Federal Court of Australia Waterproofing Technologies Pty Ltd v Perri (No 2) [2022] FCA 1293 File number: NSD 660 of 2021 Judgment of: ANDERSON J Date of judgment: 2 November 2022 Catchwords: PRACTICE AND PROCEDURE – application for variation of freezing order – where there is no material change of circumstance since the previous application which warrants the exercise of judicial discretion to vary the freezing orders – application dismissed Legislation: Civil Procedure Act 2005 (NSW) Cases cited: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Clout (Trustee) v Anscor Pty Ltd [2001] FCA 174 Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 1618 Hung v Aquamore Credit Equity Pty Ltd [2022] NSWCA 123 Hwang v Lawrie [2014] 1 Qd R 562 Ip v Chiang [2019] NSWSC 1549 Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304 National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900 Permewan Wright Consolidation Pty Ltd v Attorney-General (NSW) (1978) 35 NSWLR 365 PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2020) 145 ACSR 5; [2020] FCA 685 Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297 Waterproofing Technologies Pty Ltd v Perri [2022] FCA 714 Westpac Banking Corporation v Forum Finance Pty Ltd (Freezing Order Variation No 2) [2022] FCA 1206 Young v Jackman (1986) 7 NSWLR 97 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 67 Date of hearing: 26 October 2022 Counsel for the Applicants: Mr A McInerney SC with Mr J Simpkins Solicitor for the Applicants: McCabes Lawyers Counsel for the Respondents: Mr W T Houghton KC with Ms M Hardinge Solicitor for the Respondents: Roberts Gray Lawyers ORDERS NSD 660 of 2021 BETWEEN: WATERPROOFING TECHNOLOGIES PTY LTD (ACN 152 481 215) First Applicant POLYSEAL WATERPROOFING VICTORIA PTY LTD (ACN 086 669 650) Second Applicant AND: LUIGI PERRI First Respondent MILLENIUM HOMES PTY LTD (ACN 096 371 667) Second Respondent CCBM BARE PTY LTD (ACN 162 850 731) Third Respondent order made by: ANDERSON J DATE OF ORDER: 2 NOVEMBER 2022 THE COURT ORDERS THAT: 1. The application by the First, Second and Third Respondents, dated 14 October 2022, seeking to amend the freezing orders made 21 July 2021, as amended by the orders made on 21 September 2021, will be dismissed. 2. The First, Second and Third Respondents will pay the First and Second Applicants' costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ANDERSON J: introduction 1 The First, Second and Third Respondents by interlocutory application dated 14 October 2022, seek orders amending the freezing order made 21 July 2021 as amended by the orders made 21 September 2021. The amending order sought by the First, Second and Third Respondents is: Each order 9(b) of Annexure A, Annexure B and Annexure C of the Freezing Order dated 21 July 2021 directed at each of the First Respondent, Second Respondent and Third Respondent respectively and amended by the Orders dated 21 September 2021, is further amended to provide as follows: 9(b) paying or otherwise incurring a liability for costs reasonably incurred in this proceeding. 2 On 24 October 2022, the First, Second and Third Respondents submitted proposed orders to my chambers in which they sought an alternative order to that set out above to amend each order 9(b) of Annexure A, Annexure B and Annexure C of the Freezing Order dated 21 July 2021 directed at each of the First, Second and Third Respondents respectively and amended by the orders dated 21 September 2021 to provide as follows: 9(b) paying or otherwise incurring a liability for costs reasonably incurred in this proceeding up to the amount of $505,000. 3 The First, Second and Third Respondents were represented by PCL Lawyers until 23 June 2021. 4 On 13 July 2021, the Applicants' solicitors wrote to PCL Lawyers seeking an undertaking that the First, Second and Third Respondents not "remove from Australia or in any way dispose of, deal with, encumber or diminish the value of their assets in Australia up to the unencumbered value of AUD$1,000,000 pending the hearing and determination of this proceeding or until further order of the Court". 5 An application seeking inter alia freezing orders against each of the First, Second and Third Respondents was filed by the Applicants on 15 July 2021. 6 On 20 July 2021, PCL Lawyers wrote to the Applicants' solicitors indicating that the First, Second and Third Respondents would consent to the freezing orders sought, subject to a carve out for reasonable legal expenses of $150,000.00 for the First Respondent and $50,000 for the Second and Third Respondents. 