Federal Court of Australia

H&B Professional Tiling Pty Limited (In Liq) v Haidari, in the matter of H&B Professional Tiling Pty Limited [2024] FCA 207

ORDERS

THE COURT ORDERS THAT:

1.    Order 2 made on 21 December 2023 be varied as follows:

(a)    Pursuant to section 1323(3) of the Corporations Act 2001 (Cth), until further order the second defendant is prevented from paying to any person any amount from bank account BSB xxxxxx Account No. xxxxx6973, if such payment would reduce the balance in the account to below $230,000.

(b)    Subject to paragraph (a) above, the second defendant is at liberty to pay out the balance of the funds from that bank account above the amount of $230,000 to any person.

2.    Order 3 made on 21 December 2023 be discharged.

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

REASONS FOR JUDGMENT

BESANKO J:

Introduction

1    Section 1323 of the Corporations Act 2001 (Cth) (the Act) gives this Court power in certain circumstances to make an order prohibiting a person holding money on behalf of another person, identified in the section as the relevant person, from paying all or any of the money to the relevant person, or to another person, at the direction or request of the relevant person. The application for such an order may be made by, inter alia, a person who has begun a civil proceeding against the relevant person under the Act and to whom the relevant person is liable or may be or become liable to pay money, whether in respect of a debt by way of damages or compensation or otherwise. The Court may make such an order where it considers it necessary or desirable to do so for the purposes of protecting the interests of a person. Other orders may be made under the subsection, including the appointment of a receiver or trustee, but they are not orders sought in these proceedings.

2    The Court is given the power in s 1323(3) to make an interim order pending the determination of an application under s 1323(1) of the Act if, in the opinion of the Court, it is desirable to do so before considering the application.

3    The Court is not to require the applicant or any other person as a condition of granting an interim order under subsection (3) to give an undertaking as to damages. Where the Court has made an order under the section, the Court may, on the application of the person who sought the order or by any other person affected by the order, make a further order discharging or varying the first mentioned order. An order made under subsection (1) or (2) may be expressed to operate for a specified period or until the order is discharged by a further order under the section (s 1323(6)).

4    The plaintiff in this proceeding is H&B Professional Tiling Pty Limited (In Liquidation). On 28 November 2023, the plaintiff was wound up in insolvency and a liquidator, Mr Leigh Prior, was appointed.

5    On 20 December 2023, the plaintiff made an application under s 1317H and s 1323 of the Act for damages or compensation against the two defendants in this proceeding. Section 1317H provides that the Court may order a person to compensate, inter alia, a corporation if the person has contravened a civil penalty provision in relation to the corporation and damage resulted from the contravention. The two defendants in the proceeding are Mr Ghulam Reza Haidari (Reza Haidari) as first defendant and the Australia and New Zealand Banking Group Limited (ANZ Bank) as second defendant. The claims made by the plaintiff against the defendants as set out in the Originating process are as follows:

1.    a compensation order under section 1317H of the Act for contravention by the first defendant of sections 180, 181 and/or 182 of the Act in the amount of $118,071.80;

2.    equitable compensation in the amount of $118,071.80;

3.    damages in the amount of $118,071.80;

4.    interest;

5.    an order under section 1323(1)(e) of the Act prohibiting the second defendant from paying all or any of the money in bank account number 336826973 (BSB 015228) to the first defendant or to another person at the direction or request of the first defendant;

6.    an order under section 1323(1)(e) of the Act prohibiting the second defendant from paying all or any of the money in any other bank account maintained on behalf of the first defendant, to the first defendant or to another person at the direction or request of the first defendant;

7.    costs.

6    The plaintiff’s application was supported by an affidavit of the liquidator. A current and historical company extract for the plaintiff reveals that Reza Haidari and Solaiman Haidari were directors of the company until 15 November 2023. Reza Haidari and Solaiman Haidari are brothers. Mr Pawandeep Singh was the director and secretary of the company from 15 November 2023.

