McEntee v SJ Berry Pty Ltd - [2021] SADC 121

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
MCENTEE & ANOR v SJ BERRY PTY LTD & ORS
[2021] SADC 121
Reasons of his Honour Judge O'Sullivan
8 November 2021
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DETENTION, INSPECTION AND PRESERVATION - FREEZING ORDERS
On 8 September 2021, judgment was entered against all four respondents jointly and severally. The question of costs was reserved and the decision on costs has been delayed at the request of the applicants. After proceedings had been instituted and prior to trial, in the period late 2018-mid 2020, the first and second respondents caused the transfer of various assets to related entities.
The applicants seek a freezing order pursuant to UCR 112.14 and 112.17.
The first and second respondents oppose the order.
Held: Freezing order made
Jackson v Sterling Industries Ltd [1987] 162 CLR 612, 625 ; RTP Holdings Pty Ltd & Anor v Roberts & Ors (No.2) [2000] SASC 390; Patterson v BTR Engineering (Aust) Ltd [1989] 18 NSWLR 319; Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102 ; Hayden & Ors v Teplitzky & Ors [1997] 74 FCR 7, 16; Beach Petroleum NL v Johnson [1992] 9 ASCR 404, considered.

MCENTEE & ANOR v SJ BERRY PTY LTD & ORS
[2021] SADC 121
Introduction

On 27 August 2021, I delivered my reasons in this matter and on 8 September 2021, entered judgment against all four respondents, jointly and severally, in the sum of $205,243, inclusive of interest. That day I heard argument on, and reserved, the question of costs.
Just prior to delivering my decision on costs, I was asked by the applicants not to do so on the basis there had been a change in representation of the first and second respondents and that there was an issue in relation to insurance, indemnity and where any liability for costs on the part of the first and second respondents should lie.
On 7 October 2021, the first and second respondents issued an interlocutory application claiming a multitude of orders.[1]
[1] FDN114
Paragraph 8.5 of the application sought an order that:
"8.5 Staying any order for the payment by the First and Second Respondents pending a determination of the liability of Quanta to indemnify the First and Second Respondents for the claim and defence costs of the action."
That application has not yet been heard and has been listed for argument on 12 November 2021 with a number of other applications.
On 11 October 2021, the applicants filed an interlocutory application[2] seeking an order ("Freezing Order") pursuant to Uniform Civil Rule ("UCR") 112.14 and 112.17 in the following terms:
"2. The first and second respondents, TGYH Pty Ltd and Cheddar Studios Pty Ltd, be restrained from removing any assets locating (sic located) in or outside Australia or from disposing of, dealing with, or diminishing the value of those assets."
[2] FDN117
On 29 October 2021, I heard argument on the applicants' application for a Freezing Order. Later that day, I indicated I would make a Freezing Order against the first and second respondents and provided draft minutes of order to the parties.
These are my reasons for making a Freezing Order over the assets of the first and second respondents and TGYH Pty Ltd, a company under the effective control of the second respondent.
Documents relied upon
The applicants rely on the affidavit of Andrew Nicholas Wesley Bullock sworn 8 October 2021[3] ("Bullock Affidavit") and the documents exhibited thereto as well as their written submissions.
[3] FDN118
The first and second respondents rely on:
1.The affidavit of Kim Louise Shepherd sworn 13 October 2021[4] and the documents exhibited thereto ("First Shepherd Affidavit");
2.The affidavit of Kim Louise Shepherd sworn 27 October 2021[5] and the documents exhibited thereto ("Second Shepherd Affidavit"); and
3.Their written submissions.
[4] FDN121
[5] FDN127
They also make reference to their interlocutory application filed 7 October 2021, to which I have referred.[6]
[6] FDN114
Basis for the application
The applicants make their application for a Freezing Order on the basis[7] there is a "… danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur-
[7] UCR 112.17
a)…
b) The assets of the judgment debtor, prospective judgment debtor or another person are-
i. Removed from Australia or from a place inside or outside Australia; or
ii. Disposed of, dealt with or diminished in value."
