Batrouney v Forster - [2016] VSC 393

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2009 06947

NOEL BATROUNEY and ANDREW LYLE (in their capacity as receivers of the law practice known as Hollows Lawyers ABN 840 058 016)	Applicants
v
DAVID FORSTER	First Respondent
and
MAIRE PHILOMENA FORSTER	Second Respondent

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JUDGE:	KEOGH J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 June 2016
DATE OF JUDGMENT:	14 July 2016
CASE MAY BE CITED AS:	Batrouney & Anor v Forster & Anor
MEDIUM NEUTRAL CITATION:	[2016] VSC 393

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PRACTICE AND PROCEDURE – Freezing order – Application to vary – Freezing order made against entirety of superannuation fund containing separate accounts for each respondent – Second respondent seeking to vary freezing order in respect of the funds in her name only – Arguable case established that a portion of the funds in the account in the second respondent’s name were ‘tainted funds’ – Requisite risk of dissipation shown – ‘Just and convenient’ that a freezing order be made against that portion of the funds in the account only – Freezing order varied.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr C Caleo QC	Hall & Wilcox
For the First Respondent	No appearance
For the Second Respondent	Mr A P Trichardt	Charles Fice Lawyers

HIS HONOUR:

Introduction

By order made by Emerton J on 12 April 2010, the applicants were appointed receivers to Hollows Lawyers (the ‘legal practice’) under the Legal Profession Act 2004.[1] Subsequently, on 21 May 2010, Emerton J made an order sought by the applicants and the Legal Services Board to restrain the first respondent, the principal of the legal practice, ‘… from disposing of, dissipating or otherwise dealing with, the net proceeds of the sale of the land and the improvements known as Suite 13, 395 Nepean Highway, Frankston, Victoria.’
[1]Legal Services Board v Forster [2010] VSC 102.

In a separate proceeding commenced on 13 February 2012, the applicants sought to recover from the first respondent an amount of just under $7 million (the ‘recovery proceeding’). The claims against the first respondent related to the conduct by him of the legal practice and included allegations that money held in trust for certain clients was transferred for double payment of disbursements (the ‘double disbursement claims’), and allegations that trust money was transferred for payment of accounts for professional fees rendered otherwise than in accordance with the terms of relevant fee agreements (the ‘fee agreement claims’).

On 27 May 2015, Robson J delivered judgment dismissing the applicants’ claims in the recovery proceeding.[2] Those orders were successfully appealed by the applicants in respect of both the double disbursement claims and the fee agreement claims. The initial judgment of the Court of Appeal was delivered on 27 April 2016.[3]
[2]Batrouney v Forster [2015] VSC 230.
[3]Batrouney v Forster [2016] VSCA 80.

Following delivery of the Court of Appeal judgment, the applicants sought information from the first respondent as to his assets, as well as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Batrouney v Forster

Details

AGLC: Batrouney v Forster [2016] VSC 393
Case: [2016] VSC 393
Decision Date: 14 July 2016

CaseChat Overview and Summary

The case of Batrouney v Forster involved an application to vary a freezing order that had been issued against the entirety of a superannuation fund. This fund contained separate accounts for each of the respondents, who were also the parties to the proceedings. The second respondent sought to have the freezing order varied to apply only to the funds in her name, arguing that a portion of those funds constituted 'tainted funds'. The applicants needed to demonstrate that there was an arguable case that the second respondent's account contained such tainted funds and that there was a requisite risk of dissipation if the order was not varied to exclude those specific funds.

The court considered whether there was an arguable case that a portion of the funds in the second respondent's account were tainted, and if so, whether it was just and convenient to make a freezing order against those funds only. The court determined that the second respondent had established an arguable case that some of her funds were tainted, and that there was a sufficient risk of those funds being dissipated if the order remained in its original form. The court held that it would be just and convenient to vary the freezing order to apply only to the tainted portion of the second respondent's account, thereby protecting those assets while allowing the untainted funds to remain accessible.

Consequently, the freezing order was varied to exclude the untainted funds in the second respondent's account from its scope. The court's decision was based on the principle that the variation would be in the interests of justice and would provide an appropriate balance between protecting the assets at risk and ensuring that the second respondent's untainted funds were not unnecessarily restricted. The final orders reflected the court's decision to vary the freezing order as described.

Orders