Di Palma v Chimmalee (No 3)

[2021] NSWSC 1066

Supreme Court

New South Wales

Medium Neutral Citation:

Di Palma v Chimmalee (No 3) [2021] NSWSC 1066

Hearing dates:

13 August 2021

Date of orders:

13 August 2021

Decision date:

13 August 2021

Jurisdiction:

Equity

Before:

Henry J

Decision:

See [34]

Catchwords:

CIVIL PROCEDURE – interim preservation – freezing orders – where first defendant awaiting trial for fraud-related offences – where freezing order over first defendant’s bank account permits payment of defendants’ reasonable living expenses – whether in the interests of justice to grant second defendant’s application for payment out of first defendant’s bank account for past rental expenses – payment refused where competing claims to funds

Legislation Cited:

Confiscation of Proceeds of Crime Act 1989 (NSW), s 18

Supreme Court Act 1970 (NSW), s 23

Uniform Civil Procedure Rules 2005 (NSW), r 25.12

Cases Cited:

Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Siriluck Fatima Chimmalee (First Defendant)
Michael Roger Evans (Second Defendant)

Commissioner of Police, New South Wales Police Force (Interested Party)
Ren Zhou Lawyers (Interested Party)
IMB Bank (Respondent)

Representation:

Solicitors:
J Francis (Commissioner of Police, Interested Party)
HWL Ebsworth (Respondent)

In person:
Michael Roger Evans
Ren Zhou Lawyers

File Number(s):

2018/00246696

Publication restriction:

Nil

Judgment – Ex Tempore (Revised)

1. HER HONOUR: Before me are two notices of motion that concern access to funds held in a bank account that is subject to freezing orders made in these proceedings against the first, second, third, fourth and fifth defendants on 13 August 2018, as extended and varied.

2. The funds in issue are held in an account with IMB Bank in the name of the first defendant, Ms Siriluck Fatima Chimmalee, with account number ending 5604 (Chimmalee IMB account). Ms Chimmalee is currently in custody awaiting her criminal trial on fraud-related charges which is scheduled to commence in the District Court on 1 November this year

3. The first notice of motion was filed by the second defendant, Mr Michael Evans, on 16 April 2021. Mr Evans’ motion seeks an order that IMB Bank release funds to him for his living expenses. It was filed in circumstances where questions had been raised by the Commissioner of Police, New South Wales Police Force (NSW Police) and IMB Bank about Mr Evans’ claims for the release of funds held in the Chimmalee IMB account for living and legal expenses and claims to those funds had been made by other parties.

4. Mr Evans appears for himself. He relies on his two affidavits dated 15 April 2021 and 19 May 2021 and written submissions dated 9 August 2021.

5. The second notice of motion was filed on 25 May 2021 by the NSW Police, an interested party in these proceedings. An amended notice of motion was filed on 10 August 2021. The NSW Police’s motion seeks orders to prevent any funds from the Chimmalee IMB account being disbursed pending the outcome of Ms Chimmalee’s criminal proceedings and for the funds to be dealt with in accordance with the Confiscation of Proceeds of Crime Act 1989 (NSW) if Ms Chimmalee is found guilty.

6. The NSW Police is represented by Ms Francis and relies on the affidavits of James Gebran dated 24 May 2021 and Paul Sartor dated 9 April 2021 and written submissions.

7. In addition to the NSW Police, two other interested parties, IMB Bank and Ren Zhou Lawyers, appeared at the hearing.

8. IMB Bank is a respondent to Mr Evans’ motion and was represented by an external solicitor. As was explained to the Court, IMB Bank is effectively stuck “between a rock and a hard place” as there are competing claims to the funds held in the Chimmalee IMB account. IMB Bank relies on an affidavit of Alexander Johnson dated 25 June 2021 and written submissions on the issue of costs.

