A.P. Motors (No 2) Pty Ltd v Balfour - [2024] QSC 18

SUPREME COURT OF QUEENSLAND

CITATION:

A.P. Motors (No 2) Pty Ltd v Balfour [2024] QSC 18

PARTIES:

A.P. MOTORS (NO 2) PTY LTD
ACN 010 585 243

(plaintiff)

v
SANDRA BALFOUR

(first defendant)

AND

STEWART ALEXANDER BALFOUR
(second defendant)

AND

MICHAEL DAVID BALFOUR
(third defendant)

FILE NO/S:

BS No 5288 of 2018

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 February 2024

DELIVERED AT:

Brisbane

HEARING DATE:

3–6 April 2023

Further submissions received 23 May 2023 (plaintiff); and 24 May 2023 (third defendant)

JUDGE:

Brown J

ORDER:

1.   The plaintiff is to pay the defendant his costs of the proceedings, including the costs of the Freezing Order on a standard basis until February 2020.

2.   The plaintiff is to pay the defendant his costs of the proceedings including the costs of the Freezing Order on an indemnity basis after March 2020.

3.   The third defendant’s application for compensation pursuant to the Undertaking be dismissed.

CATCHWORDS:

INDEMNITY COSTS – STANDARD COSTS – DISCRETION – whether plaintiff had no reasonable cause of action against the third defendant - whether the plaintiff acted unreasonably in conduct of litigation – whether plaintiff unduly prolonged allegations against the third defendant for which there was no reasonable cause of action – whether the plaintiff unreasonably delayed the proceedings or otherwise acted unreasonably

FREEZING ORDERS – USUAL UNDERTAKING UPON GRANT OF FREEZING ORDER – COMPENSATION – COSTS – LOSS OF OPPORTUNITY – CALCULATION OF DAMAGES BY REFERENCE TO PROBABILITIES – whether the third defendant is entitled to compensation pursuant to an undertaking given for a freezing order - where the third defendant must show damage caused by freezing order as distinct from being caused by existence of litigation – whether costs can be claimed as compensation under an undertaking – whether the third defendant is entitled to compensation under an undertaking for loss of opportunity to purchase property – whether compensation for distress is available under an undertaking – whether compensation for loss of inheritance is available under an undertaking

Legal Profession Act 2007 (Qld) ss 316, 341, 705
Uniform Civil Procedures Rules 1999 (Qld) rr 5, 171, 260A, 293, 389, 444, 658

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Al-Rawas v Pegasus Energy Ltd [2008] EWHC 617
Badenach v Calvert (2016) 257 CLR 440
Baltic Shipping Company v Dillon (1993) 176 CLR 344
Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2009] 2 Qd R 356
Cockburn v Edwards [1881] UKLawRpCh 203
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
European Bank Ltd v Evans (2010) 240 CLR 432
First Mortgage Finance Corp Ltd v Kace Management Pty Ltd [2009] QSC 319
Flegg v Hallett [2015] 1 Qd R 191
Hamod v New South Wales (2002) 188 ALR 659
Hunt v Ubhi [2023] EWCA Civ 417
JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139
Latoudis v Casey (1990) 170 CLR 534
Laws v Collins Exposed Aggregate Pty Ltd [1997] NSWCA 186
Legal Services Commissioner v Bone [2014] QCA 179
Love v Thwaites [2014] VSCA 56
McMahon v Gould (1992) 7 ACLR 202
Mineralogy Pty Ltd v The State of Western Australia [2020] QSC 344
Palmer v Parbery (No 4) [2019] QCA 27
Parbery v QNI Metals Pty Ltd [2018] QSC 107
Principle Properties Pty Ltd v Brisbane Broncos Leagues Club Limited [2018] 2 Qd R 584
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Sigma Pharmaceuticals (Australia) Pty v Wyeth (2018) 136 IPR 8
Smith v Day (1882) 21 Ch D 421
Winky Pop Pty Ltd v Mobil Refinery Australia Pty Ltd [2016] VSCA 187
Wyatt v Albert Shire Council [1987] 1 Qd R 486

COUNSEL:

N H Ferrett KC for the plaintiff
P W Hackett for the third defendant

SOLICITORS:

