Legal Services Board v Forster
[2015] VSC 136
•1 April 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 6947
| LEGAL SERVICES BOARD | Plaintiff |
| v | |
| DAVID BRIAN FORSTER | Defendant |
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JUDGE: | ROBSON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 31 March 2015 |
DATE OF JUDGMENT: | 1 April 2015 |
CASE MAY BE CITED AS: | Legal Services Board v Forster |
MEDIUM NEUTRAL CITATION: | [2015] VSC 136 |
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PRACTICE AND PROCEDURE — Application to vary a freezing order over property of the defendant — Freezing order had been given over proceeds of sale of a property at which the defendant formerly conducted his legal practice — Defendant faced several legal proceedings relating to the conduct of his practice — Evidence of substantial legal expenses to defend those proceedings and other living expenses — Defendant a member of a superannuation fund that holds a substantial share portfolio — Evidence that defendant had been accessing assets of the superannuation fund — Defendant had not disclosed his benefits in the fund in the application — Held onus on defendant to establish that he did not have means to meet the expenses he would incur in defending the proceedings — Held that defendant had not established that onus — Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr K P Hanscombe QC with Mr S R Senathirajah | Corrs Chambers Westgarth |
| For the Defendant | Dr J Walsh of Brannagh | Darryl Nelson |
| For the Receivers of Hollows Law Practice | Mr P D Corbett QC | Hall & Wilcox |
HIS HONOUR:
Mr Forster has applied to vary an order made by Emerton J on 21 May 2010, upon the application of the Legal Services Board, freezing the proceeds from the sale of a building at Frankston owned by Mr Forster, where Mr Forster had previously carried on his practice known as Hollows Lawyers. Mr Forster has made two previous unsuccessful applications to vary the freezing order. The funds frozen are now $510,790.90.
On 12 April 2010, Emerton J appointed receivers of Hollows Lawyers under the Legal Profession Act 2004. Mr Forster unsuccessfully opposed the appointment of the receivers and was ordered to pay the Legal Services Board substantial costs of approximately $550,000.
Previously, Mr Forster unsuccessfully applied to Emerton J for a direction that the frozen funds be paid to the Legal Services Board in reduction of a moneys due by Mr Forster to the Legal Services Board under a costs orders made against Mr Forster on 16 May 2011 by the Costs Court. Mr Forster had been ordered to pay the costs of the Board of its successful application for the appointment of receivers to Mr Forster’s practice. Mr Forster appealed against the decision of Emerton J to the Court of Appeal in Forster v Legal Services Board.[1]
[1][2013] VSCA 131.
On the appeal, the Court of Appeal referred to the three reasons given by Emerton J for making the freezing order. Justice of Appeal Harper, with whom Weinberg JA and Kyrou AJA agreed, said that:
…the freezing order was made for three purposes, only one of which was to ensure so far as possible the payment of the judgment debt owed by the appellant to the Board for its costs of its successful application for the appointment of the receivers.
The two other purposes were similar. They were to ensure, again so far as possible: (i) payment of such costs orders as may be made in relation to the receivers’ costs and, most importantly, (ii) the recovery of such funds as, following the receivers’ investigations, were found to be owing by the firm to its former clients. The appellant’s submissions failed to address these other purposes. Yet it is entirely proper that the Board resist the payment to it of moneys the first call upon which may turn out to lie elsewhere.[2]
[2]Ibid [53]–[54].
I infer from the reference to ‘moneys the first call upon which may turn out to lie elsewhere’ that Harper JA was referring to the possibility that moneys may be required to be recovered from Mr Forster by the receivers to pay former clients of Mr Forster who are found to be owed money by Mr Forster.
In the application before me, in essence, Mr Forster says that he has expended all his cash and liquid assets principally in paying legal expenses relating to litigation brought against him variously by the Legal Services Board, the receivers of Hollows Lawyers and the Legal Services Commissioner and in incurring ordinary living expenses.
