Charalambous v Burgess
[2017] VSC 550
•14 September 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PERSONAL INJURIES LIST
S CI 2015 06290
| LOIS CHARALAMBOUS | Plaintiff |
| v | |
| RAYMOND CLAUDE BURGESS | Defendant |
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JUDGE: | Zammit J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 September 2017 |
DATE OF RULING: | 14 September 2017 |
CASE MAY BE CITED AS: | Charalambous v Burgess |
MEDIUM NEUTRAL CITATION: | [2017] VSC 550 |
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PRACTICE AND PROCEDURE – Freezing order – Risk of dissipation of assets – Pre-existing liabilities including non-secured loan to third party – Application refused – Order 37A of the Supreme Court (General Civil Procedure) Rules 2005.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Coote | Adviceline Injury Lawyers |
| For the Defendant | Mr C Archibald | Winn Legal |
HER HONOUR:
Introduction
By summons dated 31 August 2017 the plaintiff, Lois Charalambous, seeks a freezing order pursuant to Order 37A of the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’) restraining the defendant, Raymond Claude Burgess, from removing the proceeds of sale or any part thereof of 168 Springs Road, Sedgwick, being the property on Certificate of Title 9752 Folio 246 (‘the property’) from his solicitor’s, Winn Legal, trust account and/or disposing of or dissipating the proceeds of sale of the property, except as provided by the Court.
The application was opposed by the defendant.
The plaintiff relied on the affidavit of Deidre Petrakis, the plaintiff’s solicitor of Adviceline Injury Lawyers (‘the plaintiff’s solicitors’) sworn 31 August 2017. The defendant relied upon the affidavits of the following:
(a) Raymond Claude Burgess sworn 1 September 2017;
(b) Nea Leonie Burgess sworn 1 September 2017;
(c) John Henry Rush sworn 1 September 2017;
(d) Louise Hamby D’Wynn affirmed 1 September 2017; and
(e) Cathryn Tanya Wardrop affirmed 1 September 2017.
Relevant principles
A freezing order is an extraordinary interim remedy made for the purpose of preventing the frustration of the Court’s process by freezing assets where there is a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied. It is not an order to provide security in respect of a judgment.
The Court’s power to make a freezing order arises from the following sources:
· Order 37A of the Rules;[1]
· Practice Note SC Gen 17;[2] and
· Common law.
[1]Rule 37A.06 provides that ‘nothing in the Order limits the inherent, implied or statutory jurisdiction of the Court to make a freezing order or an ancillary order.’
[2]Supreme Court of Victoria, Practice Note SC Gen 17 – Freezing Orders, 30 January 2017 (‘Practice Note SC Gen 17’); R 37A.02(4) provides that in making a freezing order, the Court shall have regard to Practice Note SC Gen 17.
The Court has a discretion as to whether an order should be granted, and if so, on what terms.[3] Factors relevant to the granting of a freezing order include the following:
[3]Robmatjus Pty Ltd v Violet Home Loans Australia Pty Ltd [2007] VSC 165 [52] (Hargrave J).
(a) a freezing order, by its very nature, is a drastic remedy and a court must exercise a high degree of caution before taking a step which will interfere with a party’s capacity to deal with his or her assets;[4]
[4]Zhen v Mo [2008] VSC 300 [22] (J Forrest J).
(b) an order can only be made on the basis of admissible evidence which supports the contentions made by the applicant. As was noted in Zhen v Mo,[5] ‘speculation and guesswork is no substitute for either the facts or inferences properly drawn from proved facts’;
[5]Ibid [25].
(c) the applicant bears the burden of establishing that there is:
(i) an arguable case against the defendant;[6] and
[6]Rule 37A.05(1)(b); Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49.
(ii) a danger that the prospective judgment will be wholly or partly unsatisfied as a result of the defendant’s action in either removing the assets or disposing or dealing with them so as to diminish their value.
(d) the ultimate question on an application for a freezing order is whether in all the circumstances it is ‘just and convenient’ that the order be granted.[7] The balance of convenience must favour the granting of the freezing order.[8] Accordingly, the conduct of the plaintiff, and also any prejudice to a third party caused by the injunction, may be material. In this regard, the affidavit material must, where possible, identify any third party who may be affected by the order and how that person may be affected;[9]
[7]Zhen v Mo [2008] VSC 300; Pearce v Waterhouse[1986] VR 603.
[8]Zhen v Mo [2008] VSC 300 [27].
[9]Practice Note SC Gen 17, s 4.18 (d).