7    The plaintiff’s application for orders under s 1323(3) of the Act came on for hearing before another judge of this Court on 21 December 2023. The application proceeded ex parte and orders were made under s 1323(3) prohibiting the ANZ Bank from paying all or any money to the first defendant or to another person, at the direction or request of the first defendant with respect to bank account no. xxxxx6973 and a similar order with respect to any other bank account maintained by or on behalf of the first defendant. An order was also made that the second defendant file an affidavit setting out the details of bank accounts which are covered by the orders. That led to the disclosure of the following bank accounts:

8    I will refer to the first account in this list of accounts as the first family trust account and the sixth account as the second family trust account. The trust is the HB Group Family Trust and the deed of trust establishing the trust is said to have been made on 1 October 2023. The trustee is the first defendant and the named beneficiaries are the first defendant and Solaiman Haidari. The Family Trust was registered with an Australian Business Number on 16 October 2023.

9    The plaintiff also had a bank account with the second defendant and it used this bank account for the purposes of conducting its business. The details of this bank account are account no. xxxx3567.

10    The plaintiff carried on a tiling business and in the course of doing so it engaged subcontractors to assist in performing the work it was engaged to perform. The subcontractors were usually friends, family friends or friends of friends and members of the Afghan and Pakistani community. The first defendant and Solaiman Haidari became dissatisfied with the business structure for the tiling business and discussed setting up a family trust. The Family Trust was established and the first defendant said that it was his understanding and belief that since establishing the Family Trust, he conducted the tiling business in his capacity as trustee for the Family Trust.

11    On 6 February 2024, the first defendant made an application under s 1323(5) of the Act for an order that the existing order with respect to the first family trust account be varied to permit the payment of the sum of $173,650.95 from the first family trust account into the second family trust account. The order would remain in place with respect to the balance remaining in the first family trust account, being an amount of $75,053.54. The first defendant also seeks an order that the interim order with respect to the other five bank accounts, including the second family trust account, be discharged. The effect of the orders sought by the first defendant are that an amount of $263,894.42 would become available to the first defendant and an amount of $75,053.54 would remain the subject of an order under s 1323 of the Act.

12    The essence of the plaintiff’s claim is that at some point in time which it is unable to fix with any precision on the evidence presently available, the plaintiff ceased carrying on a tiling business and the first defendant as trustee of the Family Trust commenced carrying on the same or a very similar business. The plaintiff’s claim is that the first defendant took monies for work performed by the plaintiff and placed them in the family trust accounts in his name and that of Solaiman Haidari. The plaintiff through the liquidator seeks to recover those amounts.

13    The first defendant’s application came on for hearing before me on 19 February 2024. The first defendant relied on the following affidavits:

(1)    Affidavit of the first defendant filed on 6 February 2024;

(2)    Affidavit of Solaiman Haidari filed on 8 February 2024;

(3)    Affidavit of Farahnaz Haidari filed on 8 February 2024;

(4)    Second affidavit of the first defendant filed on 7 February 2024;

(5)    Affidavit of Lauren Elizabeth Arney filed on 9 February 2024.

14    The plaintiff relied on three affidavits of the liquidator sworn on 20 December 2023, 13 February 2024 and 16 February 2024 respectively.

15    I do not propose to summarise the affidavits in any detail save and except that the evidence relating to a number of particular matters is dealt with below. The first defendant’s affidavits identify, among other things, a number of family members who rely on the income from the tiling business, their health and employment circumstances and in a general way their financial needs. It is true, as the plaintiff submitted, that the first defendant does not expressly identify his assets, does not expressly say that he does not have other assets which could be used to meet the expenses he identifies, although it may be that it can be implied from all of the affidavits he has filed that he cannot meet the expenses, and he does not provide any details of the present business operated by the Family Trust and its capacity to meet at least some of the existing expenses.

