Federal Court of Australia

Blundell v Ashrafinia, in the matter of Packstore Australia Pty Ltd (in liquidation) [2026] FCA 710

ORDERS

THE COURT DECLARES THAT:

1.    The funds held by the defendants with Revolut Payments Australia Pty Ltd (Revolut) in accounts:

(a)    772 772 102995131 in the name of Mojtaba Ashrafinia; and

(b)    500037502 in the name of Pack & Store Pty Ltd,

are constituted from the proceeds of the sale of the business of the second plaintiff and the plaintiffs have a proprietary interest in and to such funds.

THE COURT ORDERS THAT:

2.    Judgment be entered against the first defendant (Mojtaba Ashrafinia) in favour of the plaintiffs in the sum of $283,383.31 plus interest thereon from 10 December 2025 to the date of judgment in the sum of $9,896.68.

3.    The second defendant pay to the plaintiffs the whole of the sum held in its name with Revolut.

4.    The orders made on 15 May 2026 be varied such that Revolut be directed to pay the funds held in account 500037502 in the name of Pack & Store Pty Ltd to the Ironbridge Legal Law Practice trust account held at Westpac, BSB 032 143, account number 473 311.

5.    The plaintiffs be permitted to pay from the amounts received from Revolut pursuant to orders 3 and 4 above and from the amount of $73,102.20 (and such further amount) previously received by Ironbridge Legal from Revolut and held in trust, such amounts necessary to discharge the amounts owing to the plaintiffs by the defendants in accordance with these orders.

6.    The defendants, jointly and severally, pay the plaintiffs’ costs of and incidental to the proceeding assessed on a lump sum basis and fixed at $125,000.

7.    The freezing or asset preservation orders made on 9 December 2025 as amended and extended from time to time be:

(a)    extended until further order; and

(b)    varied so that the “Relevant Amount” in order 5(a) be increased to $345,177.79.

8.    There be liberty to apply with regard to any relief concerning the liquidation of the securities held by Revolut in the name of the first defendant.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction

1    Andrew Blundell and Simon Cathro are the joint and several liquidators of Packstore Australia Pty Ltd (Packstore). They, together with the company, claim against the company’s director, Mojtaba (aka Marc) Ashrafinia, on various bases for payment of the proceeds of the sale of the company’s business that were transferred to a personal account of Mr Ashrafinia rather than to the company. They also claim against another company of Mr Ashrafinia’s, Pack and Store Pty Ltd (PAS), because some of the proceeds were transferred by Mr Ashrafinia to that company where they have remained frozen under asset preservation orders.

2    Mr Ashrafinia’s defence is that the proceeds were not paid under the sale of business agreement on which the plaintiffs rely, but rather under a digital assets transfer agreement under which, he says, he was personally the vendor. He says that the business sale agreement was not proceeded with, that the proceeds were rightly paid to him personally, and that there is therefore no valid claim against him or against PAS.

3    The purchaser under the business sale agreement and under the digital assets transfer agreement was Owen Cripps & Co Pty Ltd (OCC). The director of that company who dealt with Mr Ashrafinia in relation to both agreements is Glen Lawford.

4    At the conclusion of the hearing, I made orders in favour of the plaintiffs including a judgment in their favour against Mr Ashrafinia and that PAS transfer the frozen funds in its name to the plaintiffs. What follows are my reasons for making those orders.

The evidence

5    The plaintiffs read affidavits of the following witnesses:

(1)    Mr Blundell, dated 9 December 2025 and 16 March 2026; and

(2)    Mr Lawford, dated 18 March 2026 and 22 May 2026.

6    Neither Mr Blundell nor Mr Lawford was required for cross-examination, nor was there any submission that their evidence was for some reason or other unreliable. Their evidence can accordingly be accepted.

7    The defendants, at a very late stage after a number of timetabling deadlines had been missed, filed an affidavit by Mr Ashrafinia dated 19 May 2026. However, Mr Ashrafinia failed to present himself for cross-examination with the result that his affidavit was ultimately not read. The circumstances in which Mr Ashrafinia failed to be available for cross-examination are briefly as follows.

8    On 16 March 2026, the defendants became unrepresented in the proceeding when their then solicitor withdrew.

9    On 7 May 2026, Trevor Hall of Hall Partners filed a notice of acting on behalf of the defendants. Mr Hall subsequently filed various documents on behalf of the defendants including an interlocutory process, affidavits and submissions on 12 May 2026, and the affidavit of Mr Ashrafinia referred to above and opening trial submissions on 19 May 2026.

10    At 9:11am on 25 May 2026, roughly an hour before the trial was scheduled to be called on for hearing, my Chambers received an email from Mr Ashrafinia (copied to Mr Hall) which included the following:

Dear Associate,

I’m writing about NSD2298/2025, listed before Stewart J this morning at 10:15am in Court 18B.

I’m the First Defendant. I need to let the Court know that I won’t be able to make 10:15 this morning, and to respectfully ask that the matter be stood down or adjourned.

Here is a basic rundown:

On Friday afternoon 22 May 2026 my solicitor on the record, Mr Trevor Hall of Hall Partners, sent me two emails in response to my request to have my affidavit redone to include missing key details which I felt were necessary for the court to see. His first reply gave no substantive response to my request and instead said he considered my correspondence “disingenuous”. Apparently this justified him ceasing to act.

The second said he may seek leave from the Court to cease acting at today’s hearing.