(e) the applicant should proffer an appropriate undertaking, including the usual undertakings as to damages;[10]
[10]Practice Note SC Gen 17, s 4.14.
(f) if it is demonstrated that the applicant has or may have insufficient assets within the jurisdiction to provide for usual undertakings as to damages, the applicant may be required to support the undertaking of security.[11] The applicant is required to provide a frank assessment of its ability to meet the profit undertaking;[12]
[11]Ibid s 4.15.
[12]Ibid s 4.17.
(g) the applicant should be able to indicate the likely value of the award sought to be made against the judgment debtor or the prospective judgment debtor;[13]
(h) there is no set process of determining the exact nature of an order. The order will be framed according to the circumstances of the case;[14] and
(i) ‘there may be discretionary considerations which militate against the granting of a freezing order, such as delay in bringing the application on before the court or a lack of candour in the materials placed before the court’.[15]
[13]Ibid s 4.18 (a)(ii); Zhen v Mo [2008] VSC 300 [29]
[14]Jackson v Sterling Industries Limited (1987) 162 CLR 612, 621.
[15]Zhen v Mo & Ors [2008] VSC 300 [30] (Forest J) as cited in Cardile v LED Builders Pty Ltd (1998) 198 CLR 380; See also, Deputy Commissioner of Taxation v AES Services (Aust) Pty Ltd [2009] VSC 418 [20].
The factual background
The plaintiff contacted her solicitors on 17 September 2015 for advice relating to a psychological injury. She instructed her solicitors that from about 1954 to 1957 (‘the relevant period’) the plaintiff lived with the defendant and the defendant’s family at 690 Daley Road, St Arnaud (‘the premises’). She alleges that during the relevant period the defendant on many occasions sexually assaulted her at the premises (‘the sexual abuse’).
The plaintiff’s solicitor deposes that on 25 September 2015, civil litigation against the defendant had been contemplated. She arranged for land title searches to be carried out to identify what assets were held by the defendant. The search results identified two titles in the defendant’s name:
(a) Certificate of Title 5989 Folio 635 (Greater Bendigo) Lot 1 of Plan TP748089V; and
(b) Certificate of Title 9752 Folio 246 (the property) Lot 1 of Plan LP206713E.[16]
[16]Affidavit of Deidre Petrakis sworn 31 August 2017, Exhibit DZP1 [5] (‘Petrakis affidavit’).
On 11 December 2015, upon the plaintiff’s instructions, a generally endorsed writ was issued in this Court. On 28 September 2016 a statement of claim was filed with the Court and the defendant was shortly thereafter served with the writ and statement of claim.
On 2 February 2017, the plaintiff’s solicitors received a phone call from the defendant’s solicitors advising them that defendant was in poor health, that he had no money or assets, and that he was about to lose his house. A notice of appearance was served on 6 February 2017.
On 17 March 2017, the plaintiff’s solicitors wrote to the defendant’s solicitors seeking an undertaking that they would not facilitate or authorise the distribution of the defendant’s assets.[17]
[17]Petrakis affidavit, Exhibit DZP7.
On 21 March 2017, the plaintiff’s solicitors received a letter from the defendant’s solicitors confirming the defendant was:
(a) extremely frail due to ill health;
(b) unable to work and unable to service his mortgage; and
(c) would ‘deal with his assets accordingly and seek alternate accommodation elsewhere’.
The defendant’s solicitors stated that:
My client has no intention whatsoever to dissipate assets to frustrate any claim your client claims to have. My firm does not have any instructions to deal with his personal property or otherwise. An undertaking of any sort is simply not appropriate.
To this end, he has very limited assets and is in receipt of an aged pension. The defendant and his wife have limited equity in their home…[18]
[18]Petrakis affidavit, Exhibit DZP8.
The defendant placed his property on the market and it was listed for auction through Elders Real Estate on 22 July 2017. The property was sold and settlement of the property is scheduled on 20 September 2017.
The plaintiff’s solicitor deposes that she is concerned that the defendant intends to dispose of his assets in order to avoid payment and that there is a real danger that any putative prospective judgment obtained by the plaintiff will be wholly or partly unsatisfied and/or frustrated if the defendant were to dissipate the proceeds from the sale of the property.[19] The plaintiff’s solicitor’s concern is raised in circumstances where she deposes that the plaintiff has allegedly suffered a significant psychiatric injury as a result of the sexual abuse, for which she claims ‘substantial general and special damages.’ The plaintiff’s solicitor further deposes that if the plaintiff is required to pursue a claim to verdict she would incur substantial legal costs, which together with the judgment sum, could be met by the proceeds of sale.[20]
[19]Petrakis affidavit [21].
