The Appointor’s Chair.

Filippini v Keystone Asset Management Limited [2026] FCAFC 71 is an Australian case about interim relief, not a final judgment on anyone’s liability. Its lesson travels well beyond Australia, and it matches a principle this series returns to often. A discretionary trust protects assets because the beneficiary cannot take them. If the beneficiary holds the power to take them, the protection is gone, whatever the trust deed says about who holds legal title.

Keystone Asset Management Limited is now in receivership and liquidation. Keystone alleges that, between April 2022 and September 2024, roughly A$305 million from funds it managed was paid to Chiodo Corporation. It further alleges that at least A$158 million was then misappropriated through payments to City Built Pty Ltd, a construction company of which Mr Filippini was the sole director, and to Mr Filippini personally. According to Keystone, those payments were made on invoices for works that were never tendered, contracted, or performed. Id.; “Full Federal Court upholds freeze over trust assets linked to alleged $158M Keystone misappropriation,” Insolvency Insider (Australia), 2026; G. Slattery, “Welcome news for liquidators and creditors as the Full Federal Court takes an expansive view of freezing orders power over discretionary trust property,” Squire Patton Boggs, 2026. These are allegations. They have not been proved at trial, and nothing in this note suggests otherwise.

In September 2025 the primary judge granted freezing orders up to the amount of the claim. Keystone Asset Management Limited (Receivers and Managers appointed) (in liquidation) v Filippini (No 2) [2025] FCA 1138. Some of the frozen assets were Mr Filippini’s own. The ones that matter here were not. They were:

• a Chapel Street property held by the A&M Trust, with Mrs Filippini as trustee;
• a Lygon Street property held by the R&D Trust, also with Mrs Filippini as trustee; and
• three Lamborghinis and a Maserati held by the FPC Vic Trust, whose trustee is FPC Vic Pty Ltd, a company of which Mr Filippini is the sole shareholder. Insolvency Insider, supra; “Freezing Orders & Discretionary Trusts: Filippini v Keystone,” Ironbridge Legal, 2026.

In each trust Mr Filippini was a discretionary beneficiary and also the appointor. The appointor is the Australian equivalent of a protector with the power to remove and replace the trustee. On appeal it was accepted that his powers let him remove the existing trustee and appoint himself, distribute all of the trust’s income to himself, bring forward the vesting date, and direct the whole of the capital to himself. [2026] FCAFC 71, as summarised in Ironbridge Legal, supra (identifying the concession at [24]).

Mr Filippini’s argument relied on orthodox trust law. A discretionary beneficiary has no proprietary interest in any particular trust asset. He has only a hope that the trustee will exercise its discretion in his favour, together with a right to have the trust properly administered. On that view, a court can restrain him from exercising his powers as appointor, but it cannot freeze the assets themselves, because they are not his.

The Full Court (Beach, Button and Younan JJ) dismissed the appeal. [2026] FCAFC 71. Its reasoning, as reported by the practitioners who have analysed the judgment, has three parts.

First, freezing orders act on the person, not on the property. A freezing order is not security for the creditor and does not create a proprietary claim. It is an in personam order that exists to stop a party from frustrating the court’s process by making himself judgment-proof. Insolvency Insider, supra (reporting the Court’s statement that freezing orders operate in personam and are designed to prevent frustration of the Court’s process); Slattery, supra. The question is therefore not whether the assets belong to the debtor in the eyes of trust law. It is whether, in reality, the debtor can make them unavailable to meet a judgment.

Second, the rules reach assets a debtor controls through others. Rule 7.35 of the Federal Court Rules 2011 (Cth) allows freezing orders against third parties, including where a third party holds assets that the prospective judgment debtor can, in practical terms, direct or dispose of. The High Court laid the groundwork for this in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, which accepted that a freezing order can bind a non-party where the debtor has power, directly or indirectly, to dispose of or deal with assets it holds, or where the non-party may be required to contribute to satisfying a judgment. Before that, in Jackson v Sterling Industries Ltd (1987) 162 CLR 612, the High Court had described the court’s power to protect its own process in broad terms. Federal Court Rules 2011 (Cth) r 7.35; Federal Court of Australia Act 1976 (Cth) s 23; the Full Court’s reliance on Cardile and Jackson is as reported in Ironbridge Legal, supra.

Third, a beneficiary who is also the appointor is not an ordinary beneficiary. The Court drew a clear line. A person who is only one of a class of discretionary beneficiaries is an unlikely target for an asset-level freeze. A person who can dismiss the trustee, install himself, and direct all of the capital to himself is in a different position. His “hope” of benefit is a choice he can make at any time. The Court also held that the creditor did not need to show a finished route to enforcement against the trust assets. A reasonably arguable route was enough at the interim stage. Slattery, supra (distinguishing mere discretionary beneficiaries from beneficiaries with extensive powers to appoint trustees and direct distributions, and describing the “reasonably arguable” enforcement-pathway standard).