I didn’t mention or imply anything that would make him react this way, and I did ask him to email me by Sunday afternoon to confirm whether he’s representing me. On Sunday afternoon he sent a third email saying he “will abide the determination of the Court on Monday” and wouldn’t engage in further substantive correspondence.

…

I’ve been working through the weekend doing physical labour to keep things afloat and have only just got back to my depot to prepare for today’s work. Realistically I can’t be at the Federal Court by 10:15am.

I respectfully ask the Court to stand the matter down or adjourn it, so I can either secure representation or be heard in person. Despite the recent circumstances, I’m still committed to participating in these proceedings and will appear at any relisted date with adequate notice.

I apologise for the timing of this notice. I also had very little notice myself, since my solicitor only made his position clear on Friday afternoon. This is the consequence of my representation effectively collapsing on Friday and my unsuccessful efforts over the weekend to find a replacement. I hope you can understand. …

11    From that communication, the following is apparent. First, Mr Ashrafinia was aware of the time and the place of the hearing. Second, although Mr Ashrafinia apparently understood that Mr Hall intended to cease to act for the defendants (or perhaps only for Mr Ashrafinia), Mr Ashrafinia understood that Mr Hall would have to seek the leave of the Court to cease acting at that late stage and that he intended making such an application, the outcome of which was unknown, at the commencement of the hearing.

12    When the matter was called on for hearing at 10:15am, Mr Hall appeared for the defendants.

13    I discussed the defendants’ representation with Mr Hall. He said that he considered that neither he nor the defendants had terminated his retainer (T4:1-28). He continued to appear for the defendants and did not wish to bring an application seeking leave to cease acting in the proceeding (T4:30-38). He indicated that he was happy to appear for the defendants albeit under “difficult circumstances” (T2:18-20). When pressed, Mr Hall did not consider that he was embarrassed, in the sense of having a conflict between the defendants’ instructions and his duty to the Court (T4:40-5:4). Mr Hall confirmed that he had informed Mr Ashrafinia the previous day that it was necessary for him to be at court so that he could be cross-examined (T3:35-46).

14    The matter was stood down briefly to allow Mr Hall to contact Mr Ashrafinia to tell him that it was necessary for him come to court as he was needed for cross-examination. When the hearing resumed, Mr Hall informed me that he had telephoned Mr Ashrafinia but that the call had gone straight to voicemail. Mr Hall had then sent Mr Ashrafinia a text message requesting him to make arrangements to attend court by 11:45am “if he wished his affidavit to be read or in the event that he wished to be heard”. Mr Hall also sent Mr Ashrafinia an email which apparently bounced (T7:31-41; T33:26-30).

15    The hearing accordingly proceeded in the absence of Mr Ashrafinia and with Mr Hall appearing for both defendants.

16    By noon, the parties had presented their opening submissions and the plaintiffs had read or tendered the evidence on which they relied. As their witnesses were not required for cross-examination, they closed their case. It then came time for Mr Hall to read the affidavit of Mr Ashrafinia on which the defendants would rely. Mr Ashrafinia was still not there and he did not respond to his name being called outside the court. The court stood down again to give Mr Hall another opportunity to try to contact Mr Ashrafinia.

17    When the hearing resumed, Mr Hall informed the Court that he had once again telephoned Mr Ashrafinia but that the call “just went straight to voicemail”. Mr Hall had then sent Mr Ashrafinia a text message that said: “I note the court adjourned to provide you a further opportunity to be heard. I will continue on with running your case.” (T34:34-38). Mr Hall did not apply for the hearing to be adjourned to enable Mr Ashrafinia to attend. In those circumstances, Mr Hall did not seek to read Mr Ashrafinia’s affidavit but he tendered the exhibits to the affidavit.

The material facts

18    Since 1972, OCC has operated a wholesale business selling packaging supplies such as cardboard boxes, wrappings (such as bubble wrap), packing tape and packaging strapping. Mr Lawford has owned OCC since September 2017. [CB45/3]

19    Packstore was incorporated in 2018. Since May 2019, Mr Ashrafinia has been its sole director and also its secretary, and since 2021 he has been its sole shareholder. [CB146ff] The company operated a business selling storage, moving and packing supplies such as boxes, packing tape, moving blankets and bubble wrap from leased premises in Tempe, NSW. [CB34/6]

20    By order of the Supreme Court of Victoria on 12 November 2025, Packstore was wound up and Messrs Blundell and Cathro were appointed as its liquidators. [CB10/1]

21    In April 2025, Mr Lawford and Mr Ashrafinia commenced discussing with each other the possibility of Packstore selling its business to OCC. [CB45/9] That led to Mr Ashrafinia, on 27 May 2025, sending an email to Mr Lawford which set out some proposed terms of a business sale agreement. Notably, the proposed vendor was recorded as being Packstore, the purchaser was OCC and the subject of the proposed sale included the business’s intellectual property and goodwill. [CB50]

22    Mr Lawford then engaged Anthony Buda, a solicitor, to act on behalf of OCC in its purchase of the Packstore business. [CB46/12]

23    On 11 June 2025, Mr Buda sent an email to Mr Ashrafinia enclosing a draft contract for the sale of the Packstore business. The draft included an “IP List”, which I infer was supplied by Mr Ashrafinia. It included a website, domain names, branding and software. [CB67]

24    There was thereafter a delay in finalising arrangements for the sale of the business because Mr Buda found several PPSR registrations against the business which had to be removed before Mr Lawford was prepared to proceed with the sale. [CB46/15ff] In the correspondence dealing with that issue, on 11 July 2025, Mr Ashrafinia emailed Mr Buda stating the following: [CB85]

Additionally, I confirm that core digital IP—such as the primary business domains and website—are not registered to Packstore Australia Pty Ltd and are therefore unaffected by the PPSR dispute. These assets will transfer cleanly to the purchaser as part of the asset sale agreement.

