Neville's Bus Service Pty Ltd v Total Group Constructions Pty Ltd (No 3)

[2024] NSWSC 658

Supreme Court

New South Wales

Medium Neutral Citation:

Neville’s Bus Service Pty Ltd v Total Group Constructions Pty Ltd (No 3) [2024] NSWSC 658

Hearing dates:

23 May 2024

Date of orders:

30 May 2024

Decision date:

30 May 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

Nixon J

Decision:

See [168].

Catchwords:

CIVIL PROCEDURE – interim preservation – freezing orders – application for post-judgment freezing orders made ex parte following transfer of property by Second Defendant to third party – whether basis established for freezing orders against third party – whether basis established for freezing orders against each of judgment debtors – whether reasonably arguable that Third Defendant incurred contractual liability in capacity as trustee – whether freezing orders against third party should be conditioned on giving undertaking to commence proceedings – whether freezing orders should be continued until further order or for specified period

Legislation Cited:

Bankruptcy Act 1966 (Cth), s 121

Conveyancing Act 1919 (NSW), s 37A

Uniform Civil Procedure Rules 2005 (NSW), r 25.14

Cases Cited:

ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; [2014] NSWCA 402

Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557; [1998] HCA 26

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18

Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226; [1998] HCA 4

Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commissioner of Taxation v Oswal (No 6) [2016] FCA 762

Commonwealth Bank of Australia v Saleh [2005] NSWSC 843

Deputy Commissioner of Taxation v Huang (2021) 273 CLR 429; [2021] HCA 43

Deputy Commissioner of Taxation v Shi (2021) 273 CLR 235; [2021] HCA 22

Frigo v Culhaci [1998] NSWCA 88

Huntley Management Ltd v Timbercorp Securities Ltd (2010) 187 FCR 151; [2010] FCA 576

In the matter of Black Eagle Media Pty Ltd [2014] NSWSC 1778

Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11

Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3

Maric v Nominal Defendant [2013] NSWCA 190

Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133

Moustapha v Nelson (No 3) [2020] NSWSC 1263

Neville’s Bus Service Pty Ltd v Total Group Constructions Pty Ltd [2024] NSWSC 215

Neville’s Bus Service Pty Ltd v Total Group Constructions Pty Ltd (No 2) [2024] NSWSC 393

Ninemia Maritime Corp v Trave SchiffahrtsgesellschaftGmbH & Co KG [1984] 1 All ER 398

Patterson v BTR Engineering (Aust)Pty Ltd (1989) 18 NSWLR 319

PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36

P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515

Republic of Haiti v Duvalier [1990] 1 QB 202

Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102

Super Vision Resources Ltd BVI Registered No 1810534 v AC Holdings Co Pty Ltd [2020] NSWCA 319

Tagget v Sexton [2009] NSWCA 91

TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291

The Owners – Strata Plan No 98970 v Capitol Property Services Pty Ltd [2021] NSWSC 950

Wentworth v Rogers [2004] NSWCA 340

Category:

Procedural rulings

Parties:

Neville’s Bus Service Pty Ltd (Plaintiff)
Total Group Constructions Pty Ltd (First Defendant)
Jay Roberto Squillacioti (Second Defendant)
Ronisch Pty Ltd (Third Defendant)
Lisa May Squillacioti (Fourth Defendant)
MSL Consulting Pty Ltd (Fifth Defendant)
In Struggletown Pty Ltd (Fifth Respondent)

Representation:

Counsel:
NJ Kidd SC with J Adamopoulos (Plaintiff)
D Pritchard SC (First to Fourth Defendants and Fifth Respondent)

Solicitors:
Madison Marcus (Plaintiff)
Somerville Legal (First to Fourth Defendants and Fifth Respondent)

File Number(s):

2020/142849

Publication restriction:

Nil

JUDGMENT

1. The Plaintiff, Neville’s Bus Services Pty Ltd (NBS), seeks the continuation of post-judgment freezing orders which were made on an ex parte application against the judgment debtors and a third party (together, the Respondents). The matters at issue include whether NBS has established a basis for the freezing orders to remain in place against each of the Respondents; and, if so, whether those orders should be varied, and for what period and on what terms those orders should be continued.

2. The underlying proceedings concern a building contract which was entered on 23 July 2014 (the Contract). Pursuant to the Contract, the First Defendant, Total Group Constructions Pty Ltd (Total), agreed to construct a bus depot for NBS at Smeaton Grange in New South Wales. Total’s obligations were guaranteed by each of the Second Defendant, Mr Jay Squillacioti; the Third Defendant, Ronisch Pty Ltd (Ronisch); and the Fourth Defendant, Mrs Lisa Squillacioti.

3. Mr Jay Squillacioti is the elder brother of Mr Joseph Squillacioti, who is the sole director and shareholder of each of Total and Ronisch. Mrs Lisa Squillacioti is their mother.

4. Following completion of the works, NBS identified significant defects in the concrete pavement of the bus depot. As a result, it commenced these proceedings in May 2020.

5. On 5 April 2024, Ball J awarded judgment in favour of NBS, finding the Defendants liable in the amount of $10,940,098.26 for the costs of rectifying defects in the concrete pavement. His Honour’s orders gave effect to reasons which had been published on 8 March 2024: Neville’s Bus Service Pty Ltd v Total Group Constructions Pty Ltd [2024] NSWSC 215. On 15 April 2024, his Honour ordered that the Defendants pay NBS’s costs on the ordinary basis: [2024] NSWSC 393.

6. On 10 April 2024, NBS filed an application for freezing orders under rule 25.14 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) or alternatively in the Court’s inherent jurisdiction. The application was brought against each of the four Defendants and against the Fifth Respondent, In Struggletown Pty Ltd (Struggletown).

7. Struggletown is the trustee of a discretionary trust called the “In Struggletown Trust”. Mr Jay Squillacioti is the sole director and shareholder of Struggletown, and he and his wife, Anna Maria Squillacioti, are designated beneficiaries of the In Struggletown Trust.

8. The application for freezing orders was brought shortly after NBS had learned that Mr Jay Squillacioti had, in March 2024, transferred a property located at XXX, Harrington Park, New South Wales (the Harrington Park Property) to Struggletown. The transfer occurred after the delivery of Ball J’s reasons for judgment and prior to final orders being made.

9. The freezing orders were made on 10 April 2024 on an ex parte basis. The freezing orders enjoined each of the Defendants from disposing of, dealing with or diminishing the value of any of their assets up to the unencumbered value of the judgment sum, and enjoined Struggletown from disposing of, dealing with or diminishing the value of the Harrington Park Property.

10. On 12 April 2024, the freezing orders were extended, by consent, until further order, so as to allow the parties an opportunity to file evidence in relation to the issue whether those orders should be set aside or maintained.

11. At the hearing of this application on 23 May 2024, NBS conceded that the freezing orders against Mrs Lisa Squillacioti should not be continued. I made orders vacating the freezing orders against her on that date.

12. The five main issues for determination on this application are as follows:

1. first, whether NBS has established a basis for a third party freezing order against Struggletown and, in particular, has established that a process in the Court is or may ultimately be available to NBS as a result of which Struggletown may be obliged to disgorge the Harrington Park Property;

2. secondly, whether NBS has established that, having regard to the circumstances of the transfer of the Harrington Park Property, there is a real danger of the judgment being unsatisfied because Mr Jay Squillacioti’s assets are disposed of, dealt with or diminished in value;

3. thirdly, whether NBS has established that, having regard to Mr Joseph Squillacioti’s involvement in steps taken prior to the transfer of the Harrington Park Property, there is a real danger of the judgment being unsatisfied because the assets of Total or Ronisch (which are under his control) are disposed of, dealt with or diminished in value;

4. fourthly, whether NBS has established a reasonably arguable case that the guarantee given by Ronisch in respect of Total’s obligations under the Contract was given by Ronisch in its capacity as trustee of the Ronisch Trust, so as to justify the continuation of the freezing order over properties held by Ronisch as trustee of that trust; and

5. fifthly, if NBS establishes a basis for the continuation of any of the freezing orders, whether such orders should be continued “until further order”, or should be confined as to the period of their operation and conditioned upon NBS undertaking to commence a claim against Struggletown or to take enforcement action against the Defendants in respect of its judgment.

