NESCI-LAWRENCE as Executor of the Estate v Ginbey
[2023] WASC 339
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NESCI-LAWRENCE AS EXECUTOR OF THE ESTATE -v- GINBEY [2023] WASC 339
CORAM: HILL J
HEARD: 4 SEPTEMBER 2023
DELIVERED : 4 SEPTEMBER 2023
PUBLISHED : 6 SEPTEMBER 2023
FILE NO/S: CIV 2001 of 2023
BETWEEN: LUCETTA FRANCINA NESCI-LAWRENCE AS EXECUTOR OF THE ESTATE
First Plaintiff
VINCENZO SORGIOVANNI AS EXECUTOR OF THE ESTATE
Second Plaintiff
AND
HOWARD JOHN GINBEY
Defendant
Catchwords:
Practice and procedure - Application for freezing order - Ex parte application - Where withdrawals of money made from Estate bank account - Where there is a risk of removal or dissipation of assets - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 52A
Result:
Application granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | C Breheny |
| Second Plaintiff | : | C Breheny |
| Defendant | : | No Appearance |
Solicitors:
| First Plaintiff | : | Butlers Lawyers & Notaries |
| Second Plaintiff | : | Butlers Lawyers & Notaries |
| Defendant | : | In Person |
Case(s) referred to in decision(s):
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327
Distinctive FX Pty Ltd v Wright [2015] VSC 299
Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188
Perth Mint v Mickelberg (No 2) [1985] WAR 117
Rimex Wheel Pty Ltd v Wulff [2018] WASC 180
Victoria University of Technology v Wilson [2003] VSC 299
Zhen v Mo [2008] VSC 300
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript)
The plaintiffs in these proceedings filed a writ of summons on 4 September 2023. On the same date, the plaintiffs also filed a chamber summons for a freezing order against the defendant. In support of their application, the plaintiffs relied on three affidavits: a joint affidavit of the plaintiffs, an affidavit of Mr Van der Hoogt, a law clerk employed by the plaintiffs' solicitors, and an affidavit of Mr Dalitz, a solicitor employed by the plaintiffs' solicitors. The application was supported by an undertaking as to damages signed by the plaintiffs.
The application for a freezing order came on before me on an urgent ex parte basis. The plaintiffs sought a waiver of the requirements for conferral imposed by O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules). In the circumstances of this case, particularly in respect of an application for a freezing order, I am satisfied it is appropriate to grant the waiver sought.
From the outset, I note that a freezing order is a drastic remedy and that at the hearing of the application, only the plaintiffs' version of the facts is before me.
In determining the application, I have accepted the version of facts set out in the affidavits filed by the plaintiffs. In my view, this evidence meets the test set out in O 52A of the Rules. In reaching this view, it is important to stress that I am not making any findings of fact, nor is it necessary for me to do so in deciding this application. Nothing in these reasons can nor should be taken as amounting to any final or conclusive finding of fact.
Applicable legal principles
The plaintiffs' application is made pursuant to O 52A r 5 of the Rules, which relevantly provides that:
(1)This rule applies if … an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in … the Court …
(4)The Court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because … the assets of the … prospective judgment debtor … are …disposed of, dealt with or diminished in value.
The purpose of a freezing order is to prevent frustration or abuse of the process of the court. It is not to provide security in respect of a judgment or order, nor to substitute for the use and methods of execution.[1]
[1] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [43], referring to Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 626, 633, 637; and Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327, 328 - 331.
Before the discretion to make a freezing order is enlivened, I must be satisfied that:
(a)the plaintiffs have a good arguable case against the defendant on either an accrued or prospective cause of action that is justiciable in the court; and
(b)there is a danger that the prospective judgment will be wholly or partly unsatisfied because the defendant's assets might be removed or otherwise disposed of, dealt with or diminished in value.
The remedy sought by the plaintiffs is discretionary. The strength of the plaintiffs' case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant the orders sought.[2]
[2] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [142], citing Perth Mint v Mickelberg (No 2) [1985] WAR 117, 119; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, 54 - 55.
Plaintiffs' case
The plaintiffs' evidence is that the defendant is a former solicitor who, on their understanding, drafted the will of Assunta Maria Nesci (Deceased) dated 1 September 2015 (Will). Under the terms of this Will, the Deceased appointed the defendant as her executor and left her entire estate to each of her siblings and her late husband's siblings as tenants in common in equal shares (Estate).
