Federal Court of Australia

Albarran v Reynolds, in the matter of Mercedes Group Pty Ltd (in liquidation) [2025] FCA 1129

ORDERS

PENAL NOTICE

TO: Lascia Pty Ltd ACN 601 616 442

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: Lascia Pty Ltd ACN 601 616 442

This is an injunction made against you on 11 September 2025 by Justice Feutrill at a hearing without notice to you. It has effect upon the Court being given the usual undertakings set out in Schedule A to this order and was made after the Court read the affidavit listed in Schedule B to this order.

THE COURT ORDERS THAT:

1.    The plaintiffs’ interlocutory application filed on 11 September 2025 for freezing and other orders be, in the first instance, returnable instanter.

2.    The interlocutory application, in the first instance, be determined on an ex parte basis.

3.    There be no order in terms of paragraphs 3 and 4 of the interlocutory application and in lieu thereof there be orders in terms of paragraphs 4 and 5 of these orders.

4.    Upon the plaintiffs giving the Court the usual undertaking as to damages, until 4.30pm (AWST) on 18 September 2025, the fourth defendant (whether by itself, its directors, officers, employees, agents or otherwise) be restrained and an injunction be granted restraining it from disposing of, dealing with, or diminishing such of the net proceeds of the sale of the property situate at 41A Bay Road Claremont, in the State of Western Australia, as remain in its possession, custody or control at the date of these orders.

5.    The question of whether:

(a)    the fourth defendant be ordered to provide the plaintiffs with an account of the proceeds of the sale of 41A Bay Road; and (or)

(b)    the fourth defendant be ordered to identify the name, address and account details of any financial institution into which the proceeds of the sale of 41A Bay Road were paid and what has become of those proceeds; or

(c)    there be such other order as may be necessary and convenient to facilitate any continuation of the injunction granted under paragraph 4 of these orders,

be stood over and adjourned to the Return Date.

6.    By 4.30pm (AWST) on 12 September 2025 the plaintiffs serve the following documents on each of the defendants and Jane Reynolds by sending them to the last known email address of each defendant and Ms Reynolds:

(a)    the interlocutory application filed 11 September 2025;

(b)    the affidavit of Richard Albarran sworn 11 September 2025;

(c)    the plaintiffs’ written submissions filed on 11 September 2025; and

(d)    a copy of these orders and any reasons for these orders published as at the time of service.

7.    The parties and Ms Reynolds have liberty to apply on 24 hours’ written notice to vary or discharge paragraphs 3 – 5 of these orders.

8.    The interlocutory application be returnable inter partes at 10.00am (AWST) on 18 September 2025 (Return Date).

9.    The question of costs be reserved until the Return Date.

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

Schedule A

The plaintiffs undertake:

(a)    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 that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking; and

(b)    to pay the compensation referred to in (a) to the person affected by the operation of the order or undertaking.

Schedule B

AFFIDAVIT RELIED ON:

REASONS FOR JUDGMENT

FEUTRILL J:

1    The plaintiffs filed an interlocutory application for freezing orders to be made ex parte on an urgent basis. The application came before me as a duty matter on 11 September 2025. I refused the application insofar as the plaintiffs requested there be freezing orders, but made an interim injunction to restrain one defendant from dissipating the proceeds from the sale of a property that it had charged in favour of the first plaintiffs for payment of an indemnity it had made under a deed. These are my reasons.

2    The Court has general power to make freezing orders under s 23 of the Federal Court of Australia Act 1976 (Cth) and Div 7.4 of the Federal Court Rules 2011 (Cth). I summarised the applicable principles, which are well-established, in UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 at [13]. These need not be restated. I have applied them in the determination of this application.

3    The plaintiffs read an affidavit of Richard Albarran sworn 11 September 2025 on the hearing of the application. Exhibit RA-1 was also tendered and received in evidence on the hearing. Also before the Court on the hearing were the originating process and statement of claim filed on 14 August 2025 and the plaintiffs’ written outline of submissions filed on 11 September 2025.

4    On the facts deposed in Mr Albarran’s affidavit and the evidence in Exhibit RA-1 I am satisfied that the plaintiffs have a prima facie or good arguable case for final relief. However, I am not satisfied that there is a danger of any defendant absconding or a danger of any of them removing assets from the jurisdiction or disposing or otherwise dealing with them such that there is a danger that the plaintiffs, if they obtain judgment, will not be able to get it satisfied. That is, I am not satisfied that there is a real or substantial risk as opposed to a remote or speculative or theoretical possibility of a judgment going unsatisfied. The plaintiffs have not proved facts from which the Court can infer the existence of a real of substantial risk on the balance of probabilities.

5    Exhibit RA-1 contains a schedule of the assets and liabilities of the first defendant (Mr Reynolds) and Jane Reynolds (a non-party respondent to the application). Although, the schedule appears to be a mixture of assets and liabilities of Mr and Ms Reynolds as individuals and entities they control, their net asset position, as of 1 December 2024, was approximately $60 million. Disposal or dissipation of assets of that value within the jurisdiction would require significant effort and ingenuity.

6    There were also a number of communications in evidence between Mr Reynolds and the first plaintiffs (liquidators) or the liquidators’ legal representatives. Certain of those communications may have been without prejudice in that they were communications apparently directed towards settlement of matters that are now the subject of the proceedings. The plaintiffs relied on these communications as part of the context in which the liquidators had demanded payment, undertakings and the provision of information from Mr Reynolds before the proceeding was commenced. In the course of his communications with the liquidators or their legal representatives during August 2025 Mr Reynolds said that he would not take any steps to dispose of or diminish assets while he sought advice. He also said that, pending further discussions, no action would be taken to sell, transfer, or otherwise deal with the assets of the Chadston Trust. (The fourth defendant is evidently the trustee of that trust.)