13. Prior to dealing with these five issues, I have set out below the factual background regarding the Harrington Park Property and its transfer to Struggletown.

Factual Background

14. In 2011, Mr Jay Squillacioti purchased the Harrington Park Property in his own name for approximately $250,000. At the time of purchase, he intended to make the property his primary place of residence.

15. The Harrington Park Property is situated in the Struggletown Heritage Conservation Area. It was held under Old System title and had asbestos contamination. Mr Jay Squillacioti decided to subdivide the property, planning to reside in one lot and sell the other.

16. On 18 January 2013, Mr Jay Squillacioti submitted a development application to Camden Council for remediation of contaminated land, the subdivision of the Harrington Park Property into two Torrens title lots, the construction of a single storey house and associated site works. This development application was approved on 27 June 2017.

17. Mr Jay Squillacioti deposed that he subsequently discovered that, due to a fence line (which was more than 12 years old) being inside the boundary line shown on the survey, the Harrington Park Property did not meet the minimum lot size for subdivision. In those circumstances, he decided to change the purpose of the Harrington Park Property and to build a childcare centre on the site.

18. On 5 July 2021, he lodged another development application with Camden Council for the construction of a childcare centre. This development application was rejected. On 17 August 2022, he filed an appeal in the Land and Environment Court, which was upheld on 1 March 2023, leading to the granting of development consent on 3 March 2023.

19. The development application for the childcare centre named Total as the builder. Total’s logo appeared on the plans submitted as part of that application.

20. On 29 May 2023, Mr Jay Squillacioti received the deposit for a lease of the Harrington Park Property. The Trust Account Receipt for this payment named the Lessor as “Jay Squillacioti or Associated Nominee”.

21. On 7 September 2023, Mr Jay Squillacioti (as Landlord) entered into a deed of agreement for lease in respect of the Harrington Park Property with MKW Three Group Pty Ltd (as Tenant).

22. On 29 January 2024, the hearing in these proceedings commenced before his Honour Justice Ball.

23. On 13 February 2024, Camden Council approved a change to the development application in respect of the childcare centre, increasing the number of children from 68 to 72.

24. On 22 February 2024, the parties completed their closing submissions in the proceedings before Ball J. The scope of the required rectification works for the bus depot had been agreed and the only substantive dispute was in relation to the costs of those works. If the Defendants’ submissions on the remaining issues at trial had been accepted in full, the amount awarded to NBS would have been at least $7.689m.

25. On 28 February 2024, Struggletown was incorporated. The total share capital of Struggletown is $100. As noted above, Mr Jay Squillacioti was (and remains) sole director, secretary and shareholder of Struggletown.

26. On the same date, the “Deed of Establishment – Discretionary Trust” which established the In Struggletown Trust was executed. The trustee is Struggletown. The Designated Beneficiaries named in the Schedule to the trust deed are Mr Jay Squillacioti and his wife, Ms Anna Maria Squillacioti.

27. Also on 28 February 2024, Mr Joseph Squillacioti sent an email to Mr Vincent Romeo of Romeo Property Valuers. The subject line of the email was the Harrington Park Property. The email was in the following terms:

“Hi Vincent,

As discussed with Jay, can you please provide a val[uation] for the above address.

I believe vacant land is selling for approx.. $700k in the area but you may want [to] reduce this because of the heritage listing on the site.

Regards,

Joseph Squillacioti”

28. This email included, under Mr Joseph Squillacioti’s name, the registered address of Total and the website address of Total, as well as Total’s logo.

29. On 29 February 2024, Mr Romeo replied to both Joseph and Jay Squillacioti, confirming that he would open a file on this valuation.

30. On 7 March 2024, Mr Romeo issued a valuation report in respect of the Harrington Park Property. The cover page stated that the report was prepared under instruction from Mr Joseph Squillacioti. The executive summary stated that:

“Joseph Squillacioti has instructed us to assess the estimate of the current market value of the unimproved property being situated at 30 Sharman Close Harrington Park NSW 2567.”

31. The date of the valuation was the same as that of the report (7 March 2024), and the purpose of the valuation was “Stamp Duty”.

32. The report contained the following material under the heading “Improvements”:

“The Subject property comprises an unimproved regular configuration land parcel, fronting Sharman Close to the south east.

7.1 ACCOMMODATION

Vacant parcel of land.

7.2 OTHER IMPROVEMENTS:

Vacant parcel of land.

7.3 PRIME COST ITEMS

Vacant parcel of land.

7.4 AREAS AND MEASUREMENTS:

Vacant parcel of land.”

33. The report stated that Mr Romeo had “considered several sales of comparable properties within the surrounding area to assist in the estimate of the current open market value of the subject property”. Each of the comparable sales identified in the report was the sale of a residential property. In respect of each such sale, Mr Romeo identified the value of the land per square metre (after allowing for the value of the improvements).

34. Having identified those comparable sales, Mr Romeo reported as follows:

“As per your instructions, we have completed a valuation of the subject property as at 7 March 2024 to provide an assessment as to the ‘fair market’ value of the subject property for Stamp Duty Purposes. As such, we have been able to analyse sales within the period as noted herein, giving us an accurate assessment of the local market at the date of valuation.

We consider the appropriate valuation method to be that of comparative sales analysis, whereby sales of properties within close proximity, having similar characteristics, are analysed and like characteristics apply to the subject property.

We have assessed the land area of the subject property to be $675,000 as at the current date, which equates to $750/m2 and is considered to be reasonable giving [sic] its proximity to the main arterial road in comparison to evidence of similar affectated [sic] allotments.

Listed are a number of sales of properties having some degree of comparison. Based upon broad information extracted from sales, we have approached a value primarily on a direct comparative basis. We have collated sales of similar properties from the immediate vicinity which range from the values as noted herein. Based upon this evidence and the current state of the market we have assessed the market value as at 7 March 2024 in the order of $675,000.”

35. On 8 March 2024, Justice Ball delivered his reasons for judgment, and made directions requiring the parties to provide short minutes of order to give effect to those reasons by 22 March 2024.

36. On 12 March 2024, NBS’s solicitors sent the Defendants’ solicitors a draft set of short minutes, proposing that judgment be entered against the Defendants in the sum of $10,949,229.86, and that the Defendants be ordered to pay NBS’s costs of the proceedings.

37. On 20 March 2024, the Defendants’ former solicitors filed a notice of ceasing to act and their current solicitors, Somerville Legal, were appointed to act for them.

38. On 22 March 2024, a further set of proposed short minutes was sent by NBS’s solicitors to Somerville Legal, revising the judgment sum downwards slightly to $10,940,098.26.

39. On 22 March 2024, Mr Jay Squillacioti signed, as director of Struggletown, an expression of interest for a $3.6m facility with Australia and New Zealand Banking Group (ANZ). The borrower was named as Struggletown in its own right and as trustee for the In Struggletown Trust. The purpose of the facility was described as follows: “To assist with the construction of a childcare centre at [the Harrington Park Property]”.

40. Mr Jay Squillacioti deposed that on 24 March 2024 he transferred the Harrington Park Property to Struggletown for an amount of $675,000 “in accordance with [Mr Romeo’s] valuation”.

41. At the hearing of the application before me, NBS tendered a report from a valuer, Mr Staltari, regarding the value of the Harrington Park Property as at 24 March 2024. The Respondents did not lead any evidence in response to this report and Mr Staltari was not required for cross-examination.

42. Mr Staltari expressed the opinion that the value of the Harrington Park Party as at 24 March 2024 was:

1. $950,000 assuming that there were no development applications over the property; and

2. $1,800,000 assuming that there was an approved development application over the property (namely, the application for the childcare centre which was submitted on 17 August 2022 and approved on 3 March 2023).

43. The Transfer in respect of the Harrington Park Property is dated 28 March 2024. By that document, Mr Jay Squillacioti “acknowledges receipt of the consideration of $675,000”.