7 On 21 July 2021, freezing orders were made by consent against each of the First, Second and Third Respondents (Freezing Order). Pursuant to Annexures A, B and C, the freezing orders were subject to a carve out for the First, Second and Third Respondents' reasonable legal expenses, permitting the First Respondent to pay $150,000.00 and the Second and Third Respondents to pay $50,000.00 for reasonable legal expenses respectively. 8 On 21 September 2021, the Freezing Orders were amended to permit the First, Second and Third Respondents to pay up to a total of $250,000.00 for reasonable legal expenses (Amended Freezing Order). 9 The trial in this matter was scheduled to commence on 6 June 2022, although that date was vacated on 21 April 2022. 10 On 6 June 2022, the Court heard a number of interlocutory applications by the Applicants and the Respondents in this proceeding, including an application by the First, Second and Third Respondents to discharge or vary the Amended Freezing Order. 11 On 6 June 2022, I declined to discharge or vary the Amended Freezing Order: Waterproofing Technologies Pty Ltd v Perri [2022] FCA 714 (Primary Judgment) at [54]-[62]. 12 In or around late June or Early July 2022, the First, Second, Third, Eighth and Eleventh Respondents engaged Roberts Gray Lawyers to act for them in these proceedings. the evidence 13 In support of their application, the First, Second and Third Respondents rely upon the affidavits of: (a) Bojana Balen dated 12 October 2022 (Balen Affidavit); (b) Joshua Flory dated 13 October 2022 (Flory Affidavit); (c) Luigi Perri dated 13 October 2022 (First Perri Affidavit); and (d) Luigi Perri dated 24 October 2022 (Second Perri Affidavit). 14 In opposition to the application the Applicant relies upon the affidavit of Andrew Joseph James Lacey sworn 25 October 2022 (Lacey Affidavit). 15 In their evidence, the First, Second and Third Respondents accept that they have acted in breach of the Freezing Order by incurring legal expenses in excess of $250,000. 16 The evidence reveals that, by 6 May 2022, in excess of $250,000 for the legal expenses of the First, Second and Third Respondents had been paid to their former solicitors, PCL Lawyers, in breach of the Freezing Order. 17 The First, Second and Third Respondents' evidence does not explain why the breach of the Freezing Order was not disclosed to the Court on or before 6 June 2022 when I heard, determined and dismissed, the previous interlocutory application made by the First, Second and Third Respondents, to discharge or vary the Freezing Order: Primary Judgment at [54]. 18 Mr Perri concedes that in June 2022 he appreciated that the total amount paid to PCL Lawyers for the legal expenses of the First, Second and Third Respondents exceeded $250,000. Mr Perri concedes that he did not appreciate the seriousness of breaching the Freezing Order nor did he give due consideration to it: First Perri Affidavit at [12]. 19 On 6 June 2022, orders were made which inter alia: (a) granted leave to the Applicants to file a Further Amended Originating Process and Amended Statement of Claim; (b) joined the Eighth to Twelfth Respondents to the proceeding; (c) granted leave for the Respondents to file and serve a Defence to the Amended Statement of Claim; (d) permitted and required actions including in respect of searches, discovery and privilege; and (e) required the Applicants to provide further and better particulars of their loss and damage and breach of duty claimed; and (f) refused to discharge or vary the Freezing Orders made by Thawley J on 21 July 2021 as varied by orders made on 21 September 2021: Primary Judgment at [54]. 20 In my view, a reasonable inference, based on the evidence served by the First, Second and Third Respondents, was that Mr Perri did appreciate, or ought reasonably to have appreciated, that the threshold of $250,000 for their reasonable legal expenses had been exceeded by 6 May 2022. 21 As at 13 October 2022, the first, second and third respondents had paid a total $374,736.52 to their former solicitors, PCL Lawyers, and present solicitors, Roberts Gray Lawyers: Flory Affidavit at [40]. 