9. Mr Yin Chen, a solicitor at Ren Zhou Lawyers, previously acted as the lawyer for Ms Chimmalee and Mr Evans and was granted leave to be heard at the hearing as an interested party. Ren Zhou Lawyers has obtained a judgment against Ms Chimmalee in the amount of $22,715.50 for legal fees incurred by her and Mr Evans in these proceedings up to 9 June 2020. Mr Chen informed the Court that access to the funds in the Chimmalee IMB account is sought in order to satisfy the judgment.

Background

10. These proceedings were commenced on 10 August 2018 by summons seeking, amongst other things, ex parte freezing orders.

11. The freezing orders apply to bank accounts and assets in the name of Ms Chimmalee and Mr Evans up to the amount of $2,439,680. The freezing orders were extended by consent and without admissions on 16 August 2018 until further order of the Court and include the usual carveouts for ordinary living expenses and reasonable legal expenses.

12. On 18 May 2020, Ms Chimmalee was charged with 26 counts of fraud offences under the Crimes Act1900 (NSW). Following this, an additional 77 charges were laid against her. Ms Chimmalee, who has pleaded not guilty to all 103 charges, has been refused bail.

13. On 9 June 2020, Lindsay J made orders in these proceedings which, amongst other things, included notations relating to the freezing orders (9 June orders). Order 5 noted an agreement between the parties to these proceedings that Ms Chimmalee, Mr Evans and the third and fourth defendants (being companies associated with Ms Chimmalee and Mr Evans) were permitted to draw down funds from the Chimmalee IMB account for payment of their reasonable legal fees upon the defendants’ solicitors providing an itemised tax invoice to IMB Bank. Order 6 noted an agreement that IMB Bank was permitted to disburse funds for the defendants’ reasonable living expenses from the Chimmalee IMB account and an IMB Bank account in the name of Mr Evans with account number ending 4560 pursuant to order 10(a) of the freezing orders as amended on 16 August 2018 which, relevantly, provides the carveout for the payment of ordinary living expenses.

14. On 29 June 2020, the NSW Police obtained freezing orders in respect of the funds in the Chimmalee IMB account in the Local Court of New South Wales pursuant to s 42B of the Confiscation of Proceeds of Crime Act, which orders were confirmed by consent on 15 October 2020 (Local Court freezing orders). As a consequence of the Local Court freezing orders, the funds in the Chimmalee IMB account were transferred into the custody of the NSW Police.

15. On 17 February 2021, the Local Court freezing orders were varied to enable the Chimmalee IMB account funds to be returned to IMB Bank, which occurred at the end of April 2021.

16. As at March 2021, the Chimmalee IMB account held the sum of $54,736.43.

17. Mr Evans is the de facto partner of Ms Chimmalee. He currently resides in a rental property with his and Ms Chimmalee’s child, as well as Ms Chimmalee’s two other children and her mother. Mr Evans is currently employed as a disability assistant.

18. The evidence on this application indicates that, by March 2021, claims had been made on the NSW Police and IMB Bank for the release of funds from the Chimmalee IMB account totalling $73,581.21. Those claims were by Mr Evans for rent and other living expenses totalling $40,285.71, by Mr Chen in the amount of $22,715.50 by way of a garnishee order issued in respect of the judgment debt, and by another solicitor who previously acted for Ms Chimmalee for payment of legal fees in the amount of $10,580.

19. There is also evidence on this application that traces $330,000 of funds paid to Ms Chimmalee by an alleged victim, whom I refer to as "DK", to the Chimmalee IMB account. The payments made by DK to Ms Chimmalee totalling $330,000 are the subject of sequence 20 of the criminal charges laid against her.

Consideration and determination

20. While not specified in Mr Evans’ motion or the documents he relies on, Mr Evans informed the Court that, by his motion, he seeks the release of $13,000 from the Chimmalee IMB account for rent in the amount of $500 per week which he says he has paid over the past six months. Mr Evans contends that he is entitled to the release of funds to pay past rent as a living expense based on the 9 June orders and authorisation he says he has received from Ms Chimmalee to use her funds for that purpose.

