Gallagher v Birch
[2013] VCC 1858
•2 December 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
GENERAL DIVISION
Case No. CI-13-03887
| LYN GALLAGHER | Plaintiff |
| v | |
| PETER WILLIAM (BILL) BIRCH | Defendant |
---
JUDGE: | HIS HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 November 2013 | |
DATE OF JUDGMENT: | 2 December 2013 | |
CASE MAY BE CITED AS: | Gallagher v Birch | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1858 | |
RULING
---
Subject: INTERLOCUTORY INJUNCTION
Catchwords: Freezing order – arguable case – allegations of dishonesty – whether sufficient to establish an inference of a risk of dissipation of assets
Legislation Cited: County Court Civil Procedure Rules 2008, r37A.02; Family Law Act 1975
Cases Cited:MR Gloss Pty Ltd v Henry Mischel [2011] VSC 40; Zhen v Mo & Ors [2008] VSC 300
Judgment: Summons dismissed.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S McGregor | David Velleley |
| For the Defendant | Ms M Lang | Taussig Cherrie Fildes Pty Ltd |
HIS HONOUR:
Introduction
1 The plaintiff commenced a proceeding by Writ filed 30 July 2013 alleging that she was assaulted and battered by the plaintiff, with the result that she suffered injury. She claims damages for pain and suffering and loss of enjoyment of life, and past and future loss of earnings and earning capacity.
2 The plaintiff and the defendant were domestic partners. Their domestic relationship commenced in 1996. It ceased some time in April 2011.
3 The plaintiff alleges that her relationship with the defendant had been acrimonious since about 2008.
4 On 4 August 2010, the plaintiff and the defendant fell into an argument. The plaintiff alleges that it was during that argument that she was violently assaulted by the defendant.
5 A proceeding was commenced in the Family Court of Australia pursuant to the provisions of the Family Law Act 1975. The application was returnable before the Federal Circuit Court of Australia. The parties resolved the proceeding by consent orders filed in the Federal Circuit Court of Australia on 17 July 2013.
6 The substance of the settlement was that the defendant was ordered to transfer his right, title and interest in a property to the plaintiff. In consideration of the transfer, the plaintiff was to pay the defendant $288,000 on or before 4pm on 17 October 2013.
7 The plaintiff filed a Summons on 17 October 2013 seeking a freezing order restraining the defendant from disposing of $250,000 of the sum of $288,000. The application was based on Rule 37A.02 (1). I made the freezing order on 17 October 2013. The freezing order provided, among other things, for procedural steps to be taken by the plaintiff and the defendant in anticipation of a hearing whether the freezing order should be extended or dissolved.
8 The Summons came on for hearing before me on 24 October 2013. On that occasion, Mr McGregor of Counsel appeared with Ms Varney of Counsel for the plaintiff. Ms Lang of Counsel appeared for the defendant. Ms Lang informed me that the defendant had not been given sufficient time to meet the allegations made by the plaintiff. I made an order that the hearing of the Summons be adjourned to 26 November 2013 before me. I made some procedural orders for the exchange of affidavit evidence, and I extended the freezing order to 9.30am on 26 November 2013.
9 On 26 November 2013, Mr McGregor of Counsel appeared for the plaintiff. Ms Lang of Counsel appeared for the defendant.
10 In support of the Summons, the plaintiff filed two affidavits sworn 15 October 2013 and 20 November 2013. In reply, the defendant filed an affidavit sworn November 2013.
11 Mr McGregor and Ms Lang informed me that neither wished to cross-examine the plaintiff and the defendant; however, the plaintiff served a Notice to Produce on the defendant requiring him to produce the trust and office records of his solicitors, and banking records for a period from December 2012 to 17 July 2013. The defendant refused to produce the documents; however, Ms Lang obtained instructions from the defendant permitting her to allow Mr McGregor to view the documents.
12 I suggested that Mr McGregor should be permitted to use the documents in the course of his submissions without allowing the plaintiff to view the documents. The plaintiff refused to give him instructions to permit him to use the documents in that manner. Because both Mr McGregor and Ms Lang considered that the documents were of some importance, I directed that they be used in submissions, but I also directed that the contents of the documents not be disclosed by Mr McGregor to the plaintiff.
The Plaintiff's Case
13 The power to make a freezing order is provided by Rule 37A.02. It is in the following terms:
“(1)The Court may make an order (a freezing order), upon or without notice to the respondent, for the purpose of preventing the frustration or inhibition of the Court process by seeking to meet a danger that a judgement or prospective judgement of the Court will be wholly or partly and satisfied.”
14 The danger contended for by the plaintiff is based upon the following facts:
· The defendant is an IT consultant employed by Coles.