The result is significant. Restraining only Mr Filippini’s appointor powers would have left the trustees free to deal with the property. Freezing the assets themselves takes them out of circulation until the claim is decided, which may take years.

The reasoning in Filippini is Australian, but the principle is common to the common-law world.

English courts have long allowed freezing relief against non-parties holding assets that are, in substance, the defendant’s. That is the Chabra jurisdiction, named for TSB Private Bank International SA v Chabra [1992] 1 WLR 231. In JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch) (Birss J, 11 October 2017), the English High Court went further, in a final judgment. Sergei Pugachev had settled five New Zealand trusts and made himself both a discretionary beneficiary and the protector. Birss J held that, properly construed, the protector’s powers were personal powers Pugachev could use in his own interest, so the trust assets were beneficially his. In the alternative, the judge held that the trusts were shams. In Australian family law, Kennon v Spry (2008) 238 CLR 366 reached a comparable result from a different direction: where a husband retained the practical ability to take trust assets for himself, the High Court treated those assets as property of the marriage.

American courts use their own terms, including alter ego, nominee, dominion, and self-settled, but they ask the same question. Readers of this series have already seen a co-trustee beneficiary’s dominion cause a spendthrift trust to fail in Samatas, and a settlor’s retained control undo an offshore trust in Brown v. Higashi. Filippini adds a point those cases did not reach: the consequences arrive early. The freeze took effect at the interim stage, before any trial and before any finding of wrongdoing, on the basis of who held the appointor’s chair.

Mr Filippini’s structure was not unusual. Australian family trusts very often make the founder both appointor and beneficiary, with a spouse or a family company as trustee. Similar arrangements appear around the world under other names, with the settlor as protector, the settlor as director of the corporate trustee, or the settlor holding a power to add himself to the class of beneficiaries. They are popular because they feel safe. The family keeps control and pays no professional trustee.

Filippini shows why that sense of safety is misplaced. Four design points follow.

1. The power to remove and replace the trustee is the key power. A creditor and a court will look first at who holds it. If a beneficiary can install himself, or someone he controls, as trustee, then the trustee’s discretion is only as independent as his willingness to leave it alone. In a Lighthouse structure, the power to change trustees sits with an independent protector or committee. That power is fiduciary, is limited to appointing independent successors, and never allows the settlor or any beneficiary to appoint himself.

2. A spouse or a family company is not an independent trustee. Mrs Filippini held legal title to both properties, and a company Mr Filippini owned held title to the cars. None of that affected the analysis, because the person with the appointor’s power could replace either trustee in a moment. Independent administration requires a trustee that no beneficiary can dismiss at will and that makes its own decisions about distributions.

3. Discretion has to be real. A discretionary beneficiary is protected because he cannot compel a distribution. Mr Filippini’s powers let him compel one indirectly by taking control of the office that decides. If the settlor can turn the trustee’s discretion into a certainty, then for practical purposes there is no discretion.

4. Timing and structure work together. Nothing reported about Filippini tells us when the three trusts were established or funded, and we do not speculate. The general rule is well settled: a trust funded years before any claim, for legitimate reasons, carries no fraudulent-transfer taint. Seasoning, however, does not cure retained control. A trust can be ten years old and still be exposed if its founder holds the appointor’s chair. It can be independent in form and still be exposed if it was funded after trouble began. Protection needs both elements from the start: the right timing and the right control structure.

Clients often think about asset protection as a question about the final judgment: can a creditor ultimately reach this asset? Filippini is a reminder that an interim order can do most of the practical damage. Assets that are frozen cannot be sold, refinanced, or used as leverage in a settlement. A freezing order also usually comes with a duty to disclose assets on oath, which can open up an entire structure to scrutiny early in the case. Many offshore jurisdictions, including Cayman, the British Virgin Islands, Jersey, and The Bahamas, have freezing jurisdictions built on the same English equitable foundations. A structure that looks like the debtor’s own property is exposed to this kind of relief almost everywhere.

The better defence is a structure in which no beneficiary holds the powers that make trust assets look like his own. Then a creditor who seeks an interim freeze over the trust’s assets has little to point to.

The Full Court’s holding can be stated in one sentence: where a discretionary beneficiary controls the trust closely enough to take its assets whenever he wants, the court may treat those assets as within his reach. That is not a new rule. It is the oldest principle in trust-based protection, applied at an early stage of a case and with real consequences.

The trustee in Filippini was the debtor’s spouse, and the protector’s powers were effectively the debtor’s own. A trust is only as protective as its most powerful office, and that office has to be held by someone who is not the person being protected.

This note is general, informational commentary on a reported decision and is not legal advice for any person or structure. The allegations against Mr Filippini and his companies are unproven, and the decision concerns interim relief only. Whether a particular trust is exposed to freezing or enforcement relief depends on its terms, its governing law, where its assets and fiduciaries are located, and the facts.