MELLUISH AS TRUSTEE OF THE ESTATE OF ERIKSSON (A BANKRUPT)

[2015] FCCA 2235

FEDERAL CIRCUIT COURT OF AUSTRALIA

MELLUISH AS TRUSTEE OF THE ESTATE OF ERIKSSON (A BANKRUPT) [2015] FCCA 2235

Catchwords:
PRACTICE & PROCEDURE – Freezing order.

Legislation:

Bankruptcy Act 1966, s.27

Federal Court Rules 2011, r.7.35(5)

Applicant: JOHN MELLUISH AS TRUSTEE APPOINTED TO THE ESTATE OF TREVOR JAMES ERIKSSON (A BANKRUPT)

File Number: SYG 3508 of 2014

Judgment of: Judge Cameron

Hearing date: 13 August 2015

Date of Last Submission: 13 August 2015

Delivered at: Sydney

Delivered on: 13 August 2015

REPRESENTATION

Counsel for the Applicant: Mr P.J. Dowdy with Mr M.L. Rose

Solicitors for the Applicant: Norton Rose Fulbright Australia

PENAL NOTICE

TO:JENNIFER DAYMAN ERIKSSON

IF YOU:

(A)REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B)DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

ORDERS

TO:  JENNIFER DAYMAN ERIKSSON

This is a ‘freezing order’ made against you on 13 August 2015 by Judge Cameron at a hearing without notice to you after the Court was given the undertakings set out in Schedule A to this order and after the Court read the affidavits listed in Schedule B to this order.

INTRODUCTION

1. (a)     The application for this order is made returnable immediately.

   (b)The time for service of the application, supporting affidavit and originating process is abridged and service is to be effected by 14 August 2015.

   (c)This order is to be served on Jennifer Dayman Eriksson by:

   (i)sending a copy of this order by email to Messrs Mark Streeter, Evatt Styles and Simone Green, Streeterlaw Solicitors, Level 2, 50 Park Street, Sydney NSW 2000 at the following email addresses:

   A.      [email protected];

   B.      [email protected]; and

   C.      [email protected]; and

   (ii)delivering a copy of this order to Streeterlaw, solicitors, at Level 2, 50 Park Street, Sydney NSW, and marked to the attention of Messrs Mark Streeter, Evatt Styles and Simone Green.

2. Subject to the next paragraph, this order has effect up to and including Wednesday 19 August 2015 (the Return Date). On the Return Date at 10.15am at 80 William Street, Sydney there will be a further hearing in respect of this order.

3. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

4. In this order:

   (a)‘applicant’, if there is more than one applicant, includes all the applicants;

   (b)‘you’, where there is more than one of you, includes all of you and includes you if you are a corporation;

   (c)‘third party’ means a person other than you and the applicant; and

   (d)‘unencumbered value’ means value free of mortgages, charges, liens or other encumbrances.

5. (a)     If you are ordered to do something, you must do it by yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

   (b)If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS

1. You must not remove from Australia or in any way dispose of, deal with or diminish the value of the monies in Westpac Banking Corporation Account with BSB 732199 and account number 581685.

2. For the purposes of this order,

   1.your assets include:

   a.all your assets, whether or not they are in your name and whether they are solely or co-owned;

   b.any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions); and

   2.the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION

1. Subject to paragraph 9, you must:

   (a)at or before the further hearing on the Return Date (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of:

   (i)the whereabouts of any of the proceeds of the sale completed on or about 20 March 2012 of the property known as 130 Edinburgh Road, Castlecrag NSW (being the land comprised in Certificate of Title Folio Identifier Lot 14 in Deposited Plan 11138) including, without limitation, the details of every bank account into which any such proceeds or funds or credits generated by receipt of such proceeds are currently held;

   (ii)all bank accounts with monies standing to your credit, including but not limited to the details of those accounts, the balance held in those accounts, the BSB and account number for those accounts; and

   (iii)all your assets in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets, wheresoever located; and

   (b)within 5 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

2. (a)     This paragraph 9 applies if you are not a corporation and you wish to object to complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that you:

   (i)have committed an offence against or arising under an Australian law or a law of a foreign country; or

   (ii)are liable to a civil penalty.

   (b)This paragraph 9 also applies if you are a corporation and all of the persons who are able to comply with paragraph 8 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 8 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

   (i)have committed an offence against or arising under an Australian law or a law of a foreign country; or

   (ii)are liable to a civil penalty.