[20]Ibid [22].
The defendant deposes that in the later years of his working life he owned a business as a sole trader called Burgess Home Developments (‘the business’). The business largely comprised of performing renovations and constructing speculative homes on land the defendant purchased. On 8 June 2006, the defendant’s brother in law, John Rush, loaned the business $100,000 to build a speculative home in Epsom. Initially, his brother in law was to be repaid from the proceeds of sale but the property did not yield as much as anticipated and the defendant continued to owe his brother in law, paying interest at a mutually agreed rate each year. The defendant deposes that he intended to repay the loan as he kept working. At the time these statements were made, the defendant claimed to be very healthy and envisaged working until he reached 80 years of age.
In late 2015 the defendant became ill after having a cataract operation. He contracted golden staph which led to him needing a heart valve replacement. He deposes that his health was unable to recover and he has become increasingly unwell. He states that because of his weaknesses he has had a number of falls and now uses a walking stick. He cannot dress or dry himself after a shower without the assistance of his wife and has difficulty toileting. Due to these medical issues, the defendant claims he was forced to cease work.
He deposes that he is no longer able to satisfy the interest payments to his brother in law, as he is now solely reliant on a pension and does not have any superannuation.
His brother in law subsequently loaned the business a further $60,000 on 19 December 2016 to assist him to satisfy debts to suppliers and to complete work on outstanding building jobs. He still owes more than $22,000 to contractors who are seeking payment of outstanding invoices.[21]
[21]Affidavit of Raymond Claude Burgess sworn 1 September 2017 [11] Exhibit RB2 (‘defendant’s affidavit’).
He deposes that in light of the above circumstances, he and his wife determined that they would need to sell the property, their matrimonial home, to satisfy the debts to his brother in law along with their outstanding mortgage, which totals $263,630.22.[22] He provides a table of his current assets as at 1 September 2017 which, taking into account his debts and his wife’s share of the proceeds of sale, leaves him in debt in the sum of approximately $24,000.
[22]Ibid [12].
The defendant deposes that as a result of the significant debts and the limited funds, the fact that he and his wife will be renting a cottage and that, given his only income is a pension, he can only satisfy the debts he has incurred running his business by using his share of the proceeds of sale of the property. He also deposes that his pension alone is insufficient for his living expenses and that he expects that he will incur significant medical attendant care and equipment expenses due to his ongoing medical issues.[23]
[23]Ibid [21].
The defendant’s brother in law, John Henry Rush, deposes amongst other things:
(a) that on 8 June 2006 he loaned the defendant’s business the sum of $100,000, as the business was unable to obtain a loan due to the defendant’s age. It was agreed that interest would be paid on the loan at a mutually agreed rate at the end of the financial year and that the rate would be approximately the Reserve Bank interest rate or thereabouts;
(b) on 19 December 2016 he loaned the defendant’s business the sum of $60,000. At the time of this loan, Mr Rush understood that his sister and brother in law were selling the property and that both loans would be repaid to him upon the sale of the property. As outlined above, the loan was subject to an interest at a mutually agreed rate paid at the end of the financial year. The interest referred to had been paid annually up until 2015, when the defendant fell ill. The interest accrued since that time remains outstanding. He deposes that he is currently owed approximately $4,000 in interest in addition to the principal sum;
(c) he is retired and receives a state government superannuation pension of $38,000 per year. He has already lost a considerable portion of his life’s savings as he loaned $120,000 to the defendant for his business activities;
(d) he has recently suffered tongue cancer and has had half of his tongue removed. He has been cleared by his medical practitioners but still requires ongoing check-ups; and
(e) he has a leaking asbestos roof on his property requiring urgent repair and requires payment of his funds from the defendant as soon as possible so that it may be fixed. His car also needs to be replaced.
The defendant’s wife, Nea Burgess, deposes that in relation to the title search performed by the plaintiff’s solicitors locating property in which she and the defendant are alleged to have a quarter share, she believes this to be a speculative home that her husband built in partnership with another builder and that the property was subsequently sold in the 1980s. She deposes that neither she nor the defendant has an interest in that property and have not had an interest since it was sold in the 1980s.
Mrs Burgess deposes that the defendant’s health has been in a steady decline since 2015 and that as a result, he has been unable to keep up with his work and was forced to close his business and pay out suppliers by way of loans he obtained for his business.
She deposes that the defendant’s health continues to be in decline and that he can currently only manage undemanding tasks for up to an hour a day and thus is significantly restricted in his daily activities and requires assistance for tasks such as showering, dressing and toileting.[24]
[24]Affidavit of Nea Leonie Burgess sworn 1 September 2017 [14].
Mrs Burgess deposes that the defendant may need to go into assisted care due to the level of care he requires and that she does not have the strength to consistently and safely lift him. She confirms that she and the defendant are on Centrelink pensions and that they are required to sell the property to satisfy the defendant’s business debts and will be moving to a rental property. Mrs Burgess deposes that she jointly owns the property with the defendant having contributed financially and materially to its purchase, construction and maintenance. She says that she has no other assets save for her motor vehicle and is solely reliant on the pension for her income.[25]
[25]Ibid [17].
Ms D’Wynn and Ms Wardrop’s affidavits provide evidence as to the cost to date and the prospective costs of representing the defendant in this proceeding. Ms D’Wynn deposes that in investigating the plaintiff’s claim on behalf of the defendant she has grave doubts as to the merits of the plaintiff’s claim against the defendant. An application for a stay of proceedings is listed to be heard in early October 2017.
Plaintiff’s submissions
The plaintiff submits that the evidence confirms that the defendant will dissipate his assets and that it is open to the Court to infer that this will be done to frustrate the Court’s processes.
Counsel for the plaintiff noted that shortly after the plaintiff filed and served the statement of claim, her solicitors were informed by the defendant’s solicitors that the defendant was selling the property but that he would not dissipate the assets. However, subsequent to this, the plaintiff’s solicitors were informed that the defendant had elected to dissipate his assets in order to meet his outstanding debts, including loans and interest owed to his brother in law, Mr Rush, and a mortgage to the Westpac Bank. It was submitted that the defendant has decided to satisfy long standing debts in the middle of this proceeding and there is no evidence of any urgency compelling the defendant to repay the debts now.[26]
[26]Transcript of proceedings, Charalambous v Burgess (Supreme Court of Victoria, Zammit J, 5 September 2017) (‘T’)7, LL27-30.
It was submitted that this was not a case where the plaintiff is seeking security, as she only issued the freezing order application when she became aware of the defendant’s intention to dissipate the assets.[27] It was submitted that the Court can draw an inference that the defendant has elected to pay his brother in law and therefore dissipate his assets, in circumstances where the proceeding is on foot and the plaintiff has requested that the defendant does not dissipate his assets, given that there is no evidence of any immediate need to do so.
[27]T11.
Plaintiff’s counsel did not go as far as to suggest that the defendant was deliberately trying to dissipate his assets in order to frustrate the Court process. It was submitted that the defendant’s election to repay and thereby prefer his brother in law’s debt is relevant in relation to the question of dissipation of assets before a judgment is due. It was contended that it is exactly the situation that the Rules contemplate, where there appears to be a sudden desire on behalf of the defendant to dissipate the assets in the context of a proceeding being issued.
It was submitted that there is a lack of detail in the affidavit material relied upon by the defendant. It was contended that as there was no necessity to pay the principal debt, and given that the defendant was only paying nominal interest, something must have crystallised since the plaintiff issued the proceedings which compelled the defendant to repay his brother in law over that of the plaintiff. It was submitted that these circumstances are what the freezing orders were designed for, at least in part.
It was submitted that the plaintiff has a good arguable case and makes her claim based on a recognised cause of action.
It was conceded that Mrs Burgess was a joint proprietor and that it would be inappropriate to freeze her share of the proceeds of sale of the property. On this basis, it was conceded that any order made would need to appropriately take into consideration her share, as well as an allowance for the defendant’s daily living expenses and medical needs.
In relation to the damages, it was submitted that, by inference, the Court can draw the conclusion that if the plaintiff is successful then any amount awarded would be substantial. It was noted that there is approximately $300,000 equity left in the property, and therefore there would not be sufficient funds to meet any potential award of damages.
In relation to the balance of convenience, as outlined above, the plaintiff submitted that if the Court makes a freezing order it can make allowances to deal with Mrs Burgess’ share of the proceeds in addition to the defendant’s reasonable living and medical expenses. It was put that it was ultimately for the defendant to put evidence before the Court as to what these living and medical expenses would amount to.