25    On 23 and 24 July 2025, in anticipation of the purchase of the Packstore business by OCC, Mr Lawson caused OCC to pay to Packstore the sum of $120,000 by way of transfer to a bank account held by Packstore. The payments were made for the purchase of stock from Packstore. [CB46/18]

26    On or about 1 August 2025, OCC commenced leasing the Tempe premises (including paying applicable rental payments) from Packstore’s former lessor notwithstanding that Packstore continued trading the Packstore business from the premises. [CB47/19]

27    On 17 September 2025, Emily Huynh, a solicitor at Macpherson Kelley, wrote to Mr Buda copying Mr Lawson in which she said that she was representing Packstore in the sale. She said she was going to draft a new business sale agreement to reflect the changes that had occurred in respect of the transaction (including OCC having taken over the lease of the premises) since the parties originally began negotiating. [CB98]

28    On 22 September 2025, Mr Buda wrote to Ms Huynh saying, amongst other things, that the basis of the business being sold related to the intellectual property and should the vendor not be able to provide clear title to “the IP”, the vendor would not be able to complete the sale and hand clear title to the purchaser. [CB102]

29    On 30 September 2025, Mr Buda wrote to Ms Huynh advising her that he had received confirmation that the PPSR registrations had been removed and that he was instructed to proceed with arranging a simultaneous exchange and settlement. [CB112] Later the same day, Ms Huynh sent a draft business sale agreement to Mr Buda for his review. [CB113]

30    On 6 October 2025, Mr Lawson on behalf of OCC signed the business sale agreement between Packstore as vendor and OCC as purchaser. It is not apparent when Mr Ashrafinia signed the agreement for Packstore, but it is not in dispute that he did so sign. His signature appears on the same execution page as that of Mr Lawson, in both cases it being recorded that they signed on behalf of their respective companies. The date of 6 October 2025 appears adjacent to Mr Ashrafinia’s signature, suggesting that he signed the agreement on that date. [CB48/33]

31    The business sale agreement included the following relevant clauses. [CB177ff]

32    Schedule 1 contained some relevant definitions:

(1)    “Business” meant the “‘Packstore’ business owned and operated by the Vendor from the Premises immediately before Completion.

(2)    “Business Assets” meant “any assets owned and used by the Vendor in the Business (except for the Excluded Assets), including the … Goodwill; … Intellectual Property Rights”, and a number of other assets.

(3)    “Excluded Assets” did not include any intellectual property assets.

(4)    “Goodwill” meant “the goodwill of the Business and includes the exclusive right for the Purchaser to represent itself as operating the Business as the Vendor’s successor”.

(5)    “Intellectual Property Rights” meant “the Vendor’s rights and interests, whether registered or unregistered in … any brand names, tradenames and business names used in operating the Business …; … any domain names, any websites associated with them and all rights, designs and interests connected with or attaching to that website, and all programs or images necessary to operate or alter the website; … intellectual property rights or interests licensed or otherwise used by the Vendor or in connection with the Business; … any telephone or mobile numbers or facsimile numbers associated with or used in the Business; and includes the intellectual property rights specified in Schedule 3”.

(6)    “Purchase Price” was defined as having five elements, namely $150,000, plus the Inventory Value, plus the Plant and Equipment Value, plus any Prepayments, and less any Accruals.

33    Schedule 3, referred to in the definition of Intellectual Property Rights, included the Packstore business name, two Packstore trade marks, various domain names, brands and software and a telephone number.

34    Clause 2.1 provided that subject to Completion and in consideration for the Purchase Price, the Vendor sold and the Purchaser bought the Business and the Business Assets. By cl 13.1, it was agreed that the Business and the Business Assets were sold as, and the Purchase Price was calculated on the basis that the transaction constituted, the Supply of a Going Concern.

35    Clause 3.1 provided that the Purchaser had to pay the Purchase Price by paying $150,000 and the Plant and Equipment Value upon signing the Agreement, and the Inventory Value as soon as reasonably practicable after the Stocktake. By cl 3.2, all payments had to be made by electronic transfer to an account nominated by the Vendor, or otherwise in cleared funds as directed by the Vendor.

36    By cl 7.3, the Vendor had to obtain, and the Vendor and the Purchaser had to sign, transfers, transfer numbers and assignments of the Intellectual Property Rights.

37    As mentioned, Mr Lawson signed the business sale agreement on 6 October 2025, which was a Monday. For the rest of that week there was inter-solicitor correspondence dealing with various issues including Macpherson Kelley (for the vendor) requiring from Mr Buda (for the purchaser) proof that the purchaser was able to pay the purchase price. There were also disputes about whether the purchaser had been representing to the vendor’s customers that the business had already changed hands, about when the stocktake would occur and about when the vendor would transfer the intellectual property. Late on the Friday of that week, ie 10 October 2025, Macpherson Kelley confirmed that $150,000 had been received from the purchaser to be held in trust pending authority to release. [SCB421-435]

38    On Monday 13 October 2025, Mr Buda wrote that the purchaser could not accommodate any further delays in the completion and that should completion not occur by close of business the following day, 14 October 2025 at 5:00pm, the money held in Macpherson Kelley’s trust account should be immediately returned. [SCB420]

39    On 15 October 2025, Mr Buda wrote noting that he had not received a reply to his email on the Monday. He said that he was instructed to demand the immediate return of the $150,000 held by Macpherson Kelley in trust and that the purchaser would no longer proceed with the proposed purchase. [SCB418] Mr Lawson explained in evidence that he instructed Mr Buda to send that email out of frustration at Mr Ashrafinia’s repeated failure to cooperate with the required stocktake and to allow the vendor to satisfy the conditions of completion under clause 7.3 of the BSA. [SCB376/9] The email did not purport to cancel the business sale agreement.