7    On 3 September 2025, after this proceeding was commenced, the liquidators then requested Mr Reynolds to give an undertaking substantially in the form of those sought by way of freezing orders on the application. The liquidators requested that the undertaking be given by 5.00pm on 7 September 2025 failing which the freezing order application may be made.

8    Mr Reynolds did not give the undertaking. However, on 9 September 2025 the liquidators’ legal representatives received an email from Paul Mac who said he acted for Mr Reynolds and the fourth defendant (Lascia Pty Ltd). The email indicated that Mr Mac was in the process of obtaining instructions and asked for confirmation that the liquidators would ‘refrain from taking any further precipitous action for 7 days without first giving notice, so that we can finalise our correspondence to you’. That confirmation was not given, but rather the liquidators’ legal representative requested and obtained confirmation that Mr Mac had instructions to accept service of the originating process in this proceeding.

9    I do not infer from the facts to which reference has been made any real or substantial risk that Mr Reynolds will dispose or dissipate assets to frustrate enforcement of any judgment the plaintiffs may obtain against him in this proceeding.

10    The position with respect to the second defendant (Mr D’Ercole) and third defendant (Mr Kaminski) is yet clearer. Each of them has given the plaintiffs a written and signed undertaking to the effect the ‘[he] undertake[s] not to remove from Australia or in any way dispose of or deal with or diminish the value of any of [his] assets in Australia, save in the ordinary course of business or to meet my legitimate expenses, unless [he] give[s] at least 72 hours’ written notice’. Through their legal representative they explained the reasons that they were not prepared to give undertakings in the form the liquidators had requested. These included that they were ‘an overreach’. Later, in correspondence their legal representatives said that the liquidators had ‘not provided any real reason as to why they consider [Mr D’Ercole and Mr Kaminski] would dissipate their assets’. I agree.

11    Regarding Ms Reynolds, the evidence does not establish that any of her assets would be available to satisfy any judgment against any of the defendants. That she may be in the process of selling ‘her’ assets does not provide any basis to infer that there is a danger that she is putting assets that would otherwise be available to satisfy a judgment in favour the plaintiffs beyond the reach of enforcement.

12    The position of Lascia is more nuanced.

13    Lascia is evidently the trustee of the Chadston Trust. It is the registered proprietor of land situate at 398 Geographe Bay Road, Quindalup in the State of Western Australia. That property was listed for sale on 13 June 2025. It was subsequently ‘delisted’. These events appear to be consistent with Mr Reynolds’s statement during August 2025 that no steps would be taken to dispose of assets of the Chadston Trust while he was taking advice. While Mr Reynolds made the statement Ms Reynolds is, in fact, the sole director of Lascia and, therefore, it is Ms Reynolds who would or should have authority to deal with property of that company. In any event, there does not appear to be any present intention of Lascia to dispose of the Quindalup property.

14    The liquidators were originally appointed administrators of the second and third plaintiff under s 436A of the Corporations Act 2001 (Cth). They were subsequently appointed liquidators as a result of the second meeting of the creditors of those companies under s 439A of the Corporations Act. For the purpose of meeting expenses, for which the liquidators (then administrators) were responsible under s 443A of the Corporations Act, the liquidators (administrators), Mr Reynolds and Lascia made a deed of guarantee and indemnity on 9 April 2025. Under the terms of that deed Mr Reynolds and Lascia guaranteed the payment of certain expenses. These expenses total $410,685.70 and neither Mr Reynolds nor Lascia has paid them in accordance with the deed.

15    Lascia charged and granted a security interest in favour of the liquidators (administrators) over its right, title and interest in 41A Bay Road, Claremont in the State of Western Australia. Lascia acknowledged and agreed to the liquidators (administrators) lodging a caveat over 41A Bay Road as result of the security interest. The liquidators (administrators) evidently lodged a caveat over that land.

16    On 6 May 2025, that is about a month after the deed of guarantee and indemnity was made, Lascia entered into a contract for the sale of 41A Bay Road. The liquidators (administrators) agreed to withdraw their caveat to allow settlement of the sale and purchase of that land to be completed. However, no replacement security was provided. It appears that negotiations for the provision of replacement security have not been fruitful. Given that the liquidators withdrew their caveat without an agreement regarding replacement security, a genuine fear on the part of the liquidators that Lascia will dissipate its assets to avoid its legal obligations is hard to credit.

17    While I am not satisfied that the plaintiffs have demonstrated a danger that a prospective judgment against Lascia will go unsatisfied, amongst the information that the liquidators requested Lascia to provide during August 2025 was an account of the net proceeds of the sale of 41A Bay Road and the location of the net proceeds. Having regard to the liquidators’ security interest in 41A Bay Road, they would prima facie have an equitable proprietary interest in the proceeds of the sale of that property. Therefore, a request for an account and identification of the fund into which the net proceeds can be traced is prima facie a reasonable request on the part of the liquidators as the secured party.

18    The failure to proffer any undertaking or provide the requested information with respect to the net proceeds of the sale of 41A Bay Road gives rise to an inference that Lascia may dispose of or dissipate property in which the liquidators have an equitable proprietary interest. Accordingly, although not satisfied that a freezing order should be granted, I was satisfied that, although the claim against Lascia is presently pleaded as a personal claim for breach of the indemnity, it has a reasonably arguable proprietary claim that it has, in substance, sought to protect through the application for a freezing order.

19    It follows that an interim injunction was granted in the context of an urgent hearing and on the basis that the plaintiffs will be required to justify the continuation of that injunction at an inter partes hearing in due course.

Associate:

Dated:    12 September 2025

SCHEDULE OF PARTIES