Lander & Rogers for the plaintiff
Londy Lawyers for the third defendant

The third defendant, Michael Balfour, is the son of the first and second defendants, Sandra and Stewart Balfour. With no disrespect intended, but for ease of reference, I will refer to the defendants as Sandra, Stewart and Michael.
The present case is to determine what orders as to costs should be made following the proceedings against Michael being dismissed and whether Michael is entitled to compensation following dismissal of proceedings against him pursuant to the undertaking given by the plaintiff, A.P. Motors (No 2) Pty Ltd (APM or the plaintiff) contained in the freezing order made by this court which extended to Michael. A myriad of arguments were raised by Michael’s legal representatives in support of his claims, which were vigorously opposed by APM. Significant time and cost were expended by both parties which may have been better spent resolving the matter. The matter involved some four days of hearing and court books of some 4000 pages.
Sandra worked as an accountant for the plaintiff, APM, from October 1993 until 31 August 2017 when she was made redundant. APM was originally part of the A.P. Eagers Ltd car dealership group. Sandra’s redundancy occurred in the context of a restructuring of the group and the intended cessation of trading by APM. Sandra was then employed by APM on a temporary basis between 1 September 2017 and 22 January 2018 to assist in closing out matters in advance of APM’s cessation of trading.
In May 2022, Sandra was convicted of one count of fraud as an employee in relation to defalcation of funds from APM’s bank accounts. The theft from APM was discovered when, on 30 January 2018, an employee of a related entity noticed a transfer from APM’s bank account to an unknown account. The unknown account belonged to Sandra. An investigation followed which originally suggested that Sandra had misappropriated an amount in excess of $3 million. Sandra was, however, convicted of stealing a lesser amount of $1.8 million.
Following the discovery of the theft, APM commenced proceedings by way of originating application on 17 May 2018 and sought a freezing order from the Court. A freezing order was made on 22 May 2018 (Freezing Order). It applied to all three defendants and was varied on several occasions throughout the course of the proceedings.
On 3 March 2022, the Freezing Order against Michael was set aside by Bradley J. His Honour made orders which gave leave to APM to file a further amended statement of claim by 29 April 2022, deleting certain claims against Michael with which APM was no longer going to proceed and making other amendments in relation to Michael. His Honour made a further order that, if that further amended statement of claim was not filed and served by 29 April 2022, the claims against Michael were to be struck out without further order and that APM was to pay Michael’s costs of the application to be assessed if not agreed. No amendments were made by APM.
On 7 July 2022, the proceedings were dismissed and orders were made by Freeburn J for a claim for compensation pursuant to the undertaking as to damages given by APM under the terms of the Freezing Order, and for a determination of whether the costs payable by APM to Michael should be assessed on the standard or indemnity basis, to be heard on the Civil List.
Statement of facts and contentions was filed by Michael, a response was filed by APM and a reply to the response was filed with a view to outlining the issues in dispute.
APM concedes it should be liable to pay Michael’s costs but on a standard basis.
The Court must determine whether Michael is entitled to the following relief:
(a)an order that APM pay Michael’s costs of the proceeding on the indemnity basis because either;
(i)there was no justification for the Freezing Order against Michael;
(ii)there was no justification for continuing the Freezing Order on 4 June 2018;
(iii)there was no basis for continuing the Freezing Order on the maintenance of allegations in the amended statement of claim (ASOC);
(iv)there was no basis for continuing the claim against Michael after delivery of the Cook report on 4 November 2021; and
(v)APM had failed to comply with r 5 of the Uniform Civil Procedures Rules 1999 (UCPR) and had engaged in delay of the prosecution of the claim for over three years.
(b)compensation pursuant to the undertaking as to damages given by APM in relation to the Freezing Order (the Undertaking) for:
(i)the amount by which his costs incurred in respect of the Freezing Order exceed the standard costs, if the Court determines that costs of the proceeding should be awarded on the standard basis rather than the indemnity basis (the Costs Claims);
(ii)the loss of an opportunity to purchase both an investment property and a residential property during the operation of the Freezing Order, measured by reference to the capital gain on the investment property lost (the Loss of Opportunity Claim);
(iii)general damages for the embarrassment and inconvenience caused by the Freezing Order (the Distress Claim); and
(iv)the loss of an inheritance from his father, Stewart, who, it is alleged would have, but for the Freezing Order, severed his joint tenancy with Sandra in their marital home so as to leave his interest in that property to Michael (the Inheritance Claim).
Contentions
A brief overview of the parties’ contentions is as follows.
It is contended on behalf of Michael that he is entitled to indemnity costs because APM commenced and continued proceedings against him when it should not have done and ignored and omitted evidence such that its allegations were not justified and the proceedings were an abuse of process. Michael also contends that APM’s delay in the proceedings warrants an order that costs be assessed on the indemnity basis. APM concedes that it should pay Michael’s costs on a standard basis.
As to the matters which are the subject of the claim for compensation, Michael claims that the losses directly flowed from the Freezing Order and are therefore compensable.
APM contends that the claims on the Undertaking must fail because:
(a)properly construed, the Undertaking does not extend to the Costs Claim or the Distress Claim;
(b)as to the Loss of Opportunity Claim, there is no reliable evidence supporting any loss of opportunity and that, in relation to the investment property claim, there is an absence of evidence that Michael would have purchased a property at all; and
(c)as to the Inheritance Claim, there is insufficient evidence to demonstrate that Stewart intended to effect a severance of the relevant joint tenancy and, in any event, it was the effect of the Freezing Order on Sandra and Stewart which prevented the severance of the joint tenancy, not the effect it had on Michael.
History of the Proceedings
The history of proceedings has some relevance to the contentions raised in relation to both the claims for indemnity costs and compensation under the Undertaking, particularly given allegations of delay which was levelled by each party against the other, which had been on foot for four years when the parties agreed it should be dismissed. It is therefore necessary to provide a brief overview of the proceedings.
On 17 May 2018, APM filed an originating application pursuant to r 260A UCPR for an order that, inter alia, the defendants be ordered not to dispose of, deal with or diminish the value of cash, assets or other property to the value of $3,261,685.84 until further order of the Court.
APM’s insurer had instructed Crawford Forensic Accounting Services (Crawford) to investigate whether Sandra had misappropriated funds and, if so, the quantum of funds misappropriated. Crawford provided its report on 28 March 2018 (the First Crawford Report). The First Crawford Report was exhibited to the affidavit supporting APM’s application.
On 20 May 2018, Sandra, Stewart and Michael were served with the originating application and supporting affidavit.
On 22 May 2018, APM’s application was heard in this Court. No appearance was entered on Michael’s behalf at the hearing, but Sandra and Stewart appeared on behalf of themselves. Davis J made orders providing for, inter alia, the freezing of the assets of Sandra, Stewart and Michael. The order had a return date of 4 June 2018. A copy of the Freezing Order was personally served on Michael on 29 May 2018.
On 29 May 2018, APM filed its claim and statement of claim. In relation to Michael, the statement of claim:
(a)Alleged Sandra had made payments from bank accounts under her control of monies misappropriated from APM to purchase property and other assets and sold properties and purchased them in her name and jointly with Michael. The assets identified when the misappropriated funds were utilised were joint bank accounts, the Caboolture properties and Willow Street, Inala property held by or with Michael.
(b)Alleged Michael’s taxable income in 2013 was $89,090.29 and 2015 income was $42,455.
(c)Sought to recover monies paid by Sandra to Michael as monies had and received limited the sums representing real and personal property purchased by Michael at the time of commencement of proceedings.
(d)Sought an account of monies that Michael had received from Sandra and a declaration that Michael’s properties in Caboolture, Inala and Tingalpa were subject to an equitable charge and an order that they be sold.
(e)Did not allege that Michael was a participant in any wrongdoing by Sandra nor had any knowledge of that wrongdoing. The claim was a proprietary claim which is available when the monies can be traced into particular property.
On 4 June 2018, the first return date, Boddice J made orders varying the Freezing Order and extended its operation until 21 June 2018. Mr de Jersey appeared on behalf of APM. Mr Morris KC appeared on behalf of Sandra. Stewart appeared himself. Michael did not appear at that hearing but Mr Morris KC informed the Court that “although I don’t appear for [Michael], I can also inform the court that he’s aware of the proceedings and doesn’t seek to appear on this occasion.” Some variations were made to the Freezing Order in relation to living expenses, and directions were made as to the conduct of the proceedings. A copy of the orders of Boddice J were personally served on Michael on 7 June 2018.
On 19 June 2018, Michael’s representatives, Londy Lawyers, wrote to APM’s representatives, Lander & Rogers (June 2018 Letter). The June 2018 Letter addressed a number of matters. Londy Lawyers expressed the view that there were no circumstances which warranted a freezing order against Michael, that the case pleaded was speculative, and that the affidavit and outline of submissions filed in support of the application for the Freezing Order were misleading and overreached. Londy Lawyers contended that the only reasonable course APM could adopt was to discontinue the proceeding against Michael and pay his costs incurred to date. Londy Lawyers also foreshadowed its intention to make an application for security for costs. No such application was made.
The matter came on for further hearing before Boddice J on 21 June 2018. Mr de Jersey appeared on behalf of APM, Mr Morris KC appeared on behalf of Sandra, Mr Londy appeared on behalf of Michael, and Mr Lavercombe appeared on behalf of Stewart. On that occasion, Mr Morris KC stated that “[t]he point has now been reached where, I think, all parties agree that the interim regime should continue until trial, subject to any respondent having liberty to reply on seven days notice for a variation”. Boddice J, accordingly, made orders extending the operation of the Freezing Order to trial of the proceedings or earlier order of the Court and for the exchange of pleadings.
On 11 July 2018, Lander & Rogers received an email from Aitken Whyte Lawyers, Sandra’s representatives, requesting that APM agree to a stay of the proceedings until the conclusion of criminal proceedings on foot in relation to the same subject matter as the proceedings. Aitken Whyte Lawyers also requested that APM consent to an extension until 25 July 2018 for the filing of a defence in the proceedings. JML Rose, Stewart’s representatives, indicated his agreement to the extension.
On 12 July 2018, Michael filed a defence in the proceedings which included denials that any of APM’s funds:
(a)had been utilised by Sandra to purchase assets jointly in her name and Michael’s name;
(b)were used by Sandra to provide funds to Michael to help him purchase properties; and
(c)were represented in the assets the subject of the Freezing Order or any other assets owned by Michael.
Michael’s defence also contended that in respect of the Caboolture properties and the Willow Street, Inala property, it was intended that Sandra and/or Stewart only held a bare legal title and had no beneficial interest in the property. It was also pleaded that Sandra and Stewart each only held a one per cent share in the Inala Property and that they transferred their interests to Michael on 19 June 2009, and that Michael paid the stamp duty in respect of such transfer.
On 16 July 2018, Lander & Rogers advised the defendants that APM had agreed to an extension for the defendants to file their respective defences until 21 July 2019 so that the parties could discuss the proposed stay of the proceedings.
On 23 July 2018, Lander & Rogers received correspondence from Londy Lawyers which stated that Michael was not willing to agree to a stay of the proceedings as between APM and Michael. Londy Lawyers indicated its intention to proceed with the applications for security for costs and a variation to the Freezing Order foreshadowed in the June 2018 Letter.
On 20 August 2018, Lander & Rogers received correspondence from Londy Lawyers written pursuant to r 444 UCPR. Londy Lawyers reiterated its position set out in the June 2018 Letter and also indicated that it intended to proceed with the applications for security for costs foreshadowed that correspondence, as well as an application to vary the Freezing Order and for summary judgment.
In correspondence between Aitken Whyte Lawyers and Lander & Rogers on 23 August 2018, APM indicated that it would agree to the stay requested but expressed the view that the proceeding would have to be stayed against the remaining defendants, not just as between APM and Sandra, given the commonality between the claims against each of the defendants.
On 31 August 2018, Lander & Rogers wrote to Londy Lawyers pursuant to s 445 UCPR requesting that Michael provide disclosure of documentation to determine whether the claim against him should be abandoned. Lander & Rogers reasserted APM’s position that any stay of proceedings agreed between the parties should be a stay of the whole claim.
On 13 November 2018, Michael filed an application seeking, inter alia:
(a)Pursuant to r 293 UCPR, an order for summary judgment in his favour against APM;
(b)alternatively, pursuant to r 171 UCPR, an order that the claim against him as pleaded in APM’s statement of claim be struck out; and
(c)further or alternatively, pursuant to r 658 UCPR or the inherent jurisdiction of the Court, an order that the Freezing Order be vacated or varied.
November 2018 Application
Michael’s application did not proceed and on 28 November 2018, Applegarth J relevantly made variations to the Freezing Order and orders by consent that:
(a)APM file and serve any amended statement of claim and any further affidavit(s) on which it intended to rely on or before 31 January 2019;
(b)Michael file and serve any affidavit in reply to APM’s affidavit(s); and
(c)the November 2018 Application be set down for hearing on the Civil List on a date after 1 February 2019 to be fixed by the Registrar upon the giving of seven days’ notice in writing by Michael.
Michael did not seek to have the November 2018 Application relisted for hearing.