The Deceased died on 15 March 2020 and the defendant was granted probate over the Estate on 17 August 2020. The statement of assets and liabilities filed by the defendant in his application for probate stated that the total net assets of the Deceased's estate at that time was approximately $1.2 million. The assets of the Estate were primarily cash in bank accounts as well as an aged care refundable accommodation deposit.
In July 2021, the defendant advised the second‑named plaintiff that he was in the process of finalising the Estate and that he needed another 2‑3 weeks before he could advise the beneficiaries when the matter would be completed.
Since that date, the plaintiffs have heard nothing further from the defendant personally.
As a consequence of the defendant's failure to provide any notice to the plaintiffs, a notice was issued to the defendant under s 44 of the Administration Act 1903 (WA) requiring, among other things, the defendant to pass the accounts of the Estate. When no response was received from the defendant, a further notice was issued by the Principal Registrar of this court who ultimately ordered that the matter be listed before a judge on 1 June 2023.
On 1 June 2023, the matter came before her Honour Seaward J. On that date, there was no appearance by the defendant and the matter was adjourned for 14 days, namely until 15 June 2023.
On 15 June 2023, the defendant failed to appear before Seaward J. After hearing from the plaintiff, her Honour made orders that:
(a)revoked the grant of probate made to the defendant;
(b)appointed the plaintiffs as joint substitute executors of the Estate;
(c)required the defendant by 29 June 2023 to:
(i)file and serve an affidavit on the plaintiffs describing his administration of the Estate and identifying all assets of the Estate; and
(ii)transfer the assets and liabilities of the Estate to the plaintiffs;
(d)required the defendant to appear before a registrar of this court on a date to be fixed to be examined about his administration of the Estate.
After being appointed as substitute executors of the Estate, the plaintiffs' solicitors wrote to the Bank of Queensland (BOQ), where the Deceased previously held a number of accounts. Correspondence received from the BOQ on 15 August 2023 together with attached bank statements indicate that:
(a)the Estate was finalised on 15 September 2020 and an amount of $621,016.71 was transferred to a bank account opened by the defendant as executor for the Estate;
(b)prior to the opening of an account in the name of the Estate, between 28 April 2020 and 29 June 2020, an amount of $128,000 was transferred to an account in the name of the defendant in separate transactions of either $3,000 or $5,000;
(c)a deposit of $455,381.56 was made into the Estate's bank account on 9 October 2020; and
(d)the current balance of that account is $57.00. Numerous payments out of the bank account are payments that have been made to the defendant. The remaining payments do not disclose who was the recipient of the funds as they are recorded as transfers to 'other Bank'.
Claims against the defendant
The plaintiffs' claims are based on the failure of the defendant to administer the Estate or to account for funds that have been transferred from the Estate to the defendant. The plaintiffs say that the defendant has breached his fiduciary duties that were owed to the Estate and the beneficiaries, and that his actions are a breach of his duties to properly administer the Estate, as well as a breach of trust.
Assets available to the defendant
I accept on the evidence before me that the defendant is the registered proprietor as joint tenant as to one undivided half‑share of three properties, namely:
(a)98 Lawnbrook Road West, Walliston (Lawnbrook Road West Property);
(b)251 Stanhope Road, Walliston; and
(c)14 Marie Way, Kalamunda.
The evidence before the court is that each of these properties are mortgaged, although the balance of the mortgages are not known to the plaintiffs. Each of these properties is also encumbered by a Property (Seizure and Sale) Order (PSSO). The PSSO concerns a judgment debt to Pioneer Credit Solutions Pty Ltd of $36,681.08.
In relation to the Lawnbrook Road West Property, the evidence before the court is that:
(a)development approval has been sought to subdivide the property into nine lots, which was conditionally approved on 21 August 2023;
(b)each lot is being marketed for sale for approximately $500,000.00;
(c)seven of the nine lots are subject to concluded sales contracts; and
(d)advertising material indicates that the subdivided lots 'will be available in September 2023'.
The plaintiffs are concerned that there is an imminent risk that the defendant will dispose or deal with the Lawnbrook Road West Property.
Disposition
Good arguable case
On the evidence before me, I am satisfied that the plaintiffs have demonstrated that they have a good arguable case.
Based on the evidence adduced by the plaintiffs, I accept that it would be open for a court to find that the defendant has breached his duties as executor, including his duty to account for the property of the Estate and has breached his duties as trustee in diverting trust property to himself. On this basis, I accept that the plaintiffs have a good arguable case in relation to each of the causes of action set out in the writ. I also accept that each of these causes of action has accrued and is justiciable in this court.
