The short answer.
If a person who owes you money is the beneficiary of a discretionary trust and also controls that trust (typically as appointor, with the power to install themselves as trustee and direct distributions), a court can freeze the trust’s assets, not just restrain the debtor’s powers. The Full Court of the Federal Court confirmed this in Filippini v Keystone Asset Management Limited (Receivers and Managers appointed) (in liquidation) [2026] FCAFC 71, delivered on 22 May 2026. The appeal was dismissed. Two real properties and four exotic vehicles (three Lamborghinis and a Maserati) held across three discretionary trusts remain frozen.
For general counsel, insolvency practitioners, litigants, victims of fraud, and litigation funders, the decision is the cleanest authority we now have on a question that has lingered uncomfortably since Cardile v LED Builders and Carey (No 6): when a debtor hides behind a discretionary trust, what can the court actually reach at the interlocutory stage? The Full Court’s answer is broader than many practitioners had assumed.
The facts in brief
Keystone was the responsible entity of the Shield Master Fund and trustee of the Australian Diversified Property Fund. Between April 2022 and September 2024, around $305 million flowed through those funds to Chiodo Corporation. Keystone alleges that at least $158 million was then misappropriated through payments to City Built Pty Ltd and to Mr Robert Filippini personally, on invoices for works that were never tendered, contracted or performed.
In September 2025 the primary judge froze a long list of assets up to that $158 million quantum. Three sets of trust-held assets were contested on appeal:
- the Chapel Street Property, held by Mrs Filippini as trustee of the A&M Trust;
- the Lygon Street Property, held by Mrs Filippini as trustee of the R&D Trust; and
- four cars (three Lamborghinis and one Maserati) held by FPC Vic Pty Ltd as trustee of the FPC Vic Trust.
Each trust is discretionary. Mr Filippini is a beneficiary and appointor of each. Mrs Filippini is trustee of the first two; Mr Filippini is the sole shareholder of FPC, the corporate trustee of the third. Critically, none of the contested assets was acquired with the impugned funds. They predate the alleged misappropriations entirely (see [22]).
What Mr Filippini conceded he could do
At the appeal hearing, the appellants accepted that, as appointor of the A&M Trust, Mr Filippini could (see [24]):
- remove the existing trustee and appoint himself;
- distribute all trust income to himself;
- accelerate the vesting date; and
- direct the entire capital of the trust to himself.
Because the FPC Vic Trust deed is in identical terms, the same powers applied there. The R&D Trust deed differs in one minor respect (no express clause permitting the trustee to act in its own interest), but the substance of the control position is unchanged.
On top of those formal powers, the primary judge found, on unchallenged evidence, that Mr Filippini was already operating trust accounts without consulting Mrs Filippini, that family assets had been intermingled, and that he had quite possibly executed BAS lodgements as if he were trustee of a trust whose trustee he was not (see [26]).
The legal fight: what does "assets of" mean in r 7.35(5)?
Rule 7.35(5) of the Federal Court Rules permits a freezing order against a third party where the third party holds, uses, or has a power of disposition over “assets (including claims and expectancies) of the judgment debtor”, or is in a position of control or influence concerning such assets. A separate limb at r 7.35(5)(b) covers cases where a court process may oblige the third party to disgorge assets.
The appellants ran two arguments:
- The “assets of” point. The reference to “assets of” the debtor means assets beneficially owned by the debtor. A discretionary beneficiary, by orthodox trust law, has no beneficial interest in trust property. Therefore the rule cannot reach the properties or the cars.
- The “enforcement pathway” point. Even if the rule reaches further, the applicant must show a good arguable case that, post-judgment, it could compulsorily access the specific assets being frozen. Keystone had not articulated such a pathway, and so the orders should fall away on discretion.
Both arguments failed.
What the Full Court held
Expectancies are assets, and r 7.35(5) is not confined to ownership
Beach, Button and Younan JJ traced the language of “assets (including claims and expectancies)” back to the High Court’s decision in Jackson v Sterling Industries and the plurality in Cardile v LED Builders. A discretionary beneficiary’s expectancy is, by definition, not a chose in action or an item of property that can be “owned” and frozen as such. But that is precisely why the rule is drafted as it is. The expectancy is the asset; the rule’s reach is exercised by restraining the third party whose dealings would denude that expectancy of value (see [43]–[44]).
Put plainly: you do not freeze the expectancy. You freeze what gives the expectancy its value, which means freezing the underlying trust assets in the hands of the trustee. The Court was unequivocal that this does not collapse the orthodox distinction between control and ownership. Mr Filippini does not own the trust assets. He has “something approaching a general power and the ownership of trust property”, to borrow French J’s phrase from Carey (No 6), and the word “approaching” carries the load (see [83]).
