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

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.
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.
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.
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.”

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.
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.”

At the commencement of the hearing on 3 March 2025 the first plaintiff, now in possession of the history…

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.

Continue reading O'Farrell v McCarthy (No 2)

Details

AGLC: O'Farrell v McCarthy (No 2) [2025] NSWSC 171
Case: [2025] NSWSC 171
Decision Date: 04 March 2025

CaseChat Overview and Summary

The appeal concerns a dispute between the parties O'Farrell and McCarthy, focusing on alleged breaches of freezing orders and the consequences thereof. The case was heard in the Federal Court of Australia, where the primary issue was whether the defendant, McCarthy, had violated the terms of the freezing orders by incurring legal expenses exceeding the $10,000 limit stipulated in the orders. The matter also involved the defendant's cross-claim and the court's jurisdiction to hear it, especially in light of the defendant's offer to deposit $100,000 into court as a gesture of compliance and resolution.

The court was required to decide whether the defendant had indeed breached the freezing orders by exceeding the specified legal expenses limit. Furthermore, the court needed to determine if it had the jurisdiction to entertain the defendant's cross-claim and whether the defendant's offer to deposit $100,000 into court should be accepted. The court also had to consider the implications of these actions on the broader proceedings and the enforcement of the freezing orders.

The court found that the defendant had breached the freezing orders by exceeding the legal expenses limit. It ruled that the court had the authority to hear the cross-claim, but the suggestion to accept the defendant's offer to deposit $100,000 into court was refused. Consequently, the defendant's cross-claim was dismissed, and the court upheld the enforcement of the freezing orders as a means to manage the legal proceedings effectively. The decision underscored the importance of adhering to court orders and the limited circumstances under which such orders can be modified or set aside.

Orders