Federal Court of Australia

EVP Opportunities Master Pty Ltd as trustee for The EVP Opportunities Master Fund v Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) [2025] FCA 548

ORDERS

THE COURT ORDERS THAT:

1.    To the extent required, the plaintiff be granted leave to file an Amended Originating Process correcting the full names of the sixth and seventh defendants.

2.    The Originating Process be made returnable instanter.

3.    Pursuant to s 440D(1)(b) of the Corporations Act 2001 (Cth), the plaintiff has leave to commence these proceedings against the first defendant, Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) ACN 622 134 776, and to proceed with the proceedings as against it on the basis that no steps shall be taken to enforce any monetary judgment against it without a further grant of leave by the Court.

4.    Pursuant to r 10.24 of the Federal Court Rules 2011 (Cth), the time for service of the Originating Process and the Amended Originating Process, any affidavits in support, written submissions, certificate of urgency and orders made by the Court (Documents) be abridged, such that, pursuant to order 5 below:

(a)    In the case of service by email, the Documents be served by 7:00 pm AEST on 31 March 2025; and

(b)    In the case of personal service, the Documents be served by 5:00 pm AEST on 1 April 2025.

5.    Pursuant to r 10.24 of the Federal Court Rules 2011 (Cth), the Documents be served, in the first instance by sending them by email to the following email addresses:

(a)    For service of the first defendant:

(i)    stuart.dullard@ashurst.com;

(ii)    alinta.kemeny@ashurst.com;

(iii)    tgammel@hlbnsw.com.au;

(iv)    mhocking@hlbnsw.com.au; and

(v)    btaylor@hlbnsw.com.au.

(b)    For service of the Second Defendant: tgammel@hlbnsw.com.au;

(c)    For service on the Third Defendant: mhocking@hlbnsw.com.au;

(d)    For service on the Fourth Defendant: btaylor@hlbnsw.com.au;

(e)    For service on the Fifth Defendant: enquiries@walshrecovery.com;

(f)    For service on the Sixth Defendant:

(i)    lzwier@abl.com.au;

(ii)    tward@abl.com.au;

(iii)    maxmusashimito@gmail.com;

(g)    For service on the Seventh Defendant: chris.durre@strongroom.ai;

(h)    For service on the Eighth Defendant:

(i)    pbc@strongroom.ai;

(ii)    peter@peterbruceclark.com;

(i)    For service on the Ninth Defendant:

(i)    tam.mito@strongroom.ai;

(ii)    tamtakamichimito@gmail.com;

(j)    For service on the Tenth Defendant: divesh.s@strongroom.ai;

(k)    For service on the Eleventh Defendant:

(i)    divesh.s@strongroom.ai; and

(ii)    service at its registered office being c/- Accru Melbourne Pty Ltd, 50 Camberwell Road, Hawthrone East VIC 3123;

(l)    For service on the Twelfth Defendant:

(i)    divesh.s@strongroom.ai; and

(ii)    service at its registered office being Rose Partners Pty Ltd, Level 5 Suite 18, 150 Albert Road South Melbourne VIC 3205.

(m)    For service on the Thirteenth Defendant:

(i)    lzwier@abl.com.au;

(ii)    tward@abl.com.au;

(iii)    maxmusashimito@gmail.com;

(iv)    divesh.s@strongroom.ai;

(v)    chris.durre@strongroom.ai; and

(vi)    service at its registered office being 32 Palermo Street, South Yarra VIC 3141.

