Trafford-Jones v Liu, in the matter of the bankrupt estate of Liu

The case of Trafford-Jones v Liu, in the matter of the bankrupt estate of Liu, involved an application by the Trustees for freezing and ancillary orders against various third parties. The application was made pursuant to section 23 of the Federal Court of Australia Act 1976 (Cth) and rule 7.32 of the Federal Court Rules 2011 (Cth). The primary legal issue before the Court was whether such orders should be made to prevent the frustration or inhibition of the Court’s process by seeking to meet the danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied. The application was supported by extensive evidence regarding the bankrupts' dealings and the incomplete disclosure of their property transactions, which raised concerns about the potential dissipation of assets.

The Court considered the Trustees’ application as a case where additional evidence was brought to supplement the existing materials. Despite opposition from the respondents, the Court found it appropriate to allow the Trustees to reopen their case to tender further affidavits and exhibits. The Court concluded that the additional evidence was relevant and would not unduly delay or burden the proceedings. The Court also rejected the respondents’ argument that a vested or accrued cause of action was necessary before a freezing order could be made against a third party. Instead, the Court emphasized that the primary objective of such orders is to prevent the satisfaction of a Court judgment from being frustrated or inhibited.

In making its decision, the Court reviewed the complex evidence presented, which included affidavits, examination transcripts, and documentary materials. The evidence suggested that the bankrupts had been evasive and inconsistent in their disclosures, raising suspicions of asset concealment. The Court found that the Trustees' ongoing investigations and the limited information provided by the bankrupts justified the making of the freezing and ancillary orders. The Court ultimately granted the application and issued orders against the respondents, emphasizing that these orders were intended to safeguard the creditors' interests pending further investigation into the bankrupts' affairs.