Independent Cement and Lime Pty Limited v Rafidi
[2010] VCC 521
•31 May 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05214
| INDEPENDENT CEMENT AND LIME PTY LIMITED | Applicant |
| v | |
| IYAD RAFIDI & ORS (refer attached Schedule) | Respondent |
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| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 24 May 2010 |
| DATE OF JUDGMENT: | 31 May 2010 |
| CASE MAY BE CITED AS: | Independent Cement and Lime Pty Limited v Rafidi & Ors |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0521 |
REASONS FOR JUDGMENT
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Catchwords: PRACTICE AND PROCEDURE - Freezing Order - whether freezing order should continue
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr E.Woodward | Corrs Chambers Westgarth, Lawyers |
| For the First Respondent | Mr G. McEwan | Kemp Strang |
| For the Second, Third and Sixth to | Mr P.J. Hayes | Stynes Dixon Lawyers as |
| Eleventh Respondents | agent for Brown Wright Stein | |
| HER HONOUR: |
A. Nature of application 1 Independent Cement and Lime Pty Limited (“ICL”) seeks a continuation of a Freezing Order made by His Honour Judge Shelton on 27 April 2010 and varied on 4 May 2010, and 24 May 2010 pursuant to Order 37A of the County Court Civil Procedure Rules 2008.
B. Background Parties
2 ICL carries on business as a supplier of cement and lime products and prior to July 2009 had been providing cement and lime products to a company, Brick and Block Company Pty Ltd (in liquidation) (“Brick and Block”).
3 The defendant, Mr Iyad Rafidi (Mr Rafidi Snr) has been a director of Brick and Block since 2003.
4 The second and third respondents are sons of Mr Rafidi aged 21 and 20 years, respectively.
5 The other entities are part of the “Brick and Block” group of companies of which, prior to 24 March, 2010, Mr Rafidi was a director and/or shareholder.
6 The group was set up in about 2004 as part of a “formal succession and asset protection plan” by Mr Rafidi. Mr Rafidi claims he was advised that the appropriate method to formalise this plan was to adopt a trust structure within which the companies of which he was a director and/or shareholder could operate and the profits flow to the beneficiaries of any relevant trust.[1]
[1] Affidavit of Mr Rafidi Snr of 12 May 2010 paragraph 12
7 All of the Respondent companies are trustee companies except for the fourth (Alphalite Pty Limited) and seventh respondents (Concrete Aggregates Pty Limited). Mr Rafidi Snr is a director of Alphalite Pty Limited, the substantial shareholder of which is Brick and Block Investments Pty Limited. He was also formerly a director of Concrete Aggregates Pty Limited.
8 There is one discretionary trust, the BB Family Trust. Brick and Block Investments Pty Ltd is the trustee of this trust. The General Beneficiaries of that trust include Mr Rafidi Snr and his sons, the latter being also members of the “Appointed Class”. Prior to 24 March, Mr Rafidi Snr was the Appointor of that trust with the power to remove any trustee.
9 The way the trusts work is that Brick and Block Investments Pty Ltd generally holds the units in all the other unit trusts in its capacity as trustee for the BB Family Trust. The ultimate beneficiaries of the trusts are the beneficiaries of the BB Family Trust.[2]
Events prior to 24 March 2010
[2] Affidavit of Mr Rafidi Snr of 12 May 2010 paragraph 16
10 On 29 October 2009, ICL issued these proceedings wherein it sought payment of the sum of $1,269.452.20 pursuant to a guarantee contained in a written agreement of 16 July 2009.
11 On the same day that these proceedings were issued Mr Barnden and Mr Kassem were appointed joint administrators of Brick and Block. Mr Rafidi Snr was on notice of the intended enforcement of the guarantee two weeks prior to this appointment.[3]
[3] Order of AsJ Efthim of 19 February 2010
12 ICL then issued the following proceedings:
•
On 24 November 2009 proceedings were issued in the Supreme Court seeking leave pursuant to s.440J to proceed with this proceeding.
•
On 23 December 2009 ICL also commenced Federal Court proceedings which initially sought orders that a Deed of Company Arrangement be set aside and Brick and Block be wound up and, later, that Mr Barnden and Mr Kassem be removed as liquidators of Brick and Block. On 13 April, Justice Finkelstein ordered that Mr Barnden and Mr Kassem be removed as liquidators of Brick and Block.[4]
[4] Affidavit of Matthew Richard Critchley of 23 April 2010 paras8, 42 and 46
Events of 24 March 2010
13 On 24 March, Mr Rafidi Snr transferred his shareholding in Brick and Block Investments Pty Ltd, Builvest Corporation Pty Limited, Portland Property Holdings (NSW) Pty Limited, Brick and Block Technology Pty Ltd and Kembla Property Pty Limited to his sons.