40    On 16 October 2025, Mr Ashrafinia replied to Mr Buda’s email the previous day saying various things including asserting that under cl 2.2 of the “executed Business Sale Agreement dated 6 October 2025”, title and risk in the business and assets would pass to the purchaser only upon completion which had not yet occurred. [SCB436] To the extent that Mr Buda’s email the previous day may be construed as a repudiation of the agreement, the repudiation was not accepted by Mr Ashrafinia. The business sale agreement accordingly continued to be effect; it continued to govern the contractual relationship between the two companies.

41    Mr Lawson explained in evidence that on the following day, 17 October 2025, he and Mr Ashrafinia resumed discussions regarding finalising the sale of the Packstore business. On that date, Mr Ashrafinia sent Mr Lawson an updated spreadsheet setting out figures for the sale and stated that he would “like a swift but amicable resolution”. It was contemplated that an escrow service, CheckVault, would be used to facilitate the transfer of the digital assets and payment of the purchase price. [SCB376/10; 439]

42    The following week, on 20 October 2025, Mr Ashrafinia instructed Macpherson Kelley to release the $150,000 held in trust to Mr Buda “strictly and solely for the purpose of completion under the Business Sale Agreement dated 6 October 2025”. [SCB442] The purpose of that instruction was apparently to enable OCC to then transfer that sum to the escrow agent, CheckVault. In any event, the communication demonstrates Mr Ashrafinia’s understanding at that time that the business sale agreement continued to be effective and that the parties intended to complete the sale under that agreement.

43    On 22 October 2025, Mr Ashrafinia sent Mr Lawson an updated spreadsheet with proposed final figures. [SCB445] Mr Lawson replied on the same day saying: “Let’s just settle on some numbers and finish this.” He said that they could start, as discussed the previous day, by him paying the funds received for inbound stock, current stock from the stocktake and the amounts for the assets and business sale into a CheckVault escrow account. [SCB444]

44    After further exchanges, on 23 October 2025, Mr Lawson sent Mr Ashrafinia final figures as follows: [SCB450]

Total owing for current stock     $110,000.00

Total owing for assets     $24,650.00

Total owing for business sale     $150,000.00

TOTAL OWING     $284,650.00

I can put this amount of $284,650 in a CheckVault Escrow and we can start the process.

45    Mr Ashrafinia’s agreement to use CheckVault is apparent from the fact that he uploaded the business sale agreement to the CheckVault system. [SCB451; 377/15] It was recorded on the CheckVault platform that it had been agreed on 22 October 2025 that the total purchase price would be $339,500 payable in two stages, stage 1 being the amount of $284,650 made up as set out in Mr Lawson’s email of 23 October 2025 and to be held in escrow. It was also expressly recorded that “All other terms, rights and obligations remain in full effect under the Business Sale Agreement dated 6 October 2025”. [SCB452]

46    On or about 24 October 2025, OCC paid the sum of $284,650 into the CheckVault escrow. [SCB378/17; 613] I find that that payment was made for the purpose of completing the sale under the business sale agreement.

47    On 27 October 2025, Mr Lawson and Mr Ashrafinia executed a document titled “Digital Assets Transfer Agreement”. It recorded the vendor as Mr Ashrafinia (ie not Packstore) and the purchaser as OCC. It provided:

The Vendor hereby transfers to the Purchaser all digital intellectual property associated with the Packstore business, including but not limited to the domain names listed in Schedule A and the Shopify website and platform operating under packstore.com.au. All rights, logins, and administrative access required to manage these assets will be provided upon execution of this Agreement.

48    The digital assets transfer agreement provided for the finalisation of “the remaining purchase balance and associated costs” relating to the stock to be completed within six months. It also provided that upon receipt of all digital assets and confirmed access by the purchaser, the purchaser would authorise release of the funds held in escrow within 24 hours. It did not record any purchase price or other consideration. [SCB453]

49    The schedule to the digital assets transfer agreement listed 12 domain names associated with the Packstore business. [SCB454] There is no evidence of whose name the domain names were registered in as at the date of the digital assets transfer agreement. Such evidence as there is, is that on 29 October 2025, which is to say two days after the agreement and several days before the overall agreement was settled, the relevant register showed that three of the domain names were registered in the name of Packstore and not Mr Ashrafinia. [SCB614, 618, 620]

50    Also on 27 October 2025, Mr Ashrafinia sent an email to Kieran Martin of CheckVault, the escrow manager, to which he attached the signed digital assets transfer agreement. In that email, Mr Ashrafinia stated: “This document is not a variation to the business sale agreement, but a standalone confirmation of the specific digital IP assets (including domain names and Shopify platform) that were inadvertently omitted from the original contract” (emphasis in the original). [SCB455]

51    That email makes it clear that Mr Ashrafinia did not regard the digital assets transfer agreement as a standalone agreement. Nor did he regard the business sale agreement as having been superseded or overtaken by the digital assets transfer agreement, or otherwise abandoned.