Between November 2018 and December 2018, APM’s solicitors issued subpoenas and non-party disclosure notices to a number of banks seeking financial material relating to Michael’s financial position. That material was then provided to Crawford’s, the forensic accountants who had provided a report to the insurer.
On 1 February 2019, Lander & Rogers received a copy of the second report authored by Crawford dated 1 February 2019 (Second Crawford Report).
APM filed and served an amended statement of claim and two further affidavits on 5 February and 8 April 2019 respectively.
The amended statement of claim pleaded, inter alia:
(a)that since approximately 8 July 2010, Sandra and Michael had been the joint registered proprietors of the Bluebell Street, Caboolture Property;
(b)that Sandra, Stewart and Michael were, from 2 January 2007 to 19 June 2009, the joint registered proprietors of the Inala Property;
(c)a new allegation that Sandra made unauthorised payments to bank accounts under the control of, or for the benefit of, Sandra, Stewart and Michael;
(d)new allegations that monies were applied out of the bank accounts referred to in paragraph [32(c)] above to:
(i)repay loans used to acquire the Burdekin Street Property and the Hopewell Street Units;
(ii)acquire with Michael the Inala Property and the Tingalpa Unit or to repay loans used to acquire those properties;
(iii)transfer monies to Michael;
(iv)pay for improvements to properties owned by Michael or jointly by Sandra and Michael;
(v)acquire the Bluebell Street Property and Rosemary Street Property with Michael or repay the loans used to acquire those properties; and
(vi)make cash withdrawals and deposits to acquire other assets.
(e)given the breach of fiduciary by Sandra, APM was entitled to recovery of monies paid by Sandra to Michael as monies had and received but limited to the sums representing real and personal property purchased by Michael and owned by him as at the date of commencement of the proceedings together with interest; and
(f)an alternative claim that APM was entitled to recover monies paid to Michael by which Michael had been unjustly enriched at APM’s expense or a declaration that Michael holds real property together with improvements on trust for APM.
No dishonesty was alleged against Michael, nor was any knowledge of his mother’s dishonesty.
The Second Crawford Report was served on 12 April 2019.
Ms Nguyen deposed to APM taking no steps as she considered the progression of the matter was in the hands of Michael and the criminal proceedings against Sandra were progressing towards trial.
No defences to the amended statement of claim were filed by any of the respondents nor any affidavit material filed by Michael after receipt of the Crawford Report.[1]
[1]Which followed a letter of Londy Lawyers requiring APM to serve affidavit material, as required by Applegarth J’s order.
Between 26 March 2019 and 4 November 2021, limited correspondence was exchanged between the parties and applications were made on behalf of Sandra and Stewart for an increase in the amount allocated to legal costs to defend the criminal proceedings, where the amount sought was the subject of dispute, which was granted at least in part. No provision was made in respect of the civil proceedings on the basis that the criminal proceedings were to be dealt with first. Michael made no applications nor did his lawyers correspond with APM’s lawyers during this period save as to minor matters on 15, 16 April and 25 May 2021.
On 4 November 2021, Lander & Rogers received a letter from Londy Lawyers, along with an expert report authorised by Mr Simon Cook of Lotus Amity dated 19 August 2021 (Cook Report). That letter stated that Michael had instructed Londy Lawyers to request that APM consider the Cook Report, reassess its case against Michael, consent to the setting aside of the Freezing Order, and discontinue the claim against Michael. The letter indicated that if confirmation of those matters was not provided within 21 days, Michael would apply to the Court for orders in accordance with the November 2018 Application.
APM’s lawyers stated in an email of 24 November 2021, that 21 days was insufficient time to deal with the matters.
On 17 December 2021, Michael filed an application seeking orders that:
(a)APM’s claim against Michael be struck out for want of prosecution;
(b)Michael have leave under r 389 UCPR to give notice to APM pursuant to the orders of Applegarth J in November 2018 to otherwise proceed with the November 2018 Application; and
(c)APM pay Michael’s costs of the application and the proceeding, to be agreed or assessed on the indemnity basis or alternatively on the standard basis.
APM’s lawyers briefed Crawfords on 24 December 2021. Mr Cameron deposes to having to deal with a potential conflict issue causing some delay in briefing Crawfords. Damien Lawrence of Crawfords requested further material on 25 February 2022 and provided a draft report on 18 February 2022. On 25 February 2022, APM’s lawyers requested Michael’s lawyers agree to an adjournment of the application contending amongst other things that it needed further time to obtain information requested by Crawfords and obtain a report. APM’s lawyers indicated that they expected to receive instructions on 25 February 2022 to drop or abandon some claims and plead additional claims.
On 3 March 2022, Bradley J did not strike the proceedings out for want of prosecution but made orders discharging the Freezing Order as against Michael upon his providing an undertaking and that, inter alia:
(a)APM file and serve a further amended statement of claim deleting claims against Michael in paragraphs 16(a)(ii), 16(a)(iii), 16(a)(iv), 16(a)(vi), 16(b)(i), 16(b)(ii), 16(c)(ii), 16(c)(iii), 16(c)(iv);
(b)if a further amended statement of claim was not filed by 4:00 pm on 29 April 2022, the claims against Michael in the amended statement of claim be struck out without further order; and
(c)APM pay Michael’s costs of the application to be assessed if not agreed.
APM did not file or serve a further amended statement of claim by 29 April 2022. By operation of the orders of Bradley J, most of APM’s claims against Michael were struck out.
On 26 May 2022, APM filed an application for leave to discontinue the proceeding against Michael and for orders that APM pay Michael’s costs of and incidental to the proceeding, until 6 May 2022, on the standard basis and that APM pay Michael’s costs of and incidental to the application on the indemnity basis.
On 7 June 2022, Michael filed an application seeking orders that, inter alia:
(a)APM’s remaining claims against Michael be dismissed for want of prosecution;
(b)APM pay Michael’s costs of the proceeding, including reserved costs, in an amount to be agreed or assessed on the indemnity basis; and
(c)the Court determine the amount of compensation or damages payable to Michael by reasons of the effect upon him of the Freezing Order.
On 7 July 2022, at the hearing of the applications filed on 26 May and 7 June 2022, Freeburn J dismissed APM’s claims against Michael and listed the following issues on the Civil List for determination:
(a)whether the costs of the proceedings payable by APM to Michael should be assessed on the standard or indemnity basis; and
(b)the assessment of any damages payable to Michael pursuant to the undertaking as to damages given by APM and AIG Insurance Limited.
Credit of Witnesses
A number of witnesses gave evidence, although not all were subject to cross-examination.
Michael was called to give evidence and was cross-examined. I accept that the period during which he was subject to the Freezing Order was stressful. While I felt that Michael was an honest witness, I considered that some of his evidence was clouded by feelings of injustice and anger in relation to how these proceedings have affected him. That affected the reliability and accuracy of some of his evidence. I do not fully accept Michael’s evidence that he did not take any real notice or understand the nature for the application for a Freezing Order or the order that was subsequently imposed due to his shock. Michael is a highly intelligent and educated man with business acumen who appeared throughout his evidence to pay attention to detail and, in my view, he is unlikely to have not engaged and tried to understand what the application or the Freezing Order meant and how it affected him, notwithstanding the emotional trauma he would have been experiencing at the time.
Some of Michael’s evidence at times was also exaggerated in certain respects, so as to be self-serving. For instance, I do not accept that Michael did not take an active interest in his mother’s defence of the criminal charges, given documents prepared by him in relation to her case. While Sandra’s actions have clearly had an adverse effect on Michael’s life, and appeared to make him understandably angry, Michael still showed that he cared for his mother to the extent that he would not want to see her jail sentence being extended. Michael’s interest in his mother’s criminal case defence going beyond its effect on the civil proceedings was also demonstrated by his draft brief to Mr Simon Cook. In particular, he identified aspects of his mother’s criminal proceedings which were a source of delay, which given the content and detail showed a greater involvement and interest than just identifying things that had the effect of slowing the civil proceedings. Nor do I accept Michael’s evidence that Sandra did not tell him that she had decided to plead guilty after Stewart’s passing in September 2019. That was contrary to Sandra’s evidence and contrary to the fact that in making submissions about the Freezing Order her principal concern was that Michael not be caught up in the matter. Nor do I accept his mother’s pending criminal trial was not at least a factor in his thinking or timing of his application to strike out or seek summary judgment, which was filed in November 2021.
I accept Michael’s evidence that he did not act on the basis that there was a stay of the proceedings up until November 2021 and did not delay the proceedings until his mother’s matters were finalised. It is evident from the instructions to Mr Cook and the invoices of Michael’s lawyers that he was working on the proceedings and drafting instructions outlining why the proceedings against him could not succeed had begun in February 2021.
Some parts of Michael’s affidavit evidence were more in the nature of submissions, and argumentative in terms of his assertions as to why he considered that APM had no cause of action and the Freezing Order was unjustified, which tainted some of his responses in cross-examination. In particular, the notion that the Freezing Order was of greater concern than the allegations made in the statement of claim, is not reflected by his lack of appearance in response to it or the agreement to extend it where his solicitor attended court on his behalf and then the taking of no steps until late 2021 to set it aside.
Sandra was called. Her evidence was generally straight forward and relatively short although her evidence had to be treated with circumspection. That Sandra was responsible for the events which had embroiled her son and her subsequent conviction for misappropriation of monies reduced the weight and reliability of her evidence considerably. I considered that Sandra was generally trying to give evidence that was most favourable to her son. I do not accept Sandra’s evidence that she did not even think about severing the joint tenancy in order to ensure that creditors did not get access to the money and as a means of ensuring that her son got the share of the house instead. Sandra appeared to be an intelligent woman. She offered no real explanation as to why she and Stewart wished to severe the joint tenancy other than the existence of the Freezing Order. Her evidence also did not explain why originally she and Stewart proposed to the Public Trustee’s legal representative that she leave her estate to Michael and Stewart would leave his estate to Michael’s wife at the end of July 2021 but that changed in early August 2021 such that Stewart was to leave his share of the property to Michael. It simply lacks credibility that she had not considered that the property could be sold for the benefit of creditors in light of the proceedings that had been filed by APM and it was explained to her by the Public Trustee’s representative how a joint tenancy passes to the other joint tenant upon death.
The former Group Financial Controller of A.P. Eagers Ltd, Ms Natasha Daley, was called on behalf of APM. While Ms Daley’s recollection was poor and there were errors in her affidavit, I consider that Michael sought to attack her credit unfairly, though criticisms could fairly be made by Michael of her affidavit. Ms Daley was clearly assisted in the preparation of her affidavit by others providing information, given it was prepared on the basis of knowledge or information which she had received. The affidavit did not comply with the rules of evidence in some respects, in failing to identify some of those sources of information. Ms Daley did not accurately set out, in some respects, where information was based on knowledge and belief. It was also plain from Ms Daley’s evidence that she did not clearly understand the point of distinction between evidence of which she had personal knowledge, as opposed to evidence she had knowledge of because she was informed of it by another person.
Mr Thomas Cameron and Ms Lily Nguyen, solicitors from Lander & Rogers, were called. Mr Cameron gave clear and direct evidence which I accept. I also accept the evidence of Ms Nguyen as honest evidence.
Mr Simon Cook, a forensic accountant, also gave evidence as to the report which he had provided in support of the strike out application on behalf of Michael. He was considered in his evidence, and I accept the evidence he gave.
Mr Neil Ackerman, a Senior Financial and Forensic Accountant with Crawford, provided a forensic report on behalf of APM and also gave evidence. Mr Ackerman was candid in the evidence which he gave.
Mr Adam Bloom (on behalf the Michael) and Mr Marek Reardon (on behalf of APM) were called as experts in relation to the question of costs. Both experts were candid in their evidence. However, I found neither to be of great assistance to the Court in relation to the question of costs given the nature of their instructions and the deficiencies in the detail and reasoning of both individuals. The real question is in terms of whether there was sufficient reasoning in relation to the report provided by Mr Bloom to support his conclusions as to costs.
Mr Londy, the solicitor who has acted on behalf of Michael, gave evidence in relation to the question of costs. Rather surprisingly, he did not engage in the exercise of identifying those costs which he said were incurred as a result of the Freezing Order only, a task which he left that solely to the costs assessor in order to maintain impartiality. That view was misplaced. Given Mr Londy was responsible for carrying out the work, he was best placed to identify the work solely attributable to the Freezing Order, which could then have been assessed by the costs assessor. I accept, however, the evidence that he gave.
There was no cross-examination in relation to the property valuation evidence called on behalf of Michael.
Should Indemnity Costs be Awarded to Michael in respect of the Proceedings?
Legal Principles
The legal principles which apply when the Court is considering whether to grant indemnity costs were not contentious. This Court and others have commonly adopted the statement of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd:[2]
Notwithstanding the fact that [the categories of cases in which the discretion to award indemnity costs are not closed], it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J‑Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. (Citations Omitted).
[2](1993) 46 FCR 225 at 233. See also Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2009] 2 Qd R 356.
Similarly, in Hamod v New South Wales, the Full Federal Court stated that: [3]
Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
[3](2002) 188 ALR 659 at [20].
The Queensland Court of Appeal discussed the relevant principles in Legal Services Commissioner v Bone.[4] Morrison JA (with whom Fraser JA and Gotterson JA agreed) referred to some further decisions relevant to identifying the scope of indemnity costs:[5]
In LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo this Court recently referred to the principles applying to the award of indemnity costs, in these terms:
[21] The applicable principles for the awarding of indemnity costs were usefully summarised by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd. However, those principles operate as a guide to the exercise of the relevant discretion. They do not define all of the circumstances in which the discretion is to be exercised and do not limit the width of that discretion. Further, the categories in which the discretion to award indemnity costs may be exercised are not closed.
[22] Whilst the awarding of costs on an indemnity basis will always ultimately depend upon the exercise of a discretion in the particular circumstances of each individual case, the justification for an award of indemnity costs continues to require some special or unusual feature of the particular case. As was observed by Basten JA in Chaina v Alvaro Homes Pty Ltd, the general rule remains that costs should be assessed on a party and party basis, and the standard to be applied in awarding indemnity costs ought not “be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis, absent some blameworthy conduct on its part. (footnotes omitted)
[4][2014] QCA 179.
[5]Legal Services Commissioner v Bone [2014] QCA 179 at [67].
His Honour further stated:[6]
[70] Further, in Di Carlo this Court also adopted as correct the proposition that in order to enliven the discretion one is not confined to the situation of an “ethically or morally delinquent party”, but “… the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation”. Other cases have adopted as the test: “whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis.
[71] In Johnstone v Herrod this Court considered a contention that findings of fraudulent misrepresentation or unconscionable conduct would necessarily result in an order for indemnity costs. That proposition was rejected as failing to appreciate the basis on which indemnity costs were normally decided. The Court referred to Di Carlo and Colgate-Palmolive, and then said:
[10] It was said in White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) that:
[t]he authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably.
[11] It may be seen from the foregoing that, in determining whether indemnity costs should be ordered, the normal focus is on the conduct in and in respect of the litigation by the party against whom the costs order is to be made. The primary judge appeared to have accepted that the respondents’ arguments were not obviously unsustainable. His Honour was entitled to take that view. The respondents, in fact, succeeded on appeal in showing error in some of the primary judge’s findings of fact and law. (footnotes omitted)
[6] [2014] QCA 179 at [70]-[71].