14 Further, in relation to each of these companies, 99 additional shares were issued to Joel and Jesse Rafidi jointly at a price of one dollar per share.
15 Mr Rafidi Snr also resigned as a director of Brick and Block Investments Pty Ltd, Builvest Corporation Pty Limited and Brick and Block Technology Pty Limited and his sons were appointed directors in his place.[5]
[5] Affidavit of Matthew Richard Critchley of 23 April 2010 at para 47
16 Finally, Mr Rafidi Snr resigned as appointor of the BB Family Trust and appointed his sons as joint appointors instead. This also occurred in the case of the trusts of which Cementech Pty Limited, Brick and Block Technology Pty Ltd, Kembla Property Pty Limited, and Portland Property Holdings (NSW) Pty Limited were trustees.[6]
[6] Affidavit of Jesse Rafidi of 10 May 2010 paras 13, 22, 28, 33, 38
17 In relation to Concrete Aggregates Pty limited, a further transaction occurred on 24 April wherein the whole of the issued capital of that company, one ordinary share, was transferred from Builvest to the Rafidi Group Pty Ltd acting in its capacity as trustee for the Fabcrete Trust for an alleged amount of $25,450.00.[7] Jesse and Joel Raffidi are the directors and shareholders of the Rafidi Group Pty Ltd and joint appointors of the Fabcrete Trust. Mr Rafidi had also ceased being a director of Concrete Aggregates on 2 December 2009 whereupon Robert Rafidi (who appears to be a relation of Mr Rafidi Snr and gives the same address as Mr Rafidi in his affidavit) became a director.
Freezing Order
[7] Affidavit of Jesse Rafidi of 10 May 2010 paras 39-42
18 On 27 April His Honour Judge Shelton made an ex parte freezing order against Mr Rafidi Snr as well as the other third parties named in the Schedule to these reasons. The respondents were directed not to dispose of, deal with or diminish specified assets up to the value of $1,500,000.
19 This order was subsequently varied and extended on 4 May to include other shareholdings of Mr Rafidi Snr.
20 The return of the Freezing Order then came before me on 24 May 2010. The Freezing Order as varied by His Honour Judge Shelton has been extended for one week pending delivery of these reasons save that references to the amount of $1,500,000 are to now read $1,270,000.00 following ICL’s concession that it did not seek the freezing order to extend to any costs.
C. Power to make orders sought 21 ICL sought relief pursuant to Order 37A.
22 Order 37A.02(1) provides:
“The Court may make an order (a freezing order) upon or without notice to the respondent, for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.”
23 Order 37A rule 5(1)(b) provides that the applicant must have a “good arguable case” on an accrued or prospective cause of action.
24 Order 37A.05(4) then deals with judgment debtors and prospective judgment debtors and provides:
“(4) The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied because any of the following might occur –
(a) the judgment debtor, prospective judgment debtor or another person absconds; or (b) the assets of the judgment debtor, prospective judgment debtor or another person are – (i) removed from Australia or from a place inside or outside Australia; or
(ii) disposed of, dealt with or diminished in value” (emphasis added)
25 Pursuant to O37A.05 (6), nothing in Order 37A affects the power of the Court to make a freezing order or an ancillary order if the Court considers it is “in the interests of justice to do so.”
D. Principles 26 Order 37A appears to generally reflect the principles developed in the cases, including in the decision of the High Court in Cardile v LED Builders Pty Ltd[8].
[8] (1998) 198 CLR 380
27 In Deputy Commissioner of Taxation v AES Services (Aust) Pty Limited[9] Forrest J, citing Cardile, set out appropriate principles regarding applications under Order 37A which principles include that the applicant establish:
[9] [2009] VSC 418 at [20]; these principles had been also set out in His Honour’s previous decision of Zhen v Mo & Ors [2008] VSC 300
(a) an arguable case against the defendant; and (b)
that there is a danger the prospective judgment will be wholly or partly unsatisfied as a result of the defendant’s actions in either removing the assets or disposing or dealing with them so as to diminish their value.