· The defendant does not own any real property in Australia.
· In the Family Court proceeding he disclosed his assets in a financial statement sworn 19 October 2012. He disclosed that a balance in a banking account stood at $400. It was later discovered that in fact the balance stood at $33,230.60.
· The banking records of the defendant which were sought by the Notice to Produce disclose that on 3 September 2012, the defendant transferred three amounts of $5,000 from one banking account to another, and on 4 September 2012, he transferred a further two amounts of $5,000.
· After the plaintiff and the defendant separated, the plaintiff alleges that the defendant engaged in a number of transactions of withdrawal from a joint loan facility of which they were both signatories. The breakdown of the allegations made by the plaintiff is that the defendant withdrew $76,773.89 from the joint loan facility. The plaintiff herself received $50,000.
· The defendant is a citizen of the United Kingdom. He was born in Kenya. He has relatives in the United Kingdom. One of his relatives is an accountant, living in the United Kingdom. Another relative is an accountant, living in Perth.
15 The allegations made by the plaintiff are, firstly, that the defendant’s financial statement was false in part. Secondly, the movement of the total sum of $25,000 on 3 and 4 September 2012 is consistent with the defendant hiding his assets. Thirdly, the withdrawal of monies from the joint loan facility is unexplained, as is the use to which those monies were put, and fourthly, the foregoing point to the defendant engaging in conduct which should lead me to conclude that he is dishonest and will use his relatives overseas to transfer assets out of the jurisdiction.
The Defendant’s response
16 In answer to the primary allegations made by the plaintiff, the defendant says:
· He admits that his financial statement was false in part. He says that he was under pressure to complete it; he had difficulty facing completing it; his thought processes were interfered with by his longstanding problem with depression; he felt overwhelmed by the degree of detail required in the financial statement; he just wanted to get it over and done with, and it was a small amount in the context of his focus on the major asset being the family home.
· The issue over the actual balance in the bank account was flushed out through a process of discovery in the Family Court proceeding.
· The five withdrawals of $5,000 were undertaken because he had resigned as an employee of the bank where that money was originally deposited. He, and fellow employees, were embroiled in an industrial dispute.
· The withdrawal of $76,773.89 from the joint loan facility was used to cover his legal fees in the Family Court proceeding, and fees associated with other court appearances. About $20,000 was applied to school fees for the children of the plaintiff and the defendant, and to meet some of his day-to-day living expenses.
· The plaintiff also either withdrew $50,000 on 18 May 2012 from the same joint loan facility.
· He admits that he has relatives in the United Kingdom with whom he has had limited contact. He has not obtained, nor sought to obtain, any advice from one of his cousins who is an accountant in Perth.
· He has a superannuation fund in the United Kingdom. He has a valid United Kingdom passport. He does not have any banking accounts overseas. He has no intention of leaving Australia because of his two children, who are aged fifteen and thirteen years respectively.
17 One of the documents produced pursuant to the Notice to Produce is a trust account ledger of the defendant’s solicitors that demonstrates the payment of fees by the defendant of just short of $40,000 as at 18 June 2013.
Findings on the evidence
18 In the absence of cross-examination, I have been left to do the best I can to determine what to make of the areas of controversy between the plaintiff and the defendant.
19 I accept that the defendant did not make a true disclosure in his financial statement. To swear that his balance in a banking account was $400 must have occurred by the defendant giving instructions to his solicitors. He must have had some basis upon which to give those instructions. It is a remarkable mistake when in fact the balance was $33,230.60. The failure to ensure the accuracy of the financial statement is the defendant’s responsibility.
20 There are only two conclusions I can reach about the reasons why the plaintiff swore an untrue financial statement. Firstly, he did it deliberately, or secondly, he was reckless. I consider his explanation for a serious understatement of his true financial position to be rather lame and unconvincing. I think it is more likely than not that the defendant was reckless.
21 Despite the conclusion I have reached regarding the financial statement, there does not seem to me to be any other evidence which persuades me that there is a danger that the defendant will dissipate the $250,000 which has been frozen.
22 What is abundantly clear is that in the course of the process of discovery in the Family Court proceeding, both the plaintiff and the defendant satisfactorily disclosed their financial position such that negotiations were successful in reaching a settlement to the satisfaction of the plaintiff and the defendant.
23 I do not accept the assertion by the plaintiff that the defendant’s withdrawal of $76,773.89 from the joint loan facility was unreasonable and unaccounted for. I am satisfied that it was used for legitimate purposes. In any event, there are three reasons why I consider that withdrawal to be of little consequence:
· Firstly, it was not something which was highlighted during Mr McGregor’s submissions. He rather more concentrated on the financial statement.
