CIP Group Pty Ltd v So (No 8)

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FEDERAL COURT OF AUSTRALIA

CIP Group Pty Ltd v So (No 8) [2025] FCA 482

File number: QUD 93 of 2022
Judgment of: DERRINGTON J
Date of judgment: 15 May 2025
Addendum: 16 May 2025
Catchwords: PRACTICE AND PROCEDURE – injunctions – variation of injunction – circumstances revealing absence of any valuable undertaking as to damages – injunction previously dissolved in part – whether appropriate to dissolve injunction entirely
Cases cited:

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249

Bensons Funds Management Pty Ltd v Body in Balance Chiropractic Pty Ltd [2015] VSC 280

CIP Group Pty Ltd & Ors v So & Ors (2022) 164 ACSR 566

CIP Group Pty Ltd v So (No 3) [2023] FCA 518

CIP Group Pty Ltd v So (No 5) [2024] FCA 1373

Director of Public Prosecutions (WA) v Yeo [2012] WASC 440

Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd [2005] SASC 112

Graham v Campbell (1878) 7 Ch D 490

Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 828

University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 45
Date of hearing: 4 April 2025
Counsel for the Applicants and the Second to Thirteenth Respondents: Mr A Pomerenke KC with Mr A Psaltis and Ms D Tay
Solicitor for the Applicants and the Second to Thirteenth Respondents: Bartley Cohen
Counsel for the First and Fourteenth to Twentieth Respondents: Mr S Couper KC with Mr  Marckwald and Ms J Sargent
Solicitor for the First and Fourteenth to Twentieth Respondents: Colin Biggers & Paisley
Counsel for the Twenty-First Respondent: The Twenty-First Respondent did not appear
Counsel for the Twenty-Second and Twenty-Third Respondents: The Twenty-Second and Twenty-Third Respondents did not appear

FEDERAL COURT OF AUSTRALIA

CIP Group Pty Ltd v So (No 8) [2025] FCA 482

ADDENDUM

DERRINGTON J:

  1. On 15 May 2025, I handed down judgment in CIP Group Pty Ltd v So (No 8) [2025] FCA 482.  It was promptly (and very properly) brought to my attention that a logical impossibility existed as between the reasons given and orders granted.  Specifically, Order 1 envisaged the doing of some act “by 4:00 pm AEST on 26 May 2025”, whereas [44] concluded that it was “appropriate to stay the orders until the expiration of four weeks from today’s date” (being 12 June 2025).  The rationale for the stay was “to allow for any institution of an application for leave to appeal”.

  2. At a case management hearing between the parties later that day, a consensus was reached that, to best give effect to the regime I had envisaged, Order 1 ought to be amended to read “by 12 June 2025” (emphasis added).  That change is reflected in the Orders published by the Court and affords Mr Clancy, in effect, a period of four weeks in which he may comply with Order 1 or embark…

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Details
Case
[2025] FCA 482
Decision Date

CaseChat Overview and Summary

The case of CIP Group Pty Ltd v So (No 8) concerns an application to dissolve an injunction that was granted in May 2023 and subsequently relaxed in December 2024. The injunction had been put in place to prevent certain companies controlled by Mr So from dissipating proceeds from the sale of property in the Logan City Council area. The present application seeks the dissolution of the injunction, arguing that there has been a change in circumstances that warrants such action. The primary dispute revolves around the land development business involving the Clancy Interests and the So Interests, with the latter accused of breaching legal obligations through the provision of loan facilities and holding securities over the development land.

The legal issues before the court include the validity of the injunction and whether there has been a material change in circumstances or new evidence that could not reasonably have been presented earlier, justifying the variation or dissolution of the injunction. The court also had to consider the adequacy of the undertaking as to damages offered by Mr Clancy. Given the complex nature of the dispute and the significant sums of money involved, the court had to weigh the interests of justice against the need for finality in litigation.

The court found that the circumstances had changed in a manner that justified dissolving the injunction. While there was a serious question to be tried regarding the entitlements to the proceeds of the Carver’s Reach Development, the absence of a valuable undertaking as to damages and the potential for the proceeds to be moved overseas rendered the injunction ineffective. The court concluded that the injunction should be dissolved unless Mr Clancy provided a bank guarantee of $4 million within 11 days. If this security was not provided, the injunction would be dissolved, and the respondents would be released from their undertakings.