22 I accept the Applicant's submission that there is a reasonable basis to infer, from the evidence served by the First, Second and Third Respondents that: (a) on or by 6 May 2022, Mr Perri, and his corporate alter egos, Millenium Homes Pty Ltd (Millenium or Second Respondent) and CCBM Bare Pty Ltd (CCBM or Third Respondent), knew that they had acted in breach of the Freezing Order by paying legal expenses in excess of $250,000; (b) the matters in sub-paragraph (a) were not disclosed to the Court on or before the interlocutory application made to the Court on 6 June 2022 by the First, Second and Third Respondents, to discharge or vary the Freezing Order, the subject of the application heard, determined, and dismissed, by me on 6 June 2022: Primary Judgment at [54]; (c) there is no evidence from any principal of PCL Lawyers to explain their conduct in respect of (a)-(b) above; (d) on or by 14 July 2022 Mr Perri was advised by his current solicitors, Roberts Gray Lawyers, that Mr Perri and his wife, Ms Sue-Ann Perri (Eighth Respondent), had paid a total sum for legal expenses in excess of the sum of $250,000 permitted by the Freezing Order: Balen Affidavit at [25]; First Perri Affidavit at [11] and [16]; (e) on and after 14 July 2022 PCL Lawyers rendered further invoices for their legal services, and to the knowledge of Mr Perri, were paid for and on behalf of the First, Second and Third Respondents, an additional sum in excess of $48,000 in breach of the Freezing Order; (f) on and after 14 July 2022 Roberts Gray Lawyers rendered further invoices for their legal services, and to the knowledge of Mr Perri were paid for and on behalf of the First, Second and Third Respondents, an additional sum in excess of $31,000 in breach of the Freezing Order; (g) there is no adequate explanation from Mr Perri why, after 14 July 2022, he continued to act in breach of the Freezing Order; and (h) the explanation put forward by each of Mr Joshua Flory and Ms Bojana Balan, both formerly solicitors of PCL Lawyers and now solicitors of Roberts Gray Lawyers, is inadequate to explain the breach of the Freezing Order, and why it is that the breach of the Freezing Order was not brought to the attention of the applicants, or the Court, until 13 October 2022. 23 The evidence does not demonstrate a material change of circumstances since the application to discharge or vary the Freezing Order that was made on 6 June 2022, or the discovery of new material which could not reasonably have been put before the Court at that hearing, where the First, Second and Third Respondents, as well as their previous solicitors, PCL Lawyers, knew on or by 6 May 2022 of the breach of the Freezing Order: Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304 at [32]; Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46-47. 24 The first variation of the Freezing Order sought by the First, Second and Third Respondents is open-ended, too broad, not justified on the evidence, and should be refused. The alternate variation fixing a cap on legal expenses of $505,000 is not adequately explained or justified. 25 The evidence does not permit the Court to be satisfied that the estimate of future legal costs is well-founded, not excessive, and has a reasonable basis, to found the variation to the Freezing Order sought. 26 Mr Perri asserts that he does not believe he has any assets outside the scope of the Freezing Orders from which legal fees could be paid in the future. The basis for Mr Perri's asserted belief is not explained: First Perri Affidavit at [17]. There is no probative evidence that the First, Second and Third Respondents do not have other assets beyond those covered by the Freezing Order to which they can resort to meet the legal expenses in question. 27 On 6 June 2022, I joined Sue-Ann Perri as the Eighth Respondent to this proceeding. Sue-Ann Perri is the wife of the First Respondent, Mr Perri. Victorian owner-name searches conducted by the Applicant's solicitors in the name of "Sue-Ann Perri", disclose that Ms Perri owns or has an interest in three properties in Victoria. Ms Perri is joint proprietor with Mr Perri of a property situate at 77 Murray Road, Preston. The aide memoir provided by senior counsel appearing for the First, Second and Third Respondents, Mr Houghton KC, marked MFI-1 indicates that Ms Perri's half share in the net equity of that property is $446,000. Ms Perri is joint proprietor with her husband Mr Perri of the property situated at 113 Guest Street, Tootgarook. The aide memoir MFI-1 indicates that Ms Perri's net equity in that property is $225,000. 28 The title searches conducted by the Applicant's solicitors, evidences that Ms Perri is the sole proprietor of the property situate at 31 Union Street, Preston. That property is subject to a mortgage in favour of the National Australia Bank: Lacey Affidavit at [22]-[24] and Annexure AL-7. The evidence does not disclose the net equity of Ms Perri in the 31 Union Street, Preston property. 