Mr Forster requests that payments be made from the funds the subject of the freezing order to meet legal costs for him to defend seven VCAT proceedings taken against him by the Legal Services Commissioner and to defend an application by the Legal Services Board to have Mr Forster struck off the roll of barristers and solicitors of the Supreme Court of Victoria. He also seeks payment of moneys he owes his legal clerk, money for living expenses and the services of an expert psychiatrist. These total approximately $500,000.
By his latest affidavit of 30 March 2014, Mr Forster seeks an order that the freezing order be varied for payment of the full amount the subject of the order being $510,790.90.
The first of the seven VCAT proceedings is currently being heard having commenced on 3 February 2014. The Legal Services Commissioner is represented by senior and junior counsel in the matter. Mr Forster says that the matter requires a further ten days of hearing. In defending the first proceeding (identified as J169/2011), Mr Forster has engaged the services of a costs consultant, Mr Fulton. Mr Fulton has invoiced Mr Forster $13,200 and has been paid $9,000. Mr Forster says that he seeks urgent payment of the balance of $4,200 as Mr Fulton has indicated to him that he would refuse to do further work on Mr Forster’s behalf unless Mr Fulton is paid up front.
Mr Forster says that he is calling the receivers’ expert Paul Linsdell of Blackstone Legal Costing who prepared an expert report on the ‘Norrish bill’. Mr Forster says that he urgently seeks payment of the sum of $4,000 in respect of witness expenses in the ‘Thompson proceeding’ commencing shortly after 10 March 2015.
Mr Forster has engaged D G Thompson cost consultants of Sydney to prepare a cost report in proceeding no J166/2011 (Michael McGarvie v Forster re Barnes) which has cost $12,000.
Mr Forster says that he expects that her Honour Jenkins J, who is hearing the first matter, will require a hot tubbing report in the matter. Given the accommodation, flights and travel times from New South Wales he expects that the costs for D G Thompson of the hot tubbing report will be $10,000. Mr Forster said it will require joint inspection of the file in Melbourne.
Mr Forster says that he needs to urgently engage a senior and junior counsel to defend him in the strike off proceedings in the Supreme Court, being brought to strike him off the roll of counsel in proceeding no 5447 of 2014, and prepare affidavit material. Mr Forster estimates on a conservative basis that the matter will go for twenty three days plus three days preparation. He says that the matter is listed for hearing on 18 May 2015.
Mr Forster says that Mr Bruce Wilkinson, forensic accountant, has estimated his charge to appear in the Supreme Court in the above proceeding and provide a further report at $4,000, and that he requires payment in advance and payment of his previous account being a total of $12,800.
Mr Forster says that his former auditor, Ron Male, who was auditing his trust account for a period of three years, will provide him with an expert report for the sum of $2,000 and give evidence for him in respect of the above proceeding.
Mr Forster says that the trust auditor, Mr David Osborne of Shepard Webster & O'Neill, will provide him with an expert report and give evidence for him in the strike off application for the sum of $4,000.
Mr Forster says that the receivers’ claim against him in proceeding no 732 of 2012 commenced on or about 3 February 2014, and involved approximately twenty three days of hearing and judgment is awaited.
Mr Forster says this court has ordered that he be orally examined at the instigation of the Legal Services Board in proceeding no 5447 of 2014. Mr Forster says that it is listed for further hearing on 10 April 2015. Mr Forster says that he requires a senior junior counsel to appear on his behalf at that hearing.
Mr Forster says that he has filed and served a judgment debtor's statement of financial position pursuant to an order made by Muhktar AsJ in proceeding no 5447 of 2014, and he exhibits his financial position to his affidavit.
Mr Forster says that he needs the sum of $10,000 to enable him to contract with Ms Chow Trinh to provide paralegal support to him for the existing proceedings for the next ten weeks at a cost of $8,000. Due to his hand injuries it is essential, Mr Forster says, to have her support him in preparation of the voluminous material in support of his defence. Mr Forster says that he has no means of paying her in the future without release of funds.
