Miller v LMG Building Pty Ltd - [2023] NSWSC 1613

Supreme Court

New South Wales

Medium Neutral Citation: Miller v LMG Building Pty Ltd [2023] NSWSC 1613
Hearing dates: 5 December 2023
Date of orders: 5 December 2023
Decision date: 05 December 2023
Jurisdiction: Equity - Technology and Construction List
Before: Rees J
Decision:
Freezing order extended.

Catchwords:
CIVIL PROCEDURE – judgment against builder – builder engages in ‘phoenixing’, transferring assets to third party for nil consideration – no appearance by third party – whether freezing order should be continued against third party – where third party run by director of defendant builder, risk of further asset disposal to frustrate judgment.

Legislation Cited:
Uniform Civil Procedure Rules (2005) r 25.15

Cases Cited:
Commissioner of Taxation v Iannuzzi (No 2) [2019] FCA 1818
Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279
Tomasetti v Brailey [2012] NSWCA 6

Category: Procedural rulings
Parties: Susan Miller (Plaintiff)
Luke Glazenburg (Second Defendant/First Respondent)
NCC Group AU Pty Ltd (Second Respondent)
Representation:
Counsel:
Mr B Moustafa (Plaintiff)
Mr JP Nathan (Second Defendant)
Solicitors:
Fielding Robinson (Plaintiff)
Bradbury Legal (Second Defendant)
Development Lawyers (Ms Collins) (Fourth Defendant)

File Number(s): 2023/240621

EX TEMPORE JUDGMENT

HER HONOUR: On 30 November 2023, his Honour Justice Ball made an ex parte freezing order against the second defendant, Luke Glazenburg, and a third party to these proceedings, NCC Group AU Pty Limited. His Honour stood the matter over for hearing today inter partes, as to whether the freezing orders should continue in effect, and if so, until when.
Today, counsel appeared for Mr Glazenburg, and by consent, orders were made to extend the freezing order against him until 5pm on 9 February 2024. It remains to consider whether the freezing order made against NCC Group should also be extended. There was no appearance for that company today, notwithstanding that the company was served with the motion, affidavit in support, the orders made by his Honour on 30 November 2023 and the transcript of the ex parte hearing.
Notwithstanding that NCC Group has not appeared today, it remains necessary for the Court to consider whether it is appropriate to extend the freezing order. The considerations which apply are uncontroversial. An applicant for a freezing order must establish, first, a good arguable case and, second, a risk that any judgment will go unsatisfied by reason of the other party dealing with their assets to place them out of the reach of the applicant: Tomasetti v Brailey [2012] NSWCA 6 at [14] –[15]; Samimi v Seyedabadi [2013] NSWCA 279 at [72] –[74]. It must be shown that there is a risk, not a mere assertion, that a respondent may dispose of or deal with their assets in such a manner as to leave any judgment unsatisfied: Samimi v Seyedabadi at [72] –[74] .
The basis on which the freezing order is sought against NCC Group is that the first defendant, LMG Building Pty Limited (in liquidation) has been “phoenixed”, with the assets of LMG Building transferred to NCC Group. “Phoenixing” is winding up…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NSWSC 1613
Decision Date: 05 December 2023

CaseChat Overview and Summary

Miller commenced proceedings against LMG Building Pty Ltd for the recovery of monies owed. The builder engaged in 'phoenixing', transferring assets to a third party for no consideration, and did not appear in the proceedings. The third party, which was operated by the director of the builder, was the subject of a freezing order. The primary issue for the court was whether the freezing order should be continued against the third party, considering the risk of further asset disposal to frustrate the judgment. The court considered the conduct of the director and the builder, and the risk of dissipation of assets. The court found that the director and builder had engaged in conduct that demonstrated a real risk of further asset disposal to frustrate the judgment. The court held that the freezing order should be continued against the third party to prevent the dissipation of assets and to ensure the judgment creditor's rights were protected. The court found in favour of the judgment creditor and ordered that the freezing order against the third party be continued.

Orders