It is evident that it must be demonstrated that the plaintiff in conducting the proceeding has acted unreasonably, not merely that the plaintiff pursued a weak case.
Contentions
There is no issue that Michael is entitled to his costs of the proceedings. The point of contention is whether those costs should be awarded on the standard basis or the indemnity basis for the period up until 6 May 2022.
Michael’s principal arguments in justifying his claim for indemnity costs are, in summary, that:
(a)disclosure of the true facts was not made at the time the Freezing Order was sought. Such disclosure would have led to the Court refusing to make the Freezing Order against Michael;
(a)there was no reasonable basis upon which to seek the Freezing Order or to support the pleaded claim made against Michael;
(b)there was no reasonable basis to maintain the Freezing Order or the proceedings after June 2018 when information was disclosed to APM by Michael and other information became available at various points in time;
(c)APM unreasonably rejected an offer to substitute caveats over Michael’s property in June 2018 and requests to discontinue the proceedings and/or release the freezing order;
(d)APM unreasonably delayed the prosecution of the proceedings and failed to narrow the freezing order;
(e)APM engaged in other conduct demonstrated that they were acting unreasonably including refusing to pay Michael’s costs when Michael determined that the wrong company had offered the undertaking or contacted Suncorp after the Freezing Order had been discharged.
Although these contentions were raised on Michael’s behalf in correspondence to APM, it is unfortunate that these matters were not raised before the Court at the time the Freezing Order was made or on the subsequent return dates in the months that followed the making of the Freezing Order. As a result, the Court has been required to revisit the whole history of the proceedings, including the available evidence. The time and cost to the parties in doing so has been considerable.
APM had the benefit of the Freezing Order not only against Sandra and Stewart who were accused of wrongdoing, although the charges against Stewart were ultimately discontinued, but Michael who was not accused of wrongdoing for almost four years when the order was discharged in March 2022 and proceedings were later dismissed as a result of APM indicating that the proceedings should be discontinued.
APM contend that there is no basis for ordering the plaintiff to pay Michael’s costs on an indemnity basis in circumstances where:
(a)It had a reasonable basis for commencing the proceedings and believed that it had a good arguable case against Michael;
(b)APM did not mislead the Court as alleged;
(c)In the context of the argument that APM should have acted sooner to discontinue the proceeding against Michael or in respect of the Freezing Order, that should be rejected when regard was had to:
(i)Michael’s conduct in adjourning his application in 2018 to dismiss the proceedings and not pursuing it again until December 2021;
(ii)Michael’s failure to apply to reduce the Freezing Order;
(iii)The fact that Sandra was charged with stealing and was not convicted until May 2022, such that a stay of proceedings would likely have been granted if the proceedings had been prosecuted more quickly, as was originally raised by Sandra;
(d)No benefit would have accrued to APM if caveats were lodged because they would not have operated to prevent Michael dealing with the property and just prior to the offer to lodge caveats the Freezing Order had been extended with Michael’s consent; and
(e)The undertaking as to damages was offered by the correct company but the wrong company was accidentally named.
Did the plaintiff commence proceedings without any reasonable basis for doing so ?
At the hearing seeking the Freezing Order, APM relied on the affidavit of Ms Daley and the First Crawford Report as well as the fact that Michael had accrued an interest in four properties in his 20s.
It is uncontroversial that there was evidence that Sandra had misappropriated a significant amount of money over a considerable period of time from APM. According to Ms Daley’s affidavit, Sandra was employed by APM as their dealership accountant between November 2010 and 31 August 2017. Subsequent to that time, she had been engaged as a contractor with APM until 22 January 2018. At the time the application was made, it was estimated that Sandra had fraudulently removed $3.2 million from APM’s accounts between 21 July 2010 to 24 January 2018, while Sandra was employed as the dealership accountant for two dealerships. The fraudulent transactions were initially identified internally when investigating a customer query after another employee had identified a payment to an unidentified account which was found to be an account of Sandra’s. The First Crawford Report prepared for APM’s insurers after they had been notified by APM of the potential claim based on misappropriation of funds. The First Crawford Report identified in excess of 900 payments to various bank accounts said to be under the control of Sandra. The report identified the accounts into which money was paid, where there was evidence that accounts were in the names of Sandra and Stewart jointly. In addition to the payments identified by Crawfords, there were further payments identified as having been paid into a Home Loan account of Sandra and Stewart by Mr Edmonds, the General Manager of Finance of AP Eagers Limited.
As to Michael, Ms Daley identified properties revealed in property searches as being properties of Sandra, Stewart and/or Michael. The properties were said to be acquired during the period in which Sandra was an employee of APM or AP Eagers Limited. All properties in which Michael had an interest were acquired prior to 8 July 2010, Two of those properties listed Sandra as a joint tenant with Michael. There was also a spreadsheet showing Michael’s income in 2013 and 2015 found in Sandra’s email account.
According to Ms Daley:[7]
Given Balfour’s alleged conduct and the amount alleged to have been frequently misappropriated, I am concerned that if she suspects that she is under police investigation or the subject of civil proceedings, she will dissipate her assets and cause her Husband and Son to dissipate their assets.
[7]Affidavit of Natasha Daley sworn 16 May 2018 at [34].
Michael complains that Ms Daley’s affidavit did not justify the Freezing Order against him because:
(a)paragraph 20(f) stated that “[a]mongst other things, the First Crawford Report states that it is ‘highly likely’ that [Sandra] had processed further fraudulent payments prior to 21 July 2010”, when in fact the First Crawford Report stated that:[8]
The availability of records prior to 21 July 2010, sufficient to prove any further fraud, is uncertain. We have at this stage not attempted to investigate and prove further potential fraud before 21 July 2010 … What is clear from the fraudulent transactions regularity profile is that the frequency of fraudulent transactions has increased from seven payments a month in 2010 to 12 payments a month in 2017. Our opinion is therefore that it is highly likely that the Perpetrator had processed further fraudulent payments prior to what we have proven before 21 July 2010.
(b)it established that the real properties acquired by the three defendants were acquired prior to July 2010;
(c)it was “wrong and misleading” in failing to identify that the Inala Property was acquired in 2006 by the defendants as tenants in common, with Sandra and Stewart each only holding a one per cent share, and in stating that the transfer of the property from Sandra and Stewart to Michael in 2009 was for “no consideration” when there was no evidence that that was the case. According to Michael, the property searches were attached to Ms Daley’s affidavit and there was nothing to show that the transfer of Sandra and Stewart’s very small interests was done without consideration. APM concedes that to be the case. According to Michael, at the time of the transfer, all of the defendants had a personal covenant to pay the mortgage debt and it was released at the time of the transfer because Michael refinanced and paid the mortgage out. That was not, however, referenced on the transfer, where the consideration was stated to be for “natural love and affection”; and
(d)it relied on inadmissible evidence in paragraphs [34] and [35], particularly in relation to Michael, to demonstrate potential dissipation of assets. Ms Daley stated she was concerned that if Sandra found out about the application for a Freezing Order she would cause Michael to sell properties, which is said to have had no reasonable basis.
[8]DN-5 to the Affidavit of Natasha Daley sworn 16 May 2018 at [7.14].
Dealing first with the criticisms of Ms Daley’s evidence:
(a)the criticism of Ms Daley’s statement that it was highly likely that Sandra had processed further fraudulent claims prior to 21 July 2010 was clearly based on the First Crawford Report and the opinion expressed therein, even though no investigation had been made of any transactions prior to that date. The view expressed in the First Crawford Report was said to have been based on the increase in frequency of payments between 2010 to 2017 from seven to 12 per month, which suggested that Sandra would have started with fewer payments when she first commenced making fraudulent payments. Ms Daley in other parts of her affidavit stated that the transactions identified as being believed to be fraudulent occurred after July 2010. Given the First Crawford Report was annexed to Ms Daley’s affidavit, I do not consider the affidavit was false or misleading in that regard. While the basis of the assessment made by Crawfords was tenuous, there was a basis for the statement made;
(b)it is uncontentious that Ms Daley’s affidavit did not state that Sandra and Stewart each only had a one per cent interest in the Inala Property, nor was the transfer attached (or otherwise before Davis J). However, given that the transfer stated that the consideration was for “natural love and affection,” Mr Ferrett KC submitted that the Court should infer that Ms Daley had reviewed the transfer even though she could not recall what she had looked at to check the accuracy of the table at paragraph [26] of her affidavit, given she stated that she believed she would have checked the searches to confirm the table was correct. It seems likely that that would have been the case. The suggestion that the transfer was for “no consideration” is supported by the statement on the transfer itself which reflect that it occurred for no consideration. In the circumstances, the most likely explanation for the reference is that Ms Daley had seen the transfer and failed to refer to it, given her affidavit does accord with the transfer. As to the suggestion that there was valuable consideration provided by Michael refinancing the loan and his parents being released from the mortgages, while that could be valuable consideration that was not a matter raised in the statement of facts and contentions and was only raised at the hearing and, more relevantly, was not identified as consideration on the transfer document, nor a matter that APM should reasonably have known at that stage. In those circumstances, it is not the case that the reference to the transfer of the property being said to be for “no consideration” was not without any factual basis, even though the evidence relied upon was not, as it should have been, identified;
(c)significantly, in cross-examination as to the assertion by Ms Daley that the transfer of his parents’ interest in the Inala Property was without consideration, Michael’s evidence was that:
… Well, let’s talk about it now. You’ve accused the plaintiff of having misled the court; correct?---Yes.
And the – well, one of the allegations, at least, that you make is that the plaintiff misled the court by saying that you paid no consideration when you took over your parents’ interests in that property at Willow Street; correct?---More accurate to say, sir, that they withheld crucial information [indistinct] in support of that.
So you say that they withheld crucial information in support of that?---Yes.
You’re aware, aren’t you, that your solicitor has written letters accusing the plaintiff of misleading on two counts. One is that it wasn’t made plain in the hearing before Justice Davis that your parents only held a one per cent share each in - - -?---Yes.
- - - that property at Willow Street. That’s one; correct?---Yes.
And the other thing that you’ve complained about is the proposition that their interests were transferred to you for no consideration; correct?---I could be wrong, sir, but I do actually believe it was more that there was no evidence for that assertion.
All right. Do you accept that you, in fact, got their interests for no – well, let’s pause there. Do you know what “no consideration” means?---For the – the exact technical definition, no, sir. I merely presumed it meant “for nothing”.
Yes. All right. We can agree on that. Now, you said that there was no – you were complaining that there was no evidence for it. You accept, though, don’t you, that those interests were conveyed to you for nothing; correct?---Yes.
We started with this point to say you said it was more – the problem was more that there hadn’t been any evidence before Justice Davis that there was no consideration; correct?---Yes, sir.
And then what I wanted to put to you was that you would accept in those circumstances that an accusation that the court had been misled before Justice Davis because there was an allegation that no consideration was paid – that accusation would be wrong; correct?---Just on the grounds of that part, yes.
(d)as to the fact that Ms Daley’s affidavit referred to the transfer of the Inala Property being for no consideration, as opposed to identifying that the interests of Sandra and Stewart being transferred were only of one per cent and not “the property”, the description of “the property” is infelicitous but the suggestion that the affidavit was misleading is not borne out given that the title search, which showed the interests of Sandra and Stewart which were transferred in 2009, was annexed to the affidavit; and
(e)as to the statement by Ms Daley that she was concerned about the dissipation of assets, the basis of the statement was the dishonesty of Sandra, the amount and her exposure to criminal charges and given her connection to Michael and Stewart that she would cause Michael or Stewart to dispose of their assets. I do not consider the statement was inadmissible against Michael given he co-owned two properties with Sandra. The basis of the opinion was set out and it was a matter for the Court to determine whether it accepted it or not.
According to Michael, the submissions made to the Court by APM’s counsel, Mr de Jersey, overreached and were materially misleading because:
(a)of the statement in Ms Daley’s affidavit that it was “highly likely” that Sandra had processed further fraudulent payments prior to 21 July 2010;
(b)counsel did not specifically draw to the Court’s attention the fact that all the real properties owned by the defendants had been acquired prior to 21 July 2010, the commencement of the period of the established defalcation, and that there was in fact no evidence that Michael had benefited from the alleged defalcation by Sandra;
(c)counsel did not correct the record as required in relation to the statement that the Inala Property had been transferred for no consideration by Sandra and Stewart to Michael in 2009 and compounded that deficiency by submitting:
The shadowy circumstances surrounding the transfer for no consideration of 46 Willow Street, Inala by the first respondent to the third respondent is another circumstance supporting the strong inference that it, too, was purchased with the funds that were the subject of the unauthorised transfers.
(d)counsel did not highlight the deficiency in Ms Daley’s evidence as to dissipation of assets being directed only to Sandra and not to Michael;
(e)counsel’s submission that “a financier is unlikely to advance finance to purchase these properties which are mortgaged” and that it was “unlikely” that a financier would grant a mortgage for the purchase of Michael’s properties was incorrect given that St. George Bank and Suncorp Bank did lend him money and take a mortgage – a fact established by APM’s own material;
(f)of counsel’s submission that Michael purchased “three or maybe four real properties” whilst he “studied surveying at university”, because the only property purchased by Michael whilst he was a student was the Inala Property.
Michael’s submissions were in part more consistent with the application being an ex parte application, which was not in fact the case.
Originally, Michael’s statement of facts and contentions was premised on the Freezing Order being obtained ex parte. However, in his reply, he contended that the timeframe for the order meant he did not have time to obtain legal advice or get time off work. Accordingly, the hearing took place in his absence and, in that sense, was heard ex parte, without giving him the reasonable opportunity to be heard and did not draw those matters to the Court’s attention. In submissions, Michael relied on the duty of a barrister or solicitor not to mislead the court rather than the breach of the ex parte duties.
It is important to bear in mind the different duties cast upon a party where such an order is sought ex parte as opposed to the where a party has been served, even if they do not subsequently appear at the application.
The duties imposed in an ex parte application for a Mareva or freezing order are particularly onerous. A convenient summary of the relevant duties was outlined by Martin J in Mineralogy Pty Ltd v The State of Western Australia,[9] which is relevant to the present case. His Honour observed, inter alia, that:
(a) An applicant must make a full and fair disclosure of all the material facts.
(b) The material facts are those which the judge needs to know in dealing with the application. (Materiality is determined by the court, not the applicant or its legal advisors.)
(c) The applicant must make proper enquiries about the facts before making the application. The duty extends to any additional facts the applicant would have known if it had made such enquiries.
(d) How far an applicant must go in making these enquiries will depend upon all the circumstances of the case. This will include the probable effect of the order on the defendant and the degree of urgency.
(e) The applicant must identify the crucial points for and against the application and not rely on general statements and the mere exhibiting of numerous documents…
[9][2020] QSC 344 at [82].
The same duty does not apply in a case where a party has been served but does not attend court, although there is of course, as there is in all cases, a duty not to deceive or knowingly or recklessly mislead the Court.[10]
[10]See eg, Bar Association of Queensland Barristers’ Conduct Rules (23 February 2018) r 26.
The hearing of the application for the Freezing Order was not made ex parte. Michael had been served with the application and supporting affidavit on 20 May 2018 but according to Michael he did not appear at the hearing on 22 May 2018 due to work commitments. Michael explained that he was quite blindsided because he did not know that APM was going to try to freeze his assets or what the application was all about at the time. However, Michael agreed that he knew a court hearing was going to be held. He also knew that there was an allegation that his mother was stealing, although he could not understand the full extent of the allegation.