44. NBS issued a Notice to Produce requiring the production of any document evidencing the payment or receipt of this sum. No document was produced. At the hearing of this application, NBS submitted, and the Respondents did not dispute, that no amount had in fact been paid by Struggletown to Mr Jay Squillacioti.

45. On 27 March 2024, the State Revenue issued a notice of assessment for the stamp duty on the transfer of the Harrington Park Property in the amount of $25,110.

46. On 4 April 2024, the Defendants’ solicitors confirmed that they agreed with the judgment sum in the revised orders that had been proposed by NBS’s solicitors. On 5 April 2024, judgment was ordered against the Defendants in the amount of $10,940,098.28.

47. On 9 April 2024, NBS’s solicitors obtained an updated title search for the Harrington Park Property, which disclosed that it was no longer owned by Mr Jay Squillacioti, but was instead owned by Struggletown. After obtaining a company search for Struggletown which revealed the connection between that company and Mr Jay Squillacioti, NBS brought the application for freezing orders, ex parte, on 10 April 2024.

48. At the hearing of the application on 10 April 2024, NBS relied on the transfer of the Harrington Park Property. In addition, NBS relied on evidence that a property in XXX, Austral, New South Wales, which was owned by Ronisch, had been listed for sale. At the hearing before me, evidence was led by the Respondents explaining that the listing of the Kelly Street property was an error, and NBS did not rely on that listing to justify the continuation of the freezing orders.

49. The freezing orders were made on 10 April 2024 and were, on 12 April 2024, varied so as to continue “until further order”.

43. On 15 April 2024, Justice Ball made orders that the Defendants pay NBS’s costs of the proceedings.

Freezing orders against Struggletown

51. UCPR rule 25.14(5) provides that a freezing order may be made against a third party in the following circumstances:

25.14    Order against judgment debtor or prospective judgment debtor or third party

…

(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 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, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

52. This rule largely reflects the two alternative limbs for making a freezing order against third parties that were identified in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [57] per Gaudron, McHugh, Gummow and Callinan JJ:

“In our opinion such an order may, and we emphasise the word ‘may’, be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which:

(i)   the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including ‘claims and expectancies’, of the judgment debtor or potential judgment debtor; or

(ii)   some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against that actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.”

53. NBS relied on the second limb in both formulations, namely, that a process is or may ultimately be available to NBS by which Struggletown may be obliged to disgorge the Harrington Park Property.

54. In PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [47], French CJ, Kiefel, Bell, Gageler and Gordon JJ observed that:

“The actual holding in Cardile v LED Builders Pty Ltd illustrates that the prospective enforcement process that a court might protect by making a freezing order can be a process contingent on factors in addition to the outcome of a substantive proceeding in that court. The holding was that a freezing order can be made against a third party against whom no present cause of action exists and against whom no present proceeding has commenced. It is enough that some future legal process (which might be contingent, for example, on the appointment by another court of a liquidator or a trustee in bankruptcy) may be available pursuant to which the third party may be obliged to contribute to the funds of the judgment debtor to help satisfy the judgment against the judgment debtor.”

55. NBS identified two potential processes which might be available against Struggletown.

56. First, NBS submitted that, given the factual background described above, the transfer of the Harrington Park Property was potentially made with the intent to defraud creditors such that it was voidable under section 37A of the Conveyancing Act 1919 (NSW) at the instance of NBS (as a creditor). Secondly, NBS submitted that in the event that a sequestration order was made over the estate of Mr Jay Squillacioti, the transfer would be void against the trustee in bankruptcy by reason of s 121(1) of the Bankruptcy Act 1966 (Cth).

57. On this basis, NBS submitted that the freezing order against Struggletown, which is limited to restraining any dealing with the Harrington Park Property, should be continued.

58. Because the freezing orders were obtained on an ex parte basis, the Respondents are not required to satisfy the Court that the orders should be discharged. Instead, the onus of establishing that those orders should be continued at all times remains on NBS: Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133 at [47] per Leeming JA (Bathurst CJ and McColl JA agreeing). That is the case even where, as here, the freezing orders have been continued, by consent, until further order: In the matter of Black Eagle Media Pty Ltd [2014] NSWSC 1778 at [15] per Black J (referring to Commonwealth Bank of Australia v Saleh [2005] NSWSC 843 at [10]-[11] per Palmer J).

Conveyancing Act, section 37A

59. Section 37A of the Conveyancing Act provides as follows:

37A Voluntary alienation to defraud creditors voidable

(1)    Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.

(2)    This section does not affect the law of bankruptcy for the time being in force.

(3)    This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.

60. Alienation is the transfer of value from one person to another, and is usually understood as applying only to a transfer of property effected by the action of the transferor, as distinct from a transfer by involuntary operation of law: Cardile at [67]. In the present case, the relevant “alienation of property” is the voluntary transfer of the Harrington Park Property to Struggletown which was effected by Mr Jay Squillacioti.

61. NBS is a creditor of Mr Jay Squillacioti. It has been prejudiced by the transfer of the Harrington Park Property, in that the property was, prior to the transfer, legally and beneficially owned by Mr Jay Squillacioti and is now owned by Struggletown, which holds the property on the terms of a discretionary trust. In return for the transfer of the property, Mr Jay Squillacioti has received a chose in action, namely, a debt in the amount of $675,000. However, the unchallenged evidence of Mr Staltari is that, as at the date of the transfer, the value of the property that was transferred in return for this debt was $1.8m.

62. In order to establish an “intent to defraud creditors”, it is “unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss”; rather, it is “necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly” (emphasis in original): Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3 at [32] per French CJ, Gummow, Crennan and Bell JJ. It is sufficient that the debtor had an intention to hinder or delay creditors, even if this was not the sole or predominant purpose: ibid at [56]-[57].

63. The intention of the transferor may be inferred from the surrounding circumstances as disclosed by the evidence. In Cannane v J Cannane Pty Ltd(in liq) (1998) 192 CLR 557; [1998] HCA 26 at [12], Brennan CJ and McHugh J observed that:

“Although the party impugning the disposition of property must show an actual intent to defraud creditors at the time of the disposition, the intent may be inferred from the making of a disposition which, to adopt the words of Lord Hatherley LC in Freeman v Pope, ‘subtracts from the property which is the proper fund for the payment of [the] debts, an amount without which the debts cannot be paid’. The ‘proper fund’ may consist in assets out of which future creditors as well as present creditors would be entitled to be paid a dividend in respect of what is owing to them. Therefore a subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. Whether that inference should be drawn depends upon all the circumstances of the case.”

64. In Marcolongo at [34], the plurality referred to this passage, observing that Brennan CJ and McHugh J had added “the word ‘actual’ [to the statutory language of an ‘intent to defraud creditors’] as a periphrasis to emphasise that, while the existence of the intent might be inferred from the evidence, it was to be found as a fact”. If it appears from all of the circumstances surrounding the alienation of the property that the effect of the alienation might have been expected to be, and has in fact been, to hinder, delay or defeat creditors, the court will attribute the relevant intention to the transferor: P T Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 523-524 per Wilcox, Gummow and von Doussa JJ.

65. In that regard, Gilmour J noted in Commissioner of Taxation v Oswal (No 6) [2016] FCA 762 at [66] that there are “various circumstances in which it is recognised that the Court will move readily to infer the existence of the requisite intention”, including where (citations omitted):

“(1)   the ‘natural and probable consequence’ of the disposition is the defeat or delay of creditors;

(2)   the alienation is made voluntarily;

(3)   the alienation is made, relevantly, for no consideration by a person in financial difficulties;

(4)   the alienation is made in favour of a family member; and

(5)    the alienation is made in haste or proximately to one or more events indicating financial stress on the part of the disponor.”

66. For present purposes, the issue is not whether the relevant intent should be inferred, and therefore whether the requirements of section 37A(1) are established. Instead, it is whether NBS has established a “reasonably arguable case on legal as well as factual matters” that the transfer of the Harrington Park Property is voidable pursuant to s 37A.