The court ordered that the interlocutory application filed on 6 March 2025 be dismissed if Mr Clancy lodged a bank guarantee of $4 million by 12 June 2025. If he failed to do so, the injunction would be vacated, and the respondents released from their undertakings. The applicants and second to thirteenth respondents were ordered to pay the first and fourteenth to twentieth respondents' costs of the application. The court granted liberty to apply for further orders if necessary.

Orders

Orders of the court

1. The interlocutory application filed 6 March 2025 be dismissed if, by 12 June 2025, Mr Marc Andrew Clancy lodges a bank guarantee (or equivalent form of security) with the Queensland Registry of the Federal Court of Australia that:

(a) secures the sum of $4,000,000 to support Mr Clancy’s undertaking as to damages as recorded in the Orders of 24 May 2023 (2023 Orders); and

(b) is in terms satisfactory to a Registrar of this Court.

2. If Mr Clancy does not comply with the terms prescribed by Order 1 above:

(a) Order 1 of the 2023 Orders be vacated;

(b) the Orders of 9 December 2024 (2024 Orders) be vacated; and

(c) the first and fourteenth to twentieth respondents be released from the undertakings given to the Court on 9 December 2024 (and as set out in the 2024 Orders).

3. The applicants and second to thirteenth respondents pay the first and fourteenth to twentieth respondents’ costs of this application.