Background to the application
Bullock Affidavit
This matter was listed for trial on 20 August 2020, however, could not proceed that day due to the third respondent's ill health. The trial therefore proceeded in November 2020 and again in February and March 2021.
The Bullock Affidavit identifies a number of property transactions that occurred shortly prior to the first listing for trial in this matter in August 2020. Those transactions are not in dispute.
Mr Bullock deposes[8] that:
[8] FDN118 [6]-[12], [15]-[19]
1.On 6 July 2020, he caused an ASIC director search to be undertaken which revealed that Ms Berry had caused a company- TGYH Pty Ltd to be incorporated on or about 14 January 2020. At about the same time, he caused a business name search to be carried out which revealed that Ms Berry had registered two business names- "Hahndorf Real Estate Services" and "Hahndorf Property" on or around 18 December 2019.
The business name under which the first respondent, SJ Berry Pty Ltd had previously traded- Sandra Berry Real Estate- had been cancelled on 12 April 2020, and the business name "Sandra Berry Real Estate" was registered with a different organisational representative, this time TGYH Pty Ltd.
On 2 September 2021, which was after I delivered reasons in this matter, the business name Sandra Berry Real Estate was cancelled;
2.On 7 July 2021, a property search for properties in the name of Ms Berry revealed a property at 2 Schubert Drive, Hahndorf;
3.By letter dated 12 July 2020, Mr Bullock wrote to the then solicitors for the first and second respondents, expressing concern that the first and second respondents may have been taking steps to wind down the trading of the first respondent, with a view to frustrating the first and second respondents' recovery, should they succeed at trial. By letter dated 15 July 2020, Mr Bullock received a letter from Mr Geoffrey Brookes, a partner of HBA Legal the then solicitors for the first and second respondents, in which he stated that:
"… no actions have been taken which would prevent or otherwise impede (the first and second respondents') ability to satisfy any judgment which might ensue; nor is there any desire or intention to do so. This is the position irrespective of the availability of insurance."[9] (brackets provided);
[9] Bullock Affidavit, Exhibit ANWB-16
4.On 21, 23 and 24 September 2021, further property searches were undertaken on behalf of the applicants for properties in the name of the first and second respondents. They revealed that:
4.1Ms Berry sold a property held in her name in Unley in December 2018, some nine months after the proceedings were commenced; and
4.2On or about 30 June 2022, Ms Berry caused SJ Berry Pty Ltd, to transfer a commercial property located in Macclesfield, South Australia ("Macclesfield Property") to TGYH Pty Ltd for nil consideration on the basis the transfer was from trustee to trustee;
5.Business name and company searches were undertaken on behalf of the applicants on 20 September 2021 and 6 October 2021. Those searches revealed that:
5.1On or about 4 June 2021, Ms Berry had registered a new company named "Cheddar Studios Pty Ltd";
5.2Ms Berry had caused the business name "Cheddar Studios" to be registered on 16 March 2021. That business name was owned by the trustee for "Adelaide Hills PM Trust" with the organisational representative of the business name being TGYH Pty Ltd;
5.3The trustee for the Adelaide Hills PM Trust (ie TGYH Pty Ltd) owned three business names- "Cheddar Studios", "Hahndorf Property" and "Hahndorf Real Estate Solutions" and had previously owned the business name "Sandra Berry Real Estate" which, as I have noted above, ceased on 2 September 2021; and
6.On 28 September 2021, Mr Bullock wrote to Ms Shepherd, who is now acting for the first and second respondents and demanded payment by Monday, 4 October 2021 of the sum of $205,917.77, such sum representing the judgment sum of $205,243 plus post judgment interest to 28 September 2021 of $674.77. That sum has not been paid and no reason has been advanced for not doing so, although at the hearing of the application for a Freezing Order, Mr Stevens of counsel for the first and second respondents made reference to the application for a stay in the first and second respondents' interlocutory application filed 7 October 2021.[10]
Shepherd Affidavits
[10] FDN114
In response to Mr Bullock's affidavit, Ms Shepherd swore her first and second affidavits.
