Federal Court of Australia

The Infant Food Company Pty Ltd v Willis Trading Limited [2025] FCA 682

ORDERS

THE COURT ORDERS THAT:

1.    The amended interlocutory application filed in court today be dismissed.

2.    The respondents pay the applicant’s costs of and relating to that interlocutory application.

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

REASONS FOR JUDGMENT

Delivered ex tempore, Revised from transcript

JACKMAN J:

1    These are proceedings brought by the applicant (IFC), for the enforcement of an International Arbitral Award made on 28 April 2025 (Award), under article 35 of the UNCITRAL Model Law on International Commercial Arbitration, which is given force of law by s 16 of the International Arbitration Act 1974 (Cth).

2    On 2 May 2025, Lee J made an ex parte freezing order against the respondents, which was continued on 7 May 2025. The first respondent (Willis) is a Hong Kong corporation. The second respondent (GAAI) is its Australian subsidiary and the third respondent (GAAT) is wholly owned by GAAI.

3    On 2 June 2025, I made orders which were not opposed, recognising and enforcing the Award and continuing the freezing order. The respondents filed an interlocutory application dated 28 May 2025, seeking the discharge of the freezing order. At the outset of today’s hearing, that was amended so as to seek only that order 7 in the freezing order which I made on 2 June 2025 be deleted. Order 7 is as follows:

If the unencumbered value of your Australian assets is less than the award debt and you have assets outside Australia (worldwide assets):

(a)    you must not dispose of, deal with or diminish the value of any of your Australian assets and worldwide assets up to the amount of the award debt; and

(b)    you may dispose of, deal with or diminish the value of any of your worldwide assets so long as the unencumbered value of your Australian assets and worldwide assets still exceeds the award debt.

4    The respondents seek the discharge of order 7 on the following bases. First, the respondents contend that the Court lacks jurisdiction to make a worldwide freezing order against Willis, apparently on the basis that Willis has not consented to this Court’s jurisdiction and has filed a conditional appearance. The respondents say that they did not consent to the orders of 2 June 2025 but simply did not oppose them, and I will proceed on that basis. Second, the respondents contend that there is not a sufficient risk that the judgment of this Court will be wholly or partially unsatisfied so as to justify a worldwide freezing order. The respondents in that regard rely on the ability to enforce an Australian judgment in Hong Kong.

5    As to the submission concerning jurisdiction. In the first place, GAAI and GAAT are entities incorporated in Australia, and I do not understand any submission to have been put as to why the Court does not have jurisdiction to make orders in relation to those companies on a worldwide basis. Willis is a company registered in Hong Kong. As Gageler, Keane, Gordon and Gleeson JJ said in Deputy Commissioner of Taxation v Huang [2021] HCA 43; (2021) 273 CLR 429 at [25], a freezing order is an order made in personam.

6    The Court’s power to make such an order does not depend simply on whether Willis has consented to the jurisdiction of the court. The court has power to make a freezing order if there is a jurisdictional connection, irrespective of Willis’s consent. Rule 10.42 of the Federal Court Rules 2011 (Cth) (FCR) reflects the Australian harmonised rules for “long arm” jurisdiction and permits service of an originating process overseas without leave if one or more prescribed connecting factors are shown. Those connecting factors include:

(a)    that the proceeding relates to the construction, effect or enforcement of a law of the Commonwealth, a State or a Territory (r 10.42(p)); and

(b)    that the proceeding relates to an arbitration held in Australia or governed by a law of the Commonwealth, a State, or a Territory, (r 10.42(q)(i)).

7    In the present case, each of those connecting factors is satisfied. The proceeding relates to the enforcement of the International Arbitration Act 1974 (Cth), being a law of the Commonwealth, and relates to an arbitration held in Australia and governed by the law of Victoria. The originating process was served in accordance with the Court’s orders. Accordingly, the in personam jurisdiction of the Court has been established: see Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at [54] (Gaudron, McHugh, Gummow and Hayne JJ). I note, although it is unnecessary to do so, that Willis has made no application to set aside service of the originating application and has put forward none of the evidence required by r 10.43A for such an application. Accordingly, the Court has jurisdiction to make orders against Willis and for that matter the other respondents, and there is no reason why that jurisdiction is limited to assets which Willis holds in Australia.

8    As to the submission that there is insufficient evidence of a risk of dissipation of assets so as to justify the making of a freezing order, the basis for a freezing order is now stronger than it was on 2 June 2025. The Court has now given judgment enforcing the Award, whereas before 2 June 2025 the orders made by Lee J were given in protection of an apprehended judgment. Further, there is evidence on the part of Willis’s parent company to scale down the operations of Willis in Australia. The parent company, Alpha Professional Holdings Limited (Alpha) announced to the Hong Kong stock exchange on 15 May 2025 that, “the operations of Willis Trading and Alice Trading have been scaled-down due to cessation of business relationship with Bubs Australia.” IFC submits, and I accept, that that sentence reflects an intention to scale-down operations in Australia giving rise to a danger that assets in Australia will be returned to Hong Kong, thereby inhibiting the processes of this Court.

9    In addition, the warehouse in Revesby owned by GAAI remains listed for sale. The warehouse is a major asset of Willis and represents 23% of the assets of Alpha. The sale of the warehouse in Revesby is consistent with a risk of assets in Australia being returned to Hong Kong or elsewhere.

10    There is also evidence of a risk that Alpha has or may have incurred debts in Hong Kong, which are secured by the warehouse in Revesby. As at September 2024, the warehouse secured borrowings of AUD $6.5 million and was worth AUD $8.1 million, thereby yielding equity of approximately AUD $1.6 million. On 15 May 2025, Alpha also announced to the stock market in Hong Kong that there is further indebtedness of HK $10,662,000 owed to AP Diamond Limited (AP Diamond), a Hong Kong company, which is apparently secured against the warehouse in Revesby. IFC draws attention to the affidavit of Mr Zhao Lei of 19 May 2025, served pursuant to the freezing orders which required disclosure of the assets of the respondents. That affidavit (at [14]), gives different and higher figures as at the same date, namely, 15 May 2025, for Willis’s loan with AP Diamond. IFC contends, and I accept, that there is a question as to the bona fides of the indebtedness and security for that indebtedness between Willis and AP Diamond.

11    Further, I note that the amount of the Award is significant in terms of the overall assets of Alpha.

12    IFC submits, and I accept, that these matters point to a risk that should be protected by a freezing order. In view of the international operations of Willis and its parent company, it is appropriate in my view that the freezing order have worldwide effect.

Associate:

Dated:    23 June 2025