Leadenhall Australia Pty Ltd v Doman - [2019] SADC 93

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
LEADENHALL AUSTRALIA PTY LTD v DOMAN
[2019] SADC 93
Judgment of His Honour Judge Dart
1 July 2019
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
Freezing order made - non-party affected by the order - non-party applied to Court to vary the order - Court varied the order - non-party awarded costs of application - plaintiff appeals against the costs order - no error in the exercise of the discretion of the Master who made the costs order.
Held:
1. Appeal dismissed.
2. Appellant to pay the respondent's costs of the appeal, certified fit for counsel.
Project Development Co Limited SA v KMK Securities & Ors [1983] 1 All ER 465, applied.
Adelaide (SA Pools & Spa) Manufacturing & Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd [2016] SASC 60; Collex Waste Management Services Pty Ltd v City of Enfield (No 2) [2000] SASC 140; Norilya Minerals Pty Ltd v Ireland & Ors (1994) 12 WAR 485; Sunlight Nominees Pty Ltd v Zotti & Zotti [2017] SASC 176, considered.

LEADENHALL AUSTRALIA PTY LTD v DOMAN
[2019] SADC 93
JUDGE DART:

The appellant (plaintiff) appeals against a costs order made by the Master of the Court on 20 February 2019. For the reasons that follow, the appeal should be dismissed.
Background
In these proceedings the plaintiff sued Peter Doman (the second defendant) and his son, Jason Doman (the third defendant). Judgment was entered against the defendants on 30 November 2018.
The plaintiff applied to the Court for a charging order in respect of particular property. It also sought and obtained a freezing order. Those orders were made by a Master on 12 December 2018.
The freezing order was served on the Commonwealth Bank of Australia (‘CBA’) and also BankSA. Upon receipt of the freezing order, each of those banks closed down the operation of all bank accounts in the name of the defendants. The freezing order in its terms permitted the defendants to access the sum of $500 per week for ordinary living expenses and permitted the payment of reasonable legal expenses.
The wife of the first defendant, Ms Doman, the mother of the second defendant, swore an affidavit on 19 December 2018. In that affidavit she deposed to the fact that she had a joint account with her husband with the CBA, together with a business account, the accounts had been frozen by the CBA and that she had been unable to undertake any online or other banking. The affidavit was in support of an application to have the CBA reinstate the accounts so that they could be operated.
The matter came on before a Master on 20 December 2018. He directed the solicitor for the plaintiff to write to the CBA that day and advise the bank that the freezing order did not extend to the joint bank accounts. The solicitor was also directed to point out that the freezing order permitted the defendants to operate the accounts for an identified purpose and that the conduct of the CBA in freezing accounts was contrary to the intention of the orders.
As directed, the plaintiff’s solicitor sent a letter on 20 December 2018 to the CBA by email. The letter recounted what the Master had stated, but continued with the comment “This is not the position of my client on this matter. The CBA ought to take its own legal advice.” The only way to read the last two sentences is that the plaintiff disputed the Master’s interpretation of the order. Unsurprisingly, the letter did not clarify the matter. The CBA did not unfreeze the accounts.
The matter came on for a further interlocutory hearing on 15 February 2019. Ms Doman was still complaining about the fact that the CBA and BankSA had frozen the accounts. By that time the plaintiff was seeking to extend the operation of the freezing orders to Ms Doman, by application FDN158. That application had not been dealt with.
The Master directed that any applications by the respondents to application FDN158, which included Ms Doman, to serve any applications and supporting affidavits by Monday 18 February 2019 to be returnable for 20 February at 9:30am. Ms Doman filed an application (FDN159) with a supporting affidavit (FDN160) on 18 February 2019. Having filed and served the application, on the following day, that is 19 February 2019, the plaintiff offered to cooperate with the variation of the freezing order, so as to make clear to the CBA and BankSA that Ms Doman could continue to operate the relevant bank accounts.
Orders to that effect were made on 20 February 2019. The Master then said, after hearing argument in respect to Ms Doman’s application, as follows:
I’ll make an order then that the costs of FDN159 be paid by the judgment creditor on an indemnity basis, including the attendance today certified fit for counsel.
The judgment creditor being the plaintiff, it is that order that is the subject of the appeal. The costs of an application that was only unresolved for two days are unlikely to be substantial.
Consideration
The first thing to note is that this is an appeal from a discretionary order of a Master. Particular principles apply to the review of discretionary decisions.
In Adelaide (SA Pools & Spa) Manufacturing & Installation Pty Ltd & Ors v Westcourt General Insurance Brokers Pty Ltd his Honour Justice Doyle said: [1]
Before addressing the appellants’ submissions in relation to these issues, it is relevant to observe that the decision of the Master was a discretionary one, such that the appeal is subject to the principles in House v The King. Accordingly, the appellant must establish that the Master acted on a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts or did not take into account some material consideration. Alternatively, the appellant must establish that the result embodied in the orders made is, upon the facts, unreasonable or plainly unjust, such that it can be inferred that there has been a failure to properly exercise the relevant discretion despite the precise nature or source of the error not being identifiable.
[1] [2016] SASC 60 at [22].
It is also necessary to consider the particular circumstances of this matter. The respondent to the appeal was not a party to these proceedings. She was affected by a freezing order made by the Court in that two banks interpreted the order as extending to bank accounts which were at least partly in her name. She had to come to Court to have the position rectified. Her first attempt in December 2018 did not succeed, most likely because the letter written by the plaintiff’s solicitor was not likely to resolve the position, notwithstanding the intention of the Master. In the result, Ms Doman needed to bring an interlocutory application to force a resolution.