In the First Shepherd Affidavit, Ms Shepherd deposes that she is instructed that the changes deposed to by Mr Bullock in his affidavit have occurred but were undertaken for "legitimate commercial purposes on the advice of their accountant".[11]
[11] First Shepherd Affidavit at [9], [14]-[20]
Ms Shepherd deposes as to her instructions that the transactions which Mr Bullock has identified in his affidavit were undertaken in the normal course of business and for the purposes of appointing a new trustee for each of the relevant trusts.[12]
[12] Ibid at [15]
As to those transactions:
1. Sandra Berry Real Estate
Ms Shepherd deposes that SJ Berry Pty Ltd, as trustee for the SJ Berry Family Trust, traded as Sandra Berry Real Estate. In May 2019, the property management section of Sandra Berry Real Estate was marketed for sale and was subsequently sold in February 2020. That resulted in a restructure of the business known as Sandra Berry Real Estate whereby the SJ Berry Family Trust trading as Sandra Berry Real Estate traded under that name until August 2019.[13]
2. TGYH Pty Ltd
[13] Ibid at [16.1]-[16.4]
TGYH Pty Ltd was registered on 14 January 2020 with Ms Berry appointed as the sole director and shareholder. TGYH Pty Ltd is trustee for the Adelaide Hills PM Trust, trading as Sandra Berry Real Estate and is registered as the organisational representative for the business name Cheddar Studios for the trustee of the Adelaide Hills PM Trust.[14]
3. Property transfers
[14] Ibid at [16.5]-[16.7]
There are two property transfers:
3.1 A property in Unley[15] was in the name of Ms Berry as the sole trustee of a separate trust known as the SSHA Property Trust, which purchased the Unley property to provide accommodation for her son. The property was sold on 20 December 2018, with a sale price less than the mortgage. That is contrary to subsequent advice from Ms Berry's accountant[16] which refers to a small capital gain being made on the sale of the Unley property;
3.2The Macclesfield property was purchased by SJ Berry Pty Ltd as trustee for the SJ Berry Family Trust. On the basis of her accountant's advice, Ms Berry separated the real estate agency from the property management and property ownership components of the SJ Berry Family Trust, with the Macclesfield property being transferred from the SJ Berry Family Trust to the SSHA Property Trust in 2019 with consequent adjustments made to the beneficiary loan account.
4. Cheddar Studios Pty Ltd
4.1Cheddar Studios Pty Ltd was registered on 4 June 2021 with Ms Berry appointed as the sole director. The shareholders of that company are TGYH Pty Ltd as to one share and Ms Berry as to twenty three shares. The company is not trading;
4.2On 16 March 2021, TGYH as the organisational representative for the Adelaide Hills PM Trust, registered the business name Cheddar Studios. The business name Cheddar Studios and Cheddar Studios Pty Ltd were registered for the purpose of undertaking the development of the Macclesfield property.
5. Other business names
5.1Neither TGYH Pty Ltd nor SJ Berry Pty Ltd have traded using the business name Hahndorf Property or the business name "Hahndorf Real Estate Solutions".
[15] Ibid at [17]-[18]
[16] Second Shepherd Affidavit, Exhibit KLS#25
As is apparent, the reference by Ms Shepherd in her first affidavit to being instructed that these various transactions took place "for legitimate commercial purposes" on accounting advice, is both a conclusion based on her instructions and is a generic description of what occurred, but does not descend into any detail as to why these transactions were necessary.
In the Second Shepherd Affidavit, Ms Shepherd refers to a number of documents which have been supplied to the applicants' solicitors.
Exhibit KLS-25 to the Second Shepherd Affidavit is a letter from Hrvatin Tax Accounting and Business Solutions dated 14 October 2021 ("Hrvatin Letter"). That letter stated that its purpose was to "clarify the process that we undertook in respect of transferring assets and liabilities from SJ Berry Family Trust as well as changes made to the trustee of SSHA Property Trust".
