MATTHEW CURTIS v NID PTY LIMITED (ACN 000 248 475), H & R HOLDINGS PTY LIMITED (ACN 000 248 493), ESTHER FAERBER, RUTH FAERBER, HANS FAERBER and DAVID FAERBER
File number:
NSD 32 of 2010
Judge:
EDMONDS J
Date of judgment:
5 October 2010
Catchwords:
PRACTICE & PROCEDURE – O 25A r 6 Federal Court Rules (Cth) and s 23 Federal Court of Australia Act 1976 (Cth) – freezing orders – whether the Court should grant the applicant’s freezing orders where the only evidence is the potential sale of real property, the payment of a dividend and the encumbrance of personal property.
Held: None of the alleged conduct by the respondents could lead to the conclusion that there was any real risk or danger that the respondents would dissipate their assets or diminish their value.
Biscoe, PM, Freezing and Search Orders:Mereva and Anton Piller Orders (2nd ed, LexisNexis Butterworths Australia, 2008)
Date of hearing:
22 September 2010
Place:
Sydney
Division:
GENERAL DIVISION
Category:
Catchwords
Number of paragraphs:
34
Counsel for the Applicant:
Mr R Alkadamani
Solicitor for the Applicant:
Haywards Solicitors
Counsel for the Respondents:
Mr MS White with Mr BD Kaplan
Solicitor for the Respondents:
Champion Legal
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 32 of 2010
BETWEEN:
MATTHEW CURTIS Applicant
AND:
NID PTY LIMITED (ACN 000 248 475) First Respondent
H & R HOLDINGS PTY LIMITED (ACN 000 248 493) Second Respondent
ESTHER FAERBER Third Respondent
RUTH FAERBER Fourth Respondent
HANS FAERBER Fifth Respondent
DAVID FAERBER Sixth Respondent
JUDGE:
EDMONDS J
DATE OF ORDER:
5 OCTOBER 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The applicant’s motion on notice filed 2 August 2010 be dismissed.
2.The applicant…
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.
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Details
AGLC
Curtis v NID Pty Ltd [2010] FCA 1072
Case
[2010] FCA 1072
Decision Date
CaseChat Overview and Summary
The case of Curtis v NID Pty Ltd involved an application by the applicant, Curtis, for an injunction to prevent the respondents from disposing of their assets. Curtis sought the injunction in anticipation of potentially winning his claim against the respondents in ongoing litigation. The case was heard in the Supreme Court of Victoria. The central legal issue was whether Curtis had provided sufficient evidence to justify the grant of a freezing order, which would prevent the respondents from disposing of their assets.
In determining whether a freezing order should be granted, the court considered the test set out in Finn v Carelli, which requires the applicant to demonstrate a real danger that the respondent will dissipate or dispose of their assets, preventing the applicant from satisfying a judgment. The court emphasised that this must be shown by evidence, not mere assertion. The court found that Curtis's evidence was insufficient as it consisted of bare assertions that the respondents were dissipating their assets, without providing any objective facts to support this claim. The court also noted that the sale of assets for full value does not constitute dissipation.
Furthermore, the court examined various discretionary considerations that influenced its decision. These included the applicant's lack of urgency in making the application, the potential harm to the respondents' business, and the respondents' strong defence in the substantive proceedings. The court concluded that the applicant had not met the burden of proof required for a freezing order and dismissed the application with costs.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
What is settled, however, is that solid evidence of a danger of dissipation or disposal of assets be produced. The relevant test was enunciated by Brereton J in Finn v Carelli [2007] NSWSC 261 at [4], where his Honour referred to the NSW Court of Appeal’s decision in Frigo v Culhaci [1998] NSWCA 88:‘It is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment, and it is sufficient to show that the course on which the respondent proposes to embark is, objectively speaking, calculated to have that effect. But as the Court of Appeal made clear in Frigo v Culhaci, an applicant must establish, by evidence and not mere assertion, that there is a real danger that by reason of the respondent absconding or otherwise dealing with assets, the applicant will not be able to have its judgment satisfied. While acknowledging that there has been much debate as to the precise degree to which that has to be shown, the Court emphasised that mere assertion that the defendant was likely to put assets beyond the plaintiff’s reach was inadequate, for which the Court cited Ninemia Maritime Corp v Trave GmbH & Co Kg (The Niedersachsen) [1984] 1 All ER 298 as well as Patterson v BTR Engineering.’Sufficiency of the applicant’s evidence The applicant’s evidence consisted of two affidavits sworn by him; one on 2 August 2010 together with exhibits MC-70 to MC-83 (Ex 1) and the other on 20 September 2010 together with exhibits MC-84 to MC-93 (Ex 2). Some parts of Ex 1 were not read or rejected and some parts of Ex 2 were objected to and not pressed. The applicant also tendered (Ex 3) a bundle of 19 pages of correspondence between his solicitors and the respondents’ solicitors between 16 August and 21 September 2010. The applicant, at para 2 of Ex 1, asserted his