Guildford Montessori Kindergarten Pty Ltd v Wehbe
[2022] NSWSC 1560
•09 November 2022
Supreme Court
New South Wales
Medium Neutral Citation: Guildford Montessori Kindergarten Pty Ltd v Wehbe [2022] NSWSC 1560 Hearing dates: 9 November 2022 Decision date: 09 November 2022 Jurisdiction: Equity - Duty List Before: Ball J Decision: Freezing order substantially in the form sought by the plaintiffs should be granted
Catchwords: CIVIL PROCEDURE — Interim preservation — Freezing orders — No issue of principle
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW)
Category: Procedural rulings Parties: Guildford Montessori Kindergarten Pty Ltd (First Plaintiff)
Rose-Hill Montessori Kindergarten Pty Ltd (Second Plaintiff)
Eltelegraph Newspaper Pty Ltd (Third Plaintiff)
Alanwar Newspaper Pty Limited (Fourth Plaintiff)
Anoujoum Magazine Pty Limited (Fifth Plaintiff)
Access to Care Pty Limited (Sixth Plaintiff)
Future Academy Pty Ltd (Seventh Plaintiff)
Wehbe Investments Pty Limited (Eighth Plaintiff)
Remy Wehbe (First Defendant)
Linda Kafrouni (Second Defendant)
Kevin Wehbe (Third Defendant)
Karl Wehbe (Fourth Defendant)
Remy Wehbe Investments Pty Ltd (Fifth Defendant)
Advanced Training Services Pty Limited (Sixth Defendant)
The trustee for the Remy Wehbe Family Trust (Seventh Defendant)Representation: Counsel:
Solicitors:
M W Young SC (Plaintiffs)
A C Casselden SC with D K Ratnam (Defendants)
Finn Roache (Plaintiffs)
Simon Diab & Associates (Defendants)
File Number(s): 2022/258011 Publication restriction: None
EX TEMPORE Judgment
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The plaintiffs form a group of companies, which I will refer to as the Wehbe Group, controlled by Mr Wally Wehbe (Wally), which operate a number of businesses including childcare centres, Arabic language newspapers, and educational services.
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The first defendant, Remy Wehbe (Remy), who is related to Wally, held the position of CEO or financial controller in various companies in the Wehbe Group between 2008 and the middle of 2021. The second defendant is Remy’s wife and the remaining defendants are companies controlled by them.
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The plaintiffs claim that Remy misappropriated from the plaintiffs an amount totalling approximately $7.1 million, including interest, substantial amounts of which are said to have been paid to or for the benefit of Remy’s wife and the companies he and she control. The plaintiffs seek to recover the total amount from Remy and the amounts paid to the other defendants.
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By notice of motion filed on 25 October 2022, the plaintiffs seek freezing orders against the defendants in respect of the amounts they claim. A freezing order was granted ex parte by Robb J, which is due to expire at 5pm today. The question before the Court is whether that freezing order should continue.
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In support of the application, the plaintiffs rely principally on an affidavit sworn by Mr Paul Wehbe (Paul), who is the son of Wally and who became involved in the management of the plaintiff companies in about May 2021. Paul deposes to the fact that in late May 2021 he reviewed a number of invoices that had been paid to suppliers, using various bank accounts owned by the plaintiffs, which appeared to be suspicious. He says that he reported those transactions to his father and that he continued through May, June and early July 2021 to identify what he thought were questionable account entries.
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Paul says that on 14 July 2021 there was a meeting between him, Wally, Robert Wehbe (Paul’s brother), Denis Milic (an accountant) and Remy, during which Remy is said to have been confronted with a number of these suspicious transactions. During that meeting Remy is said to have agreed to pay back anything owing to him.
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There was a further meeting between the parties on 17 July 2021 which was attended by Mr George Khoury, who is an accountant for the plaintiff companies. At the end of that meeting the parties, that is to say Wally, Remy, Robert, Paul and Mr Khoury, signed a document purporting to record an agreement by which Mr Khoury was to investigate the various payments that had been made by the plaintiff companies. That document relevantly records:
6. Both Remy and Wally agreed that they wish to work co-operatively and openly to help resolve their financial dispute.
7. Remy undertook to make good any recommended financial settlement that George Khoury recommends to Remy and Wally.
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On 20 November 2021, Mr Khoury provided an incomplete draft preliminary report to the parties. He provided a further updated report dated 18 February 2022. The draft reports identified approximately $4 million in payments to or for the benefit of Remy. There appears to have been some further investigations undertaken by Mr Khoury. However, on or about 15 August 2022 Mr Khoury is said by Paul to have said that he was not prepared to be further involved because he had acted for both parties previously and there appeared to be a significant dispute between them.
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In opposition to the motion, the defendants rely on an affidavit sworn by their solicitors. It appears from that affidavit that Remy does not dispute the payments said to have been made to him or for his benefit. The solicitor says on information and belief that without access to the documents, Remy “[d]oes not presently recall the specific historical transactions referred to in Paul’s affidavit”. Remy’s position appears to be that all the payments were authorised at meetings he had once or twice a week with Wally.
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In my opinion, it is appropriate to grant a freezing order. On the evidence before the Court, the plaintiffs have a good arguable case that the money they claim was misappropriated. The nature of the payments, their amounts, the way they were made, and Remy’s agreement to the appointment of Mr Khoury, all suggest that they could not be regarded as part of Remy’s normal remuneration for the work that he did. It is also telling, in my opinion, that Remy has himself given no evidence to explain the payments.
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The defendants submit that the Court should not in its discretion grant a freezing order because of delays by the plaintiffs in seeking them and the fact that there is no evidence that the defendants are in the process of dissipating their assets.
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As to the first of these points, I am satisfied that the delays can be explained by the appointment of Mr Khoury and the hope that the matter could be resolved through his report. It only became clear in August 2022 that Mr Khoury would not complete his report and, in my opinion, the plaintiffs acted reasonably promptly after that date.
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As to the second point made by the defendants, the conclusion that there is a good arguable case that Remy has misappropriated large sums of money itself provides a strong ground for believing that there is a real danger that the defendants will seek to dispose of their assets unless restrained.
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Some support for that conclusion can also be found in the fact that there is evidence that Remy and his wife have significant property interests in the Philippines and that Remy has frequently taken large sums of cash to the Philippines and deposited them in a bank account there.
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The defendants also submit that there is no evidence that the plaintiffs will be able to meet the undertaking as to damages that they will be required to give as the price of the freezing order. However, it is apparent from the amounts that have been paid from the defendants that they are substantial companies and, in the absence of any evidence to the contrary, I am prepared to accept that the companies are of some substance, with the result that the undertaking as to damages that they will be required to give is also of some substance.
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For those reasons, in my opinion, a freezing order substantially in the form sought by the plaintiffs should be granted.
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Decision last updated: 16 November 2022
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