Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; Rialto Sports Pty Limited v CCA Estates Pty Limited; Rialto Sports Pty Limited v Davjul Holdings Pty Limited; Rialto Sports Pty Limited v Armman Pty Limited

[2023] NSWCA 228

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; Rialto Sports Pty Limited v CCA Estates Pty Limited; Rialto Sports Pty Limited v Davjul Holdings Pty Limited; Rialto Sports Pty Limited v Armman Pty Limited [2023] NSWCA 228

Hearing dates:

25 September 2023

Decision date:

25 September 2023

Before:

Adamson JA

Decision:

(1)   Leave be granted to file in Court the notice of motion dated 19 September 2023.

(2)   Make the Orders set out in the Freezing Order annexed and marked “A”. Note that the Freezing Orders are by consent except 8(a).

(3)   Liberty to restore on 24 hours’ notice for any party.

(4)   The respondent on the motion to pay the applicants’ costs of the notice of motion.

(5)   List the matter before Adamson JA at 9.30am on Tuesday, 3 October 2023. Such listing to be vacated upon the applicants’ solicitors notifying the associate to Adamson JA by email that the listing is no longer required.

(6)   Note the undertakings given by the applicants which are set out in Schedule A to these reasons.

Catchwords:

PRACTICE AND PROCEDURE — interlocutory application — freezing order — orders made by consent

Cases Cited:

Chocolate Factory Apartments v Westpoint Finance & Ors [2005] NSWSC 784

Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited [2022] NSWCA 146

Category:

Procedural rulings

Parties:

Proceedings 2022/3420
Rialto Sports Pty Limited (Appellant / Respondent on the motion)
Cancer Care Associates Pty Limited (Respondent / Applicants on the motion)

Proceedings 2022/3426
Rialto Sports Pty Limited (Appellant / Respondent on the motion)
CCA Estates Pty Limited (Respondent / Applicants on the motion)

Proceedings 2022/3432
Rialto Sports Pty Limited (Appellant / Respondent on the motion)
Davjul Holdings Pty Limited (Respondent / Applicants on the motion)

Proceedings 2022/3439
Rialto Sports Pty Limited (Appellant / Respondent on the motion)
Armman Pty Limited (Respondent / Applicants on the motion)

Representation:

Counsel:
K Ngo (Appellant / Respondent on the motion)
D S Weinberger (Respondent / Applicants on the motion)

Solicitors:
Brown Ward King (Appellant / Respondent on the motion)
Grace Lawyers (Respondent / Applicants on the motion)

File Number(s):

2022/3420; 2022/3426; 2022/3432; 2022/3439

JUDGMENT – EX TEMPORE

1. The applicants in this matter are Cancer Care Associates Pty Limited, Armmam Pty Limited, CCA Estates Pty Limited and Davjul Holdings Pty Limited (the applicants). The applicants, for whom Mr Weinberger appears, seek the Court’s leave to file four notices of motion, one for each applicant, against Rialto Sports Pty Limited. Each notice of motion seeks orders which include freezing orders, the evident purpose of which is to increase the chances that any judgment entered by this Court in their favour can be met by Rialto Sports Pty Limited, the respondent to the application and the appellant in the appeal to this Court (the respondent).

2. Mr Ngo, who appears on behalf of the respondent, has indicated to me that the respondent consents to the proposed orders set out in the notices of motion, with two exceptions, both relating to costs, to which I will return shortly. In his affidavit dated 20 September 2023, Sean Turner, the applicant’s solicitor sets out the background to the matter. It can be briefly summarised.

3. The applicants (who are the respondents to the appeal to this Court) are proprietors of commercial lots within a property situated at the Kingsway, Miranda (the Miranda development). Three out of four of the applicants purchased a lot off the plan from the respondent, a property developer.

4. The applicants sued the developer for breach of its contractual obligations to provide a property free of defects. On 9 December 2021, the applicants obtained judgments in the District Court of New South Wales for the combined sum of about $1.4 million for damages for defects in their respective lots. The developer appealed. The appeal was dismissed, save to the extent that it was upheld by consent: Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited [2022] NSWCA 146. The basis on which the appeal was upheld by consent was, in substance, that the reasons of the Court below were inadequate.