I do not find that the submissions of counsel were misleading given that:
(a)Counsel’s submissions identified the dates that property was purchased, which were all before 21 July 2010. The schedule in Ms Daley’s affidavit also demonstrated that all of the real properties acquired by Michael, or of which he was a part owner, were acquired prior to 21 July 2010. Counsel’s submissions set out the fact that the misappropriated payments had been found to have been made between 21 July 2010 and 24 January 2018.
(b)there was evidence placed before the Court of the percentage interest held by Sandra and Stewart in the Inala Property. It was contained in the searches attached to Ms Daley’s affidavit, albeit that the significance of the transfer in 2009 was exaggerated given the small percentage of the interest transferred. Counsel was not required to correct the record as to the transfer of the Inala Property. In any event, the Court would not objectively have considered the whole of the property was transferred since it was evident from the schedule that the Inala Property was held by Michael, Sandra and Stewart as joint tenants,[11] from which one would reasonably infer that Sandra and Stewart could not have held the whole of the interest in the property. As stated above, while not in evidence, the Form 1 transfer of their interests supported the contention that no consideration had been provided by Michael for the transfer. The reference to “shadowy circumstances” as a descriptor of the transfer was an overstatement but was clearly a matter of emphasis rather than fact, made in the context of Sandra’s dishonesty.[12] While it was an exaggeration of the facts, the basis of the comment was evident on the material before the Court, which did not suggest Michael was a co-conspirator of Sandra, which was made clear in submissions later made;
[11]Which was incorrect insofar as it was held as tenants in common.
[12]Outline of Submissions on behalf of the Applicant filed 22 May 2018 at [29].
(c)counsel did inaccurately suggest at one stage that Michael was a university student at the time he acquired three properties, which was incorrect. He had, however, earlier stated he had bought the property in 2006 when he was a university student. He had also stated at another point of making submissions that “it’s an inferential case against him on the basis that one property was transferred to him for no consideration. He’s now the owner of three or maybe four real properties. ...he’s 28 years old I think. He’s studied surveying at university.” As the hearing progressed, Sandra also took issue with Michael’s involvement and the suggestion that misappropriated monies had been used in relation to his properties. That included informing the Court that while Michael was a student when he bought the 2006 property, he was a student who had been employed since school and he only paid the deposit and the people he purchased it from rented it from him for a year. In light of all of the statements made to the Court by counsel, to the extent that counsel’s statement suggested Michael was a student throughout when he purchased all properties, the Court would not have been mislead when regard is had to the submissions made in the context of the hearing. This highlights the importance of material being served so that respondents may respond to it and put alternative facts before the Court – an opportunity which Michael did not take up.
(d)As to the statement that a financier was unlikely to give finance or a mortgage, to Michael in relation to the properties he purchased in circumstances where he had obtained such finance and been given a mortgage, that does not mean the statement by counsel as to it being unlikely a financier would provide finance or allow him to take a mortgage was not false and misleading. The fact that Michael had obtained his first property as a university student at the age of 24, and subsequently obtained three further properties while in his 20s earning a relevantly modest income, is unusual and does support the submission that it was unlikely that he could have obtained finance unassisted. The Court was aware of the true situation and specifically referred to the evidence that the properties were all subject to mortgages. Counsel conceded that the money could have been money loaned to Michael. The Court also challenged counsel that somebody who was studying at university could not buy houses, to which counsel responded:
HIS HONOUR: So somebody – somebody who’s studying surveying at university can’t buy houses?
MR DE JERSEY: Well, somebody who’s studying surveying at university certainly, in my respectful submission, couldn’t be – it’s not likely that they’d be able to buy three properties and have it transferred to them in their sole name a property for no consideration which they formally owned as joint tenants with their
- - -
HIS HONOUR: When you say for no consideration, where do you get that from?
MR DE JERSEY: Page 11, second row, third column. Your Honour sees transferred to Michael David Balfour as sole tenant on 19 June 2009 for no consideration.
HIS HONOUR: I see. So it’s transfers from Mr and Mrs Balfour to him.
MR DE JERSEY: Correct. Yes, your Honour. That’s right.
HIS HONOUR: Well, what about – what about – I see.
MR DE JERSEY: So - - -
HIS HONOUR: So you say – so you say that – you say that you hook into Willow Street Inala because you say that’s a transfer from Mr and Mrs Balfour to him for no consideration.
MR DE JERSEY: Yes, your Honour.
HIS HONOUR: And then you say – and then you say, then there’s all these other properties which are purchased, and the inference can be through the connection of, you say, the fraudulent Mr and Mrs Balfour that those properties could be tainted. Is that the point?
MR DE JERSEY: On the footing – yes, your Honour. On the footing that a financier is unlikely to advance finance to purchase three properties which are mortgaged. Your Honour can see that the 96 Wynnum Road, 56 Bluebell Street.
HIS HONOUR: Well, that – well, that raises another issue then, though, doesn’t it? I mean, doesn’t the son potentially have a completely different case - - -
MR DE JERSEY: In the sense it could be a proprietary claim only against him, your Honour.
HIS HONOUR: So it could be a different claim against him, but he could have different offences as well.
MR DE JERSEY: True. But your Honour, it says at the bottom of page 11, 56 Bluebell Street is owned jointly with his mother, and as is 44 Rosemary Street, Caboolture. So in my respectful submission, what your Honour’s putting to me in the result won’t matter. It says in the formulation of these orders, it says A.
HIS HONOUR: Well, I think it matters to this extent, that I will have to leave money for the son to be separately represented.
In the context of the exchange, the submissions made the representations as to a financier being unlikely to lend to someone of such an age or loan secured by a mortgage were not false and misleading. At best, the complaints of Michael lessen the weight of such a submission, however the above demonstrates the Court was aware that he had obtained loans and granted mortgages in any event;
(e)further, while counsel did not inform the Court of the true level of the interest in the Inala Property transferred by Sandra and Stewart to Michael, he was not obliged to do so. That does not mean it was irrelevant to the basis upon which the freezing order and not one of the matters from which the inference could be drawn that monies of Sandra had been used to contribute to the properties he obtained, albeit of less weight given the small interest transferred. In the circumstances, particularly having regard to the above exchange and additionally Michael’s failure to appear to contradict the position stated to the Court, I do not accept the submission of Michael’s counsel that the Freezing Order would not have been made but for that representation. It is difficult to understand why, if Michael believed that to be so firmly the case, the Court was not provided with material showing the true position on 4 or 21 June 2018 when the matters returned to the Court for hearing;
(f)as to the point in relation to the dissipation of assets, there was no evidence of any dissipation, direct or otherwise, but rather the evidence relied on the fact that Sandra had acted dishonestly and that Stewart and Michael were knowing or unknowing recipients of the fraudulent transactions. Commonly, the risk of dissipation is a matter of inference rather than direct proof. Dishonesty is prima facie evidence from which it may be inferred there is a real risk of dissipation of assets.[13] While it was not suggested that Michael had acted dishonestly or knew of his mother’s dishonesty, Michael was a part owner of two properties with his mother at Caboolture in June 2010. Given that, and his relationship with Sandra where she could be reasonably be expected to exert some influence over her son, there was a reasonable basis for[14] an inference to support an apprehension of a real risk of dissipation of assets by Sandra extending to assets held by Michael, particularly where he was a co-owner. It is clear that his Honour understood the claim against Michael may be limited to a proprietary claim only not involving dishonesty in determining whether to grant the Freezing Order.
[13]Parbery v QNI Metals Pty Ltd [2018] QSC 107 at [38], not overturned on appeal in Palmer v Parbery (No 4) [2019] QCA 27.
[14]Ibid at [32], not overturned on appeal in Palmer v Parbery (No 4) [2019] QCA 27.
Given Michael was served with the application, the fact that APM’s counsel failed to direct the Court’s attention to a number of material facts consistent with it being an ex part application.
It is contended on behalf of APM that there was prima facie evidence before Davis J, who made the Freezing Order, from which it could be inferred that Michael’s properties were at least funded in part by funds stolen by Sandra given his youth, the number of properties he held, his relatively modest income, and the amount Sandra was said to have stolen, which supported the making of the Freezing Order against him. In particular, it was submitted that:
(a)Michael owned four properties which had been acquired while Sandra was an employee of APM (or one of the AP Eagers’ companies):
(i)the Inala Property, purchased when Michael was 21 years old with Stewart and Sandra as referred to above;
(ii)the Tingalpa Property, purchased in 2009 when Michael was 23 years old; and
(iii)two Caboolture Properties, purchased in June 2010 when Michael was 24 years of age.
(b)Michael’s taxable income in 2015 was $42,455 and $68,347 gross[15]; and
(c)Michael had the same accountant as his mother at least in 2015.
[15]Which fails to take account of rental income.
According to APM, given Michael’s relatively young age and his relatively low income in 2015, even with the rental income being taken into account in addition to his employment income, there was a basis to infer that Michael’s property had been purchased using funds provided in whole or in part by Sandra which had been misappropriated, whether knowingly or otherwise,[16] notwithstanding that the properties had been acquired prior to July 2010.
[16]Although it was fairly conceded by counsel that there was no evidence of Michael having known he had received misappropriated funds.
As submitted by counsel for APM in substance the above matters were what was relied on before Davis J, putting aside the reference to the Willow St Inala Property transfer being made in “shadowy circumstances.” The Court was satisfied that a prima facie case was established in determining to grant the order. I have not found that the complaints of Michael demonstrate that the submissions or evidence was misleading or that there was any material non-disclosure (assuming that a duty arose that applied in ex parte applications which it did not).
Continuation of the Order
Michael contends that the Freezing Order should not have been continued after the filing of the statement of claim on 29 May 2018, as the statement of claim crystallised the period of fraudulent misappropriations as being since July 2010, such that the funds misappropriated by Sandra could not have been used to acquire properties in the name of Michael solely or with Sandra. The statement of claim, however, stated “at least since July 2010” as set out above and was not limited in the way submitted on behalf of Michael. Michael also relies on the fact Sandra filed an affidavit deposing to the fact that she and Stewart had made no financial contributions to the acquisition of Michael’s properties. While Sandra’s evidence no doubt was treated with a level of circumspection given the allegations, the fact that it was merely statements by her without any supporting documentation would have carried little if any weight. No affidavit was provided by Michael at that stage.
After the initial hearing, Michael was served with the Freezing Order. According to Michael, he understood that a Freezing Order was in place but not what it fully meant.
Michael did not appear on 4 June 2018 before Boddice J when the matter had been listed for directions. Although submissions were made purportedly for Michael’s benefit by Mr Morris KC who was appearing for Sandra, he was not acting on Michael’s behalf. No material was read by Mr Morris KC, including the affidavit of Sandra filed on 1 June 2018. While Mr Morris KC made submissions that the order against Michael should be narrowed, no submissions were otherwise made that the order should not continue.
The proceeding returned before the Court on 21 June 2018.
Michael was represented at the hearing of 21 June 2018 by Mr Londy. Prior to that hearing, Michael had relayed his views to Mr Londy, which were ultimately reproduced in a letter by Mr Londy of 19 June 2018 sent to APM’s solicitors. Michael stated he was aware of the arguments raised in that letter which identified flaws in the evidence in the Court and that there was no good arguable case that supported the Freezing Order. The prospect of caveats lodged by consent by APM and the Freezing Order was also proposed.
At the 21 June 2018 hearing, the Court was informed by Mr Morris KC that:
The point has now been reached where, I think, all parties agree that the interim regime should continue until trial, subject to any respondent having liberty to reply on seven days notice for a variation. And apart from that, the only changes sought are an extension of time for each respondent to deliver a defence until the 11^th of July and the applicant to file and serve a reply by the 25^th of July…
Mr Londy indicated that Michael agreed with the draft order referred to by Mr Morris KC. Michael could not recall that he gave consent to the continuation of the Freezing Order but recalls they were not in a position to pursue the arguments at the time. He did not suggest that he had not given Mr Londy instructions to consent.
Given the agreement to the continuation of the Freezing Order, Michael’s contention that the order should not have been continued is misconceived. Michael consented to the continuation, notwithstanding matters had been raised by Mr Londy in correspondence criticising evidence and the case raised against Michael prior to that date, and Michael had sworn an affidavit prior to the hearing which stated he had 100 per cent beneficial interest in all properties even where Sandra was a registered co-owner. He also provided some bank statements from Suncorp. That included the account 054435737 in the joint names of Sandra, Stewart and Michael, the existence of which Michael stated he was unaware.
The matters raised in the correspondence have largely been addressed in relation to the arguments as to why the Freezing Order should not have been granted. Michael’s affidavit raised some matters which could properly be raised in defence but did not show APM had no cause of action against Michael or basis for maintaining the Freezing Order.
Post-June 2018
A defence was filed on behalf of Michael on 12 July 2018 disputing that Sandra and Stewart had anything other than a bare title over the properties for which they were listed as co-owners and that they had made any financial contribution to the properties. Michael disputed that APM had any entitlement to relief against him.
A subsequent letter was sent by Londy Lawyers to Lander & Rogers of 20 August 2018, which alleged that APM had no cause of action against Michael and that the claim should be struck out, which foreshadowed an application for summary judgment striking out the statement of claim and/or vacating or varying the Freezing Order would be filed. Such an application was filed on 12 November 2018.
Michael had provided two affidavits by the time his application was filed on 12 November 2021. A third affidavit was filed on 27 November 2018. Two affidavits were also filed by Mr Londy. Michael’s affidavits suffered from containing a mixture of evidence and submissions. In some cases, Michael corrected assumptions made by APM in its correspondence as to the true position. For example, Michael corrected the allegation that he paid an $85,000 deposit for the Tingalpa Property, attaching the contract of sale to demonstrate that the deposit paid was $8,000, and explaining that he had combined the loan for the Inala and Tingalpa Properties. In other cases, he deposed to the fact that he was unaware of the Suncorp bank account opened in his name and was unaware a transfer was made from that account to him. In his third affidavit, Michael deposed to his having purchased the four properties with his own monies, their being mortgaged and the rental income obtained, and the accounts they were paid into as well details of the mortgage payments and his employment from 2006. Some of those matters had been said not to have been disclosed by Ms Nguyen in her affidavit which in some respects he pointed out was incorrect and otherwise he sought to provide the information which she indicated APM was seeking.
Ms Nguyen, a solicitor acting on behalf of APM, outlined the basis of the case against Michael and the matters which APM was not presently aware of but would expect to be the subject of disclosure in her affidavit of 23 November 2018. She also deposed to APM’s investigations in relation to whether misappropriations had occurred prior to July 2010 being ongoing. In correspondence to Michael’s solicitors, APM identified the basis upon which it alleged it had a valid tracing claim against Michael. That claim had not been pleaded in significant respects. That correspondence further indicated that APM needed evidence from Michael to support his defence that no monies were provided to Michael by Sandra or Stewart for the ongoing payments for properties and he did not receive monies into his account from Sandra and Stewart.
In cross-examination, Ms Nguyen stated that concerns were held by APM that monies that had been misappropriated had been used to purchase properties held by Michael because he did not have funds to purchase a property and the First Crawford Report stated that it was likely that misappropriations had occurred prior to July 2010. Ms Nguyen stated that even though the property was subject to a mortgage, she did not think it was a real possibility that the bank would have 100% financed the purchase of a property (though she accepted it was a possibility). Ms Nguyen did not know that Michael had employment while he was a university student or the amount of income he earned when she swore the affidavit. She considered the fact that Michael was young and a university student when he purchased a property was unusual. Ms Nguyen also placed weight on Michael’s salary in relation to the acquisition of the other three properties which she thought was approximately $40,000, but agreed, that looking at his tax return for 2015 his gross income, taking into account work allowances and rental income and negative gearing losses, was in the realm of $100,000.