67. I am satisfied that NBS has established a reasonably arguable case:

1. that the transfer of the Harrington Park Property was made:

1. voluntarily, to a company wholly owned by Mr Jay Squillacioti, to be held as an asset of a discretionary trust (in respect of which he was only one of the discretionary objects);

2. for a sum which has not been paid, and at a value which took no account of the approved development application for the construction of a childcare centre on the property; and

3. at a time when it was known that judgment would shortly be entered against Mr Jay Squillacioti for a sum which significantly exceeded the value of his assets;

2. that, in those circumstances, it can be inferred that the transfer was made by Mr Jay Squillacioti with an intent to delay, hinder or defeat creditors; and

3. that the transfer is therefore voidable at the instance of NBS.

68. The Respondents relied on the defence in section 37A(3) of the Conveyancing Act, submitting as follows:

“that subsection provides, if you provide valuable consideration for the purchase and you are now the registered proprietor of this property so you get indefeasible title under section 41 of the Real Property Act, for better or worse, the plaintiff against that party has to overcome a defence raised of consideration … the company has a clear defence on the basis it paid consideration, that is, it is subject of a chose in action for 675[,000] in favour of Jay. It may not, on the evidence, have paid the money, it matters not. It’s got the benefit of a registered title and it owes Jay 675[,000] and it’s a strong defence, in my submission.”

69. The onus is on a person relying on s 37A(3) to prove that they come within its operation: Super Vision Resources Ltd BVI Registered No 1810534 v AC Holdings Co Pty Ltd [2020] NSWCA 319 at [95] per Meagher JA (Basten JA agreeing), citing Wentworth v Rogers [2004] NSWCA 340 at [62]-[68].

70. In the present case, the issue is whether NBS has a reasonably arguable claim against Struggletown in relation to the transfer of the Harrington Park Property under section 37A. That question cannot be answered merely by pointing to a reasonably arguable defence to such a claim.

71. In any case, and contrary to the submission set out above, the defence in section 37A(3) does not depend on the consideration given for the transfer, but rather on the state of mind of the transferee. It provides that s 37A(1) does not apply where the relevant property is alienated “to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors”.

72. It is difficult to see that there could be any scope for the operation of section 37A(3) in the circumstances of this case, because Mr Jay Squillacioti was, at all relevant times, the controlling mind of Struggletown. Section 37A(1) will not apply to render the transfer of the Harrington Park Property void unless it is established that the transferor, Mr Jay Squillacioti, had the requisite “intent to defraud creditors”. If this is established, it would seem to follow that Struggletown had “notice of the intent” of its controlling mind and therefore could not rely on the defence in section 37A(3).

73. For those reasons, I am satisfied that NBS has a reasonably arguable claim under s 37A in respect of the transfer of the Harrington Park Property.

Bankruptcy Act, section 121

74. In the event that Mr Jay Squillacioti becomes bankrupt, the transfer of the Harrington Park Property will be void against the trustee in bankruptcy if the requirements of section 121(1)(a) and (b) are satisfied, namely if:

(a)   the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred; and

(b)    the transferor’s main purpose in making the transfer was:

(i)    to prevent the transferred property from becoming divisible among the transferor’s creditors; or

(ii)    to hinder or delay the process of making property available for division among the transferor’s creditors.

75. As regards paragraph (1)(a), NBS submitted, and I accept, that it is reasonably arguable that the Harrington Park Property would have been available to creditors of Mr Jay Squillacioti (including, relevantly, NBS) if it had not been transferred to Struggletown.

76. As regards paragraph (1)(b), section 121(2) of the Bankruptcy Act provides that:

The transferor’s main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.

77. At the time of the transfer of the Harrington Park Property, the total value of Mr Jay Squillacioti’s assets was well below the amount of the judgment which was going to be, and was, entered against him shortly afterwards. In those circumstances, it is reasonably arguable that, at the time of the transfer, Mr Jay Squillacioti was about to become insolvent, and therefore his purpose in making the transfer is taken to be the purpose described in paragraph (1)(b).

78. Section 121(4) provides that, despite s 121(1), a transfer is not void as against the trustee if the following matters are established:

(a)   the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and

(b)   the transferee did not know, and could not reasonably have inferred, that the transferor’s main purpose in making the transfer was the purpose described in paragraph (1)(b); and

(c)   the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent.

79. On the evidence before me, that defence would not appear to be available, since the consideration given for the transfer of the Harrington Park Property was not “at least as valuable as the market value of the property” (s 121(4)(a)). Section 121(9) provides that the “market value” of property transferred is “its market value at the time of the transfer”. The unchallenged expert evidence of Mr Staltari is that the market value of the Harrington Park Property at the time of transfer was $1.8m, being 267% greater than the stated amount of consideration for the transfer (which, in any event, has not been paid).

80. Further, as regards section 121(4)(b) and (c), Struggletown must have been aware, given that Mr Jay Squillacioti was at all times its controlling mind, of his purpose in making the transfer of the Harrington Park Property; and must have been aware that, with the imminent entry of the judgment, he was about to become insolvent.

Conclusion – Struggletown

81. For the reasons set out above, I am satisfied that NBS has established a reasonably arguable case:

1. that the transfer of the Harrington Park Property is voidable under section 37A of the Conveyancing Act at the instance of NBS; and

2. that, in the event that a sequestration order was made over the estate of Mr Jay Squillacioti, the transfer would be void against the trustee in bankruptcy by reason of s 121(1) of the Bankruptcy Act.

It follows that NBS has established that a process is or may ultimately be available under which Struggletown may be obliged to disgorge that property.

82. The Respondents argued that, if I came to this view, the freezing orders should not be extended unless NBS gave an undertaking to prosecute a section 37A claim against Struggletown. I deal with this issue below, when considering the period for which, and terms on which, the freezing orders should be extended.

83. Finally, the Respondents submitted that, if the freezing orders against Struggletown were continued, those orders should be varied by deleting order 6(b). Order 6 of those orders (in Annexure E to the orders made by the Court on 10 April 2024, as varied on 12 April 2024) is in the following terms:

“B. FREEZING OF ASSETS

6. (a)    You must not in any way dispose of, deal with or diminish the value of your interest in the property located at [XXX], Harrington Park in the state of New South Wales, being Folio Identifier XX/XX(‘the Property’);

(b)    However, despite order 6(a) above, if the unencumbered value of the Property assets exceeds $10,940,098.26 (‘the Relevant Amount’), you may dispose of or deal with part of your interest in the Property, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.”

84. The Respondents submitted, and I accept, that order 6(b) should not be included in the freezing order against Struggletown, given that the basis for the freezing orders is not that Struggletown has any liability in respect of the judgment sum (which is the “Relevant Amount” referred to in order 6(b), but rather that Struggletown may be required to disgorge the particular property which is referred to in order 6(a)).

Freezing order against Jay Squillacioti

85. UCPR rule 25.14(4) relevantly provides that the Court may make a freezing order against a judgment debtor if the Court is “satisfied, having regard to all the circumstances, that there is a danger that a judgment … will be wholly or partly unsatisfied” because “the following might occur”:

(b)   the assets of the judgment debtor … are

…

(ii)    disposed of, dealt with, or diminished in value.

86. A freezing order is an “exceptional” and “drastic” remedy, which should not be granted lightly: Frigo v Culhaci [1998] NSWCA 88, approved in Cardile at [51]. Many authorities attest to the care with which courts are required to scrutinise applications: ibid.

86. In Frigo v Culhaci at [8], the Court observed that a plaintiff “must establish, by evidence and not assertion, that there is a real danger that, by reason of the defendant absconding or removing assets out of the jurisdiction or disposing of assets within the jurisdiction, the plaintiff will not be able to have the judgment satisfied if successful in the proceedings”. The Court noted that there had been “much debate as to the precise degree of risk which must be shown”, adding: “What is clear is that mere assertions that the defendant is likely to put assets beyond the plaintiffs reach will not be enough”. In support of this proposition, the Court referred to Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH & Co KG [1984] 1 All ER 398. In that case, Mustill J observed (at 406) that:

“It is not enough for the plaintiff to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. This evidence may take a number of different forms. It may consist of direct evidence that the defendant has previously acted in a way which shows that his probity is not to be relied on. Or the plaintiff may show what type of company the defendant is (where it is incorporated, what are its corporate structure and assets, and so on) so as to raise an inference that the company is not to be relied on. Or, again, the plaintiff may be able to found his case on the fact that inquiries about the characteristics of the defendant have led to a blank wall. Precisely what form the evidence may take will depend on the particular circumstances of the case. But the evidence must always be there.”

