Income Asset Management Group Limited v Henry

This proceeding began when Income Asset Management Group Limited, known as IAM, sued Mr Kimberley Henry and sought urgent interim relief. IAM is described in the judgment as an Australian fixed income house with more than $2 billion of funds under administration and over 2,000 wholesale client accounts. On 19 September 2025, IAM obtained an ex parte freezing order against Mr Henry. The Court said the order was made under, among other things, r 7.32 of the Federal Court Rules 2011 (Cth) for the purpose of preventing the frustration or inhibition of the Court’s process if a later judgment were obtained.

The commercial allegation behind the application was serious. IAM said Mr Henry had been employed as Operations Manager - Bonds and was an authorised signatory for IAM’s sub-custodian, Apex Group. According to IAM, that role allowed him to operate and approve movement of funds across relevant accounts, including an Apex-controlled settlement or trust account held with JP Morgan. IAM alleged that, without authority, Mr Henry instructed Apex to transfer funds from that account to account or accounts belonging to him.

IAM’s pleaded final relief went beyond the freezing order. It sought declarations under s 1317E of the Corporations Act 2001 (Cth) for contraventions of s 182, declarations for breach of fiduciary duties and terms of employment, and orders for compensation under s 1317H as well as damages, account of profits and equitable compensation. The judgment also records that IAM had initially sought a declaration concerning s 181 of the Corporations Act, but removed that prayer on 4 December 2025 when it filed an amended originating application.

That background matters because it shows the freezing order sat inside a broader civil claim. But the decision reported at [2026] FCA 326 was not about final liability. It was about whether the existing freezing order should be discharged after Mr Henry challenged it.

IAM relied on evidence from its Chief Operating Officer and General Counsel, Mr Cameron Coleman. He said that in September 2025 he became aware of potential irregular transfers from the Apex JPM account, which held funds that were revenue generated by IAM. An internal investigation by other IAM personnel examined transaction records and money movements. That investigation identified a transaction on 21 March 2025 that could not be traced to IAM’s settlement or trust accounts. A search of Mr Henry’s email inbox then identified a manual payment instruction form sent by Mr Henry to Apex directing a transfer of $12,300 to a National Australia Bank account. IAM said the payee name function verified that account as being in the name of Kimberley Henry.

IAM further alleged that 64 transfers were made to that NAB account from an Apex account between 2 July 2024 and 12 May 2025, totalling about $1.5 million. It later accepted that the amount said to have been misappropriated should be reduced to $1,375,509.60. IAM’s case was that Mr Henry falsified payment instructions by using Apex instruction forms that listed different IAM client account details but always the same NAB account number, after which Apex would submit the instruction and JP Morgan would deposit the funds into the NAB account.

The Court’s reasons show that the freezing-order dispute turned on concrete records, not just suspicion. IAM relied on affidavit evidence about the internal investigation, the role Mr Henry held, the payment instruction process and the destination account. At the interlocutory hearing, IAM also tendered NAB bank statements produced on subpoena. The Court said those statements indicated the NAB account was in Mr Henry’s name and recorded many transfers from variants of Apex Fund Services into that account between 1 July 2024 and 30 June 2025, in amounts ranging from thousands to tens of thousands of dollars. The total shown by those transfers was more than $1.3 million.

The Court treated that material as central. It said no legitimate explanation had been provided for the transfers into or out of the NAB account. On the material before it, that absence of explanation was important because the respondent’s defence largely consisted of bare denials. The Court noted that Mr Henry had been charged with offences in Queensland in connection with the alleged payments and said it was unsurprising that he would not elaborate. Even so, the practical result was that the evidence pointing to suspicious transfers was not displaced by any innocent explanation in the interlocutory record.

The Court also referred to evidence suggesting that money entering the NAB account was then withdrawn or moved. Parts of the reasons dealing with those matters are redacted, but the visible reasons state that there was no legitimate explanation for the transfers either in or out of the account and that there was a strong case for protecting funds that appeared to be sourced from IAM from further dissipation. Later in the reasons, the Court said it appeared that a lot of the money had been received in cash withdrawals and deposits into accounts in Mr Henry’s name.