Mr Forster says that he has no income. He says that he currently resides at 1591 Mornington Flinders Road, Flinders, on the condition that he meet the expenses of the property and share food and living expenses. He exhibits to his affidavit a bundle of his latest bank statements.
Mr Forster says that these costs include gas and electricity, council rates, drainage rates, maintenance cost of pumps for garden and household. Mr Forster seeks the payment of $16,000 per month commencing forthwith to meet his necessary personal expenses anticipated and reasonable expenses.
Mr Forster says that he pays for the employment of a mower and garden maintenance person, Bruce Abrahams, and incurs employment costs of approximately $550 per week.
Mr Forster says that he envisages that the strain of further proceedings without the benefit of expert and counsel assistance and a law clerk's assistance will effectively destroy his mental health.
Mr Forster says that he is in a fragile state and requires the sum of $2,800 to obtain a psychiatric report in respect of the application to strike him off the roll, and that his psychiatrist estimated witness expenses will be $5,500.
Mr Forster said that he had expected that his legal issues would have been resolved after the receivers received the Deloitte’s report with its finding that no client suffered a financial disadvantage as a consequence of the double accounting error. He says that unfortunately his expectations have not been fulfilled in that regard. Mr Forster says that over the last five years he estimates he has incurred legal costs and expenses in excess of $2 million in defending himself.
In a further affidavit of 30 March 2015, Mr Forster produces an email received from Mr John Dever, barristers’ clerk, dated 25 March 2015 which provided updated details of the amount required to enable Mr Forster to continue to brief Mr Sandbach. In that email, Mr Dever confirms that Mr Sandbach is willing to undertake the work, which he sets out, for his usual fee. Mr Dever refers to the VCAT proceedings as Michael McGarvie (Legal Services Commissioner) v David Forster re Thompson J169/2011, Michael McGarvie v David Forster re Maultby and Michael McGarvie v David Forster as the remaining five cases to commence on 13 April 2015.
Mr Dever also refers to the Supreme Court proceeding S CI 2014 05021 being Legal Services Board v David Forster. I presume that is the application to strike Mr Forster off the roll of Barristers and Solicitors of the Supreme Court of Victoria. Finally, Mr Dever refers to the Supreme Court proceeding being an application for oral examination, Legal Services Board v David Forster, listed to continue for an estimated one and a half days. Mr Dever concludes by saying in substance that the legal work required of counsel would require $391,600 to be paid into his trust account.
Mr Forster says that Mr Sandbach is briefed to appear on his behalf in the striking off application in the Supreme Court listed for 14 May 2015, and that he is urgently required to provide material for the application to vary the existing date for filing affidavit material on 27 February 2015. Mr Forster says that he has been unable to attend to the same due to other urgent commitments. He anticipates that the matter will go for twenty three days and the Legal Services Board requested one and a half days for the hearing. Mr Forster says that he was unable to attend the earlier directions hearing and that he had provided medical evidence to the board who proceeded in his absence.
Mr Forster says that the first of the seven VCAT applications commenced on 3 February 2015 before Jenkins J. Mr Forster says that he has filed an extensive witness statement and that he has been working on the further six VCAT applications. Mr Forster says that the matter has been adjourned to this Thursday when it is intended that his cost expert will give evidence in the absence of him being able to instruct the solicitor.
Mr Forster says that Mr Sandbach is also briefed to act for him in the summons for oral examination in the Supreme Court proceeding S CI 5547 of 2014, which is currently listed on 10 April 2015. Mr Forster says that matter is part heard before Muhktar AJ, and he says in that matter Opus Red has been engaged by the Legal Services Board, whereas in the matter before Robson J, Corrs Chambers Westgarth were engaged.
Mr Forster says that in that matter Opus Red had previously been seeking a listing of the matter for further directions on approximately the same day the matter is listed before. Mr Forster says that the first of seven VCAT proceedings commenced on 3 February 2015 in the matter of Thompson J169/2011. Mr Forster says that after approximately 12 days of hearing the matter has been adjourned for further hearing on or about 2 April. Mr Forster says that the matter will take a further ten days based on a number of factors, including that he is part heard in cross-examination. Again Mr Forster says that Mr Fulton is to give evidence, and he says that Mr Pinto, a former solicitor in his employ, is to be called.