The Hrvatin letter describes the reasons for the various transactions as assisting Ms Berry with "… trying to get finance for the development of the Cheese Factory in Macclesfield". The letter then explains the process that was adopted as:
(i)Ms Berry's beneficiary loan account for the SJ Berry Family Trust became $102,992.75 as at July 2019;
(ii)On 30 July 2019, all fixed assets (property, plant and equipment) and the bank loan of SJ Berry Family Trust was transferred in specie to Ms Berry to clear the total beneficiary loan account;
(iii)As at 30 June 2019, the balance sheet of SSHA Property Trust reveals the trust was owed $23,500 from SJ Berry Family Trust for unpaid trust distributions,
(iv)the Unley property was sold during the 2019 tax year making a small capital gain.
The Hrvatin letter does not refer to the sale of the rent roll of Sandra Berry Real Estate. The only mention of the sale of the rent roll is in the Second Shepherd Affidavit by reference to the agreement for its sale. There is no evidence as to what happened to the proceeds of sale.
Exhibit A1 received on the interlocutory argument revealed the purchase price of the rent roll paid by Kevin Hodges Real Estate Pty Ltd was $335,769.96. That information was contained in the affidavit of Mr Bullock[17] and it is not apparent to me where the money received for the sale of the rent roll was directed.
[17] At [16]
In the Second Shepherd Affidavit, Ms Shepherd deposes that the property owned by Ms Berry at 2 Schubert Drive, Hahndorf, has a registered first mortgage of approximately $185,000. By reference to a website- realestate.com.au- Ms Shepherd deposes that the estimated value of the property is $817,000-$910,000. I give very little weight to a valuation according to a website as evidence of the value of the Hahndorf property.
On 2 November 2021, the parties attended before me again in relation to final orders. On 1 November 2021, the first and second respondents had filed a further affidavit sworn by Ms Shepherd ("Third Shepherd Affidavit") to which Ms Shepherd exhibited a valuation by Herron Todd White of the property at 2 Schubert Drive, Hahndorf.[18] That valuation gives a valuation of $870,000 as at 22 January 2021.
[18] Third Shepherd Affidavit, Exhibit KLS-33
The valuation was prepared on the instructions of St George Banking Group. No explanation has been forthcoming as to why it was provided after the argument and after my decision that I would make a Freezing Order, nor the reason why a valuation was obtained on instructions of St George Banking Group. Nonetheless, I am prepared to accept the Herron Todd White valuation.
Also exhibited as KLS-33 to the Third Shepherd Affidavit are what is described as "screenshots of Ms Berry's bank accounts".[19] That screenshot is of a single bank account with a balance of -$183,927.63. It was explained to me when the parties were before me on 2 November 2021, that this account was the home loan in Ms Berry's name for the property at 2 Schubert Road. Based on a valuation of $870,000, Ms Berry has nett equity in the Hahndorf property of approximately $686,000.
[19] Third Shepherd Affidavit [6]
The Second Shepherd Affidavit also exhibits the financial statements for the SJ Berry Family Trust trading as Sandra Berry Real Estate.[20] Ms Shepherd deposes that the financial statements for that trust are for the year ending 30 June 2021. That is not correct. The financial statements are for the year ending 30 June 2019.
[20] Second Shepherd Affidavit, Exhibit KLS-28
So too, Ms Shepherd exhibits the financial statements for the SSHA Property Trust.[21] Again, contrary to what Ms Shepherd deposes, those financial statements are for the year ending 30 June 2019 and not 30 June 2021.
[21] Ibid at KLS-29
I have considered the financial statements but I was not directed during argument to any particular aspect of them, and they do not assist me to any great extent.