28 Although His Honour Justice Forrest speaks of an arguable case the Respondents suggested that the appropriate formulation, consistent with other authority, should be a “good” arguable case.[10] This appears to be consistent with the terms of O37A.05(1)(b) above. However, nothing turns on any such distinction since, for reasons I will set out below, I am satisfied that there is, at the least, a good arguable case.
E. Orders against Mr Rafidi Good arguable case
[10] For example, Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft [1984] 1 ALL ER 398
29 I have considered the pleadings in this matter.
30 In his Defence and Counterclaim of 21 May, Mr Rafidi Snr appears to suggest that a period of 90 days would need to pass before rights under the guarantee would crystallise. Such a claim would appear to have little merit given the effluxion of time, but as it was not pressed before me I will not consider it further for present purposes.
31 More significantly, Mr Rafidi Snr admits execution of the letter of 16 July 2009 containing the guarantee but challenges its enforceability on the basis of an alleged misrepresentation made by a Mr Holt of the plaintiff as to the effect of the letter.[11] However, in an affidavit filed on 12 May 2010, Mr Rafidi states that it was as a result of statements made by a solicitor, Ms Whiting, that he misunderstood the effect of the 16 July letter (paragraph 9).
[11] Particulars to paragraph 15 of the Defendant’s Counterclaim
32 It is unnecessary to resolve the issues raised as to the enforceability of the guarantee. Suffice to say that, given the admission as to execution, the plaintiff has, at the very least a “good arguable case.”
33 This position was generally accepted by all of the respondents although it was suggested that ICL had not substantiated/adequately particularised the value of the prospective judgment.[12]
[12] And see Deputy Commissioner of Taxation v AES [2009] VSC 418 at para 20 wherein the eighth factor is that the applicant must establish with some precision the value of the prospective judgment
34 However, a precise amount of $1,269,454.20 has been claimed. This amount also appears to be consistent with the amount provided by the Directors in their Report as to Affairs referred to in the Administrator’s Report to Creditors of 25 November 2009 (wherein an amount of $1,340,724.75 is reported as a debt due to ICL) as well as the amount contained in the statutory demand. The proceeding is also at an early stage wherein directions for particulars have not even been made.
35 I am satisfied that there is, at the least, a “good arguable case.”
Risk
36 The actions of Mr Rafidi Snr consist of disposing of shares in the various Respondent entities by transferring them to his sons. The sons have then caused a further 99 shares in each of the entities to be issued to them. More significantly, Mr Rafidi has also disposed of the power of appointment and his directorship in the “ultimate controlling entity”[13], Brick and Block Investments as trustee of the BB Family Trust. He has thereby purported to dispose of something approaching “effective ownership” of the trust property. [14]
[13] Described as such in the financial report of Brick and Block for the year ended 30 June 2009
[14] ASIC v Carey (No 6)(2006) 153 FCR 509 at [29] and [36]-[41]
37 Mr Rafidi has suggested that the reason for these transactions related to a “succession plan” formulated in 2004, although he also conceded that his “financial difficulties” were a factor.[15]
[15] Affidavit of Iyad Rafidi of 12 May at paragraphs 19 and 20 and also paragraph 12
38 Although there may have been some “succession plan” the “financial difficulties” are clearly the significant catalyst. This is consistent with the relatively young age of the sons and the timing of the transactions “in the shadow” of the current proceedings as was the case in Rafferty v Time 2000 West Pty Limited (No2. [16] In that case, a prospective judgment debtor, Mr Donovan, transferred directorships in two trustee companies to his fiancée who also replaced him as an appointor of one of the relevant trusts. I will refer to this case further, below.
[16] [2008] FCA 1931
39 Counsel for Mr Rafidi Snr suggested that, given the insolvency of both Mr Rafidi and the Brick and Block company, no purposes would be served by the making of an order. Thus, the Administrator’s Report of 25 November suggests that the Brick and Block company had a deficiency of assets over liabilities of $34 million. Further, in his statement of personal financial position provided to Mr Barnden in about November, 2009, Mr Rafidi claimed that he was insolvent in a net amount of approximately $8 million.
40 However, the reliability of Mr Rafidi’s claims as to his exact financial position remain to be tested, particularly in the context of a relatively complex corporate structure. Moreover, the statement to Mr Barnden failed to disclose Mr Rafidi’s (then) shareholdings in the Respondents; nor did it disclose his shareholdings in two further companies, BBC(Aust) Pty Ltd and Concrete Pty Limited; nor the fact that he personally holds 10 units in the Kembla Property Trust.