88. The risk of dissipation must be sufficiently substantial to warrant the granting of the freezing order: Deputy Commissioner of Taxation v Huang (2021) 273 CLR 429; [2021] HCA 43 at [18] per Gageler, Keane, Gordon and Gleeson JJ. However, it is not necessary that the risk of dissipation be more probable than not: Patterson v BTR Engineering (Aust) Pty Ltd (1989) 18 NSWLR 319 at 325 per Gleeson CJ; Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 at [58]-[59] per Bathurst CJ (Beazley P and Barrett JA agreeing).

89. The Respondents submitted that Mr Jay Squillacioti’s conduct in relation to the transfer “has been explained and is commercially rational”. In particular, the Respondents relied on evidence given by Mr Jay Squillacioti to the effect that it was his usual practice over 20 years as a commercial builder to incorporate a special purpose vehicle for each individual development in which he is involved. In this regard, he explained that the reason why the trust receipt dated 29 May 2023 for the receipt of the lease deposit in respect of the Harrington Park Property referred to either him or an “associated nominee” as the lessor was because “it was always my intention to transfer the property to a special purpose vehicle when the time came to begin construction”.

90. However, this evidence about Mr Jay Squillacioti’s usual practice and intentions does not adequately explain the timing of the transfer. Significantly, the transfer was not effected at the point when the Development Application was approved (at the beginning of March 2023), nor was it effected “when the time came to begin construction” (noting that there is no evidence that construction is imminent, or that there is any funding for construction). Instead, it was effected between reasons for judgment being handed down and orders for judgment being made shortly afterwards. It occurred at a point in time when Mr Jay Squillacioti knew that the final orders which had been proposed in light of those reasons included entry of judgment against him for an amount in excess of $10.9m. The most plausible explanation for the timing of the transfer is that Mr Jay Squillacioti wanted to ensure that, by the time the orders for judgment were made, he was no longer the beneficial owner of his most valuable asset.

91. The Respondents also relied on the fact that the transfer was made at a price which was determined by an independent valuation. However, as an experienced builder and property developer, Mr Jay Squillacioti must have been aware that the value of a property may be significantly increased where there is an approved development application over that property. He was copied in on the email chain in which his brother asked Mr Romeo to value the Harrington Park Property as “vacant land”. He received (and likely read) Mr Romeo’s valuation report which made no reference to the approved development application for the construction of a childcare centre. Those matters provide a basis for inferring that he was aware that the value of the property was likely understated in Mr Romeo’s report.

92. For the reasons given above, I am satisfied that the evidence concerning the transfer of the Harrington Park Property establishes a real danger that the judgment in favour of NBS may be partly unsatisfied as a result of Mr Jay Squillacioti disposing of, or dealing with, his assets.

93. However, it will be necessary for the freezing orders which have been made against Mr Jay Squillacioti to be varied. In the current form of the orders, the following assets are included in the list of particular assets to which the freezing orders are stated to apply:

1. “[the Harrington Park Property] or, if it has been sold, the net proceeds of sale”; and

2. “the property located at XXX, Orange in the state of New South Wales 2800, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale”.

94. Given that the Harrington Park Property is no longer owned by Mr Jay Squillacioti, the first item should be amended to refer only to the net proceeds of sale of that property, or the right to receive the net proceeds of sale (which have not yet been paid).

95. The Orange property is owned by Mr Jay Squillacioti and his wife as trustees of their self-managed superannuation fund. At the hearing before me, NBS accepted that the guarantee which was given by Mr Jay Squillacioti in respect of Total’s obligations under the Contract was not given by him in his capacity as trustee of this superannuation fund, and that the Orange property should therefore be excluded from the scope of the freezing order.

96. I deal with the question of the period for which the freezing orders should remain in place at paragraphs [143]-[161] below.

97. One final matter which should be noted is that, shortly before the hearing of this application, Mr Jay Squillacioti swore an affidavit on 20 May 2024 in which he deposed that the signature on the Contract in the guarantor’s section was not his, and denied signing the Contract as guarantor. However, as matters stand, NBS has a judgment against Mr Jay Squillacioti in the amount of some $10.94m, and has brought a post-judgment application for freezing orders. In those circumstances, NBS can rely on the judgment itself, and does not need to show that it has a good arguable case on an accrued or prospective cause of action against Mr Squillacioti: UCPR r 25.14(1). In addition, the judgment has not been stayed and none of the Defendants has appealed against it.

98. Given that is so, I do not consider that the issue which has been raised by Mr Jay Squillacioti regarding the signing of the Contract is material to the determination of NBS’s application.

Total and Ronisch

99. NBS relied on the fact that Mr Joseph Squillacioti, who is the sole director and shareholder of each of Total and Ronisch, was involved in the transfer of the Harrington Park Property.

100. The Respondents argued that the minimal steps taken by Mr Joseph Squillacioti, which were described as going no further than asking for a valuation and expressing a view about value, were incapable of establishing a real danger that Total or Ronisch would dissipate, deal with or diminish the value of their assets in such a way that the judgment would be wholly or partly unsatisfied.

101. I am satisfied that NBS has established a basis for the continuation of the freezing orders against Total and Ronisch, particularly when Mr Joseph Squillacioti’s actions are viewed in the context of their surrounding circumstances.

102. As noted above, the development application which was made in respect of the Harrington Park Property named Total as builder, and the plans which were submitted with that application bore Total’s logo. According to the expression of interest for financing which was lodged with ANZ in March 2024, Struggletown was seeking a facility of $3.6m for the development of the childcare centre, with a construction sub-limit of $2,933,360 and a contingency sub-limit of $173,500.

103. The Respondents submitted that the appearance of Total’s logo on the development application was incapable of supporting an inference “that Joseph knew or ought to have known … that there was a DA” over the Harrington Park Property.

104. However, it is important to note that Mr Joseph Squillacioti swore two affidavits which were before the Court on this application, each of which was silent regarding the extent of his knowledge of the Harrington Park Property and the circumstances of its transfer to Struggletown, and the extent of his involvement in the events leading up to that transfer. In circumstances where Mr Joseph Squillacioti has given evidence on this application, but has chosen not to give any evidence regarding those matters, the Court will be less likely to draw inferences favourable to him from the documentary evidence which is available regarding those matters, and is entitled to infer that any evidence from him in relation to those matters would not have assisted the Respondents’ contentions on this application: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [63] per Heydon, Crennan and Bell JJ, citing Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 per Handley JA; and Maric v Nominal Defendant [2013] NSWCA 190 at [32] per Meagher JA (Leeming JA and Sackville AJA agreeing).

105. Given that Mr Joseph Squillacioti is the sole director and shareholder of Total, it is likely that he was aware of the development application which named Total as builder, and was informed of its subsequent approval. It is also likely that he was aware of the value of the works for the construction of the childcare centre.

106. Further, it is likely that he was aware of those matters when he made the request for the valuation of the Harrington Park Property. This request was made by an email sent from his Total email address, and also included, in his signature, Total’s registered address and web address.

107. This email was sent less than a week after closing submissions had been delivered in these proceedings, at a time when Mr Joseph Squillacioti knew that a judgment of at least $7.689m would be awarded against Total and the guarantors of its obligations under the Contract, including Mr Jay Squillacioti.

108. At the time the email was sent, Mr Joseph Squillacioti had an interest in ensuring that the planned construction by Total of a childcare centre on the Harrington Park Property would not be derailed as a result of the delivery of the judgment in these proceedings.

109. According to Mr Romeo’s valuation report, he received his instructions for the valuation from Mr Joseph Squillacioti. Since, according to Mr Romeo, the valuation was requested for “stamp duty” purposes, it can be inferred that Mr Joseph Squillacioti understood, when requesting the valuation, that Mr Jay Squillacioti intended to transfer the Harrington Park Property to a related entity. Given Mr Joseph Squillacioti’s interest in the development of the Harrington Park Property, it is likely that he was interested to know, and was informed of, the identity of the transferee.