52    On 3 November 2025, Mr Lawson wrote to Mr Ashrafinia stating that the last step in the process was the transfer of the Shopify store – Shopify is an online retail platform used by the business. He stated that upon receipt of the Shopify store transfer, he would “authorise immediate release of the escrow funds, in accordance with the terms and conditions of the Digital Assets Transfer Agreement and the Business Sale Agreement”. [SCB458]

53    That email makes it clear that Mr Lawson’s understanding was that the business sale agreement was still operative between the parties and that the digital assets transfer agreement was a means to facilitate or achieve the satisfaction of an aspect of the vendor’s obligations under the agreement, namely the obligation under cl 7.3 to ensure that the intellectual property used in the business was transferred to the purchaser. That was also Mr Lawson’s evidence. [SCB378/23]

54    A CheckVault screenshot shows that on 1 November 2025 Mr Ashrafinia sent a release request for the transfer of the $284,650 held in escrow. [CB145] Following that, Mr Lawson released that sum as directed by Mr Ashrafinia. That was done on Mr Lawson’s understanding that OCC was purchasing from Packstore the Packstore business in its entirety including the intellectual property. [CB49/39] The purchase of the business, including the payment of the purchase price, was governed by the business sale agreement.

55    On 4 November 2025, the amount of $284,650 was released from the CheckVault escrow. After the deduction of CheckVault’s fees and charges, on the direction of Mr Ashrafinia the amount of $283,383.31 was transferred to an account in the name of Mr Ashrafinia with Revolut Payments Australia Pty Ltd (Revolut). [SCB613; CB16/33 and 28/9] The Revolut bank statement shows that the transfer was credited to Mr Ashrafinia’s account on 5 November 2025 and that thereafter the account was in credit in the amount of $356,945.44, ie the sale proceeds became mixed with other funds of Mr Asharafinia’s. [SCB495; 506]

56    As mentioned, the liquidators were appointed on 12 November 2025. In response to inquiries made of him by the liquidators, on 29 November 2025 Mr Ashrafinia emailed them saying that he had received the sum of $283,383.32 “under” the business sale agreement of 6 October 2025 into a “nominated account” under cl 3.2. He attached a copy of the business sale agreement saying that it is “a fully executed copy” and “the complete and unchanged agreement”. He did not mention the digital assets transfer agreement. [CB175] That is contrary to the case that he later sought to advance, namely that the business sale agreement was not operative and that he had personally received the payment under the digital assets transfer agreement as the vendor.

57    On 3 December 2025, the liquidators wrote to Mr Ashrafinia seeking further details about the sale of Packstore’s business including how the sale proceeds were dispersed. [CB240] In his reply the same day, Mr Ashrafinia said that the sale proceeds were paid into his personal bank account and that no company-related payments had been made from the sale funds. Again, he made no mention of the digital assets transfer agreement. [CB242]

58    In a meeting on 4 December 2025, Mr Ashrafinia told the liquidators that he considered that the funds that were received into his personal bank account as the proceeds of sale of the business were his personal funds. [CB247]

59    On 5 December 2025, the liquidators made a formal demand of Mr Ashrafinia that he repay the sale proceeds which he had wrongfully appropriated to himself. [CB251]

60    Mr Ashrafinia replied on 9 December 2025. He asserted that “the sale proceeds were received into my account on 5 November 2025, well before [the liquidators were appointed] on 12 November 2025”. That question of timing of the appointment of the liquidators appears to have been his basis for resisting payment of the sale proceeds to the liquidators – he did not say that the business sale agreement was inoperative or that he was personally entitled to the proceeds because they had been paid under the digital assets transfer agreement. Indeed, once again he failed to even mention the latter agreement. [SCB493]

61    Also on 9 December 2025, the plaintiffs commenced the proceeding. They immediately sought urgent interim relief on an ex parte basis. On that day, Jackman J as duty judge made asset preservation orders against Mr Ashrafinia restraining him from dissipating assets up to the unencumbered value of $283,383.32 including from his Revolut account and setting a return date of 11 December 2025. Those orders were emailed to Mr Ashrafinia by the plaintiffs’ solicitors at 1:04pm the same day, ie on 9 December 2025, along with the originating process, supporting evidence and written submissions. [SCB496]

62    The following day, 10 December 2025, Mr Ashrafinia replied to the email. He requested an adjournment of the return date as he “only became aware of the material yesterday” and had not yet been able to instruct solicitors. [SCB498] From that, I infer that Mr Ashrafinia became aware of the asset preservation orders on 9 December 2025 – they were emailed to him that day with the other material and the next day he confirmed in writing that he had received them “yesterday”. Moreover, he knew from his meeting with the liquidators on 4 December 2025 and their letter of demand on 5 December 2025 that the liquidators considered that the sale proceeds belonged to the company and not to him. As outlined above, Mr Ashrafinia also knew that to be true, ie he knew that the business sale agreement was still operative, that the sale proceeds were paid under that agreement to Packstore and that it was he who directed that they be diverted to an account in his name.

63    If there was any doubt about whether Mr Ashrafinia became aware of the asset preservation orders on 9 December 2025 when they were emailed to him, and their effect, that is removed by an email that he sent to the Court’s registry on 10 December 2025 at 2:15pm. In that email he stated that: [SCB499]

I only became aware of the Orders yesterday afternoon.

…

I am not seeking to disturb the interim orders already made. I consent to the existing orders remaining in effect until the adjourned hearing date.