6.    Orders be made in the terms of the Penal Order which forms Annexure A to these Orders.

7.    The Originating Process be adjourned to 10:00 am AEDT on 3 April 2025 before Justice Derrington.

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

ANNEXURE A

PENAL NOTICE

TO:    Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) ACN 622 134 776, Todd Andrew Gammel, Matthew John Levesque-Hocking, Barry Anthony Taylor, Martin Gregory Walsh, Max Musashi Mito, Christopher Durre, Peter Bruce-Clark (also known as Peter Bruce Clark), Takamichi Mito, Divesh Dipak Sanghvi, Morton Court Pty Ltd ACN 005 998 952, Pharmarix Pty Ltd ACN 138 163 416 and Members Benefits Australia Pty Ltd ACN 151 525 272

IF YOU (BEING THE PERSON BOUND BY THIS ORDER):

(A)    REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B)    DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:    Strong Room Technology Pty Ltd) (Receiver and Managers Appointed) (Administrators Appointed) ACN 622 134 776 (Strong Room), Todd Andrew Gammel (in his capacity as administrator of Strong Room) , Matthew John Levesque-Hocking (in his capacity as administrator of Strong Room), Barry Anthony Taylor (in his capacity as administrator of Strong Room), Martin Gregory Walsh (in his capacity as receiver appointed to some of the property of Strong Room), Max Musashi Mito, Christopher Durre, Peter Bruce-Clark (also known as Peter Bruce Clark), Takamichi Mito, Divesh Dipak Sanghvi, Morton Court Pty Ltd ACN 005 998 952, Pharmarix Pty Ltd ACN 138 163 416 and Members Benefits Australia Pty Ltd ACN 151 525 272.

This is a ‘freezing order’ made against you on 31 March 2025 by the Hon Justice R Derrington at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.

THE COURT ORDERS:

INTRODUCTION

(1)    (a)     The application for this order is made returnable immediately.

(b)     The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected by 6:00 pm on 31 March 2025 (in the case of service by email), and 5:00pm on 1 April 2025 (in the case of personal service).

(2)    Subject to the next paragraph, this order has effect up to and including 3 April 2025 (the Return Date). On the Return Date at 10.15 am (or such other time as the Court appoints) there will be a further hearing in respect of this order before Justice Derrington.

(3)    Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

(4)    In this order:

(a)    ‘plaintiff’, if there is more than one plaintiff, includes all the plaintiffs;

(b)    ‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;

(c)    ‘third party’ means a person other than you and the plaintiff;

(d)    ‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

(5)    (a)     If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

(b)     If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS

(6)    (a)     You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia (‘Australian assets’) up to the unencumbered value specified for you in the following table (‘the Relevant Amount’).

(b)     If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(c)     If the unencumbered value of your Australian assets is less than the Relevant Amount, and you have assets outside Australia (‘ex-Australian assets’):

(i)    You must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and

(ii)    You may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the unencumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount.

(7)    For the purposes of this order,

(a)     your assets include:

(i)    in the case of the first defendant and sixth to thirteenth defendants, all your assets, whether or not they are in your name and whether they are solely or co-owned;

(ii)    in the case of the second defendant (Todd Andrew Gammel), the third defendant (Matthew John Levesque-Hocking), the fourth defendant (Barry Anthony Taylor) and the fifth defendant (Martin Gregory Walsh) this order only applies to assets held by any of you in your capacities as administrators of, or receiver to the property of, Strong Room. For the abundance of clarity, this order does not extend to any assets held by second to fifth defendants personally or in any other capacity which are not property of Strong Room;

(iii)    any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and

(iv)    the following assets in particular:

(A)    the property known as 56 The Boulevard, Malvern East VIC 3145 or, if it has been sold, the net proceeds of the sale;

(B)    Unit 2, 28 Liddiard Street, Hawthorn VIC 3122;

(C)    147 Finch Street, Glen Iris VIC 3146;

(D)    any assets you hold in your capacity as trustee;

(E)    any money in account number 230564805 in the name of Strong Room Technology Pty Ltd at the Australian and New Zealand Banking Group Ltd;

(F)    in relation to the second to fifth defendants, any funds paid into any bank account set up in relation to, or in connection with, your respective capacities as voluntary administrators or receiver and manager (as applicable) of Strong Room.