16    I have reached the conclusion that the plaintiff has a reasonably strong case that some monies to which the plaintiff is entitled, have been diverted from the plaintiff to the Family Trust and a reasonably arguable case that the amount exceeds the amount presently claimed in the Originating process. In my opinion, although I am not making findings at this stage, there are a number of inconsistences and assertions in the first defendant’s evidence which, on the face of it, appear unlikely such that I have reason to doubt his veracity and reliability.

17    The way in which the first defendant put his argument was that he had incurred a large number of ordinary living expenses and ordinary business expenses which, had the orders been in the nature of a Mareva injunction, would have been the subject of an exception to allow for the payment of such expenses. However, he said that he is not seeking an ongoing exception in the orders he seeks because the ANZ Bank should not be left to determine what are ongoing living and ordinary business expenses. It is not clear to me that that would be the result of an exception, but in any event, that is not the order he seeks. He seeks a “one-off” payment to pay pressing and immediate liabilities totalling $263,894.42. The business expenses include subcontractor invoices ($193,626.60) and supplier invoices ($11,293.49). The first defendant said that he has also borrowed money from three persons in order to pay living expenses ($40,000). There are also expenses in relation to four mortgages ($18,974.33). As I have said, the first defendant described his application as similar to the exceptions that are made in the case of a Mareva injunction, and the only difference is that he is seeking a one-off payment to meet what are, on his case, equivalent expenses.

18    The first defendant submits that it is relevant that there is no undertaking as to damages by the plaintiff and he submits that the risk of dissipation of assets is not relevant because there is no doubt that the assets will be used to pay what are living and ordinary business expenses. Furthermore, the tiling business may well fail if the monies are not released.

19    I have reached the conclusion that the amount of $230,000 should remain the subject of the orders made on 21 December 2023. That represents, approximately, the amount owed to the plaintiff’s creditors. The balance of the funds in the bank accounts, $122,250.84, should be released from the orders. I will hear from the parties as to whether the application to vary the interim orders can also be treated as the hearing of the plaintiff’s application under s 1323(1) of the Act.

Relevant Principles

20    I start with a brief review of those authorities referred to by the parties. There was little dispute between the parties as to the relevant principles.

21    In the case of an application for a Mareva injunction, the onus is on the defendant to show that he or she has no other assets from which to meet living, legal or ordinary business expenses: Commissioner of Taxation v Manners & Terrule Pty Ltd (1985) 81 FLR 131 at 134 per Phillips J; Cogent Nominees v Anthony [2003] NSWSC 804 at [12] per Austin J.

22    Orders may be made under s 1323 before liability is established and before the evidence necessary to establish liability has been collected. The application preserves the status quo and the assets of the relevant person pending, relevantly in this case, the civil proceedings which are on foot: Australian Securities and Investments Commission, in the matter of Richstar Enterprises Pty Ltd v Carey (No 3) [2006] FCA 433; (2006) 232 ALR 577 (Richstar) at [25] per French J. There is an element of risk assessment and risk management in the judgment the Court is called upon to make under s 1323 and it follows, and it has been accepted, that there is no requirement to demonstrate a prima facie case of liability on the part of the relevant person or that the assets have been or are about to be dissipated: Richstar at [26] per French J.

23    In Naidenov, in the matter of 30 Denham Pty Ltd (In Liq) [2023] FCA 134, Stewart J said that the fact that the power in s 1323(3) is to make an order before considering the application carries with it the implication that the Court is not required to decide on a final basis, a contested point of law on which respectable arguments could be made both ways (see also Fourteen Consulting Services Pty Ltd (In Liq) v AOB Holding Pty Ltd [2023] FCA 704 at [14] per Jackman J and Hogan (Liquidator) v McCorkell, in the matter of McCorkell & Associates Pty Ltd (In Liq) [2023] FCA 863 at [77]–[78] per Lee J).