4. Liberty to apply.

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

Background

Background to the litigation

The application before the Court is slightly unusual. It seeks to dissolve an injunction that was granted in May 2023: CIP Group Pty Ltd v So (No 3) [2023] FCA 518 (CIP No 3): and relaxed some 18 months later: CIP Group Pty Ltd v So (No 5) [2024] FCA 1373 (CIP No 5).BackgroundThe primary dispute The present application is but another shot fired in the litigious battle between companies controlled by Mr Clancy (the Clancy Interests) on the one hand and, on the other, Mr So and certain companies under his general control (the So Interests). The Clancy Interests and the So Interests were, in general terms, engaged in the land development business. Their most recent development involved property in the Logan City Council local government area (the “Carver’s Reach Estate”). For that project, a number of corporate entities were created — namely, the second to thirteenth respondents (the Carver’s Reach Entities): see CIP Group Pty Ltd & Ors v So & Ors (2022) 164 ACSR 566, 569 – 570 [6] – [8] (CIP v So); CIP No 5 [6]. Amongst other things, the So Interests were responsible for obtaining finance for the Carver’s Reach development and did so through a number of companies associated with Mr So (and his wider family). Those entities relevantly included UIP 1 Pty Ltd (UIP) and Ultimate Investment Portfolio Pty Ltd (Ultimate) who, in short compass, (a) provided loan facilities to the Carver’s Reach Entities; and (b) held securities over the development land. The loans were subsequently called in. They were not repaid and receivers were appointed: CIP v So, 570 – 571 [14] – [17]. The land was sold for approximately $18.2 million (the Proceeds). It is now said by the Clancy Interests that the effectuation of the aforementioned loans and securities involved a breach, by Mr So, of legal obligations he owed to both the Carver Entities and the Clancy Interests.Grant of the Injunction On 24 May 2023, an injunction was granted that restrained certain companies controlled by Mr So from, in effect, dissipating the Proceeds (the Injunction): CIP No 3. It provided as follows:Upon the usual undertaking as to damages given by Mr Marc Andrew Clancy:1. The first and fourteenth to eighteenth respondents:(a)notify the applicants in writing no later than 7 business days prior to the proposed settlement of any sale of any real property in Stages 7 to 11 of the development (such properties being identified in Annexure A);(b) not assign or otherwise deal with any rights, entitlements or interests to any or all proceeds from the sale of any real property in Stages 7 to 11 (Stage 7 to 11 proceeds) under any instrument;(c) hold in a trust account maintained by their solicitors, any or all of the Stage 7 to 11 proceeds purportedly payable to the seventeenth or eighteenth respondents pursuant to any asserted right, entitlement, or interest under any instrument;(d) save for making any payment into a solicitors’ trust account in order to comply with Order 1(c) above, not dispose of or otherwise deal with or diminish the value of the Stage 7 to 11 proceeds.2. Order 1 above is to apply until further order of the Court, or unless the applicants expressly provide prior written consent in respect of any proposed non-compliance orders, a request for such consent to be received no later than seven business days prior to the proposed non-compliance.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In the course of the hearing of this application, counsel for the Clancy Interests sought to take the Court to the merits of the action as it is presently constituted. There is, of course, no difficulty with that course. Much of those submissions sought to undermine the So Interests’ defences by reference to legal issues rather than factual issues. Whilst there is undoubted force in the submissions made, it is not possible, in the absence of a full hearing of the circumstances in which the issues arose, to reach any conclusion in relation to them. There is, unquestionably, a serious question to be tried as to the entitlements to the proceeds of the Carver’s Reach Development though, prima facie, UIP and Ultimate have rights under their loan agreements and securities to recover them: CIP No 5 [1]. Conclusion It follows that the Court should proceed on the basis that an injunction exists in relation to an asserted claim of right by the So Interests, in particular UIP and Ultimate, in relation to the unpaid loan agreements. There is no doubt those agreements were entered into. Although Mr Clancy now challenges their validity, it cannot be overlooked that, prima facie, loan amounts are owed by the Carver’s Reach Entities to UIP and Ultimate, and the monies which Ultimate and UIP seek to use to discharge those loans (i.e., the Proceeds) is the subject of an injunction. On that basis, those entities will suffer damage as a consequence of the Injunction as a result of their upstream liabilities. Thus, it is likely that they will continue to incur loss and damage if the Injunction remains in place. The absence of any valuable undertaking as to damages will further imperil their position. Whilst Mr Clancy has indeed proffered an undertaking of sorts, the source of funds which he intends to rely upon are not identified and the veracity of them as funds against which the undertaking as to damages might be met is questionable at best. In these circumstances, and although some question exists as to the amount of indebtedness owing to UIP and Ultimate, the circumstances are such that the Injunction should be dissolved in the absence of any valuable undertaking. The one practical difficulty with such a course is the reality that if the Injunction is dissolved, the Proceeds will be transferred out of the jurisdiction and beyond the reach of the Court. As undesirable as that may be (at least for the Clancy Interests), the Injunction was not intended to act as a freezing order in respect of the assets of the So Interests and there is insufficient material presently before the Court to establish all those matters required to make such an order. Despite that, the risk exists that the proceeds of sale may be transferred overseas and be unrecoverable thereafter. Therefore, rather than dissolve the Injunction immediately, it is appropriate to give the Clancy Interests a final opportunity to provide real security for the undertaking as to damages. That being so, if the sum of $4 million is secured by a bank guarantee in terms satisfactory to a Registrar of this Court, or in a similar form satisfactory to the Registrar, within 11 days, the Injunction will remain. If not, it is to be dissolved.