110. When asking for the valuation, Mr Joseph Squillacioti stated that: “I believe vacant land is selling for approx. $700k in the area but you may want to reduce this because of the heritage listing on the site”.

111. The Respondents submitted that this was “a request on its face for a bland valuation” and was “not suggestive of the result”, contending that:

“A more unremarkable request for a recognised valuer to prepare a valuation could not be imagined. That is, I think the value is this, you might want to think about that.”

112. However, given that Mr Joseph Squillacioti specifically drew the valuer’s attention to the heritage listing as a matter which would decrease the value of the land, it can be inferred that he deliberately omitted reference to the development consent for the childcare centre, and did so knowing that this was a matter which would likely increase the value of the land.

113. The Respondents noted that the approval of a development application is publicly available information and submitted as follows:

“That means a valuer doing his job would be able to find it.

The fact the valuer in this case did not find it is no criticism of a person retaining a competent valuer to provide a valuation.”

114. However, those propositions, stated at a level of generality, cannot take matters very far. Instead, it is necessary to focus on the specific circumstances of this case. The valuation report was addressed to Mr Joseph Squillacioti and was dated 7 March 2024, and therefore was likely received by him on around that date. Given that the instructions for the report came from him, it can also be inferred that he read the report on its receipt (particularly since he did not give any evidence to the contrary). That is, it was received and read by him just two days after Ball J delivered his reasons for judgment in these proceedings, and directed the parties to bring in short minutes giving effect to those reasons.

115. On reading Mr Romeo’s valuation report, Mr Joseph Squillacioti must have appreciated that the valuer had not in fact checked whether there was any approved development application in relation to the Harrington Park Property, since the report was silent as to the existence of the development consent for the childcare centre, and valued the property as unimproved land, having regard only to comparable sales of residential property. Mr Joseph Squillacioti must have also been aware that these matters meant that it was likely that the value of the Harrington Park Property was understated.

116. Further, it can be inferred that Mr Joseph Squillacioti was aware that the likely result was that the transfer of the property from Mr Jay Squillacioti to a related entity would go ahead at the amount stated in the valuation report, and therefore would go ahead at an undervalue, and that this would occur in circumstances where it was certain that Mr Jay Squillacioti was going to have judgment entered against him, in the near future, for an amount in excess of $7.689m.

117. Having regard to those findings regarding Mr Joseph Squillacioti’s involvement in, and knowledge in respect of, the transfer of the Harrington Park Property to Struggletown, I am satisfied that there is a real danger that he will cause Total and Ronisch, each of which is controlled by him, to dispose of or deal with their respective assets such that NBS will not be able to have the judgment satisfied. I am also satisfied that the risk of dissipation is sufficiently substantial to warrant the granting of the freezing order.

118. Accordingly, NBS has established a basis for the continuation of the freezing orders against each of Total and Ronisch. This leaves two questions which are considered below: first, whether the freezing orders should extend to assets which Ronisch holds as trustee for the Ronisch Trust; and secondly, whether the freezing orders should continue, as NBS sought, “until further order”.

Assets of Ronisch as trustee of the Ronisch Trust

119. The freezing orders against Ronisch are stated apply to “the following assets in particular”:

1. the property located at XXX, Austral in the state of New South Wales, being Folio Identifier XX/XX, or, if has been sold, the net proceeds of sale;

2. the property located at XXX, Austral in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale;

3. the property located at XXX, Smeaton Grange in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale;

4. the property located at XXX, Smeaton Grange in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale;

5. the property located at XXX, Smeaton Grange in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale;

6. the property located at XXX, Smeaton Grange in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of sale;

7. the property located at XXX, Smeaton Grange in the state of New South Wales, being Folio Identifier XX/XX, or, if it has been sold, the net proceeds of the sale.

120. Ronisch is the trustee of a discretionary trust called “The Ronisch Trust”. The Respondents led unchallenged evidence that each of the properties listed above is held by Ronisch as trustee of the Ronisch Trust.

121. Whether Ronisch entered the Contract as a guarantor in its personal capacity or in its capacity as trustee of the Ronisch Trust, Ronisch is personally liable in respect of the obligations which it guaranteed: ACES Sogutlu Holdings Pty Ltd (in liq) v Commonwealth Bank of Australia (2014) 89 NSWLR 209; [2014] NSWCA 402 at [16] per Leeming JA (Beazley P and Macfarlan JA agreeing). However, if Ronisch gave the guarantee in its capacity as trustee of the Ronisch Trust, and thereby incurred a liability to NBS in the course of the administration of that trust, Ronisch, while personally liable to NBS, is entitled to have recourse to assets of the Ronisch Trust by way of indemnity: Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [47].

122. Further, under clause 14.1 of the trust deed, Ronisch has a right of indemnity from the assets of the Ronisch Trust where it is acting or purporting to act in the execution of the trust.

123. The issue which therefore arises for determination is whether NBS has established a reasonably arguable case that Ronisch guaranteed Total’s obligations under the Contract in its capacity as trustee of the Ronisch Trust, so as to give it a right of indemnity against the trust assets.

124. Mr Joseph Squillacioti, who at all relevant times was the sole director of Ronisch, deposed that he did not have any input into the preparation of the Contract or put Ronisch forward as a guarantor.

125. The capacity in which a party contracts, or is given rights or assumes or becomes subject to obligations or liabilities under a contract, must be determined objectively in the same manner as the contract itself is construed: Huntley Management Ltd v Timbercorp Securities Ltd (2010) 187 FCR 151; [2010] FCA 576 at [53] per Rares J; and Infigo II Pty Ltd v Linmas Holdings Pty Ltd [2023] NSWSC 755 at [51] per Meek J. That requires the court to consider what a reasonable person in the position of the parties would have understood as the meaning conveyed by the words in which they expressed their bargain. Normally that process requires consideration not only of the text but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction: ibid.

126. The Contract names Ronisch as guarantor. It does not refer to the Ronisch Trust and does not have any space for the insertion of an ABN alongside Ronisch’s name. In contrast, an earlier version of the Contract, which had proposed that the builder of the bus depot would be Ronisch, had included, in the details provided for Ronisch, the ABN of Ronisch as trustee for the Ronisch Trust.

127. The question of capacity is not determined simply by ascertaining whether or not the Contract refers to Ronisch as having executed the agreement in its capacity as trustee of the Ronisch Trust. Instead, it is necessary to consider whether Ronisch’s entry into the Contract was in the course of the business of the Ronisch Trust and, in particular, whether the liabilities under it were incurred in the proper execution of its duties and powers under the Trust: Infigo II v Linmas Holdings at [67].

120. Whether the trustee has incurred a liability in the performance of the trust depends upon that being the correct legal characterisation of what occurred. The characterisation cannot be determined by the label or description given to the relevant conduct by the parties. Rather, it depends upon whether the conduct was, or must be taken to have been, undertaken in the proper execution of the trust: Infigo II v Linmas Holdings at [77], referring to TFML Ltd v MacarthurCook Fund Management Ltd [2013] NSWCA 291 at [70] per Meagher JA (McColl and Macfarlan JJA agreeing).

121. In the present context, it is not necessary for NBS to show, on the balance of probabilities, that Ronisch entered the Contract in its capacity as trustee of the Ronisch Trust. It is sufficient that a reasonably arguable case be established.

122. The evidence on this application establishes the following matters regarding Ronisch’s entry into the Contract.

123. First, the solicitor acting for NBS in relation to the Contract, Mr Michael Hewett, corresponded with each of Mr Joseph Squillacioti and his father, Mr Mick Squillacioti, in negotiating the Contract.

124. Secondly, it was initially proposed that Ronisch (rather than Total) would enter the Contract as builder, and would be responsible for the construction of the bus depot for NBS. Ronisch was put forward by Mr Mick Squillacioti as the proposed builder.