24    In Australian Securities and Investments Commission, in the matter of Richstar Enterprises Pty Ltd v Carey (No 21) [2008] FCA 381, French J made the point that the nature and purpose of orders under s 1323 is that they are not punitive and that they are intended to protect the interests of potential claimants against the assets and thereby the public interest. They are necessarily of a temporary character. His Honour said that such orders are temporary because notwithstanding that they are made in the public interest, they involve a significant interference with the property rights and, in the case before his Honour, the freedom of movement of the parties affected by them. The orders are not designed to punish defendants against whom no positive findings have been made one way or the other.

25    In Australian Securities and Investments Commission v Adler [2001] NSWSC 451 (Adler), Santow J made the following points concerning s 1323 of the Act: (1) the jurisdiction under s 1323 arises even absent strong evidence of dissipation of assets and even absent a prima facie or at least a reasonably persuasive case against the individual concerned; (2) nevertheless, both evidence of dissipation of assets and at least a reasonably persuasive case are powerful discretionary factors affecting the Court’s willingness to make an order at all and, if willing, affecting the scope of the orders justified in the circumstances; (3) in the case of a private litigant, absence of an appreciable risk of dissipation of assets and of an at least reasonably persuasive case against the individual concerned, should ordinarily lead to the denial of such asset preservation orders as a matter of discretion. The absence of either one of such factors would ordinarily be fatal; and (4) the orders made by the Court must operate in a manner that is proportionate and not more intrusive than is necessary in the circumstances, recognising that it is inevitable that such orders will intrude upon private rights (see also Australian Securities and Investments Commission v Goel [2020] FCA 1369 at [22] per Jackson J).

26    Finally, the first defendant referred to Australian Securities and Investments Commission v Burnard [2007] NSWSC 1217 (Burnard) and submitted that it was an authority for the proposition that only those claims made under the Act are relevant in terms of orders made under s 1323 and he referred to the observations of Barrett J at [85]. As I will explain, I do not think that case is authority for that proposition.

The Plaintiff’s Claim and the First Defendant’s arguments in response

27    As I have said, the essence of the plaintiff’s claim is that the first defendant and Solaiman Haidari have diverted monies to which the plaintiff is entitled to the Family Trust. If that is established, then the case against the first defendant may involve fraud and dishonesty and is likely to involve contraventions of one or more of ss 180, 181 and 182 of the Act. Section 180 places an obligation on a director of a company to exercise reasonable care and diligence. Section 181 places an obligation on a director of a company to exercise his or her powers in good faith in the best interests of the corporation and for a proper purpose. Section 182 places an obligation on a director of a company not to improperly use their position to gain an advantage for themselves or someone else, or cause detriment to the corporation. The first defendant was, on his own case, a director of the company until 15 November 2023 and on the plaintiff’s case, in dealing with the plaintiff’s monies, he was a de facto director thereafter. Solaiman Haidari was a director of the plaintiff until 15 November 2023 and, on the plaintiff’s case, involved in contraventions by the first defendant within s 79 of the Act.

28    The plaintiff submits that insofar as it must rely on acts and conduct of the first defendant at times when he was not a director or de facto director, the equitable duties nevertheless apply. The first defendant submits that the equitable duties are irrelevant because they are not claims made under the Act within s 1323. In my opinion, the better argument is that advanced by the plaintiff. That argument is that, relevant to this case, there is a jurisdictional requirement that a civil proceeding has been begun against a person under the Act. That is satisfied in the circumstances of this case by the alleged contraventions of ss 180, 181 and 182. However, it does not preclude other claims in circumstances where the jurisdictional requirement is satisfied, particularly claims which, in many respects, are closely analogous to the statutory claims. Burnard is not authority to the contrary. As I read that case, there were no claims under the Act.

29    It is convenient at this point to set out a short chronology:

30    There are other points to be noted in relation to the events identified in the short chronology. First, the liquidator produced the bank statements for the company’s bank account and of particular interest is the bank statements dealing with the period from 1 October 2023 onwards. There are a number of entries shown in the bank statements which suggest that the plaintiff was still operating its business in October 2023. These entries include a deposit on 13 October 2023 of $33,613.25 in relation to G&G Tiling Co, a deposit of $65,921.90 on 20 October 2023 in relation to G&G Tiling Co, and a deposit of $36,600.30 on 23 October 2023 in relation to Adelaide Complete Tiling, and a payment of $4,200 on 1 November 2023 to Quasim Noyan. Secondly, the first defendant alleged in his first affidavit that both he and Solaiman Haidari sold their shareholding in the plaintiff to Mr Pawandeep Singh pursuant to an agreement for the sale of shares. He produced the agreement as to the sale of shares. That agreement purports to be dated 15 November 2023 and it records the sale of all the shares in the plaintiff for a purchase price of $60,000. It would seem from the plaintiff’s bank statements that in mid to late November 2023, the plaintiff paid a total sum of $30,000 to Mr Singh. Those payments are unexplained. Furthermore, the first defendant is alleged to have told a representative of the plaintiff on 2 January 2024 that he and Solaiman Haidari had paid Mr Singh the sum of $30,000 to “take on the company”. Nor, if it be true that Mr Singh paid $60,000 for the shares, is there any explanation as to why the first defendant and Solaiman Haidari were able to secure $60,000 for the shares in the plaintiff on or about 15 November 2023 in circumstances in which the plaintiff was no longer conducting any business and it was soon to be wound up in insolvency.

31    The key point in terms of the plaintiff’s claims is whether the work for which monies were received was done by the plaintiff or by the Family Trust. The evidence suggests that the Family Trust commenced operating at the time the plaintiff ceased operating and that it operated in the same way or a similar way to the plaintiff with the same customers and suppliers. There is no evidence before the Court that the plaintiff or the first defendant gave notice to its customers of the change in the ownership of the business. I should note that it is possible that an invoice rendered by the Family Trust related to work done by both the plaintiff and then by the Family Trust.

32    The first defendant seemed to accept at one point in his argument that the relevant date may be on or around 15 November 2023 and that it is work done after this date which is work done by the Family Trust. He submits that it is difficult for the plaintiff to argue that it has a claim after 15 November 2023 when he resigned as a director and even more difficult for it to assert that it has a claim after the plaintiff was placed in liquidation on 28 November 2023. Even accepting this latter proposition, on the evidence so far presented, I consider the plaintiff has a reasonably arguable case of a claim well in excess of $118,071.80.

33    The first defendant submitted that the allegations made against him are at this stage unproven and unparticularised. That is true to a point, but there is evidence to support conclusions, at least on a prima facie basis. There is likely to be further evidence, at least from the plaintiff after the liquidator has completed his investigations.

34    Even accepting the first defendant’s submission to a point, there is nevertheless a substantial body of evidence in this case to the effect that the Family Trust did not commence operating the tiling business before 22 November 2023 when the first family trust account was opened, or perhaps 28 November 2023 when the company went into liquidation.

35    The plaintiff’s case initially related to the sum of $118,071.80. It has evolved since then to include additional amounts.

36    The plaintiff was able to identify five invoices relating to three payments in late November/early December 2023 made by G&G Tiling Co into the first family trust account totalling $118,071.80. The relevant invoices are dated between 16 November 2023 and 27 November 2023. It seems likely, at least on a prima facie basis, that these invoices related to work carried out by the plaintiff and that the money should not have been paid into the first family trust account. The plaintiff refers to the fact that further documents which have come to light since the order was made on 21 December 2023 indicate that further amounts were deposited in the first family trust account in circumstances where those monies should have been deposited into the plaintiff’s account. Those amounts include an amount of $16,445 deposited by Adelaide Complete Tiling on 24 November 2023 and an amount $200,000 deposited by Saba Bros Tiling on 4 December 2023. The plaintiff’s case is that the proper inference is that these amounts, having regard to their size and when they were made, relate to work done by the plaintiff and mean that the plaintiff has a larger claim than the claim it made at the outset of this proceeding. It is certainly arguable that the bulk of this money relates to work carried out by the plaintiff.

