FEDERAL COURT OF AUSTRALIA Insolvency Guardian Melbourne Pty Ltd v Carlei [2016] FCA 72 File number: QUD 99 of 2016 Judge: EDELMAN J Date of judgment: 9 February 2016 Catchwords: PRACTICE AND PROCEDURE – ex parte application for freezing orders r 7.32 Federal Court Rules 2011 (Cth) – reasons provided for respondents' benefit – criteria that must be satisfied for the court to grant a freezing order – applicant must establish 'a good arguable case' on a prospective cause of action – freezing order granted Legislation: Federal Court Rules 2011 (Cth) rr 7.32, 7.32(1), 7.32(2), 7.33, 7.35 Corporations Act 2011 (Cth) ss 180, 182, 183 Cases cited: Barnes v Addy (1874) LR 9 Ch App Bayley and Associates Pty Ltd v DBR Australia Pty Ltd [2012] FCA 746 BGC Contracting Pty Ltd v Western Australian Construction Hire Pty Ltd [2010] WASC 25 Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 Eaves v Hickson (1861) 30 Beav 136, 141; (1861) 54 ER 840 Frigo v Culhaci (unreported; Court of Appeal of NSW,17 July 1998) National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271 Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398 Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36; (2015) 89 ALJR 975 Date of hearing: 9 February 2016 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 32 Counsel for the Applicant: Mr B W J Kidston Solicitor for the Applicant: Rostron Carlyle Lawyers Counsel for the First and Second Respondents: The First and Second Respondents did not appear ORDERS QUD 99 of 2016 BETWEEN: INSOLVENCY GUARDIAN MELBOURNE PTY LTD ACN 167 876 851 Applicant AND: PHILIP ANTHONY CARLEI First Respondent ZUPPA SOUP KITCHEN PTY LTD ACN 606 607 407 Second Respondent JUDGE: EDELMAN J DATE OF ORDER: 9 FEBRUARY 2016 PENAL NOTICE TO: The first and second respondents IF YOU: (A) REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR (B) DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED. TO: The first and second respondents This is a 'freezing order' made against you on 9 February 2016 by Justice Edelman at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order. THE COURT ORDERS THAT: INTRODUCTION 1. (a) The application for this order is made returnable immediately. (b) The time for service of the application, supporting affidavits and originating process is abridged and service is to be effected by midnight on 11 February 2016. 2. Subject to the next paragraph, this order has effect up to and including 17 February 2016 ('the Return Date'). On the Return Date, not before 9.30 am, there will be a further hearing in respect of this order before Justice Edelman. 3. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified. 4. In this order: (a) 'applicant', if there is more than one applicant, includes all the applicants; (b) 'you', where there is more than one of you, includes all of you and includes you if you are a corporation; (c) 'third party' means a person other than you and the applicant; (d) 'unencumbered value' means value free of mortgages, charges, liens or other encumbrances. 5. (a) If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions. (b) If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way. FREEZING OF ASSETS 6. (a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia ('Australian assets') up to the unencumbered value of AUD$400,000 ('the Relevant Amount'). (b) If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount. 7. For the purposes of this order, (1) your assets include: (a) all your assets, whether or not they are in your name and whether they are solely or co-owned; (b) any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and (c) the following assets in particular: (i) any money in ANZ bank account number: 2971 04707, BSB: 013 395; and (ii) any money in ANZ bank account number: 2197 50578, BSB: 013 395. (2) the value of your assets is the value of the interest you have individually in your assets. PROVISION OF INFORMATION 8. Subject to paragraph 9, you must: (a) at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets; (b) within five working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information. 9. (a) This paragraph (9) applies if you are not a corporation and you wish to object to complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that you: (i) have committed an offence against or arising under an Australian law or a law of a foreign country; or (ii) are liable to a civil penalty. (b) This paragraph (9) also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively: (i) have committed an offence against or arising under an Australian law or a law of a foreign country; or (ii) are liable to a civil penalty. (c) You must: (i) disclose so much of the information required to be disclosed to which no objection is taken; and (ii) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and (iii) file and serve on each other party a separate affidavit setting out the basis of the objection. EXCEPTIONS TO THIS ORDER 10. This order does not prohibit you from: (a) paying your ordinary living expenses; (b) paying your reasonable legal expenses; (c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and (d) in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation. 