41 Counsel then suggested that I should be wary of drawing inferences, particularly as to risk, in the absence of proper evidence.
42 However, in cases in which freezing orders are sought there will rarely be direct evidence of conduct deliberately designed to frustrate the processes of the Court.[17] In this case, there is the systematic transfer of something approaching a general power and ownership of trust property[18] “for financial reasons” and “in the shadow” of recovery proceedings. When this is taken with Mr Rafidi’s non-disclosure to his Administrator, it is proper to infer that, absent an order, there is a risk of dissipation of assets by Mr Rafidi Snr.
[17] Deputy Commissioner of Taxation v AES [2009] VSC 418 at [35]
[18] ASIC v Carey (No 6)(2006) 153 FCR 509 at [37]
43 I am further satisfied that this inference is also available against the third parties. Each has participated in arrangements which, on their face, have resulted in a purported distancing of Mr Rafidi Snr from control over any assets in the group which might be held for his benefit.
44 There is therefore a “danger” that assets of Mr Rafidi “might” be removed, disposed of, dealt with or diminished in value. Order 37A.05(4) does not require certainty in this respect, particularly in circumstances where all of the complex circumstances of this case are yet to be unravelled.
Other factors
45 In terms of the other matters cited by Forrest J in Deputy Commissioner of Taxation v AES Services (Aust) Pty Limited,[19] I accept that ICL has the onus of establishing entitlement to a Freezing Order which is a drastic remedy. I also accept that such an order is not designed as a form of security. However, there is not just evidence of financial difficulty in this case but admissible evidence of the purported transfer of control over assets.
[19] [2009] VSC 418 at [20]; these principles had been also set out in His Honour’s previous decision of Zhen v Mo & Ors [2008] VSC 300
46 The balance of convenience otherwise favours the making of the order since, absent the order there is a genuine risk that any prospective judgment will be unsatisfied.[20]
[20] And see Deputy Commissioner of Taxation v AES [2009] VSC 418 at [39]
47 Counsel for the Respondents made a significant attack on the conduct of Mr Critchley, the solicitor who appeared for ICL at the first ex parte hearing at which the freezing order was obtained. It was submitted that the order should be discharged by reason of Mr Critchley’s alleged lack of candour and failure to make inquires. Counsel for the second, third and sixth to eleventh respondents, in particular, cited numerous transcript references in relation to this submission.[21]
[21] Outline of Submissions of Second, Third and Sixth to Eleventh Respondents dated 24 May, in particular at 4.1.5
48 I have considered the transcript references cited and am not satisfied that there is justification for the attack made. The gravamen of the attack was that Mr Critchley should have informed the court of the fact that the fifth, sixth, eighth, ninth, tenth, and eleventh respondents were trustee entities. However, it is apparent from the transcript that Mr Critchley was not aware that this was the case. In any event, he specifically drew the attention of Judge Shelton to the possibility that there were trust relationships involved and actually referred His Honour to the Rafferty decision in the event that trust relationships were involved.
49 It is then said that Mr Critchley should have contacted the Respondents’ solicitors to inquire as to the precise status of the companies. However, in my view this is an unreasonable suggestion in the context of an application made against the background of the events of 24 March.
50 Finally, it was suggested that Mr Critchley had given false evidence about a conversation he had with Mr Griffin of Grant Thornton, the former accountant of the Respondents, to the effect that Mr Rafidi was continuing to act as the controller of the Group[22]. Mr Griffin has filed an affidavit denying, in particular, that he used the word controller.[23]
[22] Affidavit of Matthew Richard Critchley of 29 April 2010
[23] Affidavit of Scott Terence Griffin of 12 May 2010
51 In these circumstances the court is left with conflicting evidence which has not been tested such that it does not assist either side at this stage. However, I am not prepared to find that Mr Critchley’s version is “false” as suggested by the Respondents.
52 In terms of other discretionary factors, the application for a freezing order was otherwise brought on promptly on 27 April following the discovery of the events of 24 March by Mr Critchley on 21 April[24]. The court is also in a position to transfer this proceeding to the Expedited Cases Division to ensure a speedy trial on 1 September.
[24] Affidavit of Matthew Richard Critchley of 23 April 2010 at para 47
53 Finally, Mr Rafidi Snr has raised little in the way of prejudice, maintaining instead that there is “nothing of value to freeze” in any event. However, there is a suggestion that he may want to sell one of the properties the subject of the current Freezing Order which he says is held on trust for his parents.[25] There will be liberty to apply given to make application on notice to further vary the order should such a sale be considered necessary prior to 1 September.