Danger that the prospective judgment will be wholly or partly unsatisfied
The affidavit evidence relied upon by the plaintiffs in seeking to establish an arguable case against the defendant may also be relied upon to demonstrate that there is a danger that a prospective judgment will be wholly or partially unsatisfied because assets of the defendant might be removed or otherwise disposed of, dealt with or diminished in value. Where the allegation made against a defendant concerns serious dishonesty, that evidence of itself may satisfy the court that the requisite danger exists.[3]
[3] Distinctive FX Pty Ltd v Wright [2015] VSC 299 [39], citing Victoria University of Technology v Wilson [2003] VSC 299 [33]; and Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, 325F‑326A.
The affidavit evidence strongly suggests that there has been apparent dishonesty on the part of the defendant in his transfer of funds from the bank account of the Deceased and subsequently from the bank account of the Estate to his own personal bank account.
The evidence before me is that one of the significant assets of the defendant is likely to be sold shortly. In these circumstances, I consider there is a danger that a prospective judgment could be wholly or partially unsatisfied unless freezing orders are granted because at least some of the defendant's assets may be disposed of.
Discretionary considerations
In considering whether or not to grant the orders sought, it is also necessary to consider whether there are any discretionary considerations which mitigate against the granting of a freezing order, such as a delay in bringing an application, or a lack of candour in the materials placed before the court.[4]
[4] Zhen v Mo [2008] VSC 300 [30].
In this case, I do not consider there has been any undue delay in bringing this application. On the evidence before me, the plaintiffs chased up the defendant and attempted to have him comply with the orders of Seaward J by serving a letter dated 24 July 2023 at the known addresses of the defendant. Despite the service of this letter, there has been no response or attempt by the defendant to comply with the orders of Seaward J.
The evidence filed by the plaintiffs is detailed and does not suggest there has been any lack of candour on behalf of the plaintiffs.
In exercising my discretion, I am required to balance the interests of the parties. In all of the circumstances, I find that it is appropriate to grant the freezing orders. I am prepared to do so on the basis that a prompt return date is fixed, that the defendant has liberty to apply at short notice, and that the orders include the usual carve outs for ordinary living expenses and reasonable legal expenses. In the exercise of discretion, I have also weighed the protection afforded to the defendant by the undertaking as to damages.
Undertaking as to damages
The plaintiffs have given an undertaking as to damages.
For the purposes of today's hearing, there is no information before me which would cast doubt on the ability of these plaintiffs to meet the undertaking from assets held within Australia.
Value of assets covered by freezing order
The value of assets covered by a freezing order should not exceed the likely maximum value of the plaintiffs' claim, but this may include interest and costs.[5]
[5] Rimex Wheel Pty Ltd v Wulff [2018] WASC 180 [48], referring to Consolidated Practice Directions PD 9.6.1 par 11.
The plaintiffs contend that the freezing order should be limited to the amount of $1,280,301.27. This amount comprises the amount of $1,205,301.27 which the plaintiffs say is the amount the defendant has removed from the Estate, together with $75,000 in estimated legal costs.
In submissions before me, the plaintiffs' counsel accepted the amount that should be the subject of the freezing order should be reduced slightly to an amount of $1,279,398.40. This is on the basis it comprises the amounts that have been deducted from the Estate, the bank account opened in the name of the Estate, together with the $128,000 that was deducted from the Deceased's account prior to the opening of the bank account in the name of the Estate.
Ordinary living expenses and reasonable legal expenses will be excluded from the freezing orders. The plaintiffs proposed an amount of $2,000 a week for living expenses. For this reason, I have fixed the amount for the defendant's living expenses at $2,000 per week and reasonable legal expenses of $25,000.
Other orders
The plaintiffs also seek ancillary orders pursuant to O 52A r 3 of the Rules. The ancillary orders concern the provision of information about the defendant's assets.
In the exercise of my discretion, I do not intend to make disclosure orders on an ex parte basis. The question of whether the proposed disclosure orders are appropriate can be raised by the plaintiffs on the return date.
Conclusion
For these reasons, I will make the freezing orders sought against the defendant for a limited time. The orders, together with the application, will be returnable before me at 10.00 am on Friday 8 September 2023. I will give the parties liberty to apply on two hours' written notice.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
6 SEPTEMBER 2023
9
0