Federal Court grants freezing orders in case alleging investment agreement breach

After the third respondent saw a short-term investment opportunity involving a debt facility related to an infrastructure project, dubbed the South East Melbourne Airport Project landholding, the applicant and the first respondent entered into an investment agreement, under which: 

• The applicant would invest up to US$10 million in three tranches, with a first tranche of US$2.5m, a second tranche of US$2.5m, and a final tranche of US$5m 
• The guaranteed return on the first and second tranches would be 55 percent, amounting to US$2.75m 
• The guaranteed return on the third tranche would be 30 percent, equating to US$1.5m 
• Upon the agreement’s maturity, the first respondent should repay the principal sum and the agreed guaranteed return 
• The investment agreement’s term would be 10 business banking days 

Pursuant to the investment agreement, the applicant invested the first and second tranches, amounting to around US$5m. However, it did not proceed with the third tranche investment. 

According to the appellant, as the investment had reached maturity, the repayment due date was 5 November 2025, during which the first respondent should repay US$7.75m in total, comprising US$5m as the principal sum invested and US$2.75m as the guaranteed return. 

The applicant filed an urgent ex parte application for freezing orders under r 7.32 of the Federal Court Rules 2011 (Cth) against the three respondents. The applicant alleged that: 

• There was a debt of US$7,207,423.05, as the first respondent had acknowledged owing a debt of US$7.75m and had repaid about US$552,563 
• Since early November 2025, the first and third respondents have repeatedly asserted the repayment of the outstanding debt via purported uneventuated bank transfers, as well as asserted unsuccessful transfers due to unidentified compliance issues 
• Since late November 2025, the first and third respondents have repeatedly assured that they would soon repay the outstanding debt in cash, including via third-party arrangements requiring the applicants to collect cash from unidentified individuals across Dubai and elsewhere 
• By 9 December 2025, the first and third respondents argued that the debt due was under US$7,207,423.05, upon ‘changing the goal posts’ concerning the debt composition 
• An outstanding debt remained, despite the assurances and the highly suspicious and irregular arrangements purportedly made for repayment 

The applicant claimed that: 

• It had a prima facie case against the first respondent for contractual breach and against each respondent for misleading and deceptive conduct contravening s 18 of the ACL 
• A prospective court judgment could go unsatisfied due to a risk or danger of the dissipation of the respondents’ assets 

Freezing orders issued

First, based on the untested and unchallenged evidence, the Federal Court of Australia saw a sufficient likelihood of success in the applicant’s causes of action to justify preserving the status quo. 

Second, the court found highly suspicious, irregular, and unusual circumstances indicative of dishonest or other underhanded conduct, resulting in a danger of the whole or partial lack of satisfaction of a prospective court judgment through the dissipation of assets held by the respondents. 

Third, regarding the balance of convenience and the dictates of justice, the court acknowledged the unsatisfactory delay involved. However, the court saw a greater interest in preventing the frustration of the court’s processes. 

The court explained that the interests of the administration of justice in preventing the thwarting of a prospective court outweighed the other considerations, given the unique and peculiar circumstances of this case.