No rigid enforcement pathway is required at the interlocutory stage
The Court dispatched the enforcement-pathway argument on a structural reading of the rule. Sub-rule (a) and sub-rule (b) are disjunctive. To require an applicant under (a) to articulate the (b) pathway in every case would collapse one limb into the other (see [96]).
That does not mean an applicant can wave at trust assets and have them frozen. The Court must still be satisfied there is utility in the order, which generally means a good arguable case that the expectancy will, in some way, be realisable. In a case like this one, that case is made out by reference to what a trustee in bankruptcy might do with the beneficiary’s powers of appointment and right to due administration (itself recognised as a chose in action, or at least an equitable one: see [80]). The pathway need not be tried and tested. It needs to be reasonably arguable.
Restraining the appointor alone was not enough
The appellants offered the Vasiliades / Ekelmans solution: restrain Mr Filippini from exercising his appointor power, and let the trustees continue. The Court rejected the offer on these facts. In Vasiliades, Mr Vasiliades was the sole director and shareholder of the corporate trustee, so restraining him restrained the trustee. Here, Mrs Filippini was a trustee in her own right, FPC had an independent director, and no undertaking was offered by either to limit their own dealings. A restraint against Mr Filippini alone would not have protected the assets (see [101]).
Why this matters beyond Filippini
First, the asset-protection planning that drives so much Australian wealth structuring (discretionary trusts holding the home, the investments, the cars) is far less robust against fraud and recovery proceedings than the brochures suggest. Control plus beneficiary status changes the analysis at the interlocutory stage. It does not need to amount to ownership.
Secondly, the Full Court has put a brake on the line of cases reading Carey (No 6) down. Fordyce, Pleash and Swishette all said, correctly, that control does not by itself convert a discretionary interest into property for every statutory purpose. The Full Court agrees, but says (rightly, in our view) that Carey (No 6) never said otherwise. The narrow reading of Vasiliades that some defence counsel have been running is now considerably harder to maintain.
Thirdly, the standard of proof at the freezing-order stage remains “good arguable case”, not balance of probabilities. The Court was careful to note that what an applicant must show varies with urgency and complexity, and that complex potential pathways through bankruptcy will not be held against an applicant moving quickly. That is a meaningful signal for litigation funders and insolvency practitioners weighing the cost-benefit of an interlocutory application.
Practical takeaways
For litigants and litigation funders
Move on trust assets earlier. Where the target is the beneficiary of a discretionary trust they also control, the evidentiary case for a freezing order is now firmer than the older case law suggested. Document control: appointor status, dealings with trust funds without trustee consultation, intermingling, and execution of trust documents are all probative.
For defendants and trust structures
An undertaking from the trustee, properly framed, may still avoid an asset-level freezing order. But the trustee has to give it. If the trustee is a related party who will not bind themselves, expect the Court to make orders directly against the trust assets. Independent corporate trustees and genuinely separated control will start to matter, again.
For general counsel and boards
If your organisation is the victim of fraud or misappropriation by a counterparty whose assets are held through family trusts, do not be talked out of the freezing application on the basis that “trust assets are out of reach”. They are not, if control is demonstrable.
Quick Answers
Acting on this decision
If a counterparty, debtor or fraud target of yours holds assets inside discretionary trust structures, the practical question Filippini raises is whether interlocutory relief should be moved for now, before any restructuring quietly tidies up the evidentiary record of control. Freezing orders are most effective when the position is captured early.
Ironbridge Legal acts for plaintiffs, liquidators, receivers and litigation funders on complex commercial fraud, asset tracing and insolvency-driven recovery, including freezing orders and Mareva applications across Australian and cross-border structures. If you would like a confidential view on whether the facts of your matter would support an application under r 7.35(5), we will give you one.
About this alert
Ironbridge Legal is a Sydney-headquartered boutique advising on complex commercial litigation, and corporate insolvency and restructuring. The firm has been recognised by Legal 500, Doyle’s Guide, LawyersWeekly and Australasian Lawyer as leader and experts in these fields.
Case: Filippini v Keystone Asset Management Limited (Receivers and Managers appointed) (in liquidation) [2026] FCAFC 71 (Beach, Button and Younan JJ, 22 May 2026). On appeal from Keystone Asset Management Limited (Receivers and Managers appointed) (in liquidation) v Filippini (No 2) [2025] FCA 1138.
Further Information
For further information about freezing orders, discretionary trust assets, asset tracing and recovery, and Mareva applications in Australia, please contact the author of this article:
