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Hewitt v McClymont (No 2)

Hewitt v McClymont (No 2)

Case [2024] NSWSC 1453 18 November 2024

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Injunction

Res Judicata

Civil Litigation & Procedure

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Supreme Court

New South Wales

Medium Neutral Citation: Hewitt v McClymont (No 2) [2024] NSWSC 1453
Hearing dates: 1 November 2024; last submissions 12 November 2024
Date of orders: 18 November 2024
Decision date: 18 November 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Dismiss application to discharge freezing order; vary freezing order.

Catchwords:
MAREVA ORDER – application to discharge or vary – principles at [77]-[78] – uncontested freezing order made against trustee of superannuation fund given $770,000 in “unexplained withdrawals” – defendant then participates in proceedings and gives an account – defendant alleges that withdrawals have now been explained by his account – plaintiff challenges account – whether freezing order should be reduced to balance of unpaid costs order – discharge does not accord with dictates of justice where plaintiff continues to have good arguable case and risk of asset disposal remains.
EQUITY – common form of account – procedure at [81]-[83] – proceedings not concluded – the defendant having given an account, the Court must still take an account having regard to the plaintiff’s challenge to that account.

Legislation Cited:
Civil Procedure Act 2005 (NSW), ss 98(4)(c), 107
Uniform Civil Procedure Rules 2005 (NSW), rr 15.3, 25.11, 36.16(2)(b), 46.9

Cases Cited:
Break Fast Investments Pty Ltd v Gravity Ventures Pty Ltd [2013] VSC 89
Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 618
Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95
Frigo v Culhaci [1998] NSWCA 88
Grace v Grace [2012] NSWSC 976
Juul v Northey [2010] NSWCA 211
Reeves v Reeves [2024] NSWSC 134
Russo v Russo [2015] NSWSC 17
SRG Civil Pty Ltd v Brolton Group Pty Ltd [2018] NSWSC 618
Torlonia v Wright [2016] NSWSC 1139

Texts Cited:
James Watson, The Duty to Account: Developments and Principles (2016, Federation Press) page 104

Category: Procedural rulings
Parties: Geoffrey Hewitt (Plaintiff)
Scott McClymont (Defendant)
Representation:
Counsel:
R Quickenden (Plaintiff)
SJ Burchett (Defendant)
Solicitors:
Peninsula Law (Plaintiff)
The Law Office of Conrad Curry (Defendant)

File Number(s): 2024/151741

JUDGMENT

This is an application to discharge a freezing order or, alternatively, to reduce the amount of the freezing order from $810,000 to $30,000. The defendant also seeks an order under s 107 of the Civil Procedure Act 2005 (NSW) to pay the $30,000 by instalments of $100 per week, that is, over the next six years. The freezing order was made on the application of Geoffrey Hewitt, a former client of the defendant, Scott McClymont. The defendant was an accountant and tax agent but has since been deregistered by the Tax Practitioners Board.
The defendant relied on his affidavits and an affidavit by his solicitor, Conrad Curry. Mr McClymont was cross-examined at length. The plaintiff pressed strongly for an adverse credit finding. I am loathe to do so on an interlocutory application and make no such finding. Similarly, any findings in this judgment are based on the evidence on this interlocutory application only.
The plaintiff relied on his affidavits and those…

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.

Continue reading Hewitt v McClymont (No 2)

Details

AGLC: Hewitt v McClymont (No 2) [2024] NSWSC 1453
Case: [2024] NSWSC 1453
Decision Date: 18 November 2024

CaseChat Overview and Summary

The case of Hewitt v McClymont (No 2) involved a dispute concerning an application to discharge or vary a Mareva order. The plaintiff, Hewitt, sought an injunction to prevent the defendant, McClymont, from disposing of assets. The matter was heard in the Federal Court of Australia. The defendant, who was the trustee of a superannuation fund, had made unexplained withdrawals amounting to $770,000. Following the making of the uncontested freezing order, McClymont participated in the proceedings and provided an account of the withdrawals. Hewitt challenged the account, asserting that it did not sufficiently explain the withdrawals.

The court was required to decide whether the freezing order should be reduced to a balance of unpaid costs order. The court considered the principles relevant to discharging or varying a Mareva order, which include the existence of a good arguable case, the risk of asset disposal, and whether the discharge would accord with the dictates of justice. The court also had to consider the equitable principle of taking an account in light of the defendant's submission of an account, and the plaintiff's challenge to that account.

The court found that the plaintiff's case remained arguable, and there was still a risk of asset disposal. Consequently, the freezing order could not be discharged. The court also held that it must take an account of the defendant's account, as the proceedings had not concluded and the plaintiff had challenged the defendant's account. The court held that the principles relevant to discharging a Mareva order did not provide a basis for discharging the order in these circumstances.

The court declined to reduce the freezing order to a balance of unpaid costs order, as it found that the plaintiff had a good arguable case and the risk of asset disposal remained. The court also held that taking an account of the defendant's account was necessary to determine whether the defendant had properly accounted for the unexplained withdrawals. The court did not make any final orders, as the proceedings were ongoing, and the taking of an account was yet to be conducted.

Orders