Ratio Decidendi

Legal Principle Established

The current application is one that now proceeds on the foundation of the conclusions reached in CIP No 5. In particular, the So Interests seek dissolution of the Injunction in toto, and the parties have suitably grappled with the appropriateness of that course. Two preliminary considerations For the present application, two important considerations arise. First, it is accepted that, should the Injunction be dissolved, the Proceeds will be moved beyond the jurisdiction of the Court. It was also generally accepted between the parties that, were that circumstance to eventuate, it would be nigh impossible for the Clancy Interests to recover that money or any part of it were they to succeed in the primary dispute. While very little was made of the worth of the So Interests or the availability of any available assets in Australia, it is not inappropriate to proceed upon the basis that dissolution of the Injunction will jeopardise the ability of the Clancy Interests to successfully execute any judgment rendered in their favour. Second is the worth of a written undertaking now proffered by Mr Clancy. In an annexure to an Affidavit of Benjamin Timothy Cohen filed 20 March 2025, Mr Clancy undertakes to “cause up to $4 million (or any such amount ordered by the Court) to be paid into an interest bearing account maintained by [his solicitors] to be held to support the undertaking [that undergirds the Injunction]”. That is a somewhat curious proposal. As briefly alluded to, Mr Clancy is a person who has no apparent assets of his own of any great worth: see, eg, CIP No 5 [46], [48]. He has interests in various business dealings and assets, although it is apparent that he has carefully structured his affairs in a manner that is designed to frustrate any attempt by a judgment creditor to recover from him. For instance, many of his “interests” are rights held as a beneficiary in discretionary trusts in circumstances where it appears that he is, if he so wishes, able to exercise a degree of influence over the exercise of the trustee’s powers: see, eg, CIP No 5 [42] – [43]. (Another) Variation of the Injunction? The Clancy Interests urge upon the Court a resolution to the present application based upon the principles relating to the variation of injunctions. Conversely, the So Interests submit that they were technically entitled to the total dissolution of the Injunction on their previous application and that it was only a consequence of the Court adopting a heightened sense of fairness inter partes that such relief was not granted. The general principles relating to the variation of interlocutory orders were surveyed in some detail in CIP No 5 and it is appropriate to recite them here:Variations to interlocutory injunctions13There is little doubt that the Court has wide jurisdiction to vary or set aside any interlocutory order. There is express power to do so by r 39.05(c) of the Federal Court Rules 2011 (Cth), and a similar power exists under s 1324(5) of the Corporations Act 2001 (Cth). 14In Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121 [26], Jagot J observed that, in the matter before her, the principles relating to whether a court should vary a previous interlocutory order were not in dispute and were as follows:•A court has jurisdiction to vary or set aside any interlocutory order but the re-litigation of issues already decided, even on an interlocutory basis, is undesirable having regard to the need for finality (Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46).•The “overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case” (Brimaud at 46).•The interests of justice should be assessed having regard to the nature of the interlocutory order in question. Interlocutory orders that are merely procedural or made by consent without any contest are different from substantive orders made after a contested hearing and intended to operate until the final hearing. In the latter case the general rule is that there must be a material change in circumstances or the discovery of new material which could not reasonably have been put before the court on the earlier application (Brimaud at 46).•There is a debate in the authorities between approaches that are more and less permissive. Nevertheless the approach generally adopted at first instance accords with that of Goldberg J in P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466; [2009] FCA 413 at [49], namely, that an applicant seeking to vary a substantive interlocutory order made after a contested hearing must persuade the Court that:… one or more of the following factors has occurred or is satisfied:(a)there is new material or new evidence which was not available, or reasonably available, to them at the time the orders were made …;(b)there has been a material change in the circumstances since those orders were made;(c)there are exceptional circumstances which warrant re-consideration of the matter…; and(d)as a matter of discretion, the justice of the matter requires that the applicants be allowed to revisit the matter …15There is, of course, much common sense in those principles and, to some degree, the basis for them was referred to by Yates J in Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 2) [2021] FCA 894 [30]: In the case of an interlocutory order of a substantial nature made after a contested hearing—in contemplation that the order will operate until the final disposition of the hearing—the usual rule is that a variation (or discharge) of the order must be founded on a material change in circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett (1988) 217 ALR 44 (Brimaud) at 46; Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 (Adam P Brown) at 177-178; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 (Hutchinson) at 447.(Emphasis omitted). 16There, his Honour identified that the rationale for the usual rule was that the interlocutory order was made in contemplation that it would preserve the position until the final disposition of the hearing of the action in which it was made. In that sense, it established the status quo for the parties to the litigation pending the trial. Such orders are usually self-evident and begin with the orders “until the trial of this action …”. 17So much is clear from the observations of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44, 46 – 47 (which were cited with approval by Abraham J in Roberts-Smith v Fairfax Media Publications Pty Limited (No 31) [2022] FCA 271 [14]):Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest “until further order” (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979) .In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164 –5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447 –8; Chanel Ltd v F W Woolworth & Co [1981] 1 All ER 745; [1981] 1 WLR 485; Adam P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177–8; 35 ALR 625 at 629–30; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano Building Contractors Ltd v Burgess [1988] 1 WLR 890 at 894.18The foregoing views reflect the modern approach to the variation of interlocutory orders, though it must be noted that some earlier authorities suggested a slightly more stringent test in the first instance, such as the need to show “exceptional circumstances”: P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466, 478 [39].Consideration (1): Change in circumstance?