Mr Forster says that Mr Sandbach in the VCAT matters has yet to make the strike out application which will be heard at the end of this proceeding. Mr Forster says that he expects there to be four days of final addresses. Mr Forster says that the case is complex and includes the first of seven matters which include allegations of attempted deceptive conduct in providing second fee agreements to clients of which two thirds were signed and allegations of excessive charging.
Mr Forster says that Mr Nelson Pinto, a former solicitor in his employ, will give evidence in seven VCAT proceedings and in the ‘striking off proceeding’ for the sum of $12,000. He exhibits a letter from Mr Pinto. Mr Forster says that Mr David Osborne, an experienced auditor of solicitor's trusts accounts of Shepard Webster & O'Neill will provide an expert report and give evidence in the ‘striking off proceeding’ for the sum of $4,000, and he exhibits a letter from Mr Osborne dated 12 March 2015.
Mr Forster says Ms Trinh, his personal assistant, is currently owed $1,154.57, and he is contracted to employ her until 3 June 2015 for the sum of $9,000, and he exhibits a letter from Ms Trinh dated 30 March 2015.
Mr Forster says that following his hand injuries he has difficulties in performing some administrative tasks and he lacks energy. Mr Forster says that he is having difficulty keeping up with legal demands of Opus Red, the four lawyers for the Legal Services Board in the summons for oral examination, and the five lawyers for the receiver and a further four lawyers for the Legal Services Board in this application.
Mr Forster says that he is suffering significant stress because of multiple cases which are going on which are not of his choosing. Mr Forster says that it is essential to have competent and experienced counsel to represent him.
Mr Forster says that Mr Sandbach has informed him that he is not able to appear for him in this matter as he may be conflicted. Mr Forster says, ‘I need to have counsel appear on my behalf. I fear [the Legal Services Board] will again seek to have me jailed for contempt of Court or the Tribunal.’ Mr Forster says that part of the litigation strategy being used by the Legal Services Commissioner is to try and deliberately upset him. Mr Forster exhibits a letter which concerns him copying in the Legal Services Commissioner counsel in an email from Mr Bowels. Mr Forster says, ‘I had received emails from the Associate with these Counsel emails and I thought it was appropriate to copy them in material presented to the Tribunal to avoid them being taken by surprise and late service.’ Mr Forster says that, ‘If I do not have funds for counsel I will no longer be capable of defending myself.’
Mr Forster says that in all the seven VCAT matters the Legal Services Commissioner is relying on reports by Ms Hedstrom, many of which say Mr Forster’s proper expenses are less than what was recovered for party/party costs. Mr Forster says that the party/party costs do not include the 25 per cent uplift and the media and lobbying costs. Mr Forster says that, ‘I will incur other expenses for running my home office including telephone, printing costs, computer costs and technical support and other essential services.’ Mr Forster says that he requires accommodation at the RACV so that he can access the business centre and that he incurs very substantial copying costs.
Mr Forster exhibits a bundle of his bank statements and he exhibits a copy of the Forster Superfunds Portfolio Valuation by cost from 1 January 2015 to 20 February 2015.
Mr Forster also exhibits a report of Dr Gaze dated 28 March 2015. Mr Forster says that it is likely that he will need to obtain psychiatric evidence to address the opposition of the Legal Services Board and the Legal Services Commissioner to reports of his family therapist, Christine Cox, and a psychologist, Mandy Bell, who is contracted by the Law Institute of Victoria to provide services to its members suffering emotional issues.
Mr Forster says that he is concerned that the Legal Services Commissioner is insisting that he see their psychiatrist which he believes is being done for the collateral purpose of supporting their application to the Supreme Court to strike him off the roll on the Supreme Court, wherein he says that the Legal Services Board is alleging that he is not a fit and proper person to be a solicitor.
