The Federal Court finds “reasonably arguable” claims Hall Chadwick private lender and receiver behind Kimberley Pearl collapse engaged in unconscionable conduct. Stephanie Tran reports.
In a judgment delivered on Wednesday, Justice Feutrill granted an injunction restraining receiver Hall Chadwick and entities associated with lender Blackbird Private Equity from selling the Kimberley Pearl vessel until the proceedings are determined.
The court also ordered that a creditors’ meeting be postponed and referred the parties to mediation.
The decision represents a significant win for Daniel Brown, the sole director of Kimberley Pearl Tours Pty Ltd, who alleges he was subjected to a predatory lending scheme that ultimately placed his business into receivership.
Justice Feutrill emphasised that the court was not determining the merits of Brown’s allegations. Rather, the court found they were sufficiently arguable to justify preserving the status quo until they can be tested at trial.
Brown’s claim arises from a loan of about $470,000 taken out in 2024 to complete the purchase of the Kimberley Pearl, a charter vessel operating Indigenous cultural cruises through the Kimberley.
Brown alleges the loan was repeatedly refinanced, accumulating substantial fees and interest before growing to more than $1.2m.
Receivers were subsequently appointed over the company, and security was enforced against properties owned by Brown’s stepfather and his mother-in-law, who had provided guarantees and mortgages to support the lending.
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Questions over the receiver’s independence
One of the central issues in the proceedings concerns the independence of receiver Richard Albarran, the managing partner of Hall Chadwick.
Brown alleges Albarran held an undisclosed financial interest connected to the Blackbird lending structure that appointed him, creating a conflict between his duties as receiver and his financial interests.
Justice Feutrill found there was evidence that the Albarran Family Trust No 2 held a security interest over Blackbird First Mortgage Corporation Pty Ltd and that the trust could be inferred to be associated with Albarran.
Although the interest was of an “unknown magnitude”, the judge said it “could have an effect on the independence of Mr Albarran as a receiver appointed by Blackbird Private Equity to the property of the Brown parties.”
The judge also found there was sufficient evidence to support Brown’s allegation that Blackbird failed to disclose both that Albarran was likely to be appointed receiver in the event of a default and that he held “an indirect financial interest in Blackbird Private Equity that could affect his ability to discharge his duties as receiver independently.”
Justice Feutrill further held it was reasonably arguable that the lenders appointed the receivers
in bad faith, for improper purposes,
and in circumstances that were not reasonably necessary to protect their legitimate interests, but instead to place undue pressure on Brown and his family.
Sale of the Kimberley Pearl
Justice Feutrill found there was a reasonably arguable basis for restraining the proposed sale of the company’s principal asset.
The judgment states it is reasonably arguable that selling the vessel while the dispute remains unresolved would itself amount to unconscionable conduct under the ASIC Act, empowering the court to grant an injunction preventing the sale.
The judge also concluded the sale would likely cause irreparable harm because the Kimberley Pearl is central to the business.
“Without the vessel,” Justice Feutrill wrote, “the Company’s current business will be non-existent”, and there would be little prospect of reviving either the business or its reputation. In those circumstances,
damages would not provide an adequate remedy.
The Kimberley Pearl is the centrepiece of Brown’s tourism operation, which takes visitors through the Kimberley to ancient Aboriginal rock art sites and culturally significant locations in partnership with Traditional Owners.
Lending practices under scrutiny
The judgment also identifies several aspects of the lending arrangements may have been unconscionable and should proceed to trial.
Among them was Brown’s contention that default interest imposed under successive loan facilities was punitive rather than protective of the lender’s legitimate interests.
Justice Feutrill held “it is reasonably arguable that the terms of the BPE Loans 2 Facility and Blackbird Private Equity Facility requiring payment of the Higher Interest Rate are penalties, unfair terms and not necessary to protect the legitimate interests of the Blackbird Lenders”.
The court also found it was reasonably arguable that Blackbird took advantage of Brown’s financial distress to secure more favourable loan terms than were reasonably necessary.
Justice Feutrill concluded Brown had established an arguable case that the lending arrangements breached the statutory prohibition on unconscionable conduct in the ASIC Act and could ultimately be set aside if those allegations are proven at trial.
“The applicants have established that it is reasonably arguable that the Blackbird Lenders engaged in conduct in trade or commerce in connection with the supply of financial services to the Brown parties that was, in all the circumstances, unconscionable in contravention of s 12CB(1) of the ASIC Act,” the judge wrote.
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Stephanie is a journalist with a background in both law and journalism. She has worked at The Guardian and as a paralegal, where she assisted Crikey’s defence team in the high-profile defamation case brought by Lachlan Murdoch. Her reporting has been recognised nationally, earning her the 2021 Democracy’s Watchdogs Award for Student Investigative Reporting and a nomination for the 2021 Walkley Student Journalist of the Year Award.