   (c)You must:

   (i)disclose so much of the information required to be disclosed to which no objection is taken; and

   (ii)prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

   (iii)file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER

1. This order does not prohibit you from:

   (a)paying your reasonable living expenses not exceeding $1,000 per week;

   (b)paying your reasonable legal expenses;

   (c)dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

   (d)in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

2. You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied.  In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

3. (a)     This order will cease to have effect if you:

   (i)pay the sum of $650,000; or

   (ii)pay that sum into a joint bank account in the name of your lawyer and the lawyer for the applicant as agreed in writing between them; or

   (iii)provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.

   (b)Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.

   (c)If this order ceases to have effect pursuant to (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS

1. The costs of this application are reserved to the Court hearing the application on the Return Date.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT

1. Set off by banks

   This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

2. Bank withdrawals by the respondent

   No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

1. The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

2. As soon as practicable, the applicant will file and serve upon the respondent copies of:

   (a)this order;

   (b)the application for this order for hearing on the return date;

   (c)the following material in so far as it was relied on by the applicant at the hearing when the order was made:

   (i)affidavits (or draft affidavits);

   (ii)exhibits capable of being copied;

   (iii)any written submission; and

   (iv)any other document that was provided to the Court.

   (d)a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

   (e)the originating process, or, if none was filed, any draft originating process produced to the Court.

3. As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it.

4. The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent’s assets.

5. If this order ceases to have effect the applicant will promptly take all reasonable steps to inform in writing anyone who has been notified of this order, or who the applicant has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

6. The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

7. The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.

SCHEDULE B

AFFIDAVITS RELIED ON

Name of Deponent	Date affidavit made
1.	John Melluish	13 August 2015

NAME AND ADDRESS OF APPLICANT’S LAWYERS

The applicant’s lawyers are:

Norton Rose Fulbright Australia
Grosvenor Place, 225 George Street, Sydney NSW 2000

Attention:David Goldman

Tel: work:[phone]

Tel: A/H+61 (0) 414 936 746

Fax:[phone]

Email:[email protected]

Ref:2817388

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3508 of 2014

JOHN MELLUISH AS TRUSTEE APPOINTED TO THE ESTATE OF TREVOR JAMES ERIKSSON (A BANKRUPT)

Applicant

REASONS FOR JUDGMENT

1. The present proceeding concerns the bankruptcy of Trevor James Eriksson in respect of whom a sequestration order was made on 6 December 2013.  The applicant is the trustee of Mr Eriksson’s bankrupt estate.  The proposed respondent to the present proceeding is Mr Eriksson’s wife.  The evidence indicates dealings with properties in which Mr Eriksson has had an interest which have involved Mrs Eriksson.  The applicant’s concern is that assets which should be available to creditors have been alienated by transactions and court orders liable to be set aside and that assets presently in Mrs Eriksson’s hands may be dissipated.

2. The applicant seeks a freezing order in respect of a bank account in Mrs Eriksson’s name which holds what may well be the proceeds of sale of a property of which Mr Eriksson was a registered proprietor, together with related orders. I am satisfied that the Court has jurisdiction not least because the Court is a court of bankruptcy pursuant to s.27 of the Bankruptcy Act 1966. 

3. The applicant appears to have a good arguable case.  The evidence contained in the applicant’s affidavit filed in support of the present application and in exhibit 1 indicates that he has good basis to believe that certain transactions involving Mr and Mrs Eriksson may be set aside, in particular certain Family Court orders which have been central to the transaction by which it appears Mrs Eriksson has come into possession of more than $650,000.

4. It further appears that although Mrs Eriksson was not a party to the proceedings in which the sequestration order was made against her husband she meets the criteria found in r.7.35(5) of the Federal Court Rules 2011 in that she is a third party holding or using, or has exercised or is exercising, a power of disposition over assets of the judgment debtor or prospective judgment debtor.  I think Mr Eriksson can reasonably be characterised as a judgment debtor for the purposes of that rule.

5. Mrs Eriksson’s possession of the large cash amount in the Westpac Bank account to which reference has been made today may lead to the sequestration of Mr Eriksson’s estate being less than completely effective.  The evidence suggests a course of conduct by which Mr and Mrs Eriksson have taken active steps to keep assets which should be part of the bankrupt estate out of the hands of the applicant.  In those circumstances, it seems appropriate as a matter of discretion that the freezing order sought by the applicant be made. 

6. Orders in accordance with the interlocutory application filed today by the applicant will be made.

I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Associate: 

Date:  18 August 2015