(b)     the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION

(8)    Subject to paragraph 9, the Sixth Defendant (Max Musashi Mito), Seventh Defendant (Christopher Durre), Eighth Defendant (Peter Bruce-Clark), Ninth Defendant (Takamichi Mito) and Tenth (Divesh Dipak Sanghi) must:

(a)    at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the plaintiff in writing of:

(i)    all your assets worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets (whether you hold them on trust or not);

(ii)    any funds you received from the first defendant, whether directly or indirectly, on or after 12 February 2025, including details of the source of such funds, the amount of such funds and the current whereabouts of such funds;

(iii)    if any of the funds in 8(a)(ii) have been turned into some other property, identify the nature, location and value of that property

(iv)    the on-distribution or payment to any third party of any of the sum of $10,440,969 paid by the Plaintiff to the First Defendant on or about 12 February 2025 and 20 February 2025, including details of the dates of all such payments, the names and contact details of all recipients of such payments and the amounts paid to each recipient.

(b)    within 3 working days after being served with this order, swear and serve on the plaintiff an affidavit setting out the above information.

(9)    (a)     This paragraph (9) applies if you are not a corporation and you wish to object to complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that you:

(i)    have committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    are liable to a civil penalty.

(b)     This paragraph (9) also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

(i)    have committed an offence against or arising under an Australian law or a law of a foreign country; or

(ii)    are liable to a civil penalty.

(c)     You must:

(i)    disclose so much of the information required to be disclosed to which no objection is taken; and

(ii)    prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii)    file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER

(10)    This order does not prohibit the following:

(a)    The joint and several voluntary administrators of Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) ACN 622 134 776 (being the second to fourth defendants) incurring reasonable professional fees and disbursements in carrying out their role as voluntary administrators up to the amount of $200,000;

(b)    The receiver and manager to Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) ACN 622 134 776, being the fifth defendant incurring reasonable professional fees and disbursements in carrying out his role as receiver and manager up to $25,000;

(c)    Each of the fifth to eleventh defendants paying up to $10,000 each on their reasonable legal expenses;

(d)    Each of the sixth defendant (Max Musashi Mito), the seventh defendant (Christopher Durre), the eighth defendant (Peter Bruce-Clark), the ninth defendant (Takamichi Mito) and the tenth defendant (Divesh Dipak Sanghvi) paying $1,000 per week on their respective living expenses

(e)    dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(f)    in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the plaintiff at least two working days written notice of the particulars of the obligation.

(11)    You and the plaintiff may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the plaintiff or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the plaintiff and you, and the Court may order that the exceptions are varied accordingly.

(12)    (a)     This order will cease to have effect against you if you:

(i)    pay Relevant Amount specified in relation to you in order 6(a), above, into Court;

(ii)    pay that sum into a joint bank account in the name of your lawyer and the lawyer for the plaintiff as agreed in writing between them; or

(iii)    provide security in that sum by a method agreed in writing with the plaintiff to be held subject to the order of the Court.

(b)     Any such payment and any such security will not provide the plaintiff with any priority over your other creditors in the event of your insolvency.

(c)     If this order ceases to have effect pursuant 12(a) above, you must as soon as practicable file with the Court and serve on the plaintiff notice of that fact.

COSTS

(13)    The costs of this application are reserved to the Court hearing the application on the Return Date.

PERSONS OTHER THAN THE PLAINTIFF AND DEFENDANTS

(14)    Set off by banks

This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

(15)    Bank withdrawals by the defendants

No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

(16)    Persons outside Australia

(a)    Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia.

(b)    The terms of this order will affect the following persons outside Australia:

(i)    you and your directors, officers, employees and agents (except banks and financial institutions);

(ii)    any person (including a bank or financial institution) who:

(A)    is subject to the jurisdiction of this Court; and

(B)    has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and

(C)    is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and

(iii)    any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person’s assets.