Legal principles
The principles relating to freezing orders are well known with the following principles extracted from the authorities:
1.The purpose of a freezing order is to prevent a defendant from disposing of their actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action- Jackson v Sterling Industries Ltd.[22]
2.In RTP Holdings Pty Ltd & Anor v Roberts & Ors (No.2),[23] Lander J considered an application for a Mareva injunction pursuant to the then Rule 68.3 of the Supreme Court Rules. His Honour considered that apart from it being necessary to establish that a cause of action exists within the jurisdiction and that there is a serious question to be tried, a party seeking a Mareva injunction must also establish that there is a danger that the defendant's assets may be removed from the jurisdiction, or disposed of, and if such occurs, there is a danger that any judgment the plaintiff may obtain will go unsatisfied.
Since the applicants have the benefit of a judgment against the first and second respondents, there is no issue as to a serious question to be tried or the merits of the action. Rather, it is a question of whether or not the applicants have made out the grounds in UCR Rule 112.17.
3.In Patterson v BTR Engineering (Aust) Ltd,[24] the Court of Appeal in New South Wales considered an application for a Mareva injunction. In considering whether there was a prima facia case for the making of such an order, the Court considered that evidence which goes to that question may also be considered in determining whether there is danger of assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with in some fashion such that the plaintiff will not be able to have its judgment satisfied.[25]
4.A freezing order is an exceptional remedy and one that should not be granted lightly, Severstal Export GmbH v Bhushan Steel Ltd.[26]
5. It is not necessary for the applicants to show an actual intention on the part of the respondents to defeat the applicants from recovering judgment- Hayden & Ors v Teplitzky & Ors.[27] In that matter Lindgren J considered the question of whether it was necessary to establish an actual intention to dispose of or remove assets. His Honour referred to Beach Petroleum NL v Johnson[28] and the judgment of von Doussa J where his Honour said:
I propose to apply the test formulated by Gleeson CJ (in Patterson v BTR Engineering (Aust) Ltd & Ors). It will be noted that it is not necessary for the applicants to show an active intent on the part of the respondent to defeat the applicants from recovering the judgment. It is enough if the applicant establishes that, in the absence of relief, there is a danger that assets will be dealt with in a way which will prevent the applicants recovering the judgment. (brackets provided)
[22] [1987] 162 CLR 612, 625 per Deane J
[23] [2000] SASC 390
[24] [1989] 18 NSWLR 319
[25] Ibid at p325-326 per Gleeson CJ
[26] [2013] NSWCA 102 per Bathurst CJ at [57]
[27] [1997] 74 FCR 7, 16
[28] [1992] 9 ASCR 404
Respondents' submissions

The respondents oppose the making of the freezing order on seven grounds.
1.The freezing order is not intended to provide security for a judgment. That may be so but in this case the applicants seek an order on the basis of UCR 112.17. They have the benefit of a judgment and a request for payment of the judgment sum has not been met and no explanation proffered;
2.Although a freezing order may be made against a non-party who has possession, power or control of an asset, they must be joined as a respondent to the application.
UCR Schedule 3, Part 1 at clause 1(1) and (2) provide:
Schedule 3—Freezing order protocol
Part 1—Introduction
1—Introduction
(1) This Schedule addresses the Court’s usual practice relating to the making of a freezing order under Chapter 10 Part 2 Division 5 or Chapter 19 Part 13 of the Rules and the usual terms of such an order.
(2) While a standard practice has benefits, this Schedule and Form 82B do not, and cannot, limit the judicial discretion to make such order as is appropriate in the circumstances of the particular case.
Clause 1(6) of Schedule 3, Part 1 provides:
(6) A freezing order or ancillary order may be sought against a person other than the person said to be liable on a substantive cause of action of the applicant who has possession, custody, control or ownership of assets that the person may be obliged ultimately to disgorge to help satisfy a judgment against the person said to be liable, in which case the person against whom the order is sought must be joined as a respondent to the application for the freezing or ancillary order.
In contrast, UCR 112.17(4)(b) provides:
(4) The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur—
…
(b) the assets of the judgment debtor, prospective judgment debtor or another person are—
(i) removed from Australia or from a place inside or outside Australia; or
(ii) disposed of, dealt with or diminished in value.