21. The NSW Police conceded, appropriately, that it may be open to interpret the freezing orders and the notation in order 6 of the 9 June orders as permitting Mr Evans to access funds held in the IMB Chimmalee account for the payment of reasonable living expenses. However, the NSW Police submits that the amount sought by Mr Evans exceeds what is reasonable in the circumstances, noting that the evidence indicates that Mr Evans has been paying rent on an ongoing basis and the documents provided in support of his claims did not indicate what the amounts incurred were for or whether they were incurred by him.

22. The NSW Police also holds concerns as to the use of the funds if they are released to Mr Evans based on the fact that Ms Chimmalee had made a number of bail applications in respect of which surety and an amount of $25,000 for an ankle bracelet was offered to be paid and Mr Evans had said he would bear all financial costs. It submits that Mr Evans’ application for access to the funds may not be for the bona fide purpose of meeting reasonable living expenses. It contends that it would not be in the interests of justice to allow the release of the funds in the Chimmalee IMB account until the finalisation of the criminal proceedings.

23. I need not make any determination as to whether the concerns of the NSW Police about the bona fide nature of Mr Evans’ claims have any basis as, having considered the evidence and submissions, I have concluded that it is in the interests of justice to refuse the relief sought by Mr Evans and to grant the orders sought by the NSW Police.

24. It is well established that the power of the Court to grant freezing orders and associated relief is to be found in its inherent power and its statutory power to grant such relief as is “just or convenient” or “appropriate”. Relevantly, s 23 of the Supreme Court Act 1970 (NSW) provides that the Court has “all jurisdiction which may be necessary for the administration of justice in New South Wales”, which confirms the inherent power of this Court: Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 617; [1987] HCA 23. The Court also has the power to make orders ancillary to freezing orders as it considers appropriate pursuant to r 25.12 of the Uniform Civil Procedure Rules 2005 (NSW).

25. These powers enable the Court to make orders of the nature sought by the NSW Police if it considers that they are necessary for the administration of justice or to prevent injustice. In my view, it is appropriate to make such orders in this case. This is primarily because Mr Evans has not satisfied me that, at this stage, he requires access to those funds to meet his living expenses, the evidence indicates that the funds held in the Chimmalee IMB account may be tainted as the proceeds of crime, and there are competing claims to those funds.

26. I accept that rental payments of $500 per week in respect of accommodation for Mr Evans, his and Ms Chimmalee's children and her mother constitute reasonable living expenses for which, in ordinary circumstances, I would be inclined to grant relief to enable payment to be made from the Chimmalee IMB account. However, and relevantly in this case, Mr Evans seeks the release of funds from an account that is not in his name, but is in the name of Ms Chimmalee, where that account is the subject of competing claims and the freezing orders do not prohibit Mr Evans from accessing money in his own accounts to pay his ordinary living and reasonable legal expenses. Further, the evidence on this application indicates that Mr Evans has been able to meet rental payments up until the end of December 2020 and he informed the Court that, subject to a few missed payments, he is currently keeping up-to-date with those payments. In those circumstances, it seems that Mr Evans has other funds or assets that are not caught by the freezing orders to which he has had and continues to have access and from which legitimate rental and other living expenses may be met.

27. There are also several competing claims to the funds in the Chimmalee IMB account, one of which is the claim by an alleged victim of Ms Chimmalee’s alleged crimes. If Ms Chimmalee is found guilty, it is likely that forfeiture orders under the Confiscation of Proceeds of Crimes Act would be sought in respect of the funds held in the account. In making any such order, the Court must be satisfied that the property is tainted in relation to the offence, must consider the use that is ordinarily or had been intended to be made of the property and any hardship that is reasonably likely to arise on any person following the making of that order, and may also specify the extent of any interests or rights that are affected by the orders: Confiscation of Proceeds of Crime Act, ss 18(1), 18(5). Thus, Mr Evans’ interests, and those of the other competing claimants to the funds in the Chimmalee IMB account, would be taken into account if such an order is made.