11. You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly. 12. (a) This order will cease to have effect if you: (i) pay the sum of $400,000 into Court; or (ii) pay that sum into a joint bank account in the name of your lawyer and the lawyer for the applicant as agreed in writing between them; or (iii) provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court. (b) Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency. (c) If this order ceases to have effect pursuant (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact. COSTS 13. The costs of this application are reserved to the Court hearing the application on the Return Date. PERSONS OTHER THAN THE APPLICANT AND RESPONDENT 14. Set off by banks This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order. 15. Bank withdrawals by the respondent No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order. LIBERTY TO APPLY 16. Liberty to apply on one (1) day's notice. SCHEDULE A UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT (1) The applicant and its director Mr. Jarrod Sierocki undertake to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order. (2) As soon as practicable, the applicant will file and serve upon the respondent copies of: (a) this order; (b) the application for this order for hearing on the return date; (c) the following material in so far as it was relied on by the applicant at the hearing when the order was made: (i) affidavits (or draft affidavits); (ii) exhibits capable of being copied; (iii) any written submission; and (iv) any other document that was provided to the Court. (d) a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court; (e) the originating process, or, if none was filed, any draft originating process produced to the Court; and (f) the reasons for decision on the application. (3) As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it. (4) The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent's assets. (5) If this order ceases to have effect the applicant will promptly take all reasonable steps to inform in writing anyone to who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect. (6) The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding. (7) The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent's assets. (8) The applicant and its director Mr. Jarrod Sierocki will: (a) on or before 12 February 2016 cause an irrevocable undertaking to pay in the sum of $5,000 to be issued by a bank with a place of business within Australia, in respect of any order the court may make pursuant to undertaking (1) above; and (b) immediately upon issue of the irrevocable undertaking, cause a copy of it to be served on the respondent. SCHEDULE B AFFIDAVITS RELIED ON Name of deponent Date affidavit made (1) Jarrod Sierocki 8 February 2016 NAME AND ADDRESS OF APPLICANT'S LAWYERS The applicant's lawyers are: Rostron Carlyle Lawyers, Level 15, 270 Adelaide Street, Brisbane QLD 4000, Attention: Mr. Billy Fitzgerald, Tel: 07 3009 8444, Fax: 07 3009 8499 E: b.fitzgerald@rclaw.com.au Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT EDELMAN J: 1 This urgent application was brought last night for an ex parte freezing order. It involves an application by Insolvency Guardian Melbourne Pty Ltd (Insolvency Guardian (Melbourne)) pursuant to r 7.32 of the Federal Court Rules 2011 (Cth). It is for freezing orders including over the bank accounts of the first and second respondents. These are my oral reasons which summarise the basis for the application and explain, for the benefit of the respondents to whom I will direct that these reasons be provided, why I have made the freezing order, which is returnable for hearing in the Brisbane Registry of the Federal Court of Australia on 17 February 2016 at not before 9.30 am. 2 The reasons which follow are based only upon the affidavit evidence of the applicant. That evidence has not yet been tested. It has not been contradicted. The respondents have not had the opportunity to make any submissions about this evidence. For that reason, any assessment in these reasons of whether the "applicant has a good arguable case on a prospective cause of action" is necessarily a provisional and highly tentative assessment. 