APM contends that Michael has not established that he and his wife would have had the capacity to borrow during the relevant period or secure the property for the asking price. In that regard APM submits:
(a)Michael did not put any evidence before the court as to what his earnings were in 2019 -2020 when he intended to buy the next property nor of his wife’s finances or her capacity to borrow, a matter which he agreed in cross-examination;
(b)Michael has not shown evidence of his capacity to borrow. In that regard it points to the lack of evidence that the bank would have provided the loan given he would have had to provide his assets and liabilities and was relatively highly geared given he had four properties all of which were subject to mortgages;
(c)In that regard, the respondent points to the email from the National Australia Bank dated 14 October 2022 which indicated the process that would occur in relation to a loan. The email stated, amongst other things, that if the valuation and credit assessment were acceptable and “your financial situation has not changed” it would send a formal offer.[72] There is no evidence however of what Michael and his wife’s financial circumstances were or what information was placed before the bank. It further contends that the court would question Michael’s ability to have borrowed given his income in 2018 dropped and that his evidence of his living expenses showed a level of frugality such that a lender may question its accuracy;
(d)Michael’s evidence (and instructions to Mr Cook) as to his mother being placed on the title for each of the Caboolture properties in 2009 was that he was not at that stage able to obtain loan without his mother being a co-owner;
(e)That the court should infer that Michael was not committed to getting a property. The respondent submits that given Michael was contending that the case supporting the Freezing Order was bound to fail and that the Freezing Order would be discharged, he did not apply to set it aside until November 2018 and then did not pursue the application to set it aside. The respondent contends that had he been so eager, he would have proceeded with the strike out application.
(f)In January 2019 he was informed by Suncorp that the loan was refused. According to the email, it stated that the application did not meet current servicing and policy requirements. Michael however attributes the refusal to the Freezing loan and the manner in which APM’s lawyers described the proceeding. APM rely on Michael’s evidence that he couldn’t pay legal costs until 2020 when he was able to borrow from his wife and that in relation to refusal by Suncorp in 2019, Michael had stated at paragraph 25 of his affidavit of 16 March 2023 that: [73]
At the time the loan application was refused, I owed a substantial amount in legal costs and my income from employment and rent was covering mortgage payments and other expenses from my four properties and my living expenses, and not leaving a sufficient amount to pay outstanding legal costs or the cost of further action. As at 5 February 2019 my bank balance was $5,111.81.
[72]MDB-111 to the Affidavit of Michael Balfour affirmed 11 November 2022.
[73]Michael provided a bank statement for his Suncorp Account which showed a closing balance of $11,982.54: MDB-128 to the Affidavit of Michael Balfour filed 16 March 2023.
The further difficulties with Michael’s claim that APM identifies is that:
(a)Further, the notion that the property would have been held until the discharge of the Freezing Order rather than having been realised for a capital gain when he was reasonably geared is highly questionable and should be subject to a significant discount; and
(b)Any loss is not purely Michael’s given that he and his wife were planning on buying the property together. Thus, only half loss could be attributed to being Mr Balfour’s. The latter was not a point in contention.
The respondent therefore contends that the value of the opportunity must be discounted to take account of the risk factors.
According to the report of the National Australia Bank, the Michael Road, Tingalpa Property had been sold in January 2018 prior to the making of the Freezing Order. Counsel for Michael however in oral submissions stated that the property was for sale during the Freezing Order period which was not challenged by APM in reply. I will assume that there was an opportunity to buy the property or at least one of the properties identified by Michael that was looked at by his wife and that they would have bought for a similar price.
I accept that after July 2019 and 2020 Michael and his wife were looking to buy a house having been married the year before. The real question is whether Michael and/or his wife would have been in a position to purchase the property absent the Freezing Order. In that regard APM submits the Court should find that Michael has not established that he had the borrowing capacity to purchase a property at that time.
I accept Michael had shown himself to be a capable investor and had purchased four properties by the age of 24. He was funding those properties through his income and the rental income. On the evidence before me given that he had some surplus after payment of the loan repayments, incidental property costs and other expenses, although generally not significant and with very modest living expenses. He was not challenged in relation to those figures. However, it is apparent from the best evidence before me, namely the schedule prepared by Michael himself that his income and rental dropped in 2018. That is significant given the period when he would be looking to buy a property was after 2018 and no financial information has been provided as to Michael’s earnings or liabilities. His income and rental was in early 2019 said by Michael to be covering his mortgage, property costs, expenses and living costs without sufficient leftover funds to meet his legal costs. In 2019-2020 his wife was able to contribute to the purchase of the property and he had some equity in the properties he owned. While the Commonwealth Bank had in an email to his wife referred to a loan of $600,000 being able to be provided if Michael also purchased the property, that was contingent on him providing his assets and liabilities so whether or not, regardless of the Freezing Order, his financial position would have resulted in the grant of a loan remains unknown. His income did not appear to be increasing significantly and indeed in 2018 was decreasing. It is also the fact that the National Australia Bank lent he and his wife $800,000 and they were able to purchase the Tingalpa property. According to his own evidence that followed the sale of two of his properties which would have reduced his expenses. While the equity in his properties would have been a factor in his favour in obtaining finance, the absence does not enable me to conclude that he and his wife could have serviced the loan while maintaining the other four properties. Unfortunately on the present state of the evidence I cannot be satisfied on the balance of probabilities that Michael would have been able to purchase the Tingalpa property if the Freezing Order had not been in existence.
If I had been satisfied that Michael and his wife had the capacity to borrow sufficient funds to purchase the Tingalpa property I would have discounted any loss to take account of the fact that other purchasers may have been able to outbid Michael and his wife or been able to purchase the property before they did. I would have further discounted it to take account of the fact that they may not have been able to service the loans of all of the properties and the Tingalpa property and may have had to sell the property. Taking into account the possibilities and probabilities I would have reduced the claimed capital loss of $312,000 by 30 %. Only half of that loss would have been claimable by Michael albeit that his wife were joint tenants.
Investment Property
Michael claims he would have purchased a further investment property as well as the residential property.
Michael has presented evidence that he and his wife looked at a number of different properties and, in that regard, have supporting emails with real estate agents that show that contact was made with real estate agents and interest expressed. Accordingly, Michael has identified multiple properties, including ten that he could have purchased.
In his affidavit of 11 November 2022, Michael identified houses at 18 Doherty Place, Wakerley; 89 Randall Street, Wynnum West; 15 Poinciana Street, Wynnum West; 11 Bent Street, Cannon Hill; and 10 Verdun Street, Tingalpa, one of which, but for Freezing Order, they would have purchased.[74] Michael noted that the houses at Wynnum West and Cannon Hill were at a lower price range than the house at Wakerley, but because their savings were insufficient even those houses were beyond their ability to raise finance without getting security.
[74] Affidavit of Michael Balfour affirmed 11 November 2022 at [11].
. In final submissions Mr Hackett, on behalf of Michael, submitted that the relevant lost opportunity in this case was in relation to Michael’s opportunity to purchase a residence when housing prices were lower during the operation of the Freezing Order. It is contended that the loss suffered by Michael is a capital loss of $291 4310 based on an average of ten properties. This was derived from the report of Mr Bristow, the valuation expert called on behalf of Michael. He provided a report comparing the price of the property as at the sale date of the property in 2019 and 2020 and then gave a value for that property as at March 2022 and a percentage increase in the property. That was supported by providing a suburb by suburb summary as to the movement in the price of property.
Putting aside the challenges of dealing with multiple alternatives the same difficulties as identified in relation to the residential property applies to the purchase of an investment property. For the same reasons outlined above, such that I cannot be satisfied that Michael on the balance of probabilities would have been able to purchase the property but for the Freezing Order in place.
While it is clear that Michael was a fairly entrepreneurial young man, accruing four properties by the time he was 26 years of age. However, that had not continued to purchase properties after 2010 up until the Freezing Order was made.