64    Mr Ashrafinia admits in his defence that on 10 December 2025 he transferred $120,000 from his Revolut account to PAS. [CB29/12] Immediately after that transfer, there remained a positive balance of $90,226.80 in Mr Ashrafinia’s account. [SCB501]

65    The PAS account was also held with Revolut. The evidence does not reveal whether there were any other funds in the account. That account was frozen by orders made by Owens J as duty judge on 22 December 2025. In the meanwhile, the balance of the original transfer from CheckVault, ie $163,383.32, remained frozen in Mr Ashrafinia’s account with Revolut.

66    In an affidavit sworn by Mr Ashrafinia on 16 February 2026 in fulfillment of an obligation imposed on him under the asset preservation orders, Mr Ashrafinia deposed that the balance in his personal account was $80,737 and the balance in PAS’s account was $111,771, totalling $192,508. Mr Ashrafinia also deposed that he owned “listed shares and securities”, the estimated value of which was $128,849 at that time. The shares and securities were also held on a Revolut platform.

67    At a hearing on 15 May 2026 dealing with Mr Ashrafinia’s interlocutory application to vary the asset preservation orders, Mr Hall informed the Court that he was instructed that the balance in Mr Ashrafinia’s personal account was $70,737 and the balance in PAS’s account was $111,675, totalling $182,412. The estimated value of Mr Ashrafinia’s listed shares and securities held through Revolut was $129,098. [T9:18-27]

68    On the interlocutory application, I ordered that Revolut pay the funds held in the cash accounts to the Ironbridge Legal Law Practice trust account, and those funds be held there and not be disbursed other than under further order of the Court. I also ordered that there be an exception to the asset preservation orders, to allow Mr Ashrafinia to sell his listed shares and securities on 24 hours’ notice, on the condition that $25,000 be transferred to Hall Partners and the balance to the Hall Partners trust account subject to further order.

69    During the trial, Mr Emmerson informed the Court that $73,102.20 had been transferred from Revolut to the Ironbridge Legal Law Practice trust account. There was no evidence before me as to what the remaining balances were in each of Mr Ashrafinia’s and PAS’s accounts. Mr Hall informed the Court that Mr Ashrafinia had not sold any of his listed shares and securities.

70    The short point of this is that at the time of the hearing, what remained of the proceeds of sale of Packstore’s business transferred from escrow may be found in three places: Mr Ashrafinia’s and PAS’s Revolut accounts and the Ironbridge Legal Law Practice trust account. It would appear overwhelmingly likely that the shares and securities were bought with the balance of the proceeds of the sale, but no submissions were directed to that question so it can be put to one side.

Was the business sale agreement abandoned?

71    In his defence, Mr Ashrafinia admits that the business sale agreement dated 6 October 2025 was signed by OCC and Packstore, but he says that it “was never exchanged and did not become binding on the Company or the Purchaser”. [CB27] There is absolutely no basis to that assertion. I reject it. A common copy of the business sale agreement was signed by both parties in blocks that indicated that by signing the contract was being “executed” by the relevant party. The parties’ signatures evidence their common intention to be bound. The contract was binding and of full force and effect from when it was executed. The parties gave no indication of any common intention that a “ceremony of exchange” (cf Sindel v Georgiou [1984] HCA 58; 154 CLR 661 at 668) was required before there would be a binding legal relationship on the terms of the executed document.

72    Mr Ashrafinia also pleads that further discussions were held between the parties which led to OCC entering into “a separate agreement with the Director for the Sale of the Other IP from the Director to the Purchaser”, which he refers to as the “true sale agreement”. “Other IP” is defined in the defence as being “valuable intellectual property” that “the Company was permitted by others to use”. [CB27] He pleads that the amount paid into the CheckVault escrow was for the Other IP under the true sale agreement, that it was correctly released to him and that Packstore had no interest “in those monies”. [CB28-29]

73    The defence sought to be put up by Mr Ashrafinia is patently false.

74    The facts as found above make it abundantly clear that even though some of the IP may have been registered in the name of Mr Ashrafinia – which was not proved and in any event does not prove legal ownership – that IP was always the subject of the business sale agreement and one of the obligations of the vendor was to have the IP transferred to the purchaser (cl 7.3). The circumstances in which the digital assets transfer agreement came to be drawn up and concluded establish that that was done in order to fulfil the vendor’s obligations to transfer the IP. The terms of the digital assets transfer agreement themselves reference the terms of the business sale agreement.

75    Further, Mr Ashrafinia himself made it clear by uploading the business sale agreement to CheckVault that that was the agreement under which the parties would perform. He then stated to CheckVault that the digital assets transfer agreement was not a variation to the business sale agreement, but a standalone confirmation of the specific digital IT assets to be transferred (see [47] above). Mr Lawson was of the same understanding, as is apparent from his statement that he would release the escrow funds in accordance with the digital assets transfer agreement and the business sale agreement (see [52] above).

76    It is also telling that when confronted with the liquidators’ demands for an explanation about what happened to the sale proceeds, Mr Ashrafinia did not immediately raise the defence that he now raises. Rather, his answers affirm that the business was sold under the business sale agreement. His subsequent defence, and his reliance the digital assets transfer agreement recording that he was personally the vendor, would appear to be a recent fabrication.

77    It is hardly surprising in the light of the overwhelming contemporaneous documentary evidence against his version, that Mr Ashrafinia ultimately failed to be available for cross-examination. Having so failed, there is absolutely no evidence in support of his pleaded version of a partly oral agreement.