3 In Frigo v Culhaci (unreported; 17 July 1998), in a passage quoted with approval in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, the New South Wales Court of Appeal said at 10-11 that a freezing order is "is a drastic remedy which should not be granted lightly". It is an order which: imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to 'provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency'. ... 4 Nevertheless, I am satisfied that the freezing order should be granted as sought by Insolvency Guardian (Melbourne) with liberty to apply on one day's notice. The facts asserted on this application 5 The facts giving rise to this application are described in the affidavit of Mr Jarrod Sierocki which is sworn on behalf of Insolvency Guardian. Mr Sierocki is the sole director of Insolvency Guardian. 6 The applicant company (Insolvency Guardian (Melbourne) was established in 2014 in Melbourne, closely associated with Insolvency Guardian. The two companies worked closely together to assist clients who were insolvent, nearing insolvency, or in financial distress. Mr Sierocki describes the two companies as "offices" in his affidavit. 7 The first respondent, Mr Philip Carlei, was a contractor for Insolvency Guardian (Melbourne). From around February 2014, Mr Carlei was the sole person engaged in the Melbourne office. His position entailed following up leads generated by Insolvency Guardian, either himself or through Mr Sierocki's referral network. Mr Carlei had a great deal of autonomy and worked largely unsupervised. However, all of the administrative work and advertising was performed by employees of Insolvency Guardian, and paid for at its Brisbane office. 8 On 21 January 2015, Mr Carlei was appointed as a director of Insolvency Guardian (Melbourne). His remuneration was the equivalent of 50 per cent of the fees charged to the clients he introduced. The fees would be charged and received by Insolvency Guardian, who would then pay 50 per cent of that amount to Mr Carlei. 9 The Melbourne office did not reap the same financial rewards as the Brisbane office. On 9 December 2015, Mr Sierocki decided that Insolvency Guardian (Melbourne) would cease trading. 10 Around mid-December 2015, Mr Carlei informed Mr Sierocki that he intended to resign as a director of Insolvency Guardian (Melbourne). Mr Carlei lodged a Form 370 with the Australian Securities and Investments Commission giving notice of his resignation as director on 6 January 2016. The form said that Mr Carlei had resigned as a director on 30 June 2015. However, Mr Sierocki says that neither he nor anyone else at Insolvency Guardian received this resignation until mid-December. 11 Following Mr Carlei's resignation, Mr Sierocki arranged for all emails sent to Mr Carlei to be diverted to Mr Sierocki's email address. In late January, Mr Sierocki received three emails that revealed that Mr Carlei may have continued to conduct business in the name of Insolvency Guardian (Melbourne) despite having resigned as a director. Mr Sierocki became aware that Mr Carlei had received money as payment for that work into bank accounts that were not controlled by Insolvency Guardian or Insolvency Guardian (Melbourne). 12 Those emails, as well as two more emails sent to Mr Carlei after his oral intention to resign in December, suggest that payments of $22,000 and $385 were made into accounts not owned by Insolvency Guardian. The sum of $385 was paid into an account operated by the second defendant, Zuppa Soup Kitchen Pty Ltd. Mr Carlei is the sole director and company secretary of Zuppa Soup Kitchen. 13 Mr Sierocki has not yet fully inspected the emails that were received by Mr Carlei following his resignation. But Mr Sierocki says that he suspects that Mr Carlei may have received up to $400,000 in profits that should have been paid to Insolvency Guardian (Melbourne). This suspicion is due to (i) the poor performance of Insolvency Guardian (Melbourne), (ii) the number of matters referred to Insolvency Guardian (Melbourne), (iii) the rates at which Insolvency Guardian converted such referrals into clients, and (iv) the fees charged by Insolvency Guardian. 