It was submitted that the balance of convenience favours granting the freezing order, given that for over a decade the defendant only paid his brother in law nominal interest and, on the defendant’s own evidence, there is only $4,000 outstanding interest owed. It was noted that the affidavit material does not outline the exact amount of interest that has been previously paid by the defendant. It was submitted that the defendant cannot argue that the balance of convenience lies with the defendant, given that too many questions remain unanswered in the defendant’s affidavit material. Specifically, the affidavit material lacks detail in relation to the defendant’s medical condition, other than assertions by the defendant and his wife. Further, there is no detail regarding the reasons why the principal owed to his brother in law has to be repaid immediately. Moreover, there is no evidence that the bank is making demands under the mortgage.
Defendant’s submissions
The defendant relied on a written outline of submissions dated 5 September 2017 and oral submissions.
In summary it was submitted that:
(a) the plaintiff does not have an arguable case for sufficient prospects for any estimated amount of damages;
(b) the evidence demonstrates that the defendant and his wife are selling their jointly owned home due to financial pressure, instigated by the defendant’s poor health and business closure, without any threat of dissipation; and
(c) the defendant has no assets amenable to be frozen after providing for existing debts, such that the prejudice to the defendant and his creditors outweighs the plaintiff’s concerns to obtain security for any judgment.
Counsel for the defendant submitted that while it was open to the defendant to sell the property at an earlier time to satisfy the debts, the evidence establishes that the defendant and his wife have been driven to sell the property because of the financial circumstances brought about by the defendant’s ill health leading him to close his business approximately two years ago. His inability to work has meant that he has been unable to service and maintain the loans obtained from his brother in law and the mortgage and that he is now unable to afford ‘the luxury of maintaining his own case while paying $4,000 to Mr Rush and interest to the Westpac Bank’.[28]
[28]T21, LL7-9.
It was submitted that the sale of the property has been brought about in order to meet existing bona fide business debts and as such it does not give rise to any threat of dissipation as contemplated under O 37A. Further, the result of meeting those existing debts meant that there are no assets amenable to be frozen, because after providing for those existing debts, the evidence is that the defendant has net liability. It was submitted that if a freezing order were to be made which intruded or interrupted the defendant’s ability to deal with his assets to meet existing liabilities, then that would be to the greater disproportionate prejudice to him and indeed his creditors.[29]
[29]T21, LL16-22.
It was submitted that the burden of establishing a good arguable case rests with the applicant and that there has been no attempt made to support the arguability or the level of arguability of the plaintiff’s case, or estimate the amount of the claim.
It was submitted that there is a distinction to be drawn between the defendant’s proposed use of his assets and the kind of dissipation which is the subject of a freezing order and amounts to frustration or abuse of Court process. It was submitted that at its highest, the plaintiff’s solicitor’s affidavit does no more than speculate about a concern that the defendant intends to dissipate the assets and abuse the process of the Court. It was submitted that the plaintiff’s freezing order application was commenced without any proper foundation and was speculative in nature.
It was submitted that the affidavit material discloses that the sale of the property is explained by the defendant’s precarious financial position and his serious health problems. It was submitted that this is a case where the defendant’s solicitors have regularly and transparently kept the plaintiff’s solicitors informed as to the defendant’s financial position and the plans for selling the house. It is said that this dispels any suggestion of a threat of dissipation, seeking to avoid meeting any prospective judgment debt from 17 February 2016. It is noted that from February 2017 onwards the defendant has openly disclosed and provided updates on the progress for selling the property. It was put to the Court that that is not the conduct of an individual who is seeking to slip away and ‘squirrel all the money away from a prospective claim.’[30] It was submitted that the plaintiff in this case was, in effect, seeking security for judgment rather than preventing any abuse of the Court process.
[30]T26, LL5-7.
In relation to the prejudice flowing from a freezing order, it was submitted that the defendant’s financial position was so difficult that restrictions imposed by any freezing order would manifestly operate unfairly on his ordinary living, in circumstances where there are no net assets to which any properly framed freezing order could attach. The defendant does not have any assets after paying his existing liabilities. His proceeds of sale will be $185,084.89 and his existing business liabilities are $186,185 (including $164,000 owed to Mr Rush) and legal costs of $23,572.51 leaving net liabilities of $24,672.62.
Further, it was submitted that any freezing order is ordinarily subject to payment of ordinary living (including medical) expenses, reasonable legal expenses, as well as dealings or bona fide obligations properly incurred under contract entered into before the freezing order is made. It was submitted that the evidence reveals that the costs incurred by this application, which are estimated at $10,000 to $15,000,[31] plus the costs associated with the future defence of the proceeding, as well as medical and living expenses, will be substantial.
