O'Farrell v McCarthy (No 2)

[2025] NSWSC 171

Supreme Court

New South Wales

Medium Neutral Citation:

O’Farrell v McCarthy (No 2) [2025] NSWSC 171

Hearing dates:

3 March 2025

Date of orders:

3 March 2025

Decision date:

04 March 2025

Jurisdiction:

Equity

Before:

Elkaim AJ

Decision:

Noting that the reason for the order is that the first defendant breached the freezing order made on 28 March 2023, it is ordered that the cross-claim dated 8 September 2023 is struck out.

Catchwords:

FREEZING ORDERS — where defendant allegedly in contempt for breach of freezing orders — where freezing orders limited legal expenses to $10,000 and defendant spent in excess of $130,000 —whether court can hear cross-claim by defendant — where defendant offers to pay $100,000 into court — suggestion refused and cross-claim dismissed

Cases Cited:

Stojic v Stojic [2018] NSWSC 723

Stokes (by a tutor) v McCourt [2013] NSWSC 1014

Category:

Procedural rulings

Parties:

Brian Richard O’Farrell (First Plaintiff)
Talentpool Recruitment Pty Ltd (Second Plaintiff)
Talentpool Consulting Pty Ltd (Third Plaintiff)
Trevor Gerrard McCarthy (First Defendant)
Talentpool Recruitment Pty Ltd (Second Defendant)
Talentpool Consulting Pty Ltd (Third Defendant)

Representation:

Counsel:
Mr S Fitzpatrick SC (Plaintiffs)
Ms S Steinhoff (Plaintiffs)
Mr G Stapleton (Defendants)

Solicitors:
McGirr Lawyers (Plaintiffs)
Operational Legal Australia (Defendants)

File Number(s):

2023/93781

Publication restriction:

No

JUDGMENT

1. On 27 February 2025 I dealt with a notice of motion filed by the first defendant in which he sought a variation of a freezing order that had been made by Kunc J on 28 March 2023, and later extended on 5 April 2023.

2. I allowed a variation of the freezing order to allow for the expenditure of $90,000 for the legal expenses associated with the preparation and running of the hearing.

3. In the course of the motion, reference was made to a notice to produce that had been served upon the first defendant seeking, inter alia, documents relating to legal expenses that had been paid by the first defendant.

4. I observed in my reasons that the first defendant’s solicitor, Mr James, had not been informed about the freezing order until the day before the hearing of the motion. I also noted at [20] that:

“He [the first defendant] is also almost certainly in breach of the freezing order.”

5. The documents which were produced on 28 February 2025 by the first defendant, include a history of legal fees paid to lawyers by the first defendant. They total $130,993.45. Kunc J had allowed an exception to the freezing order enabling the first defendant to expend up to $10,000 on his legal expenses. It is apparent that he grossly exceeded this limit.

6. There can be little doubt that the first defendant was aware of the freezing order. At [164] of his affidavit he states:

“Due you to the Freezing Order and these proceedings the Company has suffered significant damage, including reputational damage, which has resulted in a decrease in the Company’s revenue and profits.”

7. At the commencement of the hearing on 3 March 2025 the first plaintiff, now in possession of the history of paid legal fees, made an application that the first defendant not be permitted to pursue his cross-claim. In support of this application I was referred, primarily, to the decision of Lindsay J in Stokes (by a tutor) v McCourt [2013] NSWSC 1014, from [18] where his Honour discusses the principle or rule arising from the entitlement of a party that has been found to be in contempt of court to pursue any relief that is sought by that party.

8. The fact that the first defendant has not formally been dealt with for contempt is not, in my opinion, significant (as was the case in Stojic v Stojic [2018] NSWSC 723 at [22]). As I have said, the degree to which the orders of Kunc J have been exceeded is significant and the first defendant knew about the orders.

9. Mr Stapleton, who appears for the first defendant, after taking instructions from his client, proposed that the defendant be required to pay $100,000 into court on or before 10 March 2025. It was suggested that because the first defendant is currently in Morocco, a payment into court could not be effected more expeditiously. However, a document showing the initiation of the transfer process could be produced more quickly.

10. This matter has a three day estimate and will be completed well before 10 March. To await the payment into court would be an unreasonable impost upon the first plaintiff and might also affect the extent of cross-examination of the witnesses to be called.

11. In addition to the first defendant not only having disobeyed orders of which he was aware, it is apparent that he did not disclose the presence of the orders to his own solicitors, in particular those solicitors that currently act for him and have done so for some time. I have already related that his solicitor, Mr James, was not told about the freezing orders until 26 February 2025.

12. I do not see any basis for any leeway being given to the first defendant beyond the variation that I allowed in my earlier decision. I will not permit the proposal put forward by the first defendant, leaving me, in my opinion, with no alternative but to deny the first defendant from seeking the relief that he has requested in the cross-claim.

13. I do not think it would be practical to sever the cross-claim; however, to avoid any estoppel difficulties that might arise if the first defendant chooses to relitigate the cross-claim, or any part of it, I will note the reason for the cross-claim being struck out.

14. I make the following order: Noting that the reason for the order is that the first defendant breached the freezing order made on 28 March 2023, it is ordered that the cross-claim dated 8 September 2023 is struck out.

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Decision last updated: 26 March 2025