29 The Third Respondent, CCBM, is the sole proprietor of the property located at Unit 1, 238-244 Edwardes Street, Reservoir in Victoria (Reservoir Property). Mr Perri is a 50% shareholder in CCBM. Ms Perri is the remaining 50% shareholder in CCBM. The Second Perri Affidavit deposes to the Reservoir Property having a value of approximately $390,000 to $700,000. The aide memoir, MFI-1, records the property as having a value of $550,000, being the best estimated value by Mr Perri. There is a mortgage to Westpac Banking Corporation on which $98,000 is owed to the bank. The net equity in the property based on the calculation in MFI-1 is $452,000 of which Mr Perri and Ms Perri each have $226,000 equity. 30 Annexure AL-3 to the Lacey Affidavit is a schedule of invoices from PCL Lawyers and Roberts Gray Lawyers of the invoices annexed to the First Perri Affidavit and the affidavit of Flory Affidavit. That schedule at Annexure AL-3 sets out the invoices for the period 4 February 2022 to 2 September 2022 which were rendered to the Respondents for legal services provided in this proceeding by initially PCL Lawyers and subsequently Roberts Gray Lawyers. It is apparent that the First, Second and Third Respondents, including those respondents joined on 6 June 2022 to the proceeding (which includes the Eighth Respondent, Ms Perri), have the same solicitors acting on their behalf and the same counsel retained to act on their behalf. The invoices which have been rendered are for services provided to these Respondents and have been paid on behalf of these Respondents. 31 Mr Perri, in the Second Perri Affidavit, for the first time acknowledges the breach of the freezing order as well as its seriousness at [33] and [34]: 33 I now fully appreciate that the making of the payments which exceeded the maximum limit for legal expenses in the Orders constitutes a serious breach of those Orders. I acknowledge the seriousness of breaching Orders of the Court and I deeply regret that this has occurred. 34 On behalf of myself, Sue-Ann and the Second, Third and Eleventh Respondents, I proffer a full, unreserved and unqualified apology to the Court for making payments, which exceeded the monetary limit for legal expenses provided for in the orders in the Orders. 32 It is to be observed, that this apology by Mr Perri comes after the Applicant's written submission at [25] identified that Mr Perri had expressed no contrition whatsoever for being in contempt of the Freezing Order. should the applicants be heard on this application? 33 There is a preliminary question of whether the First, Second and Third Respondents, as applicants for interlocutory relief in breach of the Freezing Order, can be heard at all on this application: Young v Jackman (1986) 7 NSWLR 97; Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297 at [6]. 34 In Young v Jackman (1986) 7 NSWLR 97 at 102, Young J held that the rule that a party in contempt should not be heard by the Court was a fixed rule that did not allow the Court a discretion. 35 In Permewan Wright Consolidation Pty Ltd v Attorney-General (NSW) (1978) 35 NSWLR 365 at 368-369 Hutley JA said: The power to refuse to hear an applicant is an important weapon in the hands of the court. Such a refusal is a public reprimand to educate a litigant to treat its order seriously. … Moreover, it has a wider public importance. The necessity of complying faithfully and literally with the terms of an order made by a court whatever may be the views of the person bound by it and whatever may be the inconvenience or financial embarrassment which may follow from it must be continually emphasised. 36 In Hwang v Lawrie [2014] 1 Qd R 562 at [24], the Queensland Court Appeal (Holmes JA, with whom Fraser JA and Mullins J agreed) said that "[t]his court, […], should treat the question of whether a party in contempt will be heard as one of discretion, which in general terms, depends on where the interests of justice lie". 