125. Thirdly, it can be inferred that Mr Joseph Squillacioti was aware that Ronisch had been proposed by his father as the builder under the Contract. That is because a copy of the Contract which named Ronisch as the builder and which was sent by Mr Mick Squillacioti to NBS’s solicitor on 23 June 2014 bears a signature closely resembling the signature of Mr Joseph Squillacioti on his affidavits.

126. Fourthly, this version of the Contract specified, for Ronisch, an ABN which is the ABN for Ronisch as trustee of the Ronisch Trust. That is, it was proposed that Ronisch enter this version of the Contract in that capacity. Further, the only email address which was specified for Ronisch on this version of the Contract was that of Mr Mick Squillacioti.

127. Fifthly, NBS was concerned that Ronisch did not have any assets. NBS’s solicitor wrote to Mr Mick Squillacioti on 7 July 2014, and stated that:

“I believe there needs to be security and/or Joseph and you should guarantee the contract. Ronisch appears to be a $2 company with no assets and Joseph the only officer and shareholder. If something goes awry, Nevilles will have spent $5 million and have a company without assets to look to for recompense.”

136. Sixthly, when the proposed builder of the bus depot was changed to Total, and NBS sought evidence as to Total’s assets, Mr Mick Squillacioti replied on 11 July 2014 as follows:

“Total Group Constructions will be the builder and the guarantors will be Jay Squillacioti as the director of Total Group Constructions with personal assets house in Thredbo two residential lots in Harrington park approx. value of $1.9m and Ronisch Pty Ltd assets industrial land in Smeaton Grange approx. value $4.5m.”

137. Finally, on 16 July 2014, Mr Mick Squillacioti sent to NBS’s solicitor, Mr Hewett, a statutory declaration of Mr Jay Squillacioti which referred to the proposed Contract and guarantees, and relevantly stated as follows:

“The other guarantor of the contract is Ronisch Pty Limited which is a company I am familiar with. The assets of that company and their approximate values comprise:

44 Topham Road, Smeaton Grange with a value of $4.5m-$5m”

138. Mr Jay Squillacioti gave evidence that the signature on the statutory declaration (which, according to the document, was witnessed by a Justice of the Peace) was not his, and he denied having signed this document. However, whether or not the document was in fact signed by him is of little significance. What matters for present purposes is that Mr Mick Squillacioti, when negotiating on behalf of the Total parties (including Ronisch) in relation to the Contract, put forward this material as evidence that Ronisch had assets available to support its guarantee under the Contract.

139. Mr Joseph Squillacioti has deposed that Ronisch does not own any assets beneficially. It follows that all of the assets which Mr Mick Squillacioti referred to as available to support Ronisch’s guarantee under the Contract were assets which Ronisch held in its capacity as trustee of the Ronisch Trust.

140. The Respondents contended that there was no evidence that, in proposing Ronisch as guarantor on the basis that it had these assets available to support its guarantee, Mr Mick Squillacioti had any actual or ostensible authority to act on behalf of Ronisch:

“The representations … by Mick and Jay, weren’t by a director or officer of Ronisch. … Why is that important? There is no evidence that the company, Ronisch, knew, made those representations so as to bind it or cause it to be responsible.”

141. In circumstances where Mr Joseph Squillacioti swore affidavits which were read on this application, and those affidavits were silent as to whether Mr Mick Squillacioti had authority to act, or make representations, on behalf of Ronisch in those negotiations, inferences may be more readily drawn from the available documentary evidence in relation to that issue. As summarised above, there is evidence that Mr Mick Squillacioti was named as the contact person for Ronisch on a document that was signed by its sole director, Mr Joseph Squillacioti, and that each of Mr Mick Squillacioti and Mr Joseph Squillacioti was communicating with NBS’s solicitor on Ronisch’s behalf in the negotiations which led to the Contract. Further, the evident objective purpose of the transaction involving Ronisch was to ensure that the obligations of Total under the Contract were guaranteed by a person with assets available to support the guarantee; and Ronisch was proposed as guarantor by Mr Mick Squillacioti specifically on the basis that it held assets worth $4.5m (all of which were trust assets).

142. Given those matters, I am satisfied that NBS has established a reasonably arguable case that Ronisch entered into the guarantee in its capacity as trustee of the Ronisch Trust.

Terms of freezing orders

143. NBS contended that because the orders made on 10 April 2024 were, on 12 April 2024, extended “until further order”, there was no need for any other orders to be made in the event that I was satisfied on the evidence that a basis for the orders had been established.

144. However, the Respondents submitted that the duration of the freezing orders should not be open-ended. They contended that any freezing orders against Mr Jay Squillacioti, Total or Ronisch should be limited to a period of 28 days, in order to allow enforcement procedures to be taken. Further, the Respondents contended that the Court should not extend freezing orders against Struggletown without NBS giving an undertaking to commence a section 37A claim; and that, because no such undertaking had been given, those orders should be set aside.

145. Freezing orders may be made, and may continue to operate, after final judgment to protect the efficacy of the execution: Deputy Commissioner of Taxation v Shi (2021) 273 CLR 235; [2021] HCA 22 at [22] per Gordon J.

146. In Moustapha v Nelson (No 3) [2020] NSWSC 1263 at [43]-[44], Parker J observed that the rationale for a freezing order is to protect the eventual process of execution on any judgment the plaintiff may obtain (citing Cardile at [41]) and that such an order is temporary in the sense the once execution has taken place, its operation will be spent. His Honour said that in principle, the order “should usually be framed so as to remain in force (if the plaintiff obtains judgment) until execution has taken place”, with the Court retaining “power in the meantime to vary the order if the circumstances call for that”.

147. In Tagget v Sexton [2009] NSWCA 91, Beazley JA said (at [67]) that in the normal course, a freezing order, whether in respect of the assets of a party to the proceedings or a third party, “should be made for a limited period, delimited either by a date or event or subject to a condition, such as the bringing of an application under the Conveyancing Act, s 37A, or under the Bankruptcy Act, s 121”.

148. In making those observations, Beazley JA cited Cardile. In that decision, Gaudron, McHugh, Gummow and Callinan JJ observed (at [53]) that:

“Discretionary considerations generally also should carefully be weighed before an order is made. Has the applicant proceeded diligently and expeditiously? Has a money judgment been recovered in the proceedings? Are proceedings (for example civil conspiracy proceedings) available against the third party? Why, if some proceedings are available, have they not been taken? Why, if proceedings are available against the third party and have not been taken and the court is still minded to make a Mareva order, should not the grant of the relief be conditioned upon an undertaking by the applicant to commence, and ensure so far as is possible the expedition of, such proceedings? It is difficult to conceive of cases where such an undertaking would not be required. Questions of this kind may be just as relevant to the decision to grant Mareva relief as they are to a decision to dissolve it. These are matters to which courts should be alive. As will appear, they are matters which should have been considered by the Full Court in this case.”

149. Their Honours held (at [70]) that where the rights and obligations of Mr and Mrs Cardile with respect to their property could only be finally determined in proceedings under section 37A of the Conveyancing Act, “consideration should have been given to the order being made subject to an undertaking that those proceedings would be commenced” and in this respect, the Full Court erred.

150. The Respondents referred to The Owners – Strata Plan No 98970 v Capitol Property Services Pty Ltd [2021] NSWSC 950 as an example of the approach described in Cardile being adopted. In that case, Williams J determined that there was a basis for a continuation of a freezing order that had been made ex parte against a defendant and a third party, and held (at [4]) that the order should continue:

1. on the plaintiff’s undertaking to commence as soon as reasonably practicable proceedings under s 37A of the Conveyancing Act in relation to the transaction that triggered the plaintiff’s application for the freezing order; and

2. for a period of four months.

151. Her Honour noted that it would be open for the plaintiff to apply to have the order extended beyond that period, and observed that any such application would fall to be determined having regard, inter alia, to “an assessment of the strength (or otherwise) of the [plaintiff’s] cause of action under s 37A of the Conveyancing Act on the basis of the pleadings and any evidence served in those proceedings (which will have been commenced by then) and the diligence with which the [plaintiff] has prosecuted those proceedings”.