(17)    Assets located outside Australia

Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party’s application, reasonable written notice of the making of the application is given to the plaintiff.

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE PLAINTIFF

(1)    The plaintiff undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

(2)    As soon as practicable, the plaintiff will file and serve upon the defendants copies of:

(a)    this order;

(b)    the application for this order for hearing on the return date;

(c)    the following material in so far as it was relied on by the plaintiff at the hearing when the order was made:

(i)    affidavits (or draft affidavits);

(ii)    exhibits capable of being copied;

(iii)    any written submission; and

(iv)    any other document that was provided to the Court.

(d)    a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

(e)    the originating process, or, if none was filed, any draft originating process produced to the Court.

(3)    As soon as practicable, the plaintiff will cause anyone notified of this order to be given a copy of it.

(4)    The plaintiff will pay the reasonable costs of anyone other than the defendants which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the defendants’ assets.

(5)    If this order ceases to have effect the plaintiff will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

(6)    The plaintiff will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

(7)    The plaintiff will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the defendant or the defendant’s assets.

SCHEDULE B

AFFIDAVITS RELIED ON

NAME AND ADDRESS OF PLAINTIFF'S LAWYERS

The plaintiff’s lawyers are:

Mr Benjamin Neil Wibo Dibden
Bridges Lawyers

Level 2, 50 Margaret Street, Sydney NSW 2000

Tel: 02 8272 7100

Fax: 02 8272 7199

Email: bdibden@bridgeslawyers.com.au

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    EVP Opportunities Master Pty Ltd (EVP) is the trustee of the EVP Opportunities Master Fund. In February 2025, it invested some $10.4 million in the first defendant (the Investment), Strong Room Technology Pty Ltd (SRT). In so doing, EVP is said to have relied upon (a) a series of representations and warranties made by directors of SRT; and (b) documentary material made available to it during the due diligence process (the Documents).

2    On 28 March 2025, SRT was placed into voluntary administration and receivers appointed to a bank account held in its name. EVP now says that it was “profoundly misled” in relation to the Investment and, in particular, that the warranties given were “false, misleading or deceptive” and may have been undergirded by “deliberate fraud”.

3    The application before the Court is for the grant of freezing orders against an array of persons and entities who, in substance, received, directly or indirectly, the monies paid by EVP for its interest in SRT. For the reasons that follow, those orders should be made.

Preliminary observations

4    For the purposes of this application, it is important to remain abreast of two matters.

5    First, the current application seeks interim relief by way of an ex parte order: see rule 7.32(1) of the Federal Court Rules 2011 (Cth). As such, the defendants have neither been served with the application nor had the opportunity to respond to the material tendered or contest it in any way: see International Finance Trust Co Ltd v New South Wales Crime Commission (2009) 240 CLR 319, 363 – 364 [88] – [89]. Indeed, they are seemingly unaware of the present proceedings. That necessarily has the consequence that any observations made with respect to the issues are, at best, preliminary: see generally Farrell v Delaney (1952) 52 SR (NSW) 236, 238; WEA Records Ltd v Visions Channel 4 Ltd [1983] 1 WLR 721, 727. They are unassisted by argument from the defendants and made in the absence of any countervailing evidence.

6    Second, the orders sought are for the freezing of assets pending the return of the matter to Court. The nature of that order is somewhat significant. In effect, it has the consequence of preventing persons utilising assets which they may perceive to be their own (and indeed, may well be their own) before any opportunity has arisen for them to defend the claim against them. Orders of this general nature have been labelled “draconian”: see, eg, Deputy Commissioner of Taxation v Huang (2021) 273 CLR 429, 449 [34]; Commissioner of Taxation v Regent Pacific Group Ltd [2013] FCA 36 [26]: and that may not be an unjustified observation. However, for present purposes, it must be kept steadily in mind that the orders sought are of a limited duration, being some 72 hours. To that end, any interference with the assets of the defendants will be minimal, and they will soon have the opportunity to vary the orders or otherwise have them dissolved.