For business readers, this is a reminder that urgent applications usually rise or fall on records that can be shown to the Court quickly. Here, the Court was not being asked to infer wrongdoing merely from messy books or unresolved reconciliations. It had evidence of specific transfers, a destination account said to belong to the respondent, and a payment instruction pathway that allegedly enabled the transfers to occur.

The legal question was not whether IAM had already proved theft, breach of duty or contravention of the Corporations Act. The question was whether the freezing order should be discharged. The Court had to assess the seven grounds Mr Henry advanced and decide whether, taken separately or together, they undermined the basis for continuing the order.

Those grounds were: first, that there was no real risk of dissipation; second, that the order was not proportionate to the identified risk; third, that the order operated oppressively; fourth, that IAM’s undertaking as to damages was inadequate; fifth, that there had been material non-disclosure at the ex parte hearing; sixth, that the balance of convenience no longer favoured continuation; and seventh, that there had been a material change in circumstances since the order was made.

The Court’s reasons make clear what matters were central to that assessment. A freezing order exists to protect the Court’s process by reducing the risk that a future judgment will be frustrated. So the Court focused on whether there remained a real risk of dissipation of assets and whether the prima facie case for protective relief remained strong. It also considered whether the practical burdens of the order had become so serious that discharge was justified, whether any alleged non-disclosures were truly material, and whether later developments had changed the factual basis for the order.

The judgment is also useful because it shows the difference between a challenge to the amount frozen and a challenge to the existence of the order itself. IAM accepted that the amount originally frozen should be reduced. That concession did not mean the order should disappear. It meant the Court had to decide whether variation, rather than discharge, was the proper response.

The Court refused to discharge the freezing order. It held that the grounds raised by Mr Henry did not establish a basis for discharge. The order remained in place because the Court was comfortably satisfied that there remained a risk of dissipation of assets and that the evidence, including the NAB bank statements, supported continuation of the order. The Court said Mr Henry had not explained the transfers into the NAB account from Apex Fund Services or where that money had gone. It also said that, while Mr Henry may have been reluctant to give evidence on those topics because of the criminal charges, that reluctance did not dispel or undermine the evidence of high risk.

On proportionality, the Court accepted that the order may have caused practical problems, including difficulties in funding legal representation. But it noted that the order contained carve-outs permitting payment of legal expenses and other expenses, and that the evidence suggested those exceptions could be used. The process was inconvenient, but possible. The Court said that if the permitted amount for legal expenses was insufficient, the appropriate course was to seek an uplift, as Mr Henry had done before, rather than discharge the order.

On oppressiveness, the Court distinguished between complete inability to access funds and administrative inconvenience. Mr Henry’s evidence was that the Commonwealth Bank had restricted digital and online banking and required a multi-stage in-branch process and repeated manual intervention to access funds for permitted purposes. The Court accepted that this was inconvenient, but said it was not the same as a refusal to release funds at all. Given the seriousness of the allegations and the high risk of further dissipation, the inconvenience did not justify discharge.

On the undertaking as to damages, Mr Henry relied on an ASX announcement by IAM about a $2 million unsecured debt capital raising at 15% interest. He argued this cast doubt on the substance of IAM’s undertaking. The Court rejected that argument, noting that the announcement said the facility was to bolster liquidity and that the board considered IAM had sufficient cash resources to continue operating efficiently even without those funds.

On alleged non-disclosure, the Court was not persuaded there had been any material non-disclosure. Mr Henry pointed to reconciliation deficiencies, unresolved negative balances, incomplete monthly reconciliations and unallocated items in banking systems, and also raised an allegation about senior executives using client funds for their own investment accounts. The Court said that even if those matters were established, they were peripheral at best. They might suggest that misappropriations should ideally have been detected earlier, but they did not materially undermine the prima facie evidence of misappropriation. The Court stressed that IAM’s case was not simply an inference drawn from unreconciled records. It was based on identified payments from an Apex account to Mr Henry’s personal bank account, with no apparent reason for IAM funds to be paid into that personal account, followed by withdrawals or transfers.