This evidence may not be relevant to this application. On reflection the evidence may be of some relevance to show the emotional pressures that Mr Forster is under and how he needs money to pay a psychiatrist.
Mr Forster says that he is concerned that when he informed the two solicitors of the Legal Services Commissioner that he was worried about suicide he was told to put it in writing which further upset him.
Mr Forster says that he is determined to fight on but needs the funds to be able to continue. Mr Forster says that an extraordinary amount of legal bills have been paid from the public purse for the Legal Services Board's solicitors and the receivers exceeding $4.5 million.
Mr Forster says that he believes the regulators are after him because he has complained that they were asleep at the wheel when users of the Infinity package sought assistance from the Law Institute of Victoria to support them in their complaints regarding the Infinity package.
Mr Forster says that the investigator and the President of the Law Institute of Victoria denied the existence of the report into accounting packages. I do not consider this evidence relevant.
Mr Forster exhibits copies of his reports in relation to his hand injury and reports of Mandy Bell and Christine Cox.
Mr Forster says that he will be seeking to appoint a costs consultant to review the account of the receivers and the Legal Services Board. Mr Forster says that, ‘I'll be seeking orders in the receivership that my party/party costs be paid to me’, and that he is confident that his further legal costs will amount to $3 million.
Mr Forster exhibits what he says are copies of his non–lodgement of income tax returns forms. Mr Forster exhibits a copy of the trust deed establishing the Forster Superannuation Fund. Mr Forster exhibits an email from Mr Chun which relates to the initial investigations that were undertaken into his practice.
Some of the statements made by Mr Forster in his affidavits are perhaps not relevant to this application. However, I have recited his evidence in my judgment to make it clear that I have fully taken into account Mr Forster's financial predicament and his personal circumstances.
I accept that Mr Forster will be expending large sums in defending the VCAT proceedings and the application to strike him off the roll of barristers and solicitors of the Supreme Court of Victoria. I accept that Mr Forster is not employed in gainful employment and that the whole of his time is devoted to defending the various proceedings brought against him by the receivers, the Legal Services Board and the Legal Services Commissioner.
The Legal Services Board submits that where the freezing order sought to be varied was not over all the assets and means of Mr Forster then Mr Forster must establish that he does not have other assets or means available to meet the expenses he has referred to in his affidavits before the Court should consider varying the freezing order.
The Legal Board submits that the onus falls on Mr Forster to satisfy the Court that the freezing order should be varied and that it was not sufficient for Mr Forster to establish that legal costs were to be met by Mr Forster in the proceedings Mr Forster faces.
The Board relies on Clout (Trustee) v Anscor Pty Ltd,[3] which was cited with approval by Davies J in Allomak Ltd v Allan.[4]
[3][2001] FCA 174, [20].
[4][2010] VSC 187.
Her Honour said:[5]
I do not consider that the orders should be discharged or varied on that basis alone. In Clout (Trustee) v Anscor Pty Ltd, Drummond J stated:
[W]here, as here, a Mareva restraint is imposed only on part of the assets of a respondent in an action, the respondent who seeks a relaxation of the restraint has an evidentiary onus, if not a full persuasive onus to show that it has no other assets beyond those covered by the injunction to which it can resort to meet the expenses in question. In A v C (No 2) [1981] 2 All ER 126, Robert Goff J held that on an application to vary a Mareva injunction that had been granted over part only of a respondent's assets to permit the payment of legal costs of the action out of the assets the subject of the restraint, that it was not enough for the respondent to merely state that it owed money to someone but had instead, to show that it did not have any other assets available out of which the expenses could be paid. Rogers J took the same approach in Australian Iron & Steel Pty Ltd v Buck [1982] 2 NSWLR 889 at 890. See also Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd [1998] 14 NSWLR 552 at 568 to 569.
[5]Ibid [24].