The appropriateness of the orders sought

7    The principles governing the grant of provisional and protective relief in the nature of freezing orders can be accepted as well-settled: see, eg, Basi v Namitha Nakul Pty Ltd [2019] FCA 743 [7] – [9]; UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 [13]; Tsiang v Wu [2019] FAMCAFC 128 [20] – [27]. As Feutrill J recently observed in Montague Estate Pty Ltd (In Liq.) v Montague VY No1 Pty Ltd [2024] FCA 1426 (at [9]):

… the plaintiffs must first show they have a prima facie case in the sense of a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo, pending trial. That is commonly referred to as a serious question to be tried. What is sufficient depends on the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders sought. … The second matter is that a plaintiff must demonstrate that the balance of convenience and justice favours the grant of injunction. …

Sufficient likelihood of success to justify preservation of the status quo?

8    On the evidence before the Court, which remains yet untested and unchallenged, it appears that the Investment was procured as a result of significant and, ostensibly, wilful misinformation. For example, the plaintiff points to the Documents and financial records of SRT which (a) were represented as accurate and complete in a suite of written warranties provided by SRT in early February 2025; and, nevertheless, (b) do not accurately record, amongst other things, the debts, revenue or income of SRT. Indeed, EVP has adduced evidence which suggests that such errors were, on the admission of a director of SRT, intentional and the product of a fraudulent design.

9    As such, it is reasonably arguable that certain directors of SRT, namely Mr Max Mito and Mr Christopher Durre, engaged in conduct which was deliberately misleading for the purposes of inducing EVP to invest a significant sum of money in SRT. The position of other directors of SRT, including Mr Peter Bruce-Clark and Mr Divesh Sanghvi, is slightly further removed from that conduct. The evidence presently before the Court of their knowledge of the circumstances surrounding the Investment is inferential, however, for the purposes of the present application, it is appropriate to proceed upon the basic premise that, in the course of their directorships, they fulfilled all relevant obligations associated with that office. To that end, and in circumstances where (a) SRT is not a large commercial entity; and (b) the Investment was substantial, it would be unfair in the first instance to assume that Messrs Bruce-Clark and Sanghvi neglected to keep themselves appraised of the manner in which the transaction was to occur or the information to be provided to EVP for the purposes of informing and effecting the transaction. On that basis, which may be readily disproven at some later date, both Mr Sanghvi and Mr Bruce-Clark are sufficiently associated with the alleged misrepresentations and, indeed, their deliberateness.

10    That substratum of fact, it is submitted by Mr Zahra SC for the plaintiff, gives rise to “a number of causes of action” including, inter alia, deceit and fraudulent misrepresentation, misleading or deceptive conduct and liability under either limb of the “rule in Barnes v Addy” ((1874) LR 9 Ch App 244, 251 – 252). Noting those observations canvassed above, that assertion is, at least prima facie, not without force. For instance, on the evidence before the Court, there is a good arguable case that (a) SRT furnished EVP with information that it represented to be accurate, but knew to be false; and (b) EVP was induced, by that information, to make the Investment.

11    Relevantly, Mr Zahra SC continued:

In short, almost all of those causes of action mean that the moneys initially paid by EVP to SRT are impressed with a constructive trust, such that EVP has a proprietary interest in those moneys, which interest has survived their transformation into another asset, and transfer to other persons.

12    That proposition raises several questions, such as whether fraud or deceit can underpin a claim for proprietary relief where the ownership of property is consensually transferred (cf fraud or deceit tantamount to theft: see, eg, MBF Australia Limited v Malouf [2008] NSWCA 214 [32], citing Evans v European Bank Ltd (2004) 61 NSWLR 75, 99 – 100 [111] – [116]). Whilst that query may ultimately be answered in the affirmative: see, eg, Orix Australia Corporation Ltd v Moody Kiddell & Partners Pty Ltd [2005] NSWSC 1209: there is no pressing need to reach any definitive conclusion on the topic for the purposes of resolving the present application.

