

(1)    Details of all assets of TGL worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of TGL’s interest in the assets;

(2)    Details of all dealings by TGL with property of a value exceeding $50,000 for the period 1 July 2007 to date;

(3)    Audited (or, if not available, signed) financial statements for the financial years ended 30 June 2008 to date;

(4)    Bank statements for the period 1 July 2007 to date;

(5)    All annual prudential compliance statements prepared by, for or on behalf of TGL and/or in relation to the Veronica Nursing Home in accordance with any prudential requirements of any Commonwealth legislation for the financial years ended 30 June 2008 to date;

(6)    All independent audit reports prepared in respect of any such annual prudential compliance statements;

(7)    All documents recording or referring to the liability of TGL or any other person or entity to the payee parties recorded on the draft settlement sheet attached to Mr Balog’s email to Danielle Funston dated 5 November 2014;

(8)    Valuation reports or appraisals prepared for the purpose of the sale of the Veronia Nursing Home pursuant to the agreement at page 294 of exhibit GIL-1;

(9)    An explanation supporting by relevant documents, of how the amount of $16,707,279.77 on the draft settlement sheet attached to the email from Mr Balog to Danielle Funston dated 5 November 2014 was calculated.

57    As to the second category of documents, I was not informed that TGL held or dealt in significant volumes of property of a value exceeding $50,000 such that the production of this material would be unduly burdensome. Having regard to the commencement of the ATO audit in the year ended 30 June 2008, and the evidence of non-arms length transfers of substantial assets from BVL to related parties in the context of the ATO audit, this information may be relevant to a prospective freezing order. The same applies to the third to sixth categories inclusive.

58    In my opinion, the second defendant should be required to provide the following information:

(1)    Details of all assets of the second defendant worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the second defendant’s interest in the assets;

(2)    Details of all dealings by the second defendant with any property of a value exceeding $50,000 for the period 1 July 2007 to date;

(3)    Audited or (if not available) signed financial statements for the financial years ended 30 June 2008 to date;

(4)    Bank statements for the period 1 July 2007 to date.

59    Again, I was not informed that the second defendant held or dealt in significant volumes of property of a value exceeding $50,000 such that the production of this material would be unduly burdensome.

60    For the avoidance of doubt, the information to be provided concerning the defendants’ assets should include all assets, whether or not they are owned in the relevant defendant’s name and whether they are owned solely or jointly with another person or entity. It should also include any asset which the relevant defendant has the power, directly or indirectly, to dispose of or deal with as if it were that defendant’s own.

Associate:

Dated:    10 November 2014