37 More recently, in see PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2020) 145 ACSR 5; [2020] FCA 685 at [55], Yates J observed: There remains a debate about whether there is a rule that a contemnor cannot be heard in respect of an application to the Court made on its behalf, or whether the Court has a discretion to refuse to hear such a party. The competing views are discussed in Hwang, Foster and Stokes, among other authorities. […] It is accepted that the "rule" is subject to exceptions, including an exception that the contemnor can appeal with a view to setting aside the order upon which the alleged contempt is founded: Hadkinson v Hadkinson [1952] P 285 (Hadkinson) at 288–289 per Romer LJ. The same consideration would inform the exercise of a discretion to refuse to hear a contemnor. In Hadkinson, Denning LJ (at 298) concluded that a party who has disobeyed a court order should not be barred from being heard unless the disobedience, so long as it continues, impedes the course of justice in the cause by making it more difficult for the court to ascertain the truth or to enforce the orders it may make. 38 Similarly, in Ip v Chiang [2019] NSWSC 1549 at [43] Parker J observed that "[t]here is a general "rule" that a party in contempt should, except in certain circumstances, not be heard by the Court. I have referred to this as a "rule", in inverted commas, because there is a question about whether it is a fixed rule, or allows the Court a discretion." His Honour went on to comprehensively review the authorities (at [60]-[114]) and, having regard to the case management principles in the Civil Procedure Act 2005 (NSW), concluded at [115] that "where a party is in default of an order of the court, whether to hear that party is ultimately a matter of discretion. It is open to the Court to decline to entertain an application by a party in default in order to secure compliance with earlier orders, but the Court is not limited to that approach". 39 At present, the debate as to whether it is a fixed rule, or whether the Court has a discretion to refuse to hear a contemnor has not been authoritatively determined. 40 In the present case, I propose to hear the First, Second and Third Respondents' application to vary the Freezing Order notwithstanding their admitted breach of the Freezing Order. In my view, the interests of justice lie in hearing the First, Second and Third Respondents' application. should the freezing order be amended? 41 I reject the First, Second and Third Respondents' application to vary the Freezing Order for the following reasons. 42 First, the first variation of the Freezing Order sought by the First, Second and Third Respondents is open-ended, too broad, not justified on the evidence and should be refused. The alternate variation of the Freezing Order fixing a cap on legal expenses of $505,000 is not adequately explained or justified. I am not satisfied on the evidence filed by the First, Second and Third Respondents that such legal expenses are reasonable. Mr Perri, in the Second Perri Affidavit at [29]-[31], deposes to legal fees and disbursements from the time at which he appointed Roberts Gray Lawyers as solicitors for the Respondents up to and including a mediation listed for 2 November 2022, to be estimated by Roberts Gray Lawyers at approximately $150,825. No proper particulars are provided as to how this amount is calculated or arrived at other than the most general estimates for Roberts Gray Lawyers's fees and counsel fees. No particulars are provided of the hours of work to be performed. The nature of the work to be performed is not identified and nor is there a proper description of the work to be undertaken by counsel as opposed to the legal work undertaken by Roberts Gray Lawyers in the lead up to the mediation on 2 November 2022. Hourly rates for Roberts Gray Lawyers solicitors and counsel were not provided. There is simply no proper explanation on the evidence which will enable me to form any view as to whether the amount of legal fees and disbursements of $150,825 is reasonable. Mr Perri deposes in his affidavit at [31] to legal expenses of $31,003.60 having been paid to Roberts Gray Lawyers to date. No sufficient particulars are provided as to what legal work was undertaken by Roberts Gray Lawyers. As a consequence, it is not possible for me to form a view as to whether that work was reasonably necessary to be undertaken and whether the legal expense is, in the circumstances, reasonable. 43 Mr Perri deposes in the Second Perri Affidavit at [32] to a further $119,821.40 in legal fees and disbursements being required for representation by Roberts Gray Lawyers and counsel up to and including the mediation on 2 November 2022. Again, no sufficient particulars are provided as to how that amount of legal fees and disbursements is calculated and arrived at. No hourly rates are provided for solicitors. No hourly or daily rates are provided for counsel. I am simply not in a position to ascertain whether the estimated future legal expenses and disbursements are reasonable. 