In the matter of Gondon Five Pty Ltd

In this case, Gondon Five Pty Ltd, the trustee of a discretionary family trust, sought to enforce an earlier judgment for a freezing order against various parties, including the individual defendants and several companies. The judgment in question had been entered against the individual defendants, who were directors of one of the companies, and related to an earlier claim for unsecured debts and damages. The trustee sought to prevent the defendants from distributing trust assets until the judgment debt was satisfied. The defendants argued that the previous orders did not allow for the payment of reasonable legal costs and expenses, which they claimed were significant.

The court had to determine whether the previous judgment, which did not explicitly allow for the payment of reasonable legal costs and expenses, should be interpreted to permit such payments. The court noted that while it was generally accepted that a freezing order should not prevent the payment of legal costs and expenses reasonably incurred, it did not necessarily follow that an express carve-out was required if the practical effect of the order was not to prevent such payments. The court found that the proposition that a freezing order should not prevent payment of reasonable legal costs and expenses was strongest in cases where the order was granted to aid a claim for unsecured debt or damages. Here, the previous judgment had made clear that an express carve-out for legal costs was not required, given the structure of the parties involved in the proceedings. As two-thirds of what the trustee received from the trust would be available for distribution, the court found that the defendants were not prevented from paying reasonable legal costs and expenses.

The court granted the defendants leave to pay reasonable legal costs and expenses incurred in relation to the current proceedings, but not in relation to the earlier claim. The court also dismissed the application for the freezing order.