The "Rules" are defined in UCR as including the protocols.[29]
[29] UCR 2.1
In my view, the re-organisation of the assets of the first and second respondent and, in particular, the maintaining of control of those assets by Ms Berry are such that in the circumstances it is not necessary for TGYH Pty Ltd and Cheddar Studios Pty Ltd, both of which are under the effective control of Ms Berry, to be joined as respondents to the application. TGYH Pty Ltd and Cheddar Studios Pty Ltd are not arm's length third parties under the effective control of another who is not a respondent in the proceedings. Ms Berry is the sole director and shareholder of TGYH Pty Ltd and the sole director and majority shareholder of Cheddar Studios Pty Ltd. Accordingly, I do not consider it was necessary for TGYH Pty Ltd and Cheddar Studios Pty Ltd to be named as parties to the applicants' application for a Freezing Order.
3.It was in July 2020 that Mr Bullock developed concerns the first and second respondents may have been taking steps to wind down the trading of the first respondent, with a view to frustrating the first and second respondents' recovery. They submit that the applicants elected to rely on the reply given by HBA Legal in their letter of 15 July 2020 which I have set out above.[30] They submit that it is an abuse of process to make an application for a freezing order 15 months after the applicants made a forensic decision not to pursue the matter further.
[30] Bullock Affidavit, Exhibit ANB-16
I do not accept that submission. The applicants were entitled to rely on the statements by the first and second respondents' then solicitors as to whether any actions had been taken which would prevent or otherwise impede the first and second respondents' ability to satisfy any judgment that might ensue, and that they had no intention to do so. That is particularly so where that statement was accompanied by a further statement that the position enunciated was the case, irrespective of the availability of insurance.
4.The respondents submit that a freezing order is an exceptional remedy and not to be granted lightly. I accept that submission.
5.The applicant must show that there was a danger that the respondents' assets may be removed from the state or disposed of. I accept that submission.
6.The first and second respondents point to the business being conducted by SJ Berry Pty Ltd as trustee for the SJ Berry Family Trust. They submit that the Hrvatin letter[31] gives an overview of the transactions. That is so, but there is no detail as to why the transactions took place other than a broad description by Ms Shepherd on instructions that they were done:
(i) for legitimate commercial purposes on the advice of the first and second respondents' accountant;[32] and
(ii) in the normal course of business and for the purpose of appointing a new trustee for each of the relevant trusts;[33] and
(iii) to assist in getting finance for the development of the Cheese Factory in Macclesfield.[34]
What is apparent, and irrespective of whether at the time these transactions took place, the first and second respondents intended to act to potentially frustrate any judgment that might be obtained by the applicants, that position has changed substantially in the sense that not only is there now a judgment against the first and second respondents, there is now a question over whether indemnity will be extended by the first and second respondents' insurer.
Further, as the Hrvatin letter makes clear, there is an intention to develop a property at Macclesfield known as the Cheese Factory. The entities developing that project, are not parties to the proceedings.
7.The respondents refer to the fact that the first and second respondents filed a notice of appeal against the judgment in this matter. It submits that the applicants have sought an application for security for costs of the appeal and that under those circumstances, a freezing order is being used in an oppressive and vexatious manner. I do not accept that submission. These are steps available to the applicants in circumstances where the judgment sum has not been paid, notwithstanding a demand for its payment.
[31] Second Shepherd Affidavit, Exhibit KLS-25
[32] First Shepherd Affidavit at [9]
[33] Ibid at [15]
[34] Hrvatin letter - Second Shepherd Affidavit, Exhibit KLS-25
Applicants' submissions
The applicants submit that they currently hold a judgment for damages against all four respondents on a joint and several basis for the sum of $205,243 on which they are entitled to post-judgment interest.
The applicants also submit that although the court is currently reserved on the question of costs, there is a high likelihood of a costs judgment in their favour leading to an entitlement of a substantial order for costs, such that they have a "good arguable case". On that basis, they say the threshold requirement in UCR 112.17 is met.