78    In the circumstances, I conclude that OCC paid the purchase consideration of $284,650 into escrow as part of the purchase price under the business sale agreement to which Packstore was the vendor party. Also, the sum of $283,383.31 was transferred from escrow to Mr Ashrafinia under that agreement. That sum constitutes part of the proceeds of the sale by Packstore of its business, and it belongs to Packstore (in the sense that the Packstore has a legal interest in it).

Was Mr Ashrafinia in breach of his director’s duties?

79    By reason of his position as director and officer of Packstore, Mr Ashrafinia owed Packstore the directors’ statutory duties set out in ss 180(1), 181(1) and 182(1) of the Corporations Act 2001 (Cth), and the directors’ fiduciary duties owed at law and in equity, as pleaded in the statement of claim and admitted in the defence. [CB13/18-19; 26/1]

80    Mr Hall accepted that if it was found that the funds transferred from escrow to Mr Ashrafinia’s account belonged to Packstore, Mr Ashrafinia and PAS would have to repay them (T28:18-44). Although Mr Hall did not accept as much, it is obvious that Mr Ashrafinia was in breach of his director’s duties. A director cannot knowingly appropriate the company’s assets to himself. It is difficult to conceive of a more obvious case of breach.

81    Mr Ashrafinia did not exercise his powers and discharge his duties as a director with the degree of care and diligence that a reasonable person would exercise in the circumstances, in breach of s 180(1) of the Corporations Act. That is an objective test: Shafron v Australian Securities and Investments Commission [2012] HCA 18; 247 CLR 465 at [18]-[19]. No reasonable director in Mr Ashrafinia’s position would have directed the proceeds from the company’s sale of its only assets, being its business and the stock, goodwill and other assets associated with that business, into their personal bank account for their personal use. The liquidators have established that there are substantial claims against the company by its creditors. A director acting reasonably would have ensured that the sale proceeds were paid to the company’s accounts for the payment of creditors before any distribution of any remaining sum to the shareholder.

82    Mr Ashrafinia also did not act in good faith in the best interests of the company or for a proper purpose, in breach of s 181(1) of the Corporations Act. The diversion of the sale proceeds was plainly for Mr Ashrafinia’s personal benefit and not in the interests of the company. No corporate justification for that payment exists, objectively or otherwise – none has even been suggested. It was not made for a proper corporate purpose: Sunnya Pty Ltd v He [2025] NSWCA 79; 427 ALR 583 at [45] per Basten AJA, Bell CJ and Leeming JA agreeing.

83    Mr Ashrafinia also improperly used his position to gain an advantage for himself causing detriment to the company, in breach of s 182(1) of the Corporations Act. The test is whether a reasonable person, with knowledge of the duties, powers and authorities of the director including the relevant commercial context, would consider that the standards of conduct expected of a director in Mr Ashrafinia’s position had been breached: Doyle v Australian Securities and Investments Commission [2005] HCA 78; 227 CLR 18 at [35]. As sole director, Mr Ashrafinia had the authority to direct CheckVault where to make payment. He exercised that authority to benefit himself at the company’s expense.

84    It is unnecessary to keep going, but it is equally clear that Mr Ashrafinia was in breach of his fiduciary duties to the company at common law. He acted to preference his personal interest in diverting the funds to himself at the company’s expense. That was in breach of his duty to avoid a conflict between his own interests and those of the company.

85    It is also clear that Mr Ashrafinia was in breach of his fiduciary duty not to profit from his position. Mr Ashrafinia as a director of Packstore owed fiduciary duties to the company in relation to company property, given the power he had to deal with company property and his assumption of responsibility for that property in the best interests of the company: Hospital Products Ltd v United States Surgical Corp [1984] HCA 64; 156 CLR 41 at 68 per Gibbs CJ, 96-97 per Mason J, and 141 per Dawson J.

86    The company is entitled to be compensated for its loss occasioned by the above breaches: ss 180(1), 181(1) and 182(1) of the Corporations Act are civil penalty provisions (s 1317E(3)), the breach of which gives rise to a claim for compensation (s 1317H(1)). Its loss (ie the damage resulting from Mr Ashrafinia’s breaches) is the amount paid from escrow to Mr Ashrafinia’s account, and that is the amount in which it should be compensated. That is why I entered judgment against Mr Ashrafinia in that amount.

Is PAS liable to repay what it received?

87    By transferring $120,000 from his Revolut account to PAS on 10 December 2025, Mr Ashrafinia further breached his director’s duties. The funds transferred formed part of the traceable proceeds of the company’s net sale proceeds. The transfer to PAS, solely owned and controlled by Mr Ashrafinia, further diminished Packstore’s assets taking them from an account that was already subject to the asset preservation orders.

88    The plaintiffs bring a claim against PAS in knowing receipt. To succeed against PAS, all the plaintiffs need to show is that PAS knew that the money it received originated in Mr Ashrafinia’s breach of fiduciary duty, so as to make it unconscionable for PAS to retain the benefit of the receipt. Whatever might be said of lesser forms of knowledge, actual knowledge certainly suffices for the purposes of imposing this kind of liability: Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; 200 FCR 296 (Grimaldi) at [259], [267]-[270] per Finn, Stone and Perram JJ.

89    What an artificial person such as a corporation “knows” involves a process of attribution: QBE Underwriting Ltd v Southern Colliery Maintenance Pty Ltd [2018] NSWCA 55; 97 NSWLR 459 at [95] per Leeming JA, Macfarlan and Payne JJA agreeing; Anderson v Canaccord Genuity Financial Ltd [2023] NSWCA 294; 112 NSWLR 151 at [234] per Gleeson, Leeming and White JJA. In this particular case, attribution is straightforward. Mr Ashrafinia was PAS’s sole director and company secretary – its controlling mind and will – so what he knew is attributed to PAS.