44 Second, there is no evidence that the legal costs paid to date have been reasonably incurred for the reasons stated above. 45 The only evidence of the legal costs incurred to date is the cover pages of invoices issued by PCL Lawyers and Roberts Gray Lawyers. This, in the circumstances, is wholly inadequate for the reasons which I have identified above. 46 On 29 July 2022 Roberts Gray Lawyers, on behalf of the first to third respondents, sought an amendment to the Freezing Order in the form sought in the present Interlocutory Application: Letter from Roberts Gray Lawyers to McCabes dated 29 July 2022 (Annexure JF-1 to the Flory Affidavit). The correspondence did not reveal that the First, Second and Third Respondents were already in breach of the Freezing Order. On 4 August 2022, McCabes responded seeking, inter alia: (a) particulars of the legal costs incurred to date in the proceedings; (b) copies of invoices relating to those legal costs; (c) proof that those costs had been paid. (Letter from McCabes to Roberts Gray Lawyers dated 4 August 2022 (Annexure JF-1 to the Flory Affidavit)). 47 The First, Second and Third Respondents did not respond to that request. 48 The evidence does not permit the Court to be satisfied that the estimate of future legal costs is well-founded, not excessive, and has a reasonable basis, to found the variation to the Freezing Order sought: Hung v Aquamore Credit Equity Pty Ltd [2022] NSWCA 123 at [26]. 49 Third, there is no satisfactory evidence from Mr Perri to explain why he acted in breach of the Freezing Order. His explanation in First Perri Affidavit at [12] was "… Notwithstanding, I did have some knowledge or appreciation that the total amount invoiced by and paid to PCL Lawyers in June exceeded $250,000. I thought that PCL Lawyers would provide me with advice about this but they did not and in the circumstances I did not appreciate the seriousness of the issue or give due consideration to it." 50 Fourth, there is no proper explanation from the principals of PCL Lawyers, or Roberts Gray Lawyers, as to how PCL Lawyers, and then Roberts Gray Lawyers, permitted the First to Third respondents to exceed the $250,000 threshold for legal expenses. 51 The affidavit of Joshua Flory made 13 October 2022 is most unsatisfactory in the circumstances of this application. 52 Mr Flory at [28] of his affidavit deposes that in about mid-July 2022, it became apparent to him that the $250,000 limit imposed by the Amended Freezing Order was still in effect and that the Respondents or some of them had likely exceeded the limit through various payments to PCL Lawyers. Mr Flory deposes in his affidavit at [29]: "I did not, at the time, give due consideration to the implications of the order and the amended order". Mr Flory then deposes in his affidavit at [30] and [31] that he was attending to a number of matters on behalf of the Respondents that he believed were urgent and essential to the protection of the Respondents' interests. Mr Flory in his affidavit at [32] deposes that on 29 July 2022, Roberts Gray Lawyers wrote to the Applicant's solicitors, seeking to amend the Amended Freezing Order by consent. Mr Flory did not, in that letter, advise the Applicant's solicitors that he was aware that the Respondents or some of them had likely exceeded the limit in the Amended Freezing Order. Mr Flory in his affidavit at [33] deposes to writing on 4 August 2022 to Roberts Gray Lawyers again seeking a response to amend the Amended Freezing Order by consent. Again, Mr Flory did not inform the Applicant's solicitors of his belief that the Respondents or some of them had exceeded the limit for legal costs in the Amended Freezing Order. On 4 August 2022, the Applicant's solicitors wrote to Roberts Gray Lawyers stating that they would consider a request to amend the amending order on the provision of material including: (a) particulars of the legal costs incurred to date; (b) copies of invoices relating to the legal costs; (c) proof that those invoices had been paid; and (d) the estimated future legal costs to progress the matter to mediation and comply with all procedural orders made on 6 June 2022. 