28. The hearing of Ms Chimmalee’s criminal proceedings is scheduled to take place in November this year. Based on the evidence on this application, it seems that there will be no significant prejudice to Mr Evans if he is not able to access the funds in the Chimmalee IMB account now and is required to await the outcome of Ms Chimmalee’s criminal proceedings. Similarly, I see no urgency in the claim to the funds asserted by Mr Chen.

29. Having regard to the above matters, in my view, it would not be in the interests of justice to order the release of funds from the Chimmalee IMB account to Mr Evans for his living expenses at this stage, as sought by his motion. In my opinion, it would best serve the interests of justice if the funds in the account were able to be preserved until the outcome of the criminal proceedings. This is because the outcome of those proceedings should enable a proper determination to be made as to how the funds should be dealt with taking into account and balancing the interests of all relevant parties. Accordingly, I propose to make the orders sought by the NSW Police’s motion.

30. In coming to the above conclusion, I acknowledge that there is a possibility that the current COVID-19 pandemic may require the deferral of Mrs Chimmalee’s criminal proceedings and circumstances may change. To address this, the orders that I propose to make will be subject to any further order of the Court and liberty to apply. Such an order will enable Mr Evans to approach the Court if he finds himself in a position where he cannot meet the payment of rent going forward from any of his other assets and he has the appropriate evidence to support an application for the release of funds for that or any other legitimate purpose.

Costs and orders

31. As to costs, the NSW Police accepts that it should pay Mr Evans’ costs of filing his notice of motion. In my view, this is an appropriate concession having regard to the NSW Police’s prior position as to Mr Evans's entitlement to access the funds and the fact that the Local Court freezing orders had been drafted to provide a carveout in recognition of the notations made in the 9 June orders.

32. Otherwise, there should be no order as to the costs of Mr Evans’ motion and the NSW Police’s motion, with each party to bear their own costs, including IMB Bank.

33. To the extent that legal costs have been incurred by Mr Evans in respect of his past claims for payment out of the Chimmalee IMB account, those costs can be dealt with as part of these proceedings at a later time when there is a final determination as to how the funds held in the account are to be dealt with following the completion of the criminal proceedings.

34. For these reasons I make the following orders:

1. Direct the Notice of Motion filed by the Commissioner of NSW Police on 10 August 2021 be returnable before Henry J at the hearing on 13 August 2021 and vacate the listing before Registrar Walton on 30 August 2021.

2. Grant leave to Mr Chen of Ren Zhou Lawyers to be heard as an interested party pursuant to s 23 of the Supreme Court Act 1970 (NSW).

3. Refuse the Second Defendant’s application for the release of funds from the IMB Bank Account in the name of the First Defendant, Siriluck Chimmalee, BSB 641 800 Account Number ending 5604, for his living expenses.

4. Order the Commissioner of NSW Police to pay the costs of the Second Defendant in respect of the filing fees for the Second Defendant’s Notice of Motion filed 16 April 2021.

5. Otherwise dismiss the Second Defendant’s Notice of Motion filed 16 April 2021.

6. Order that there be no disbursements of the funds held in the IMB Bank Account in the name of the First Defendant, Siriluck Chimmalee, BSB 641 800 Account Number ending 5604 (the Account) to any party, pending the outcome of the criminal proceedings (H75622768) (the criminal proceedings) against the First Defendant, unless ordered by this Court.

7. Order that, upon the First Defendant being found guilty in the criminal proceedings of all or any of the charges to which the funds held in the Account relate, the funds be dealt with in accordance with Confiscation of Proceeds of Crimes Act 1989 (NSW) as ordered by the relevant Court.

8. Note that Orders 6 and 7 are intended to have the effect of varying the Freezing Orders made by this Court on 13 August 2018, as varied on 16 August 2018 and subject to notations 5 and 6 of the orders made on 9 June 2020.

9. Grant liberty to apply to the Second Defendant on 3 days’ notice.

10. There be no orders as to costs in respect of the Notice of Motion of the Commissioner of NSW Police filed on 10 August 2021, with each party to bear their own costs in respect of, and incidental to, that Notice of Motion.

**********

Decision last updated: 25 August 2021