Kalgin Holdings Pty Limited v Lagazo

[2018] NSWSC 1271

Supreme Court

New South Wales

Medium Neutral Citation:	Kalgin Holdings Pty Limited v Lagazo [2018] NSWSC 1271
Hearing dates:	15 August 2018
Date of orders:	15 August 2018
Decision date:	15 August 2018
Jurisdiction:	Common Law
Before:	Campbell J
Decision:	I direct counsel to bring in a re-engrossed version of the orders for the purpose of fixing the Court's seal and for service on the defendant. I will initial and date today the short minutes of order.
Catchwords:	CIVIL PROCEDURE – Summons seeking order of restitution – freezing order of assets – strong prima facie case of fraud – “gross dishonesty” – exceptional category – necessary ingredients established – balance of convenience satisfied – undertaking as to damages
Legislation Cited:	Nil
Cases Cited:	Patterson v BTR Engineering (Aust) Ltd and Ors (1989) 18 NSWLR 319
Texts Cited:	Nil
Category:	Procedural and other rulings
Parties:	Kalgin Holdings Pty Ltd trading as Kalgin Global Logistics (Plaintiff) Mayline Lagazo (Defendant)
Representation:	Counsel: N Simpson (Plaintiff) No appearance (Defendant)   Solicitors: Eakin McCaffery Cox, Lawyers (Plaintiff)
File Number(s):	2018/250666

REVISED EX TEMPORE Judgment

1. I have given the plaintiff leave to file in Court a summons seeking, by way of principal relief, an order for restitution on the ground of money had and received and seeking urgently on an ex parté basis a freezing order of the assets of the defendants.

2. Mr Simpson of counsel, who appears for the plaintiff, has read in support of his application the affidavit of Richard James Lamport sworn 14 August 2018. Mr Lamport is the managing director of the plaintiff company. Counsel has also read an affidavit of the plaintiff's solicitor Mark Geoffrey Doble, also sworn 14 August 2018. I record in these reasons that the usual undertaking as to damages has been proffered on behalf of the plaintiff. From the evidence I have read, I am satisfied that the plaintiff is in a position to make good on that undertaking, if called upon to do so.

3. The defendant in the proceedings is employed by the plaintiff as its accounts manager. The evidence indicates that she has been on leave since 10 August 2018 and is not expected to return from her leave until tomorrow, 16 August 2018. The defendant has been in the plaintiff's employ since October 2010. From the evidence I am satisfied at this preliminary stage that during her absence Mr Lamport had occasion to perform the work she normally performs and in the course of that, discovered certain defalcations from the company's bank account which could not be adequately explained.

4. I interpolate that, given the shortness of time the company has had to look into the matter, investigations are continuing and it is not clear to Mr Lamport or Mr Doble that the sum of $157,000, which is referred to as the amount sought by way of final relief, is the final figure representing the alleged defalcations of the defendant. Mr Simpson has carefully taken me through the exhibit to Mr Lamport's affidavit and I am satisfied that there is a strong prima facie case of fraud on the part of the defendant.

5. I have been taken to a number of transactions in the defendant's accounts, which demonstrate that purported payments to known suppliers or service providers have in fact been directed to bank account numbers associated with the defendant by way of electronic transfer, according to the plaintiff's records. It has also been shown that certain BPAY payments, purportedly made to a known supplier or provider, have been paid to what appears to be the defendant's credit card account. And finally for present purposes, from Mr Doble's affidavit, I am satisfied that payments have also been made, again purportedly to a supplier or provider, but in fact to what appears to be the defendant's mortgage. I have no doubt that that material demonstrates a strong prima facie case.

6. Mr Simpson has helpfully reminded me of the decision of the Court of Appeal in Patterson v BTR Engineering (Aust) Ltd and Ors (1989) 18 NSWLR 319. Learned counsel has taken me through the relevant passages. It suffices for present purposes if I refer to the judgment of Meagher JA (at 326C-D of the report). His Honour said:

“To obtain [a freezing order] a plaintiff must prove two ingredients: first, that he has a prima facie case against the defendant, and secondly, that there is some risk of a dispersal by the defendant of his assets so as to defeat the value of the plaintiff's victory if he ultimately wins. Normally proof of the first ingredient alone will not suffice; normally one cannot infer a risk of dissipation of assets from the mere fact that the plaintiff has a prima facie cause of action. In normal circumstances this is particularly so in cases like the present, where there is no evidence at all what the defendant's assets are. However, in exceptional cases (of which the present is unfortunately one) one can infer the existence of the latter ingredient partly or wholly from proof of the former. This may well be the situation in all cases where the plaintiff's prima facie case against the defendant involves proof of gross dishonesty.”

7. I am satisfied that this principle applies in the case at hand. There is little proof of the assets of the defendant other than that she appears to be the registered proprietor of a property jointly with her husband subject to a mortgage of uncertain amount. However, there is no doubt that the prima facie case established by the evidence to which I have referred, involves, to use his Honour's phrase "gross dishonesty". This case, therefore in my judgment, falls into that exceptional category where proof of the first ingredient will suffice to satisfy the second ingredient. I am satisfied that the plaintiff has established the necessary ingredients for the making of the freezing order sought.

8. Given this order is made ex parté, I will be making an order that the matter come back before the Duty Judge on 27 August 2018 to enable the plaintiff to demonstrate why the freezing order should continue, lest there be any dispute about it from the defendant.

9. It is also the case of course that proceedings involving an allegation of fraud, ought to be commenced by statement of claim so that the case of fraud may be set out with sufficient particularity for the defendant to know exactly what is alleged against him or her. But given the urgency with which the application is brought, which I regard as well justified by the circumstances, that matter can be dealt with on the next occasion when directions for the future conduct of the proceedings can be made.

10. To the extent to which the balance of convenience may be a separate consideration in matters of this kind, I am satisfied that for the reasons I have given, it favours the making of the order. That it is not clear what assets the defendant has, makes it necessary that such as they may be, should be preserved until further order.

11. In this regard I am also well satisfied that the plaintiff, as I have said, is able to honour the undertaking as to damages and I will make orders in accordance with the short minutes of order, as amended initially by Mr Simpson and also by me. However, I direct counsel to bring in a re-engrossed version of the orders for the purpose of fixing the Court's seal and for service on the defendant. I will initial and date today the short minutes of order.

**********