14 Counsel for Insolvency Guardian (Melbourne) properly acknowledged that a possible argument that Mr Carlei might make is that he was acting on his own account in working for, and receiving funds from, the clients described in the affidavit evidence. As counsel said, there are a number of serious questions that would be raised by such an explanation. One of those questions is why Mr Carlei was receiving emails from those clients at his Insolvency Guardian email account. Another is why Mr Carlei was engaged in work for, or opportunities related to, matters which appear to be within the business opportunities of Insolvency Guardian (Melbourne) while he was (as counsel asserted) a director of Insolvency Guardian (Melbourne). Rule 7.32 of the Federal Court Rules 2011 (Cth) 15 Rule 7.32(1) of the Federal Court Rules 2011 (Cth) empowers the Court to make an ex parte freezing order "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." By r 7.32(2) the freezing order may restrain a respondent from dealing with or removing any assets located in or outside Australia. The purpose of the provision is not to enable an applicant to obtain security for its judgment in advance of execution. Rather, it is founded on the jurisdiction of the court to prevent abuses of its processes. A freezing order may be made before a cause of action has accrued, and before judgment. The High Court of Australia upheld the validity of the Western Australian Supreme Court equivalent of r 7.32 in PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015] HCA 36; (2015) 89 ALJR 975. 16 The criteria that must be satisfied for the court to grant a freezing order are set out in r 7.35 of the Federal Court Rules 2011 (Cth). In substance, the criteria relevant to this application are that: (1) the applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Federal Court of Australia; (2) there is a sufficient prospect that the judgment will be registered in or enforced by the Federal Court of Australia; and (3) the Court is satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment 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. Is it appropriate to grant a freezing order? 17 Each of the three criteria discussed above are considered separately below before I turn to the exercise of overall discretion and the manner in which the freezing order should be fashioned to protect, as far as possible, the interests of the respondents who are not present before the court and have not had the opportunity to make submissions or provide evidence. 1) Good arguable case on a prospective cause of action 18 The applicant must establish a good arguable case on a prospective cause of action. The phrase 'a good arguable case' has a long history. Its provenance may have been in the judgment of Mustill J, as his Lordship was then, in Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398, 404. The phrase has been treated as the equivalent of the general law requirement explained by Gaudron, McHugh, Gummow and Callinan JJ in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 at [68] that the applicant must establish that it has a reasonably arguable case on legal and factual matters (see also BGC Contracting Pty Ltd v Western Australian Construction Hire Pty Ltd [2010] WASC 25 [5] (Le Miere J); Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [144] (Beech J)). Further, it is not sufficient merely to assert a claim in an affidavit or pleading in order to establish a good arguable case. 19 In oral submissions, counsel for Insolvency Guardian (Melbourne) explained that his client undertook to bring proceedings in the Federal Court of Australia (Queensland Registry) within 14 days. Consistently with his obligations to put all issues before the Court, counsel indicated that Mr Carlei was based in Melbourne and may seek to have the proceedings transferred to Melbourne. That is a matter that can be addressed if, and when, it arises. It suffices to note that with videolink technology, directions and any interlocutory matters can be dealt with via videolink in the immediate future. 20 The prospective causes of action upon which Insolvency Australia relies were described in broad terms by counsel. He characterised the prospective actions against Mr Carlei as actions for breach of director's duties and corresponding common law and equitable duties. This appears to be a reference to causes of action which include: (1) a breach of s 180 of the Corporations Act 2011 (Cth) and an associated claim in equity insofar as Mr Carlei breached any duty of care and diligence as a director of the applicant; (2) a breach of s 182 of the Corporations Act 2011 (Cth) and an associated claim in equity insofar as Mr Carlei improperly used his position to gain an advantage for himself or someone else and cause detriment to the company; or (3) a breach of s 183 of the Corporations Act 2011 (Cth) and an associated claim in equity insofar as Mr Carlei improperly used information obtained from his position to gain an advantage for himself or someone else and cause detriment to the company. 