The Legal Services Board said that the evidence established that Mr Forster is a member of the Forster Superannuation Fund. The trustees are Marie Philomena Forster (Mr Forster’s wife) and Mr Forster. Mr Forster tendered what he called a copy of the Forster Superannuation Fund account with UBS showing a cash and share portfolio valued at $5,964,132.91 as at 20 February 2015. Mr Forster did not depose as to whether they were the only assets of the fund, or as to his interests or benefits in the fund. Mr Forster did not tender the accounts of the fund. Those accounts would have shown the assets of the fund and presumably Mr Forster’s interest or benefits in the fund.
The Legal Services Board submitted that as Mr Forster attained the age of 65 on 23 July 2014, Mr Forster is entitled to unfettered access to his superannuation benefits held in the Forster Superannuation Fund.
The Legal Services board referred to the Superannuation Industry (Supervision) Regulations 1994 (Cth) and in particular regs 6.18(1) and 6.18(3)(b)(i); 6.19(1) and 6.19(1)(3)(b)(i); 6.20(1) and 6.20(3)(a), the definition of ‘condition of release’ contained in reg 6.01(2), and in turn item 106 in pt 1 of sch 1. The condition of release for a member who has attained 65 is ‘Nil’.
It is not necessary to examine in detail the regulations referred to as there was no suggestion by Mr Forster that the submissions by the Legal Services Board on his entitlements under the Superannuation Industry (Supervision) Regulations 1994 (Cth) were wrong.
Regulation 6.18(1) provides:
A member’s preserved benefits in a regulated superannuation fund may be cashed on or after the satisfaction by the member of a condition of release.
Regulation 6.19(1) provides:
A member’s restricted non-preserved benefits in a regulated superannuation fund may be cashed on or after the satisfaction by the member of a condition of release.
The Legal Services Board submitted that in accordance with the regulations referred to, Mr Forster is entitled to cash in his preserved and non-preserved benefits in one or more lump sums. Mr Forster did not contest the submissions of the Legal Services Board on his entitlement to access his fund benefits.
As mentioned above, Mr Forster led no evidence as to what Mr Forster’s benefits were under the Forster Superannuation Fund. The onus, however, was on Mr Forster to establish the extent of his benefits where he seeks to vary the freezing order.
On 22 January 2015, Mr Forster was examined under Order 67 of the Supreme Court Rules. Mr Forster gave evidence that he had received $130,000 from the Forster Superannuation Fund for the financial year beginning 30 June 2014 in the last two months.[6] Mr Forster also tendered bank statements for an account he holds with the CBA that show he made the following transfers from the UBS superannuation fund account held by the Forster Superannuation Fund to the CBA account:
24 February 2015 $ 10,000
11 February 2015 $ 10,000
28 January 2015 $ 10,000
15 December 2014 $ 15,000
13 November 2014 $ 30,000
$ 75,000
[6]Transcript of Proceedings, Legal Services Board v Forster (Supreme Court of Victoria, Mukhtar AsJ J, 22 January 2014) 9.
It should be noted that $30,000 was transferred after the examination on 22 January 2015 which would not be part of the $130,000. So there is evidence of $160,000 being withdrawn from the Forster Superannuation Fund by Mr Forster.
It was submitted on behalf of Mr Forster that the Forster Superannuation Fund was controlled by the two trustees, himself and Mrs Forster. Mr Forster submitted that he could not withdraw funds without Mrs Forster’s consent as a co-trustee and that she will no longer agree to the fund being used to meet legal costs.
Mr Forster sought to tender a letter from Mrs Forster dated 31 March 2015, which confirmed that as trustee she did not agree to any release or dissipation of retirement funds held in their joint superannuation fund for the purpose of legal fees or any other related expenses. The Legal Services Board objected to the tender. I upheld that objection. Dr Walsh of Brannagh of counsel, who appeared for Mr Forster, then sought an adjournment of the hearing to allow him to tender evidence from Mrs Forster verifying the letter.