[25] Affidavit of Iyad Rafidi of 12 May 2010 at para 37
54 In my view then the Freezing Order insofar as it relates to Mr Rafidi Snr should be extended to the hearing and determination of this proceeding or further order, subject to the receipt of further undertakings. The order should also be extended so that there is added to paragraph 6(a) a new sub- paragraph to cover the 10 units held in the Kembla Property trust which are not already covered by the existing order.
55 Although the court has, since reserving, received a further affidavit of Mr Rafidi Snr which may suggest that the units have little value[26], the court has not been addressed as to the contents of this affidavit. In any event, I am satisfied, for reasons given already, that the assets of Mr Rafidi should be generally frozen while facts are still being uncovered. Application on notice may be made to vary these orders should that really be appropriate.
[26] Affidavit of Iyad Rafidi of 25 May 2010
F. Claim against Third parties 56 It remains to consider whether the order should be extended insofar as it affects third parties.
57 In terms of the question of a “good arguable case” I refer and repeat my findings made already that this has been substantiated.
58 The court must otherwise consider Rule 37A.05(5) which reflects the principles set out in Cardille as follows:
“(5) The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that –
(a) there is a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied because – (i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(b)
a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment of the Court, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment” (emphasis added).”
Power of disposition, control or influence over expectancy
59 Mr Rafidi Snr has, at least, an “expectancy” under the BB Family Trust by virtue of being a general beneficiary. This was decided as one of the possible bases for relief in the case of Rafferty v Time 2000 West Pty Limited (No2). [27] The two sons are now directors of the Trustee of the BB Family Trust, Brick and Block Investments Pty Limited. As directors and trustee, each exercises control over which beneficiaries will be entitled to income/ capital. It follows that Rule 37A.05(5)(a) applies to the two sons and Brick and Block Investments Pty Limited.
[27] [2008] FCA 1931 at [26] per Besanko J; See also ASIC v Carey (No 6) [2006] FCA 814 at [36] per French J, cited in Rafferty
60 Moreover, the trustees of the various unit trusts control the disposition of assets of those trusts the benefit of which flows directly to the discretionary trust. In these circumstances, these corporate trustees also hold a position of control or, at least, influence over Mr Rafidi’s expectancy such that Rule 37A.05(5)(a) also applies to the corporate trustee respondents.
61 In terms of the two corporate Respondents, Mr Rafidi’s expectancy under the BB Family Trust is also controlled or influenced by Alphalite by reason of the shares held by Brick and Block Investments in Alphalite Pty Limited.
62 Further, in relation to Concrete Aggregates Pty Limited, I am unable to properly determine the connection to Mr Rafidi given I have not been provided with a copy of the Fabcrete trust, although it is highly probable, given the evidence of the trust structures before the court, that Mr Rafidi has some sort of expectancy under this trust which is also controlled or influenced by Concrete Aggregates Pty Limited. At this stage I will extend the order to include Concrete Aggregates Pty Limited but will hear the parties further should they wish pursuant to the provision of liberty to apply.
Effective Control
63 An alternative way of looking at this case is the way Besanko J considered the position in Rafferty v Time 2000 West Pty Limited (No2)[28] such that the court is able to look behind the trust structure and determine that, in reality, the property of the trusts is effectively that of Mr Rafidi because he effectively controls the power of selection.
[28] [2008] FCA 1931 at [26]
64 As in that case, I am inclined to place little weight on the transactions effected on 24 March. Similar to that case, the transactions have occurred in “the shadow” of recovery proceedings wherein Mr Rafidi has purported to distance himself from trust assets under difficult “financial circumstances.”
65 Counsel for Mr Rafidi Snr suggested that the case of Rafferty was distinguishable given it was the prospective debtor’s fiancée who was appointed as appointor and director. In this case it was Mr Rafidi’s sons who had some previous involvement in the business.
66 However, the sons are young and continue to live at home with their father. Mr Rafidi himself is also in his forties[29] and there is no evidence to suggest he would be ready to retire. As already expressed, there also appears to be no reason for a succession apart from the “financial circumstances” Mr Rafidi concedes were relevant.