90    In circumstances where Mr Ashrafinia failed to make himself available for cross-examination where he is the person with all the relevant knowledge, I draw an adverse inference against the defendants; I infer that Mr Ashrafinia knew the proceeds of sale were the property of Packstore, he knew he breached his duties to Packstore by transferring the proceeds to his personal account, and he knew the $120,000 he transferred from his personal account to PAS’s account was from the fund wrongfully transferred to him. By attribution, PAS therefore knew that the $120,000 it received originated in Mr Ashrafinia’s breach.

91    The result of this is that PAS immediately became fixed with an equitable duty to restore the amount of $120,000 to Packstore. It failed to do so. PAS is therefore liable to account for this amount to Packstore as if it were a constructive trustee under the first limb of Barnes v Addy (1874) LR 9 Ch App 244.

Is the $120,000 in PAS’s account identifiable as part of the sale proceeds?

92    Instead of a judgment debt against PAS, the plaintiffs seek a remedial constructive trust over the amount remaining in PAS’s business account. This kind of proprietary claim is similar to but conceptually distinct from personal liability in knowing receipt: Fistar v Riverwood Legion and Community Club Ltd [2016] NSWCA 81; 91 NSWLR 732 at [42]-[45] per Leeming JA, Bathurst CJ and Sackville AJA agreeing, citing Grimaldi at [251].

93    To succeed on their proprietary claim, the plaintiffs must establish some legal or equitable interest in the funds remaining in PAS’s account. If they cannot do so, then their claim to have those particular funds paid to them must fail. That question requires a consideration of the “tracing” rules, which have been described as “not a right or remedy, but a process of demonstration or proof of what has happened to property”: Toksoz v Westpac Banking Corp [2012] NSWCA 199; 289 ALR 577 at [7] per Allsop ACJ, Hoeben JA and Sackville AJA agreeing, citing Foskett v McKeown [2001] 1 AC 102 at 128 per Lord Millett, and see also at 113 per Lord Steyn.

94    For historical reasons, there are different rules on identification at common law and in equity. What is relevant for present purposes is that equitable tracing is wider in its operation than its common law counterpart: Boyd v Thorn [2017] NSWCA 210; 96 NSWLR 390 at [77] per Leeming JA; Brady v Stapleton [1952] HCA 62; 88 CLR 322 at 336-338 per Dixon CJ and Fullagar J. In particular, the common law does not allow money to be followed into a mixed fund, whereas in equity it is possible to trace into and through such a fund. This distinction is significant because the proceeds of sale were mixed with money in Mr Ashrafinia’s personal account, and so any claim to follow the legal interest in that money at common law would fail.

95    To rely on the equitable rules of identification, a plaintiff must have some distinct equitable interest in the original property. This requirement is often satisfied by showing that the original property was held subject to a fiduciary relationship before it was misapplied by the agent. The breach of the fiduciary duty, being the misapplication of the property, is what creates the distinct equitable interest that enlivens the equitable tracing rules.

96    In this case, Mr Ashrafinia’s misappropriation of the proceeds of sale of Packstore’s business, being in breach of his fiduciary duties to the company, was an event that created a distinct equitable interest in those proceeds in favour of Packstore. That equitable interest can be traced into the funds held in Mr Ashrafinia’s bank account because that is where Mr Ashrafinia directed the proceeds into. It can then be traced in equity through that account and into the funds held in PAS’s account because that is where Mr Ashrafinia paid the $120,000 into from the account that held the original fund. As Sir George Jessel MR explained in In re Hallett’s Estate (1879) 13 Ch D 696 at 711:

[S]upposing, instead of being invested in the purchase of land or goods, the moneys were simply mixed with other monies of the trustee, using the term again in its full sense as including every person in a fiduciary relation, does it make any difference according to the modern doctrine of Equity? I say none. It would be very remarkable if it were to do so. Supposing the trust money was 1000 sovereigns, and the trustee put them into a bag, and by mistake, or accident, or otherwise, dropped a sovereign of his own into the bag. Could anybody suppose that a Judge in Equity would find any difficulty in saying that the cestui que trust has a right to take 1000 sovereigns out of that bag?”

97    PAS therefore holds the amount remaining in its business account on constructive trust for the plaintiffs, and the company should be ordered to pay that amount to the plaintiffs.

Is Mr Ashrafinia liable for indemnity costs?

98    For the reasons already given, Mr Ashrafinia’s defence of the claim was dishonest. So was his transfer of $120,000 of the sale proceeds from his account to that of PAS, in particular because he was at that stage aware of the asset preservation orders prohibiting such a transfer.

99    Indeed, there has never been a reasonable basis to defend the proceeding.

100    In those circumstances, I am satisfied that Mr Ashrafinia should pay the costs of the proceeding on an indemnity basis.

101    With the assistance of Mr Hall and Mr Emmerson who appeared for the plaintiffs, I assessed those costs on a lump sum basis at $125,000.

From when should interest run?

102    As mentioned, the liquidators made a demand of Mr Ashrafinia on 5 December 2025. They have sought interest from that date, to which they are clearly entitled. Indeed, they could likely have successfully claimed interest from the date that the money was transferred from escrow, 4 November 2025.

103    In any event, in the circumstances interest should run at the applicable rate from 5 December 2025.

Associate:

Dated:    9 June 2026