152. NBS submitted that it should not be required to provide any undertaking to bring a proceeding against Struggletown, for the following reasons:

“We have taken a lot of steps to seek to enforce and we intend to take more. We only need to pursue the 37A proceeding if we are not paid the judgment debt from the four judgment debtors. No one can say we have not been acting quickly in relation to enforcement generally.

What will happen is if we are not paid, eventually there will be either bankruptcy trustees for the individuals or winding up orders for the companies made and at that point in time, either we will bring 37A proceedings or perhaps the bankruptcy trustee of Jay will bring s 121 proceedings but until those steps are taken there ought not be some requirement at this point that we commence those proceedings immediately because there’s lots of things that can happen and ought to be permitted to happen before we get to that point, which might result in the judgment being paid or might result in some other similar application being brought under s 121.”

153. The difficulty with this submission is that it fails to acknowledge that a freezing order is a drastic and extraordinary remedy. A freezing order should not remain in place for an indefinite period so as to provide a plaintiff with an option to pursue a cause of action against the respondent at some uncertain time in the future, if the plaintiff subsequently forms the view that there is merit in so doing.

154. Although NBS did not, at the hearing of this application, proffer an undertaking to commence a claim against Struggletown, Senior Counsel for NBS stated that “we don’t disavow the notion of an undertaking to proceed with the section 37A proceeding” and submitted that if, in the light of the authorities summarised above, I reached the view that “there ought to be a specific condition relating to bringing a 37A proceedings”, then I should “make that as a condition of the order” rather than “refuse to extend the orders at all”.

155. Having regard to the authorities set out above, I consider that it is appropriate that the freezing orders against Struggletown only be extended if NBS gives an undertaking to commence as soon as reasonably practicable proceedings under s 37A of the Conveyancing Act in relation to the transfer of the Harrington Park Property. Further, having regard to the period for which they have already been in place, the freezing orders should only be extended for a period of three months from now. It will be open for NBS to seek an extension of the orders beyond that point, and the determination of any such application would depend, inter alia, on an assessment of the strength of the claims made in the s 37A proceedings.

156. As regards the remaining Respondents, I was provided with evidence that Examination Notices had been issued in these proceedings to Ronisch and Mr Jay Squillacioti. NBS submitted that, in circumstances where it has obtained a judgment against Total, Ronisch and Mr Jay Squillacioti, and has a number of options available as regards the enforcement of that judgment, the Court should not make the extension of the freezing orders against them conditional upon NBS undertaking to pursue any particular form of enforcement action. In particular, NBS submitted as follows:

“Now what we don’t have to do is to elect one and one only form of execution. We’re entitled to take any means of enforcement and all means of enforcement available to us to seek to recover the judgment. And the rationale of the freezing order is to protect the position until any and all available steps to enforce the judgment have been taken, or the judgment debt has been paid, whichever is first to occur. There’s no principled reason for thinking that the freezing order is only there to protect the very first form of enforcement that the judgment creditor chooses to adopt.”

157. While I accept that NBS should not be required to elect, and pursue, any particular form of enforcement action, I consider that it is not desirable for the freezing orders against the judgment debtors simply to remain “until further order”. There should be some time limitation placed on those orders. In Republic of Haiti v Duvalier [1990] 1 QB 202 at 214, Staughton LJ (with whom Stocker and Fox LJJ agreed) said that a freezing order granted after judgment “should normally, in my view, be of limited duration”:

“the plaintiff should be encouraged to proceed with proper methods of execution; perpetual injunctions restraining a defendant from dealing with his assets until the crack of doom are undesirable.”

158. As the plurality said in Cardile at [70], a court, in granting interlocutory relief, “should generally grant the minimum relief necessary to do justice between the parties” and “it should specify the circumstances in which the order will cease to operate”.

159. The Respondents submitted that, if the freezing orders against the Defendants were extended, they should be extended for a period of no more than 28 days. However, consistently with the approach adopted in relation to the freezing orders in respect of Struggletown, and having regard to the period for which the freezing orders against Total, Ronisch and Mr Jay Squillacioti have already been in place, I consider that those orders should remain either until the judgment debt is paid in full, or until a date three months from now, whichever is the earlier.

160. If the judgment is enforced within the three-month period, the operation of the orders will be spent. Further, if, during that period, the operation of the orders causes any prejudice to the Respondents, then they will have liberty to apply so as to set aside or vary those orders.

161. If, at the end of the three-month period, all or any part of the judgment remains unsatisfied, NBS will be able to make an application for the extension of the orders and any such application will fall to be determined on the basis of the circumstances then existing, including what steps have been taken to enforce the judgment, what steps continue to be taken (and how long they are expected to take) and what steps have not yet been taken (and why they have not been taken to date).

Conclusion and orders

162. As matters stand, the freezing orders remain in place “until further order”.

163. I will direct that NBS notify the Respondents and my Associate, within three business days, whether it proffers, in addition to the usual undertaking as to damages, an undertaking to commence a claim against Struggletown under section 37A of the Conveyancing Act in respect of the transfer of the Harrington Park Property as soon as reasonably practicable.

164. If NBS does not proffer this undertaking, I will make orders vacating the freezing orders in respect of Struggletown.

165. At the same time as providing this notification, NBS should provide to the Respondents and my Associate proposed short minutes to give effect to these reasons, including the following matters:

1. noting the usual undertaking as to damages and (if applicable) the undertaking to commence a claim against Struggletown under section 37A of the Conveyancing Act in respect of the transfer of the Harrington Park Property as soon as reasonably practicable;

2. extending the freezing orders in respect of Total, Ronisch and Mr Jay Squillacioti (and, if applicable, Struggletown) until the earlier of the payment or the judgment debt or 30 August 2024;

3. varying the freezing orders in respect of Mr Jay Squillacioti in the manner identified in paragraphs [94]-[95] above; and

4. (if applicable) varying the freezing orders in respect of Struggletown by deleting order 6(b) of those orders.

166. If there is any dispute about the form of the orders which are proposed by NBS in order to give effect to these reasons, I will list the proceedings for further argument.

167. I do not consider that there should be any costs order in respect of the costs of the hearing before me. Although NBS has been successful in establishing a basis for continuing the freezing orders against Total, Ronisch, Mr Jay Squillacioti and Struggletown, there was not an adequate basis (as was belatedly acknowledged in the course of the hearing) for continuing the freezing orders against Mrs Lisa Squillacioti; and in determining that there is a basis for continuing the remaining freezing orders, I have accepted the Respondents’ submissions that those orders should be limited in time, that the continuation of the freezing orders against Struggletown should be conditioned on NBS undertaking to commence a section 37A claim, and that the freezing orders against Mr Jay Squillacioti should be varied to exclude the property held by him as trustee of a self-managed superannuation fund.

168. For those reasons, I make the following orders:

1. Direct that the Plaintiff notify the Respondents and my Associate by 4pm on 4 June 2024 whether, in addition to the usual undertaking for damages, it proffers an undertaking to commence a claim against the Fifth Respondent under section 37A of the Conveyancing Act in respect of the transfer of the Harrington Park Property as soon as reasonably practicable.

1. Note that, in the event that the undertakings referred to in order (1) above are not proffered by the Plaintiff by the time specified in that order, orders will be made in chambers vacating the freezing orders against the Fifth Respondent which are contained in Annexure E to the orders made by the Court on 10 April 2024, as varied on 12 April 2024.

2. Direct that the Plaintiff provide to the Respondents and my Associate by 4pm on 4 June 2024, proposed short minutes of order to give effect to these reasons for judgment, including the matters specified in paragraph [165] of these reasons.

3. Direct that the Respondents notify the Plaintiff and my Associate, by 4pm on 6 June 2024, whether there is any dispute about the form of the orders to give effect to these reasons for judgment which are provided by the Plaintiff in accordance with order (3) above.

4. Order that, in the event that the Respondents notify a dispute about the form of the proposed orders to give effect to these reasons for judgment, the matter be listed on 12 June 2024 at 9.30am, or at such other time as may be arranged with my Associate.

5. There be no order as to the costs of the hearing on 23 May 2024.

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Decision last updated: 30 May 2024