5. The only issue following the appeal was the quantum of the applicants’ damages. This Court referred that question for inquiry and report to a referee, Janet Grey. Ms Grey, who delivered her report on 17 April 2023, found that the applicants are collectively entitled to about $1.3 million.

6. Each of the applicants filed a notice of motion seeking orders that this Court adopt the report. The developer has not filed a motion seeking a rejection of any part of the report. The applicants’ notices of motion are listed for hearing in this Court before Bell CJ and Gleeson JA on 16 November 2023. The applicable principles which govern consideration by a Court of a report of a referee are conveniently summarised by McDougall J in Chocolate Factory Apartments v Westpoint Finance & Ors [2005] NSWSC 784 at [7]. Paragraphs [7](5)-(8) are of particular relevance to the present case and confirm that the Court, on receipt of a report in these circumstances, does not engage in an investigation into the merits of the report, although it is entitled to exercise a supervisory jurisdiction over the referee’s report.

7. Until relatively recently, the respondent was the registered proprietor of Lot 24 in the Miranda development. The evidence adduced on behalf of the applicants indicate that the respondent sold Lot 24 at the end of last year or earlier this year to Santo Peter Tripodina Investments Pty Limited (Tripodina Investments). The evidence adduced on behalf of the applicants indicates that the respondent does not own any other real property in Australia. The registered office of Tripodina Investments is the same registered office and principal place of business as the respondent’s. The sole director of Tripodina Investments is Santo Tripodina. The director of the developer is Adrian Tripodina.

8. Tristate Produce Merchants Pty Limited (Tristate) has registered its security interest over “all present and after acquired property” held by the respondent on the Personal Property Security Register. Once again, the principal place of business and registered office of Tristate is the same as that of the developer and Tripodina Investments. The director of Tristate is Santo Tripodina.

9. Mr Turner deposed that he became aware of the sale or transfer on 21 August 2023. He acted immediately by communicating with the solicitor for the respondent developer seeking undertakings and an affidavit of assets and liabilities. There was considerable correspondence since that time between the parties during which the respondent’s solicitor allegedly had difficulty obtaining instructions from his client.

10. I am satisfied that it is appropriate that the Court make orders in terms of the orders agreed between the parties in order to safeguard the interests of the applicants. As I referred to above, there are two issues relating to the orders sought in the notices of motion.

11. In each of the four notices of motion, there is an exception to the freezing order in paragraph 8(a) of the proposed orders (which are annexed to the notices of motion) which provides:

“8.   This order does not prohibit you from:

(a)   paying $10,000 for your reasonable legal expenses”

12. Mr Ngo submits that the exception should be extended to permit the respondents to pay their legal representatives for costs and expenses already incurred but not yet paid to date with, as I understand it, no monetary limit. Mr Weinberger submits that the allowance of $10,000 for each of the four matters is sufficient and it would not be appropriate for this Court to effectively grant a preference to the respondent’s legal representatives by having a larger carve-out than is provided for in paragraph 8(a) of the annexure.

13. I accept Mr Weinberger’s submissions. There would appear to be a very strong indication that the respondent may not be able to meet all its debts, either because of its recent conduct in divesting itself of Lot 24 or by other conduct. If that is the case, it will be a matter, ultimately, for a liquidator or administrator to work out the priorities between unsecured creditors. It would be undesirable for this Court to, in effect, give the legal representatives a preference.

14. For these reasons, I am persuaded by Mr Weinberger that an order in the form of 8(a) ought be made.

15. The other order sought is that the costs of the application be paid by the respondent. While Mr Ngo formally opposed that order, I understood him, sensibly and correctly, to appreciate that there was nothing much that could be said against it. The applicants gave the respondent ample time to resolve this dispute without their having to incur the costs of preparing notices of motion, affidavits in support and listing the matter for hearing. It was, as I understand it, only today, or very recently, that the respondent indicated that it consented to the orders sought. In these circumstances, the respondent ought be ordered to pay the applicant’s costs of these applications.

Orders

16. For the reasons given above, I make the following orders:

1. Leave be granted to file in Court the notice of motion dated 19 September 2023.

2. Make the Orders set out in the Freezing Order annexed and marked “A”. Note that the Freezing Orders are by consent except 8(a).