[31]Affidavit of Louise Hanby D’Wynn sworn 1 September 2017 [8], [11].
Further, without the usual exclusion for existing liabilities, an imposition of a freezing order would also prejudice Mr Rush, a third party, in circumstances where Mr Rush has deposed as to his poor financial position and deteriorating health and his need of repayment of funds to repair a leaking asbestos roof.
Determination
As noted, a freezing order is by its very nature a drastic remedy and the Court must exercise a high degree of caution before interfering with a party’s capacity to deal with his or her assets. Importantly, it is not designed to provide security for the applicant’s claim and is directed solely to preserving assets from being dissipated, to prevent the frustration of Court processes.
The affidavits relied upon by the defendant are not challenged. I accept the defendant had bona fide dealings with his brother in law giving rise to two loans and an agreement that initially the interest on the loans would be paid and that at a later stage the principal would be paid.
The Court is vested with wide discretionary power in the determination of a freezing order application. The exercise of the discretion, in circumstances where there is limited objective evidence, poses difficulties; however the onus is on the plaintiff in this respect and the evidence was unchallenged.[32]
[32]It has been held that the various matters relevant to the question whether the court should grant a freezing order should be decided on comparatively brief evidence: Derby & Co Ltd v Weldon (No 1) [1989] 1 All ER 469 at 475.
There have been intervening events which have now put the defendant under serious pressure to sell the property and have created a financial need that emerged at or about the same time this litigation commenced. The defendant was served with the writ and statement of claim in late November 2016. Before then, the defendant became extremely ill following a cataract operation and contracting golden staph. Following the deterioration in his health, the defendant realised he would not be able to satisfy the interest payments to his brother in law, as he was solely reliant on a pension, and did not have superannuation. Therefore, the defendant required a further loan of $60,000 in late December 2016 to assist him to satisfy debts to his suppliers and to complete work on outstanding building jobs. He still owes more than $22,000 to contractors and has been unable to meet the interest payments to his brother in law. The summary of the defendant’s liabilities confirms that he has a number of substantial existing liabilities, including his share of a mortgage, interest and capital repayments to his brother in law, outstanding liabilities to contractors and legal fees incurred in this proceeding.
The defendant now has medical and financial needs which have forced him and his wife to sell the property. I do not consider that the evidence supports the assertion that the defendant is deliberately preferring to satisfy his debt to his brother in law over any potential judgment damages that may be awarded to the plaintiff.
Whilst Mr Rush has not previously sought repayment of the principal or outstanding interest, he now requires payments due to his own poor ill health and financial needs. There is now an element of need for the defendant to meet his existing liabilities which did not previously exist, due to this change in circumstances since the commencement of the litigation.
I accept that the plaintiff has an arguable case and that if no freezing order is made, the defendant will use the only asset he has to satisfy the existing debts and liabilities. However accepting, as I do:
(a) that the defendant’s dealings, liabilities and debts are bona fide;
(b) that his ill health has caused him and his wife financial hardship;
(c) that he can longer service his debts and liabilities;
(d) that they have been forced to sell the property; and
(e) the relatively recent need to repay Mr Rush;
I do not consider the Court’s discretion should be exercised to grant the freezing order.
Plaintiff’s counsel submitted that the plaintiff simply wants to be placed in the same position she was in at the time she commenced the proceeding. That is, she wants to ensure there will be an asset to meet any prospective judgment obtained in her favour. In effect the plaintiff seeks an order, which will in the interim, provide security in preference to other creditors. To this end, it was submitted that there was no evidence of any urgency to meet the existing liabilities. I do not accept this. Mr Rush’s circumstances have changed and he now has a need that the debt and interest be repaid. I accept that the defendant has no other means to repay Mr Rush or any other outstanding debt, including interest repayments, on his mortgage. The defendant is an unwell individual who is financially reliant on the aged pension.
In addition, there were no submissions made and more importantly, no evidence before the Court, of the plaintiff’s ability to give any appropriate undertakings as to damages.
On the basis that I do not consider the Court’s jurisdiction ought be exercised, I do not need to consider the balance of convenience. However, it seems to me for the reasons identified in relation to the defendant’s needs and Mr Rush’s needs, I accept the defendant’s submissions, that the balance of convenience would not favour the granting of the freezing order. A freezing order would create greater prejudice to the defendant given his health and financial situation, and further prejudice innocent third parties, namely his creditors.
I therefore refuse the plaintiff’s application and I will hear the parties on costs.
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