37    The plaintiff submits that the sum of $118,000 relates to the first family trust account. As I have said, the other potential claims are the claims against Reza Haidari in relation to the payments by Adelaide Complete Tiling and Saba Bros. There is also a potential claim with respect to the monies paid into the second family trust account. The plaintiff also relies on two invoices that were sent to Adelaide Complete Tiling on 22 November 2023 with the plaintiff’s Australian Business Number (ending 3598) and relating to Sushi premises at Lightsview and Ingle Farm. There was a meeting with the liquidator on 2 January 2024 and the name on the invoices were changed from H&B Professional Tiling to HB Group Family Trust and the Australian Business Number was changed to a number ending 1327. Finally, in the liquidator’s third affidavit, he deposes to evidence that the work done for Adelaide Complete Tiling in relation to the Lightsview Kinura Sushi store was commenced in late September 2023 and finished on 18 October 2023 and that the work on the Ingle Farm Kinura Sushi store was commenced on 20 October 2023 and completed on 24 November 2023.

38    The first defendant submits that the invoices dated 16 January 2024 (invoices no 71–74 inclusive) relate to work done in December 2023 and January 2024 and that this money was paid into the second family trust account. On his case, it undoubtedly related to work done by the Family Trust.

39    As I have said, the first defendant seeks the release of $263,894.42 and that is for the purpose of paying the following expenses and liabilities:

40    As I have said, the first defendant points to the fact that there is no undertaking as to damages and the fact that in the case of a Mareva injunction, there would ordinarily be an exception permitting the payment of ordinary living expenses and ordinary business expenses. I note that the usual exceptions are ordinary living expenses and properly incurred liabilities, including legal costs. The properly incurred liabilities may include bona fide business expenses (see Practice Note GPN- FRZG). The first defendant points to the fact that the Court is dealing with a small family tiling business with creditors in the order of $200,000 and not the collapse of a large corporate group. That is true, although the relevance of that circumstance is not clear to me. The principles remain the same. The first defendant points to the fact that at least since 28 November 2023 when the company went into liquidation, the work could not have been performed by the plaintiff and must have been performed by the Family Trust. He points to the fact that the amounts received are not pure profits alone and there would need to be an allowance for the expenses incurred in generating the revenue. Even if that be right, it is not a matter that can be calculated at this stage. He points to the fact that the creditors of the plaintiff are in the order of $233,171 which is less than the amount frozen in the accounts. As I have said, I will vary the orders so that an amount of $230,000 remains subject to the orders. He submits that the orders made are disproportionate and he points to the effect on third parties, including his family members, suppliers and subcontractors as set out in the affidavits he has filed. As I have said, I have considerable reservations about a number of aspects of the first defendant’s evidence, including his evidence with respect to this matter.

41    The first defendant also submits that there is a dispute about the amount claimed by the creditors of the plaintiff in that there is a dispute about the superannuation charge. I am not in a position to resolve that dispute. He also submits that the Australian Taxation Office could issue a separate penalty notice against the directors and that it would be unfair if the directors could not access the money to pay it. The fact is a penalty notice has not been issued and, in any event, the first defendant is not seeking access to the monies in order to pay it.

42    The first defendant submits that the accounts, other than the first family trust account, clearly fall outside the interests of the plaintiff. However, the answer to this argument is that the power in s 1323 does not depend upon a person’s ability to trace assets.

43    The first defendant referred to the subcontractors’ invoices which total $193,626.60. The first defendant said that his understanding was that most, if not all, of the work for these unpaid subcontractor debts relates to work which was done in December 2023, January 2024 and February 2024. The invoices are “GRH-14” to the affidavit of Reza Haidari. As was pointed out by the plaintiff, the amount which involves the brothers, Reza, Solaiman and Nasser, totals approximately $80,000. There is at least a query about Nasser’s invoices which appear to involve lump sum amounts for a person previously paid regular amounts of a modest nature and, in at least one case, refer to an Australian Business Number not yet obtained. The first defendant refers to the fact that subcontractors are affected and may withdraw their services which would mean the collapse of the business. It is difficult to place any substantial weight on this circumstance when there is no evidence as to the performance and resources of the Family Trust business.