As to a danger that the judgment will be wholly or partially unsatisfied, the applicants submit that such a danger exists because:
1.The first and second respondents have failed to pay the existing judgment sum and any post-judgment interest without any explanation;
2.The first and second respondents disposed of significant assets during the course of the proceedings;
3.The first respondent has now become an empty vessel with no assets; and
4.The sole substantial asset available to the second respondent, which is the Hahndorf property, may be inadequate to protect the applicants and can easily be diminished in value by Ms Berry without reference to the applicants. Further, the property management section of Sandra Berry Real Estate was sold for $335,769.96. There is no information as to whom those proceeds have been paid.
Consideration
UCR Rule 112.17 provides:
112.17—    Order against judgment debtor or prospective judgment debtor or third party
(1)     This rule applies if—
(a)     judgment has been given in favour of an applicant by—
(i)    the Court; or
(ii)     for a judgment to which subrule (2) applies—another court; or
(b)     an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(i)    the Court; or
(ii)     for a cause of action to which subrule (3) applies—another court.
(2)This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court.
(3)     …
(4)The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur—
(a)     …
(b)     the assets of the judgment debtor, prospective judgment debtor or another person are—
(i)    removed from Australia or from a place inside or outside Australia; or
(ii)     disposed of, dealt with or diminished in value.
(5)The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that—
(a)     there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(b)     a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
SJ Berry Pty Ltd
It is not clear to me why it was necessary to change the trustees at the time that the trustees were changed and no explanation has been proffered, other than in a very cursory way. The adverse judgment against SJ Berry Pty Ltd leads to the question of its capacity to be indemnified from the assets of the SJ Berry Family Trust in circumstances where those assets have been transferred out of that trust.
Ms Berry
I consider that there is a danger that Ms Berry's assets, whether actual or expectancies, may be disposed of, dealt with or diminished in value. In particular, I consider there is a danger that any equity that Ms Berry may have in the Hahndorf property or any funds she may have received from the sale of the rent roll of her previous real estate business, may well be committed to the Macclesfield project, or otherwise committed, either now or prospectively. Although I accept that involves a degree of speculation, nonetheless there was no information available to me or any suggestion on information given to me on the part of the first and second respondent that such a scenario is not the case.
UCR 112.17
Applying the factors in UCR 112.17;
1.The applicants have a judgment against the first and second respondents which is joint and several with the third and fourth respondents;
2.In all the circumstances, I am satisfied that there is a danger that the judgment will be wholly or partially unsatisfied because the assets of the first and second respondents, or another person, may be disposed of, dealt with or diminished in value.
In particular, I am satisfied that there is a danger that the judgment will be wholly or partly unsatisfied because a third party, namely TGYH Pty Ltd holds, or is using, or has exercised, or is exercising a power of disposition over assets (including claims and expectancies) of Ms Berry. As to Ms Berry herself, she has put no information before the Court as to her asset position. She has some equity in the Hahndorf property but I cannot be satisfied that it will not be used for the development of the Macclesfield property.
As to the potential for a costs order, the applicants were successful in their judgment against all four respondents. Were it not for the request that I not deliver a ruling as to who may be liable for costs in view of a question concerning the status of the indemnity by the insurer of the first and second respondents, I would have delivered those reasons.
The normal position in costs follow the event.
The first and second respondents are prospective judgment debtors in the sense that the costs order is intimately linked to the judgment to which the applicants are currently entitled.
Conclusion
In all the circumstances, I am satisfied that there is a danger that a prospective costs order will be wholly or partly unsatisfied because the assets of the judgment debtor may be disposed of, dealt with or diminished in value and that there is a danger that the prospective costs order will be wholly or partly unsatisfied because a third party, namely TGYH Pty Ltd holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of Ms Berry.
Under the circumstances and in the exercise of my discretion, I make the Freezing Order in this matter.