While the court has considerable sympathy for Michael in terms of the position he found himself in in being subject to a Freezing Order which ultimately was discharged and a proceeding against him which was ultimately dismissed, the evidence before me does not establish that he would have been in the position to purchase the house but for the Freezing Order. Accordingly, I cannot conclude on the balance of probabilities on the evidence before me that he did suffer loss as a result of the Freezing Order.
If I had been satisfied on the balance of probabilities that loss was caused to Michael I would have characterised the loss of opportunity as a loss to an investment property before the rise in the market and make a capital gain between 2019 and 2020. Given the fact that the evidence does not suggest his income had gone up significantly in that period. I estimate that he would have, lost an opportunity to buy a house at the lower end of the scale between $550,000 to $600,000. Assuming that he would have been able to buy one of the Properties at Wynnum West which Michael and his wife had looked at and which he said he would have bought in the period 2019 and 2020 that were priced between $500,000 and $600,000, other than Samarinda Street, Tingalpa the increases in the property between the sale date and 3 March 2022 was 46 per cent, 54 per cent, 44 per cent, 45 per cent, 48 per cent, 58 per cent and 44 per cent. Taking the difference between the sale price and the value as at March 2022 for each property and then drawing the average of the movement in those properties is a price of approximately $274,250 as the approximate capital loss. I would discount that amount by one-third to take account of the risk factors which would include the terms of offer for the loan not being acceptable, other parties buying the properties first or outbidding Michael and not being able to retain the properties.
Loss of inheritance
Michael contends that he lost the benefit of his inheritance of $650,000 from his late father, Stewart, because the Freezing Order prevented his father from severing the joint tenancy on the Wakerley property.
For the purposes of this argument I have assumed that Michael can claim for payment of a compensation on the basis that he is a person affected by the operation of the order against Stewart. However, ultimately that does not alter the outcome and I find this basis for the claim for damages is not made out.
After the criminal charges were dropped against Michael’s father in July 2021, Stewart was diagnosed with terminal cancer. He did not have a Will and went to the Public Trustee in order to obtain one. The instructions given to the Public Trustee assumed that Sandra and Stewart could separately bequeath their respective half shares in the house. Under Stewart’s Will dated 16 August 2022, Stewart provided that Michael and his wife would share equally in his share and interest in the Wakerley property. However, the joint tenancy had not been severed between his father and his mother. In an exchange of emails with the Public Trustee, the Public Trustee officer informed Sandra on 26 July 2021 that she and her husband owned the properties jointly with the effect that should either of them pass, the survivor would automatically own 100 per cent of the property. Following that email, it appears Stewart sent an email stating:[75]
After me and my wife having discussions with you yesterday this is what we are wanting to happen.
At present Stewart and Sandra have a Commonwealth Bank account separately. We also have a joint bank account with Suncorp.
If anything happens to Stewart Lauren Balfour will receive everything that he has.
If anything happens to Sandra, Michael Balfour will receive everything that she has. If something happens to both of us then they each get 50%…
[75]MDB-29 to the Affidavit of Michael Balfour affirmed 30 June 2022.
The Will made by Stewart in fact provided:[76]
[76]MDB-30 to the Affidavit of Michael Balfour affirmed 30 June 2022.
I give –
the whole of my estate to my wife Sandra Balfour otherwise known as Alexandrina Cummings but if this gift fails then the following provisions for this distribution shall apply instead.
8. Specific Bequest
I give to my son Michael Balfour and my daughter-in-law Lauren Balfour my share and interest in the property known as 14 Burdekin Street, Wakerley, Queensland and all my household furniture and household effects (other than motor vehicles) therein at my death which shall be held by them or the survivor of them equally.
9. Further gift of residue
I give –
my residuary estate to my son Michael David Balfour absolutely. …
Stewart passed away before his wife and his wife and his wife remains living. As such, the specific bequest did not operate given clause 7 of the Will.
Sandra gave evidence. According to her, she and her husband in about early June 2021 had decided to get their Wills done and had decided to get them done by the Public Trustee. According to her, when the Public Trustee officer told them that Sandra would receive Stewart’s interest because the property was owned by them as joint tenants, they were not happy. Sandra and Stewart wanted the draft Wills to expressly state Michael would receive Stewart’s half of the Wakerley property if Stewart died and her half if she died. Sandra states that after she received the 26 July 2021 email explaining the effect of joint ownership, she and Stewart had discussed things again and decided because of the Freezing Order on Michael, it would better for Stewart to leave his 50 per cent interest in the Wakerley property to Michael’s wife Lauren and for Sandra to leave her interest to Michael. That resulted in the email of 29 July 2021. According to Sandra, following that both she and Stewart reconsidered and decided each would leave their half share to both Michael and Lauren. As a result of that, she stated that they had a telephone conference with the Public Trustee officer and told her what they wanted. She stated that she and Stewart wanted to change the Wakerley property from joint tenancy to tenants-in-common, however because of the Freezing Order and the solicitors of the plaintiff being so uncompromising they knew asking for permission to transfer the property to each of them as tenants-in-common would be a waste of time and therefore did not pursue it. They signed the Will on 16 August 2021.
In cross-examination Sandra denied that she understood that because she was guilty for at least part of the amount of money that she was accused of, it was likely that when the house was sold the money would go back to the people from who she had stolen money. She denied that one of the reasons she was keen to sever the tenancy was as a way of ensuring the creditors would not get the money but rather Michael would instead. That was a matter she denied. In relation to the suggestion that it would have been a waste of time to approach APM’s lawyers to see whether they would permit the title to be severed, because they had “refused every request made by my solicitors” she had to agree that the plaintiff’s solicitors had consented to enlarging the amount she could spend from her assets in April 2022 and August 2021 and December 2021. The enlargement of the amounts were not opposed by the plaintiff’s solicitors rather the amount which she had sought. The extent of the amount which she had sought had been sought.
While I do accept Sandra’s evidence that she and Stewart discussed leaving Michael the property as reflected in their exchanges with the Public Trustee. I don’t accept that it had gone beyond that and that Stewart had decided to sever the tenancy and only did not do so as a result of the Freezing Order. This is supported by the fact that Stewart ultimately left his whole estate to his wife, and did not take any steps towards severance. While Stewart was an unwell man and passed away in September 2021, if he and Sandra had both wished to sever the joint tenancy, one would have envisaged that they would have at least taken steps to write to the other side to request that they would be able to do so and then take urgent steps to have the Freezing Order discharged against Stewart to be able to effect a severance of the tenancy. While there were exchanges with the Public Trustee none of these steps were taken.
In any event, in order to succeed in his claim, Michael must show that the Freezing Order was wrongly ordered against Stewart.
The claim fails given that the evidence does not establish that the order against Stewart was wrongly made.
As to the notion that the proceedings were wrongly brought against Stewart on the same basis as Michael, there are a number of difficulties with that proposition. First, Stewart had legal representation in relation to the Freezing Order and did not contend that the Freezing Order should not be made. Secondly, the proceedings against Michael were dismissed in June 2021. Stewart was informed that the criminal charges against him would be dropped on 9 June 2021. Notwithstanding that, he took no steps to have the Freezing Order dismissed against him. While Counsel for Michael referred to the same evidence he had relied on in relation to Michael to say there was no case, Stewart was in a different position to Michael insofar as he shared the joint bank accounts into which large amounts of money alleged to be misappropriated were paid. the property was jointly owned by Sandra and Stewart and the allegation made against him were different. As to the question of whether the loss claimed is foreseeable at the time the Freezing Order was granted, Counsel for Michael contends that the proper question was whether property frozen cannot be dealt with by a registered proprietor in a way in which he ordinarily could and any loss that flows from that inability to so deal with it which would include the property being disposed of under that person’s Will. However the loss claimed is that suffered by a beneficiary under the Will said to arise because the party to a Freezing Order could not sever a tenancy to leave the beneficiary the property the subject of the Freezing Order. In circumstances where the Freezing Order was against both property owners and there was no evidence that Stewart was in ill health at the time of the making of the order, loss was not of a kind that could have been reasonably foreseen.
Summary of Conclusions

