O'Farrell v McCarthy
[2025] NSWSC 170
•27 February 2025
Supreme Court
New South Wales
Medium Neutral Citation: O’Farrell v McCarthy [2025] NSWSC 170 Hearing dates: 27 February 2025 Date of orders: 27 February 2025 Decision date: 27 February 2025 Jurisdiction: Equity Before: Elkaim AJ Decision: 1. Order 10(b) made by Kunc J on 28 March 2023 and extended on 5 April 2023 is varied so as to permit the expenditure by the defendants of $90,000 provided that sum is expended only on the preparation for the hearing due to commence on 3 March 2025 and for the costs of that hearing.
2. The first defendant is to pay the plaintiffs’ costs of the notice of motion filed on 26 February 2025.
Catchwords: CIVIL PROCEDURE — interim preservation — variation of freezing orders — application to increase the maximum amount the defendant may spend on reasonable legal expenses — where variation necessary to defend proceedings at hearing — where refusal would require defendant to self-represent at hearing from an overseas location — freezing order varied
Category: Procedural rulings Parties: Brian Richard O’Farrell (First Plaintiff)
Talentpool Recruitment Pty Ltd (Second Plaintiff)
Talentpool Consulting Pty Ltd ACN 698511468 (Third Plaintiff)
Trevor Gerrard McCarthy (First Defendant)
Talentpool Recruitment Pty Ltd (Second Defendant)
Talentpool Consulting Pty Ltd ACN (Third Defendant)Representation: Counsel:
Solicitors:
Mr S Fitzpatrick SC (Plaintiffs)
Mr G Stapleton (Defendants)
McGirr Lawyers (Plaintiffs)
Operational Legal Australia (Defendants)
File Number(s): 2023/93781 Publication restriction: No
EX-TEMPORE JUDGMENT - REVISED
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This matter is set down for a hearing before me, commencing on 3 March 2025. It has an estimate of three days.
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On 26 February 2025, which is yesterday, the first defendant filed a notice of motion seeking a variation of an order that had been made by Kunc J on 28 March 2023.
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The motion is supported by two affidavits of Mr Paul James dated 26 and 27 February 2025 respectively. Mr James is the first defendant’s solicitor.
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The orders made by Kunc J were freezing orders that had been sought by the first plaintiff. The orders contained a number of exceptions, including:
“10(b) paying AUD$10,000 on your reasonable legal expenses.”
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Based on the orders made by Kunc J, I understand the plaintiffs’ claim to be for a sum in the order of $652,000 (plus any applicable interest).
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It is also relevant to observe that the freezing orders were made at the beginning of the proceedings and well before any hearing date, and also that the orders contemplated variations to the exceptions, albeit only by agreement between the parties (cl 11).
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On 5 April 2023, the orders made on 28 March 2023 were extended by Kunc J. The extension was made with the consent of the first defendant.
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The variation sought in the notice of motion is that the $10,000 in order 10(b), as set out above, be changed to $150,000. The reason for the change in the order is that the first defendant’s legal representation for a three-day hearing could not be conducted within the scope of the permitted $10,000.
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The motion was filed ‘at the last minute’ because, according to Mr James, he only found out about the freezing orders on 26 February 2025. He then acted promptly by contacting the plaintiff’s solicitor to seek consent to the variation of the order. I was informed that there was reference to the freezing order in the mediation papers and it is also contained in evidence filed in the proceedings. I am not however, in a position to make any finding that Mr James was aware of the freezing order, although he probably should have been so aware.
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In his affidavit of 27 February 2025, Mr James annexes a Service Agreement dated 8 July 2024 for work to be done in respect of a mediation on 11 July 2024. On 29 July 2024, a tax invoice was sent to the first defendant in the sum of $10,000. I observe from the breakdown of the invoice that the total was actually $11,000 but was reduced to $10,000. There is no suggestion that this implies a knowledge, by Mr James, of the restriction to $10,000 which exists in the freezing orders.