· Secondly, the defendant’s explanation for its use was not challenged. There is documentary evidence to at least verify that he used just short of $40,000 to pay legal costs.
· Thirdly, the plaintiff obtained $50,000 from the joint loan facility. All of this must have come out in the wash up of the Family Court proceeding.
24 I assume that the plaintiff's reference to the defendant’s relatives who live overseas is to demonstrate that he has the means by which he can organise for his assets to be transferred overseas. There is no evidence that he has done so, and no evidence upon which I can draw such an inference that he will do so.
25 The defendant appears to have a sound reason for wanting to remain in Australia, and to re-establish himself. He is employed in Australia. He has two teenage children with whom he appears to have a reasonable relationship. To the extent that the plaintiff’s evidence suggests that he is footloose and will leave the jurisdiction, I am not satisfied the evidence allows me to reach such a conclusion.
The principles
26 Mr McGregor and Ms Lang provided me with written and oral submissions, and authorities which have been very helpful to me in understanding the principles of law which apply to the grant and refusal of an application for a freezing order.
27 What is meant by “danger” was dealt with by Davies J in MR Gloss Pty Ltd v Henry Mischel.[1] Additionally, her Honour dealt with the quality of the evidence which the plaintiff must adduce in order to satisfy me that I should grant a freezing order:
“The authorities make it clear that the plaintiff’s must establish a ‘real risk’ of dissipation of assets. In other words, they must establish that there is a danger that assets will be dissipated if the freezing order is refused. The existence of a real risk or danger may be a matter of inference and there does not have to be evidence of a positive intention to frustrated judgement. However there must be ‘solid evidence’ of the risk of dissipation.”[2]
[1][2011] VSC 40
[2]at paragraph 4
28 In another helpful judgment of Zhen v Mo & Ors,[3] J Forrest J provided an excellent summary of the relevant considerations which I must have regard to:
[3][2008] VSC 300
· A freezing order by its very nature is a drastic remedy, and therefore, a Court must exercise a high degree of caution before taking this step which will interfere with a party’s capacity to deal with his or her assets.
· A freezing order is not designed to provide security for the plaintiff’s claim. It is solely directed to preserving assets from being dissipated which will thereby frustrate the Court process.
· The plaintiff bears the onus to satisfy me that a freezing order should be made, and the amount which is to be the subject of the freezing order.
· A freezing order can only be made on the basis of admissible evidence. Speculation and guesswork are impermissible and are no substitute for either the facts or inferences properly drawn from proved facts.
· The plaintiff must establish that she has an arguable case, and that there is a danger that the prospective judgment will be wholly or partly unsatisfied as a result of the defendant’s actions in either removing assets, or disposing or dealing with them so as to diminish their value.
· The balance of convenience must favour the granting of the freezing order.
· The plaintiff must establish with some precision the value of her prospective judgment.
· The freezing order should not unnecessarily tie up the defendant’s assets and property.
· Discretionary considerations may militate against the granting of a freezing order, such as delay in bringing the application for the freezing order or a lack of candour in the materials place before me.[4]
[4]paragraphs 22-30
Disposition
29 I am satisfied that the plaintiff has an arguable case against the defendant. I am also satisfied that an assessment of the plaintiff’s damages might return her a significant sum.
30 However, in the context of the findings I have made on the evidence, I am not satisfied that the plaintiff has discharged the onus which she bears to satisfy me on solid evidence that there is a real risk that the plaintiff will dissipate his assets; in other words, a danger that he will engage in conduct which will frustrate or inhibit the Court process.
31 I do not accept that even if the defendant had dishonestly misrepresented the balance in his banking account, that it is sufficient evidence to take such a drastic step to grant a freezing order.
32 It is apparent to me that the discord between the plaintiff and the defendant which led to the breakdown of their domestic partnership persists. The plaintiff places no trust in the defendant at all. She has a deep-seated mistrust of the defendant. There might be some substance in the view the plaintiff has of the defendant; however, I am not satisfied that the evidence in that regard is solid evidence for the reasons I have set out above.
33 There are other reasons why I refuse to grant a freezing order. It is a drastic remedy to tie up the only serious asset which the plaintiff has at his disposal to re-establish himself post the breakdown of his relationship with the plaintiff and the settlement of their property issues.
34 Next, it is unlikely that this proceeding will be listed for trial before March 2015, which will mean that the defendant’s only asset will be tied up for a significant period of time. I think that is a cogent reason why the balance of convenience does not favour the granting of a freezing order.
Orders
35 The order I propose to make is that the Summons be dismissed. I will now hear the plaintiff and the defendant of who should pay the costs of the Summons. I will also want the parties to prepare interlocutory orders so that I can fix the proceeding for trial.
---
0
2
0