Michael has been successful insofar as the Court has determined he is to be paid standard costs of the proceedings up until February 2020 and indemnity costs from March 2020 until the proceedings were dismissed.
As to the claims for compensation, I do not find that Michael has established an entitlement to compensation under the undertaking.

Orders

The Court orders that:
(a)The plaintiff is to pay the defendant:
(i)His costs of the proceedings, including the costs of the Freezing Order on a standard basis until February 2020;
(ii)His costs of the proceedings including the costs of the Freezing Order on an indemnity basis after March 2020.
(b)The third defendant’s application for compensation pursuant to the Undertaking be dismissed.

I will hear submissions from the parties as to costs of the third defendant’s application filed 26 May 2022 at a time to be agreed between the Court and the parties in the week of 26 February 2024 unless the Orders can be agreed between the parties.
When judgment was delivered, following submissions of the parties, the Court gave directions for the delivery of submissions as to costs if the costs order could not be agreed. The Court therefore directed that the plaintiff would deliver its submissions on 8 March 2024 and the third defendant will deliver his submissions on 15 March 2024.

CITATION:	A.P. Motors (No 2) Pty Ltd v Balfour [2024] QSC 18
PARTIES:	A.P. MOTORS (NO 2) PTY LTD ACN 010 585 243 (plaintiff) v SANDRA BALFOUR (first defendant) AND STEWART ALEXANDER BALFOUR (second defendant) AND MICHAEL DAVID BALFOUR (third defendant)
FILE NO/S:	BS No 5288 of 2018
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	16 February 2024
DELIVERED AT:	Brisbane
HEARING DATE:	3–6 April 2023 Further submissions received 23 May 2023 (plaintiff); and 24 May 2023 (third defendant)
JUDGE:	Brown J
ORDER:	1. The plaintiff is to pay the defendant his costs of the proceedings, including the costs of the Freezing Order on a standard basis until February 2020. 2. The plaintiff is to pay the defendant his costs of the proceedings including the costs of the Freezing Order on an indemnity basis after March 2020. 3. The third defendant’s application for compensation pursuant to the Undertaking be dismissed.
CATCHWORDS:	INDEMNITY COSTS – STANDARD COSTS – DISCRETION – whether plaintiff had no reasonable cause of action against the third defendant - whether the plaintiff acted unreasonably in conduct of litigation – whether plaintiff unduly prolonged allegations against the third defendant for which there was no reasonable cause of action – whether the plaintiff unreasonably delayed the proceedings or otherwise acted unreasonably FREEZING ORDERS – USUAL UNDERTAKING UPON GRANT OF FREEZING ORDER – COMPENSATION – COSTS – LOSS OF OPPORTUNITY – CALCULATION OF DAMAGES BY REFERENCE TO PROBABILITIES – whether the third defendant is entitled to compensation pursuant to an undertaking given for a freezing order - where the third defendant must show damage caused by freezing order as distinct from being caused by existence of litigation – whether costs can be claimed as compensation under an undertaking – whether the third defendant is entitled to compensation under an undertaking for loss of opportunity to purchase property – whether compensation for distress is available under an undertaking – whether compensation for loss of inheritance is available under an undertaking Legal Profession Act 2007 (Qld) ss 316, 341, 705 Uniform Civil Procedures Rules 1999 (Qld) rr 5, 171, 260A, 293, 389, 444, 658 Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 Al-Rawas v Pegasus Energy Ltd [2008] EWHC 617 Badenach v Calvert (2016) 257 CLR 440 Baltic Shipping Company v Dillon (1993) 176 CLR 344 Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2009] 2 Qd R 356 Cockburn v Edwards [1881] UKLawRpCh 203 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 European Bank Ltd v Evans (2010) 240 CLR 432 First Mortgage Finance Corp Ltd v Kace Management Pty Ltd [2009] QSC 319 Flegg v Hallett [2015] 1 Qd R 191 Hamod v New South Wales (2002) 188 ALR 659 Hunt v Ubhi [2023] EWCA Civ 417 JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139 Latoudis v Casey (1990) 170 CLR 534 Laws v Collins Exposed Aggregate Pty Ltd [1997] NSWCA 186 Legal Services Commissioner v Bone [2014] QCA 179 Love v Thwaites [2014] VSCA 56 McMahon v Gould (1992) 7 ACLR 202 Mineralogy Pty Ltd v The State of Western Australia [2020] QSC 344 Palmer v Parbery (No 4) [2019] QCA 27 Parbery v QNI Metals Pty Ltd [2018] QSC 107 Principle Properties Pty Ltd v Brisbane Broncos Leagues Club Limited [2018] 2 Qd R 584 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Sigma Pharmaceuticals (Australia) Pty v Wyeth (2018) 136 IPR 8 Smith v Day (1882) 21 Ch D 421 Winky Pop Pty Ltd v Mobil Refinery Australia Pty Ltd [2016] VSCA 187 Wyatt v Albert Shire Council [1987] 1 Qd R 486
COUNSEL:	N H Ferrett KC for the plaintiff P W Hackett for the third defendant
SOLICITORS:	Lander & Rogers for the plaintiff Londy Lawyers for the third defendant