13    There is, at least, some arguable basis that EVP retained ownership in the monies that passed to SRT and that, therefore, some proprietary claim exists in its favour. On that basis, it would be entitled to recover the money in specie (to the extent that it could be traced). That conclusion has the ancillary consequence that proprietary claims might be made against the secondary recipients of money, that is, entities to whom the money has been passed. I am prepared to accept that to be so. Nevertheless, it is a matter which is far from clear.

Balance of convenience and justice?

14    It is a matter of common experience that the (alleged) misconduct of Messrs Mito and Durre is enough to enliven the risk that they may seek to dissipate any assets in their possession and/or control: see, eg, Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, 325 – 326.

15    It is also the case that Mr Bruce-Clark and Mr Sanghvi are implicated in the conduct of Messrs Mito and Durre and, on that basis, they too might be regarded as persons who would have some real motivation to put assets beyond the reach of creditors. In those circumstances, the risk of dissipation is tangible and favours the grant of the orders sought. That conclusion is bolstered by a more liberal assessment of the “balance of convenience”, noting (a) EVP is alleged to have been a victim of fraud; (b) that fraud is alleged to have deprived EVP of $10.4 million which has, in part, been dissipated; and (c) the orders sought are temporally limited and seek to ensure that “there are funds available to the plaintiff against which to enforce, if it succeeds at trial”.

16    The second of those considerations foreshadows a thorny issue that confronts the plaintiff on the present application – namely, that the use of the Investment by SRT is not directly within the knowledge of EVP. In that respect, questions arise as to the extent to which the freezing orders should be made. As against SRT, orders are sought that its assets be frozen in the sum of $10,440,969, being the amount which it received from EVP in the form of the Investment. Other persons who received money from it are sought to be enjoined from disposing of assets, but only to the extent that they hold the assets of SRT. That is entirely appropriate.

17    Greater difficulty arises in relation to other entities who are the subject of this application. The amounts in respect of which the plaintiff seeks to enjoin the several other defendants from disposing of assets varies, although, in relation to Messrs Sanghvi, Bruce-Clark, Mito and Durre, one might accept that, until they can be heard from, a sum of $10,440,969 would be appropriate. Otherwise, the amounts sought to be restrained are intended to reflect the value of the Investment that could feasibly have been received by the relevant defendant.

18    Again, but not without a modicum of hesitation, that appears appropriate for present purposes. Whilst taking that view, I harbour concerns as to the drafting of Order 10 of Annexure A of the plaintiff’s short minutes of Order. That Order is drafted in the following terms:

(10)     This [asset preservation] order does not prohibit the following:

…

(c)    Each of the fifth to eleventh defendants paying up to $10,000 each on their reasonable legal expenses;

(d)    Each of the sixth defendant (Max Musashi Mito), the seventh defendant (Christopher Durre), the eighth defendant (Peter Bruce-Clark), the ninth defendant (Takamichi Mito) and the tenth defendant (Divesh Dipak Sanghvi) paying $1,000 per week on their respective living expenses; …

(Emphases added).

19    Specifically, I am concerned that the plaintiff does not go far enough to grant to the defendants the sufficient funds with which to meet their legal expenses. Sad it is to say that the sum of $10,000 does not go terribly far in litigation in this Court, and I would have thought that a sum in the amount of $35,000 would be more appropriate. Similarly, and with respect to the carve-out for “living expenses” in proposed Order 10(d), the sum of $2,000 is appropriate.

20    Noting those amendments, the orders in the draft handed to the Court should be made.

Note

21    These are the amended and revised reasons for judgment given on 31 March 2025. Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said on 31 March has not been changed nor has any other material change been made.

Associate:    

Dated:    26 May 2025

SCHEDULE OF PARTIES