53 Roberts Gray Lawyers did not respond to the Applicant's solicitors' letter requesting relevant information on 4 August 2022. It appears from Mr Flory's affidavit that from 4 August 2022 up until about 6 September 2022, Mr Flory obtained invoices from Mr Perri and calculated that the Respondents had paid a total sum of $374,736.52 in fees and disbursements in this proceeding. Mr Flory then at [45]-[47] of his affidavit acknowledges that he was aware that invoices had been issued and paid in excess of the Freezing Order and acknowledged and accepted that his failure to deal with the breach of the amended orders was a serious error on his part. 54 Ms Bojan Balen, a solicitor previously employed by PCL Lawyers and subsequently by the Respondents' current lawyers, Roberts Gray Lawyers, affirmed an affidavit on 12 October 2022. This affidavit is also wholly unsatisfactory. In that affidavit, Ms Balen deposed at [21] that in or about late June to mid-July 2022, she had formed the view that the First, Second and Third Respondents had likely exceeded the $250,000 limit imposed by the amended order. Ms Balen then deposed at [25] of her affidavit: On 14 July 2022 I informed the First Respondent to the effect that it is important that he is not in breach of the freezing orders and that we will write to McCabes separately to seek their consent to change the carve out for legal fees. I had understood from those discussions that the issues would be considered further before payments were made by the Respondents to RGL [Roberts Gray Lawyers]. I now understand that those further discussions did not eventuate. 55 Ms Bolan does not identify who at Roberts Gray Lawyers was to have the further discussions to ensure that the issue of the breach of the Freezing Order was addressed before further payments were made by the Respondents to Roberts Gray Lawyers. Ms Bolan did not apparently advise the principals' solicitors at Roberts Gray Lawyers of the breach of the Freezing Order. Ms Bolan in her affidavit at [29] and [30] acknowledges that it was regrettable that she was aware that invoices were being issued to the Respondents but did not give sufficient consideration whether payments were being made in satisfaction of those invoices. Ms Bolan acknowledges the serious errors and failures in the manner in which she dealt with the breach of the amending orders. 56 The explanations of Mr Flory and Ms Balen in their affidavits are wholly inadequate and do not satisfactorily address, in my view, the manner in which the First, Second and Third Respondents were, with the apparent acquiescence of their solicitors PCL Lawyers and subsequently Roberts Gray Lawyers, able to breach the Amended Freezing Order. 57 Mr Flory and Ms Balen's affidavits do not provide any apparent basis upon which they can give evidence as to a usual billing practice (cf. Flory Affidavit at [13]; Balen Affidavit at [9])), or evidence that PCL Lawyers did not implement a system or policy to ensure compliance with the Freezing Order (cf. Flory Affidavit at [18]; Balen Affidavit at [10]). 58 Fifth, the Freezing Order is imposed only on part of the assets of the First, Second and Third Respondents, and they have not led any probative evidence to show that they do not have other assets beyond those covered by the Freezing Order to which they can resort to meet the legal expenses in question. Evidence from Mr Perri as to his belief (First Perri Affidavit at [17]), as I have said above, is entirely inadequate. The First, Second and Third Respondents have not met the evidentiary and persuasive onus cast upon them to justify modification of the Freezing Order: Clout (Trustee) v Anscor Pty Ltd [2001] FCA 174 at [20]. 59 Sixth, I am not satisfied on the evidence that if I refuse to vary the Freezing Order that the First, Second and Third Respondents will not have access to funds to pay for the legal services provided to all of the Respondents joined to the proceeding. There is no evidence that Ms Perri will not make available the net equity which she has in the properties identified above and her net equity in CCBM. In circumstances where the Respondents have the same solicitors and counsel acting on their joint behalf, I am not prepared to infer that Ms Perri will not make her equity in the abovementioned properties available to meet the Respondents' legal costs. 60 Seventh, a freezing order is an interlocutory order made to prevent the frustration of a court's process. 61 In order to engage the Court's discretion to vary a freezing order, the moving party must establish that there has been a material change of circumstance since the previous application, or that new material has been discovered that was not reasonably available at the time the orders were made: National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900 at [104] and [119]; Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 (Brimaud) at 46; Short v Crawley (No 42) [2009] NSWSC 1110 at [75]. This principle was recently cited by Thawley J in Westpac Banking Corporation v Forum Finance Pty Ltd (Freezing Order Variation No 2) [2022] FCA 1206 at [15]. 