21 As for the prospective cause of action against Zuppa Soup Kitchen Pty Ltd, counsel initially described this action as based on its involvement in what was described as a "scheme" by Mr Carlei. Although reference was made by counsel to the receipt of funds by Zuppa Soup Kitchen, his characterisation appeared to be a reference to a cause of action based on the second limb of Barnes v Addy (1874) LR 9 Ch App 244, 251-252 or Eaves v Hickson (1861) 30 Beav 136, 141; (1861) 54 ER 840, 842. These actions are not limited by the amount received but can extend to the sums lost by an applicant. 22 Based upon the facts that I have described, I consider that there is a good arguable case, within the meaning of that phrase that I have described, against each respondent for up to $400,000. 2) Sufficient prospect that the judgment will be registered in or enforced by the Federal Court of Australia 23 There is sufficient prospect that a judgment obtained as a consequence of a good arguable case described above would have sufficient prospects of being enforced by the Federal Court of Australia. 3) Danger that a prospective judgment will be wholly or partly unsatisfied 24 The next question is whether "there is a danger that a prospective judgment will be wholly or partly unsatisfied" because (relevantly, in the circumstances of this case) the respondents might "dispose of, deal with or diminish in value" their assets. This is a matter that must be established by evidence and not merely by assertion. There must be a risk which is "palpable and demonstrated by evidence" rather than residing "only as a suspicion in the mind of an overly anxious plaintiff": Bayley and Associates Pty Ltd v DBR Australia Pty Ltd [2012] FCA 746 at [34] (Foster J). However, in National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271, Mason CJ, Brennan and Deane JJ explained that a freezing order could be obtained even where there was not shown to be a positive intention by the party against whom the order was sought to frustrate any judgment. 25 In the circumstances I have described, particularly the serious concern raised in the affidavit of Mr Sierocki concerning what counsel described as the "scheme" to divert funds from Insolvency Guardian or Insolvency Guardian (Melbourne), I am satisfied that there is a danger that Mr Carlei or Zuppa Soup Kitchen would deal with his and its assets in a fashion which would leave Insolvency Guardian (Melbourne) unable to have a judgment satisfied. Conclusion 26 I am satisfied that the freezing order should be made. 27 The applicant has made this application ex parte. As I have explained, and as the New South Wales Court of Appeal said in Frigo v Culhaci (unreported; Court of Appeal of NSW, 17 July 1998, 10-11), in a passage quoted with approval in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, a freezing order "is a drastic remedy which should not be granted lightly". 28 The serious nature of the freezing order and the ex parte application have the effect that the freezing order must be fashioned to ensure that the order is not abused. As Gaudron, McHugh, Gummow and Callinan JJ said in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 at [50], the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made: in a practical sense it operates as a very tight "negative pledge" species of security over property, to which the contempt sanction is attached. It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct. 29 One way in which the order can, and should, be narrowed to protect the interests of the respondents is for them to have liberty to apply with one day's notice and for the matter to be returnable within a week. 30 The form of the freezing order sought is also appropriate. It is in the order set out in the current Federal Court of Australia Practice Direction. There are appropriate carve-outs from the order in respect of living expenses, legal fees and ordinary existing obligations. I am also satisfied that the undertakings given by Insolvency Guardian (Melbourne) and Mr Sierocki are of substance. Mr Sierocki deposes to having substantial net assets and will provide an irrevocable bank undertaking in the amount of $5,000 on or before 12 February 2016. 31 Finally, any concern that the freezing order might affect any trading activities of Zuppa Soup Kitchen is mitigated by the following matters: (1) Zuppa Soup Kitchen is a $12 company; (2) shareholders of Zuppa Soup Kitchen are companies associated with Mr Carlei; (3) Mr Carlei is the sole director of, and only shareholder of the companies that hold shares in, Zuppa Soup Kitchen; (4) Zuppa Soup Kitchen was established 7 months ago while Mr Carlei was working full time for Insolvency Guardian (Melbourne). 32 For the above reasons, I order that a freezing order is to be made returnable on Wednesday 17 February 2016 at 9.30 am. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman. Associate: Dated: 9 February 2016