Re Colorado Products Pty Ltd (in prov liq)

The plaintiffs sought an order preventing the defendants from expending funds on living and legal expenses and ordinary course business expenses, in the context of an application for a freezing order under section 1324 of the Corporations Act 2001 (Cth) and rule 25.11 of the Uniform Civil Procedure Rules 2005 (NSW). The plaintiffs were concerned about the risk of dissipation of the defendants' assets. The defendants sought to vary their undertakings to the Court, arguing that the purposes to which their assets were being applied were legitimate and that there were no other assets available to meet legitimate expenditures. The defendants also sought orders for security for costs, and the plaintiffs made a corresponding application for an order that the defendants give security for their undertaking as to damages.

The Court considered whether it had the jurisdiction to make orders for the payment of monies into Court and whether the circumstances justified depriving the defendants of their property. The Court also considered the defendants' application for leave to vary their undertakings and whether the purposes to which their assets were being applied were legitimate. The Court held that the removal of the exception for legal expenses was retrospective and that the purposes to which the defendants' assets were being applied were legitimate. The Court declined to deprive the defendants of their property, finding that there were no other assets available to meet legitimate expenditures. The Court also declined to make an order for security for costs, finding that the delay in the application tended against the order in respect of past costs.

The Court considered the defendants' application for review of the Registrar's decision on categories of discovery and held that the categories were relevant and not unduly broad or onerous. The Court ordered that the plaintiffs give security for their undertaking as to damages, but declined to order payment out of funds paid into Court. The Court declined to make an order for security for costs, finding that the delay in the application tended against the order in respect of past costs. The Court did not make any orders for the payment of monies into Court or for the variation of the defendants' undertakings.