concern that ‘the [r]espondents and related companies are dissipating their assets and that this may frustrate the Court’s process in the event that my claim is successful’. In response, the respondents made four points. First, the applicant makes this assertion merely on the basis that such assets ‘[are] being offered for sale’ (Ex 1, Ex MC-70). Even although the 10 Stokes Avenue, Alexandria and Flat 173, Latymer Court, Hammersmith, London properties either have been or will be placed on the market for sale, and the property at 52-54 McCauley Street, Alexandria has been placed on the market for sale or lease, it is trite that ‘[s]ale of an asset for full value is not dissipation’: P M Biscoe, Freezing and Search Orders: Mareva and Anton Piller Orders (2nd ed, LexisNexis Butterworths, 2008) at 6.30. Second, there is not an iota of evidence to suggest that the proceeds from the sale of the abovementioned properties might be disposed of or diminished in value. The evidence provided by the applicant goes no further than ‘[b]are assertions that the [respondents] are likely to put any asset beyond the [applicant’s] grasp’: Ninemia at 1419 per Kerr LJ. Freezing orders are only granted on the basis of objective facts from which a danger of dissipation or disposal of assets may be inferred. With respect, it is patently clear that the applicant has pointed to no such objective facts.
Decision
Reasons for decision
The substance of the applicant’s case is that the shareholders of NID represented to the applicant that they would not interfere with the day-to-day management of NID, and that he relied on such representations in accepting his position as Chief Executive Officer of NID. It is stretching the credulity of the Court to ask it to accept that an experienced accountant such as the applicant understood such representations, even if made, to be a guarantee that the shareholders would never exercise their rights as shareholders to intervene in the affairs of the company in the event that they formed a view that the company was being mismanaged, or that they somehow relinquished the rights of the company under an employment contract to terminate the employment of the applicant.Conclusion For all these reasons, the applicant’s motion must be dismissed with costs.
Ratio Decidendi
Legal Principle Established
It follows, in my view, that the applicant’s motion fails on the sufficiency of evidence threshold. Nevertheless, in the event I am wrong on this score, I consider below the discretionary considerations raised in the submissions of the respondents; they too lead me to the conclusion that the motion must fail.Discretionary Considerations First, the applicant has not proceeded with his application with any vigour or urgency. The applicant’s solicitors first wrote to the respondents’ solicitors expressing concern in respect of the sale of the assets in question on 15 June 2010 (Ex 1, Ex MC-70). The applicant’s notice of motion was filed on 2 August 2010. A delay of seven weeks could hardly be said to indicate that the applicant has ‘proceeded … expeditiously’: Cardile at [53]. Second, no ex parte or truly interim relief was sought by the applicant, even though this course was available to him. Third, the granting of a freezing order will have a damaging effect on NID’s business (see, for example, Pearce v Waterhouse [1986] VR 603 at 607 – 608). As the correspondence from the respondents’ solicitors indicates, the purpose of the sale of the assets in question is ‘to return both NID and H & R … to good corporate health’ (Ex 1, Ex MC‑72, p 2). If an order were made, there is a real risk that the business will be adversely affected, even though the proposed orders are framed in such a way as not to do so. Ironically, this would be to the applicant’s detriment were he ultimately to succeed in the substantive proceedings. Fourth, the proposed orders amount to an invasion of the liberty of the third to sixth respondents. For example, if one of these parties needed to purchase a car with their own funds they would be required to apply to the Court to vary the orders, as not to do so would expose them to a charge of contempt. As stated above, freezing orders are granted in the most exceptional of cases. They are granted in circumstances where the respondents fit Slattery J’s characterisation of the ‘unscrupulous defendant’ in Khalifeh. This is not such a case, and to impose this regime on each of the third to sixth respondents would make life unduly burdensome. Fifth, it is noteworthy that, on 25 June 2009, in a letter addressed to the board of directors of NID (Ex 1, Ex MC-83 p 92), the applicant, amongst other things, describes the McCauley Street and Latymer Court properties as ‘non-performing assets’ which he recommends ought to be ‘discard[ed]’. The applicant’s position on 25 June 2009 and his position today are irreconcilable, and this ought to be taken into account. Finally, and without ‘undertaking a preliminary trial’ (Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622 per Kitto, Taylor, Menzies and Owen JJ), the respondents’ defence to the applicant’s claim in the substantive proceedings (a relevant factor) is strong: see, in the context of interlocutory injunctions, Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [248] per Heydon J, citing Hubbard v Vosper [1972] 2 QB 84 at 96 per Lord Denning MR.