62 The variation to the Freezing Order must also accord with the interests of justice, therefore the question must be asked: "whether it is in the interests of justice for the freezing order to be varied". In Brimaud, McLelland J observed at 46: The overriding principle governing the approach the court to an interlocutory application is that the court should do whatever the interests of justice require in the particular circumstances of the case. Giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised … In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceeding. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstance since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application … 63 The above passages were cited with approval by Jagot J in Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 1618, which dealt with an application to vary a freezing order to prevent use of Australian assets to pay legal expenses, where a substantial judgment debt for income tax and penalties were unpaid by the respondent. In that case, Jagot J granted a variation on the basis that it was in the interests of justice to do so, but her Honour also stated that she was satisfied that there was a material change in circumstances justifying the variation of the freezing order. 64 I am not satisfied on the evidence that there has been a material change of circumstances since the First, Second and Third Respondents' application on 6 June 2022 to discharge or vary the existing Freezing Order. The new material which has been discovered since the application to discharge or vary the Freezing Order on 6 June 2022 demonstrates that as at that time, the First, Second and Third Respondents were in breach of the Freezing Order yet failed to bring this to the attention of the Court or the Applicant's solicitors. In my view, it is significant that the First, Second and Third Respondents and their solicitors did not, at the hearing of the application on 6 June 2022, bring to the attention of the Court and the Applicant's solicitors that they were then in breach of the $250,000 cap on legal fees and expenses. 65 Eighth, at the hearing of the application, I asked senior counsel for the First, Second and Third Respondents whether the solicitors for the Respondents, Roberts Gray Lawyers, would restore the funds which they had received in the order of $31,000 in breach of the Freezing Order. Mr Houghton KC informed me that he was not able to get those instructions: HIS HONOUR: Is your instructing solicitor offering to restore the fund? MR HOUGHTON: No. The situation is this, your Honour. The previous solicitors were overpaid by a fairly significant amount, and I have no instructions in relation to the previous solicitors who left the record, I think, in about July. HIS HONOUR: Yes. MR HOUGHTON: The present solicitors – your Honour, I can't get those instructions, but the amount involved is some $31,000 that have been paid to my present instructing solicitors. HIS HONOUR: Yes. MR HOUGHTON: So in the scheme of things, although it's a very regrettable error that has been committed, in the scheme of things it's not a large amount in terms of the total costs that my clients have been paying since the proceeding was initiated against him in July last year. Now, there's a few points that arise out of my client being in contempt of your Honour's order, but perhaps we can deal – I don't know whether it's convenient for my learned friends. They've served some notices to produce late on Thursday night last week. Now, strictly speaking, we're entitled to five clear days to respond to those notices. We've had two clear days, but my learned friend and I have just had a brief conversation. He intends to call upon the 45 notices, and if my learned friend wants to do that now, we will produce what we have been able to gather that is responsive to those notice snow. This is also a matter which is relevant to the exercise of my discretion. 66 The First, Second and Third Respondents, in my view, have not established that it is in the interests of justice to vary the Freezing Order. 67 For these reasons, on 25 October 2022, I ordered that the First, Second and Third Respondents' interlocutory application dated 14 October 2022, be dismissed with costs. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anderson. Associate: Dated: 2 November 2022