[29] The company search for Concrete Pty Ltd suggests he was born on 5 May 1962
67 Moreover, there is some indicia that Mr Rafidi effectively treats the assets of the group as his own. Thus, for example, on 16 July he specifically warranted to ICL that Brick and Block owed him personally an amount of approximately $14,000,000. However, in the report of Barnden and Kassem provided to creditors of 25 November it appears that Brick and Block’s liabilities included amounts owing to various members of the Group an amount of approximately $14,000,000.
68 Given the timing of the transactions, the ages of those involved, Mr Rafidi Snr’s years in the business and the address at which they all live, I am prepared to find that it is, in reality, Mr Rafidi Snr who effectively controls the property of the trusts in this case, and in particular, the property of the BB Family Trust. In these circumstances, where a discretionary trust is controlled by a trustee who is in truth the alter ego of the beneficiary, Mr Rafidi would have at least a contingent interest because it would be “as good as certain” that he would receive distributions of income or capital. In such circumstances, French J (as His Honour then was) has found there is “effective ownership of the trust property.”[30]
[30] ASIC v Carey (No 6) [2006] FCA 814 at [36] and [41]
69 In circumstances where there is such effective control, it is appropriate to treat the property of the trusts as Mr Raffidi’s own. It follows from this that Mr Rafidi’s property of the discretionary trust includes all of the units in the various unit trusts. In such circumstances, the trustees of each of those unit trusts are thereby in a position of disposition, control or influence over assets of Mr Rafidi pursuant to O37A.05(5)(a).
70 In these circumstances I am satisfied that the third parties hold powers of disposition, control or influence over assets or expectancies of Mr Rafidi Snr.
Risk
71 It was said by Counsel for the Respondents that there was no risk or danger by reason of the transactions occurring in March, particularly since no alterations had been made to the beneficiaries of the trusts, nor had there been any transfer or attempted transfer of the trusts assets.
72 However, for reasons already described above, in my view there is a risk in this case. Given it was Mr Rafidi who previously controlled the power of selection as trustee and appointor, he had something approaching a general power and ownership of trust property.[31] His actions in purporting to divest himself of that power and ownership present a risk that assets, including assets of the trusts, may be dissipated.
[31] ASIC v Carey (No 6) [2006] FCA 814 at [37]
73 More particularly, given the actions of Mr Rafidi Snr have been taken with the consent and participation of third party relatives of Mr Rafidi there is a “danger” that assets and expectancies held in the names of third parties will be dissipated if not frozen.
Other factors
74 In terms of the other factors cited by Forrest J in DCT v AES, I again accept that the onus is on the plaintiff and the remedy drastic. However, the evidence and timing of the transactions of 24 March are telling in this case.
75 In terms of other discretionary factors the relevant matters have largely been considered in the context of the order against Mr Rafidi.
76 There is some generalised evidence adduced by the Respondents that the order will make it “difficult” to run the business properly and citing an inability “to deal with assets of the entities in the family group.”[32]
[32] See e.g. Affidavit of Jesse Rafidi of 10 May 2010 para 44
77 However, paragraph 10(b) of the Order explicitly states that the order does not prohibit the respondents from dealing with or disposing of any of their assets in the ordinary and proper course of their business, including paying business expenses bona fide and properly incurred.
G. Conclusion 78 The Freezing Order made by His Honour Judge Shelton on 27 April 2010 (as varied on 4 May 2010 and 24 May) will be extended to the hearing and determination of the proceeding, or further order, subject to the taking of a further undertaking.
79 Order 6(a) of the existing Order will also be varied to include reference to the 10 redeemable units held in the Kembla Property trust.
80 Liberty to apply to vary the order is reserved.
81 I will hear from the parties as to the questions of costs and as to the further directions of this matter to trial.
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SCHEDULE OF PARTIES
Independent Cement and Lime Pty Limited
ABN 49 005 829 550 Applicant Iyad Rafidi First Respondent Jesse Rafidi Second Respondent Joel Rafidi Third Respondent Alphalite Pty Limited Fourth Respondent ACN 137 970 284 Portland Property Holdings (NSW) Pty Limited Fifth Respondent (receivers and managers appointed)
ACN 108 610 359Kembla Property Pty Limited Sixth Respondent ACN 117 242 949 Concrete Aggregates Pty Limited Seventh Respondent ACN 109 978 823 Cementech Pty Limited Eighth Respondent ACN 117 967 192 Builvest Corporation Pty Limited Ninth Respondent ACN 106 922 794 Brick and Block Technology Pty Limited Tenth Respondent ACN 108 682 579 Brick and Block Investments Pty Limited Eleventh Respondent ACN 108 682 720
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