On balance of convenience and material change in circumstances, the Court again rejected discharge. It accepted that some prejudice was inevitable, but held that the prejudice identified did not outweigh the protective purpose of the order. The Court also said that most of the matters said to amount to changed circumstances were peripheral and that, if anything, the basis for the order had been strengthened by the bank statement evidence.

The one point on which Mr Henry succeeded was the amount. IAM accepted that the amount said to have been misappropriated had reduced. The Court therefore varied paragraph 5(a) of the earlier freezing orders so that the relevant amount became $1,375,509.60 rather than $1,528,621.71. The application to discharge the order was otherwise dismissed, and Mr Henry was ordered to pay IAM’s costs associated with that part of the interlocutory application.

For business owners, this case is most useful as a practical guide to urgent asset-preservation strategy. The Court was persuaded because IAM could point to specific transfers, identify the destination account, connect that account to the respondent and show there was no apparent legitimate purpose for the payments. That is a much stronger position than simply saying the books do not reconcile or that something feels wrong. If your business suspects internal diversion of funds, the first priority is to preserve the evidence that can tell a clear story quickly.

The case also shows that internal control weaknesses do not automatically defeat an urgent application. Mr Henry argued that IAM had longstanding reconciliation deficiencies and broader control problems. The Court treated those matters as peripheral because the core case did not depend on accounting inference alone. It depended on evidence of actual transfers into a personal account. That does not mean weak controls are unimportant. They can still create commercial loss, regulatory issues and evidentiary problems. But they may not stop a business from obtaining urgent relief if there is direct evidence of suspicious payments.

There is also a defensive lesson. If a business owner, employee or officer is subject to a freezing order, the Court may be willing to adjust the order if the amount is too high or if practical carve-outs need refinement. But this case suggests that complaints about inconvenience, legal expense pressure or the applicant’s internal governance problems may not be enough to remove the order altogether where the evidence still points to a real risk of dissipation. The Court repeatedly returned to the same practical point: there was no legitimate explanation on the material before it for the transfers into the NAB account and what happened to the money afterwards.

Another useful point is procedural. Mr Henry had twice consented to continuation of the freezing order before later seeking discharge. The judgment does not treat that as determinative, but it is part of the procedural setting. Businesses involved in urgent interlocutory disputes should keep in mind that interim arrangements can become entrenched if not challenged carefully and with evidence.

For many businesses, the most practical lesson is that fraud risk often sits inside ordinary operations. A person with enough trust, system access or signatory authority may be able to move money in ways that are not picked up quickly if reconciliations are delayed or if too much control sits with one role. This case involved allegations about payment instructions and account movements through a custodian structure, but the underlying lesson is broader. Businesses should know exactly how money leaves the organisation, who can direct it and what records are created at each step.

It is also worth noting that urgent court relief is not a substitute for internal controls. A freezing order can help preserve assets after suspicious conduct is discovered, but it does not undo the operational damage, investigation cost and management distraction that usually follow. Basic controls such as dual approval, destination account verification, prompt reconciliation and exception reporting remain the first line of defence.

The judgment is a Federal Court interlocutory decision delivered by Moore J on 25 March 2026. It concerns an application to discharge a freezing order first made ex parte on 19 September 2025. The order had later been continued by consent on 23 September 2025 and 3 October 2025. The respondent’s interlocutory application seeking discharge was filed on 2 January 2026 and heard on 26 February 2026.

The status point to keep in mind is that this was not the final trial. The Court did not finally determine whether Mr Henry had contravened the Corporations Act, breached fiduciary duties or breached his employment obligations. It decided only that the freezing order should remain, subject to a reduction in the amount covered by it.