There is some law in respect of third parties who are affected by freezing orders. In an English case, Project Development Co Limited SA v KMK Securities & Ors Parker J said: [2]
In my judgment an innocent third party affected by a Mareva injunction ought, if he has to apply to the court for variation of the order and is successful in so doing, to have all costs incurred, so long as they are not unreasonable in amount or unreasonably incurred; and a plaintiff who resorts to the draconian remedy of a Mareva injunction should expect to pay such costs.
That decision was followed in Australia in Norilya Minerals Pty Ltd v Ireland & Ors.[3]
[2] [1983] 1 All ER 465 at 466.
[3] (1994) 12 WAR 485.
The factual situation is the same here. The plaintiff obtained a freezing order, which ended up affecting a third party who had to come to Court to get a variation. With freezing orders, there is always a possibility that the order will have unintended consequences. Banks served with such orders generally suspend accounts completely. It is unrealistic to expect them to do otherwise.
As a matter of justice, the party who obtained the order should pay the costs of the innocent party affected by the order. The order of the Master was consistent with that approach.
Issues on appeal
The first issue to be dealt with is the request of the plaintiff to introduce fresh evidence by way of a further affidavit. The plaintiff relies on the authority of Sunlight Nominees Pty Ltd v Zotti & Zotti where his Honour Justice Doyle said: [4]
In terms of the principles governing the plaintiff’s application to adduce the above evidence, the Court has a broad discretion under r 286(3)(a) of the Supreme Court Rules 2006 (SA) to receive further evidence on a question of fact in an appeal such as the present. The discretion is not circumscribed by the common law principles governing the reception of “fresh evidence” on appeal, although similar considerations will often be relevant. In particular, it will generally be relevant to consider:
•Whether the evidence was available, or could with reasonable diligence have been obtained for use at trial.
•Whether the evidence is such that it would have had an important influence on the result of the trial. While it need not necessarily be decisive, it must be more than merely useful.
•The likely impact of the evidence in terms of whether it is controversial or contested, and if so likely to require cross-examination, further responding evidence and/or that the matter be remitted for rehearing.
• The public interest in the finality of litigation.
[4] [2017] SASC 176 at [82].
The respondent relies on the Full Court authority of Collex Waste Management Services Pty Ltd v City of Enfield (No 2) where Bleby J, with whom Doyle CJ and Lander J agreed, said:[5]
To the extent that the fresh evidence is brought about by or relates to material changes in the design and construction or in the management of the plant, that was evidence which Collex could have led at the trial, both as to its intention to make the changes and as to the likely effect that those changes would have had in preventing fugitive emissions. One of the first principles on which an appellate court will act in deciding whether to allow the calling of fresh evidence is that it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: Ladd v Marshall [1954] EWCA Civ 1; [1954] 1 WLR 1489 at 1491; Orchard v Orchard (1972) 3 SASR 89; Ventura v Sustek (1976) 14 SASR 395 at 399, 406.
[5] [2000] SASC 140 at [26].
The application and the costs argument were conducted on behalf of the plaintiff by its solicitor, who was familiar with the matter, as he was the file principal. The new matters sought to be raised were within the knowledge of the plaintiff’s solicitor at the time of the argument. The evidence is proposed to be led to re-argue the issue, but could have been deployed before the Master. I decline to permit the introduction of fresh evidence.
The position of the plaintiff on the appeal generally is that the costs order was unreasonable and plainly unjust, such as to warrant the re-exercise of the discretion. It is said that the Court acted on a number of erroneous assumptions, including that the plaintiff conceded the respondent’s application and the Court treated the respondent as the successful party. It was further suggested that the Court proceeded on the erroneous basis that the plaintiff did not comply with the direction of 20 December 2019, to communicate with the CBA and that there had been no discussion about variations between the parties prior to the hearing on 20 February 2019.
Having considered the plaintiff’s submissions on the appeal, and reviewed the transcript of the plaintiff’s submissions before the Master, I am not satisfied there was any error in the exercise of the discretion by the Master such as would allow for the order to be set aside.
The respondent was a non-party affected by an order obtained by the plaintiffs. In those circumstances, the approach adopted by the English court in Project Development appears to be appropriate. The Master cannot be criticised for following that approach.
It is true that Ms Doman did not obtain the exact order sought in her application. The order she obtained was perhaps less than originally sought. Nonetheless, that does not detract from the fact it was necessary to make the application to the Court, to have the position rectified so that she could commence operating the bank accounts.
If I had to exercise a discretion afresh, I would do so in the same manner as the Master. It might be strictly true that the plaintiff’s solicitor complied with the direction of 20 December 2018 to write a letter to the CBA, however the rider in the letter that the plaintiff did not agree with the Master’s interpretation of the orders made the sending of the letter futile. The intent of the Master’s direction was thwarted. That should have a consequence.
I dismiss the appeal. The appellant is to pay the respondent’s costs of the appeal, certified fit for counsel.