44    The first defendant referred to the affidavit of Farahnaz Haidari, who is his sister. She referred in detail to the circumstances of the family. She states that she has enrolled to start a course at university at the end of February 2024. She states that the freezing of Reza’s bank accounts has left the family unable to meet essential household expenses and financial obligations, including mortgage repayments and day-to-day living expenses. She refers to the deterioration of her mother’s health and the health of other members in the family. She states that she is required to pay an enrolment fee of $6,000 by 12 or 13 March 2024 otherwise she will lose her place. She states that with the bank account frozen, she has no other means of paying this fee.

45    The first defendant also relies on the affidavit of Solaiman Haidari. He refers to the family circumstances. He states that he is liable to make four mortgage repayments per month as follows: (1) his family home at Devon Park; (2) his parents and siblings home at Ferryden Park; and (3) two mortgages for properties located in Enfield. Solaiman Haidari refers to the fact that the freezing of the bank accounts means that his family is unable to pay living expenses, medical expenses and financial obligations and that this is causing immense stress and strain.

46    I take the evidence of these witnesses into account, but I note there are the competing interests of the plaintiff to be taken into account and I repeat there is no evidence of the performance and resources of the Family Trust business.

47    The plaintiff submits that the decision in Adler did refer to the need to undertake a balancing exercise, but that was in the context of a general order, that is to say, an order over all of the defendants’ assets. In this case, the order relates to specific assets, being the bank accounts. Not all of the assets of the first defendant are the subject of restraining orders and the plaintiff contends that there is no clear evidence as to what other assets the first defendant has. It may be implied that he cannot otherwise discharge the liabilities that he identifies, but a basis for that assertion is not clearly set out.

48    With respect to the risk of the dissipation of assets, the plaintiff accepts that this is a consideration, but it is not as the first defendant contends a powerful discretionary factor. In that context, the plaintiff relies on the decision in Burnard at [107] per Barrett J. The plaintiff submits with respect to the dissipation of assets that there is a prima facie case of dishonesty and, if nothing else, the dissipation of assets relates to the $80,000 approximately in subcontractor invoices from Reza Haidari and his family.

49    I do not consider the risk of the dissipation of assets is a major factor in circumstances in which the order to be made relates to one bank account and the dispute relates to whether monies can be released to pay what are said to be liabilities. Even if this be wrong, I accept the plaintiff’s argument insofar as it relates to the invoices from Reza Haidari and his family.

50    On the one hand, it is not unreasonable for the first defendant to claim that he requires funds for ordinary living expenses and ordinary business expenses. However, for the reasons given, I am not satisfied that the amount claimed by the first defendant fairly reflects those expenses. Not the least of the deficiencies in the first defendant’s evidence is the lack of any firm and clear evidence of the performance and resources of the Family Trust business. Furthermore, the evidence, at least on a prima facie basis, is that the plaintiff may be entitled to recover a reasonably substantial amount by way of compensation or damages. There are, as I have said, deficiencies in the first defendant’s evidence and recognising those and that, in any event, the material presently before the Court is necessarily incomplete, I consider the order should remain as to the amount of $230,000, but not as to the balance.

Conclusions

51    For these reasons, I made the following orders:

1.    Order 2 made on 21 December 2023 be varied as follows:

(a)    Pursuant to section 1323(3) of the Corporations Act 2001 (Cth), until further order the second defendant is prevented from paying to any person any amount from bank account BSB xxxxxx Account No. xxxxx6973, if such payment would reduce the balance in the account to below $230,000.

(b)    Subject to paragraph (a) above, the second defendant is at liberty to pay out the balance of the funds from that bank account above the amount of $230,000 to any person.

2.    Order 3 made on 21 December 2023 be discharged.

Associate:    

Dated:    28 March 2024