Dr Hanscombe QC, one of Her Majesty’s counsel, who appeared with Mr Senathirajah of counsel, objected on the grounds that Mrs Forster’s evidence to that effect would not assist Mr Forster’s case. Dr Hanscombe said that whatever benefits Mr Forster had under the superannuation fund were rights as against the trustee, and the trustees could not deny Mr Forster his benefits if he was entitled to them under the Superannuation Industry (Supervision) Regulations 1994 (Cth). I accepted that submission and declined to adjourn the hearing so that Mrs Forster’s evidence could be tendered. In my view, evidence that Mrs Forster would not agree to the payment of any further benefits to Mr Forster would not establish that Mr Forster was not entitled to receive lump sum payments from his benefits under the fund.
The Legal Services Board submitted that the evidence showed that Mr Forster had withdrawn at least $130,000 from the superannuation fund and had withdrawn some $75,000 in the last few months. In substance, the Legal Services Board said that Mr Forster bore the onus and had not sworn to his benefits and entitlements under the superannuation fund in circumstances where Mr Forster had withdrawn large sums from the fund. Dr Hanscombe conceded that if all Mr Forster’s accounts and entitlements were caught by a freezing order, there may have been grounds to vary the freezing order to permit Mr Forster to use the funds to meet his legal costs. But, as Dr Hanscombe pointed out, that was not the case here. Authorities such as Iraqi Ministry of Defence v Arcepey Shipping Co SA;[7] Barclay-Johnson v Yuill;[8] AJ Bekhor & Co Ltd v Bilton;[9] Riley McKay Pty Ltd v McKay;[10] Jackson v Sterling Industries Ltd[11] and Paul Cardile v LED Builders Pty Ltd,[12] establish that a freezing order may be varied to permit a business or person to pay its or their debts and to permit a person to meet their living and similar expenses from the frozen property.
[7][1981] QB 65.
[8][1980] 1 WLR 1259.
[9][1981] QB 923, 936.
[10][1982] 1 NSWLR 264.
[11](1987) 162 CLR 612, 642 (Gaudron J, in dissent on other grounds).
[12](1999) 198 CLR 380 per Gaudron, McHugh, Gummow and Callinan JJ, 428 [41]–[43].
Wilson and Dawson JJ said in Jackson v Sterling Industries Ltd:[13]
One important result of viewing the Mareva injunction in this way is to emphasize the limits of the remedy. Its use must be necessary to prevent the abuse of the process of the court. As Ackner L.J. pointed out in A.J. Bekhor & Co. Ltd. v. Bilton; (1981) QB 923, at pp 941-942, the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. The remedy is not to be used to circumvent the insolvency laws.
[13] (1987) 162 CLR 612, 617–18.
But these authorities are of little use where the freezing order does not apply to all the property and resources available to the person whose property has been frozen.
Mr Forster submits that in this case all his property was frozen. He submits that his only asset was the office premises, which he sold in order to meet his living and other expenses. The short answer to that submission is that his property also includes his superannuation benefits, about which Mr Forster has not properly informed the Court.
Mr Forster is the subject of the VCAT proceedings brought by the Legal Services Commissioner which I referred to earlier. I was informed by Dr Hanscombe that if the VCAT proceedings are successful, then the findings of VCAT may be used as additional grounds in the application to strike off Mr Forster from the roll of barristers and solicitors of this Court.
I accept that the reasons why Mr Forster requires the funds are genuine and valid reasons. There was no suggestion by the Legal Services Board and the receivers that Mr Forster meeting his legal costs and other expenses he referred to in his evidence would be construed as a dissipation of his assets designed to defeat the processes of the court.
The receivers, who are parties to Mr Forster’s summons, support the submissions of the Legal Services Board.
I accept the authority of Allomak Ltd v Allan[14] referred to above. I find that Mr Forster has not met the onus that rests on him to show that he does not have the means from other sources available to him (such as the Forster Superannuation Fund) to meet the legal costs and other expenses for which he seeks the money the subject of the freezing order.
[14][2010] VSC 187.
In those circumstances, Mr Forster has not satisfied me that the freezing order should be varied to permit the payment of some or all of the expenses he has referred to in his supporting affidavits.
Accordingly, I dismiss the application.
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