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The tax invoice for $10,000 was met by funds that had previously been placed in the trust account of Mr James’s firm.
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Upon Mr James seeking consent to variation of the freezing order, the plaintiffs quickly told him that consent would not be given.
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According to Mr James, the costs agreements that have been provided to the first defendant by his firm and by counsel, for the hearing, include fees of $70,050. In addition, there are “expenses and other fees and GST” that will be incurred. One of the expenses will presumably be the accepted obligation to pay one half of the cost of the preparation of the court book.
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After discussion with counsel, a figure of $90,000 was suggested as a reasonable amount to cater for the hearing including preparation.
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Mr James says that on 3 February 2025, his firm’s trust account received funds from the first defendant. There were four payments totalling $73,050. Mr James states:
“I am not aware of the source of the funds in [10] above, other than what I had been told by Mr McCarthy by telephone today, which is that they were from friends and family members.”
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Mr James states the impossibility of providing legal representation for the hearing within whatever remains of the $10,000 (presumably nothing). He also says the defendants, absent representation, would need to be represented by the first defendant in person. However, the first defendant is unwell and would need to appear by AVL from Morocco.
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On 12 February 2025 I made orders, with the consent of the plaintiff, allowing the first defendant to give evidence by AVL from Morocco. Evidence had been provided that the first defendant normally resides in the United Arab Emirates but is currently in Morocco for medical treatment. He is suffering from an abdominal hernia, a hiatal hernia and a spasmic colon and is due to undergo surgery on 10 March 2025.
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When the ‘AVL application’ was made there was no accompanying application for an adjournment due to the first defendant’s ill-health. The application was restricted to him appearing, and no doubt giving evidence, by AVL.
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The first plaintiff does not suggest that the defendants could conduct their defence (and cross-claim) within the bounds of the $10,000 limitation, which, as I have said, has obviously already been spent. The fundamental point made by the plaintiffs was that the first defendant was seeking to gain an advantage from a position into which he had voluntarily placed himself.
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The first defendant could have made an application a long time ago to vary the $10,000. The fact that Mr James was not made aware of the restriction is itself a mark against the first defendant. He is also almost certainly in breach of the freezing order.
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The plaintiffs suggested that the first defendant had significant assets and could easily pay an amount of money into court. This is an attractive suggestion but would probably not allow for the matter to still proceed next Monday. The plaintiffs did not want there to be an adjournment. They point to the limited time to make a payment into court as another example of the first defendant benefiting from his own improper conduct. I should say at this stage that I do not make any credit findings against the first defendant, bearing in mind that I must approach the hearing next week on a neutral basis.
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The problem presented by the situation in this case is that the plaintiffs, reasonably, do not wish there to be an adjournment, but refusing the defendant’s application will necessarily leave the court in a situation where an unwell man will need to conduct proceedings from Morocco. I have little doubt that the proper presentation of this case, probably to the benefit of all parties, is more likely to be met by the defendants being represented.
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As far as the apparent breaches of the freezing order are concerned, I will leave those to be dealt with, if necessary, at another time. I was informed that they will be the subject of cross-examination of the first defendant.
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I will also endeavour, by my orders, to ensure that the variation requested by the defendant is limited to cater only for the hearing, including its preparation.
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As far as the costs of the motion are concerned, there is no doubt that they should be paid by the first defendant. This situation is of his own making and notwithstanding some success on the motion, he should nevertheless pay the costs.
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I make the following orders:
Order 10(b) made by Kunc J on 28 March 2023 and extended on 5 April 2023 is varied so as to permit the expenditure by the defendants of $90,000 provided that sum is expended only on the preparation for the hearing due to commence on 3 March 2025 and for the costs of that hearing.
The first defendant is to pay the plaintiffs’ costs of the notice of motion filed on 26 February 2025.
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Decision last updated: 26 March 2025
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