3. Liberty to restore on 24 hours’ notice for any party.

4. The respondent on the motion to pay the applicants’ costs of the notice of motion.

5. List the matter before Adamson JA at 9.30am on Tuesday, 3 October 2023. Such listing to be vacated upon the applicants’ solicitors notifying the associate to Adamson JA by email that the listing is no longer required.

6. Note the undertakings given by the applicants which are set out in Schedule A to these reasons.

**********

Annexure A

FREEZING ORDER

TERMS OF ORDER

PENAL NOTICE

TO:   RIALTO SPORTS PTY LTD IF YOU:

(A)   REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR

(B)   DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING, YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

TO:   RIALTO SPORTS PTY LTD

This is a ‘freezing order’ made against you on 25 September 2023 by Justice Adamson at a hearing after the Court was given the undertakings set out in Schedule A to this order.

THE COURT ORDERS:

INTRODUCTION

1. Anyone served with or notified of this order, including you, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

2. In this order:

(a)   applicant, if there is more than one applicant, includes all the applicants;

(b)   you, where there is more than one of you, includes all of you and includes you if you are a corporation;

(c)   third party means a person other than you and the applicant;

(d)   unencumbered value means value free of mortgages, charges, liens or other encumbrances.

1. (a)   If you are ordered to do something, you must do it by yourself or through

directors, officers, partners, employees, agents or others acting on your behalf or on your instructions.

(b)   If you are ordered not to do something, you must not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

FREEZING OF ASSETS

1. (a)   You must not remove from Australia or in any way dispose of, deal

with or diminish the value of any of your assets in Australia (Australian assets) up to the unencumbered value of 699,077.93 (the Relevant Amount).

(b)   If the unencumbered value of your Australian assets exceeds the Relevant Amount, you may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of your Australian assets still exceeds the Relevant Amount.

(c)   If the unencumbered value of your Australian assets is less than the Relevant Amount, and you have assets outside Australia (ex-Australian assets):

1. You must not dispose of, deal with or diminish the value of any of your Australian assets and ex-Australian assets up to the unencumbered value of your Australian and ex-Australian assets of the Relevant Amount; and

2. You may dispose of, deal with or diminish the value of any of your ex-Australian assets, so long as the unencumbered value of your Australian assets and ex-Australian assets still exceeds the Relevant Amount.

1. For the purposes of this order,

2. your assets include:

(a)   all your assets, whether or not they are in your name and whether they are solely or co-owned;

(b)   any asset which you have the power, directly or indirectly, to dispose of or deal with as if it were your own (you are to be regarded as having such power if a third party holds or controls the asset in accordance with your direct or indirect instructions).

1. the value of your assets is the value of the interest you have individually in your assets.

PROVISION OF INFORMATION

1. Subject to paragraph 7, you must:

(a)   at or before the further hearing on the return day (or within such further time as the Court may allow) to the best of your ability inform the applicant in writing of all your assets worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;

(b)   within 7 working days after being served with this order, swear and serve on the applicant an affidavit setting out the above information.

1. (a)   This paragraph (7) applies if you are not a corporation and you wish to

object to complying with paragraph 6 on the grounds that some or all of the information required to be disclosed may tend to prove that you:

1. have committed an offence against or arising under an Australian law or a law of a foreign country; or

2. are liable to a civil penalty.

(b)   This paragraph (7) also applies if you are a corporation and all of the persons who are able to comply with paragraph 6 on your behalf and with whom you have been able to communicate, wish to object to your complying with paragraph 6 on the grounds that some or all of the information required to be disclosed may tend to prove that they respectively:

1. have committed an offence against or arising under an Australian law or a law of a foreign country; or

2. are liable to a civil penalty.

(c)   You must:

1. disclose so much of the information required to be disclosed to which no objection is taken; and

2. prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

3. file and serve on each other party a separate affidavit setting out the basis of the objection.

EXCEPTIONS TO THIS ORDER

1. This order does not prohibit you from:

(a)   paying $10,000 for your reasonable legal expenses;

(b)   dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(c)   in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation.

1. You and the applicant may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case the applicant or you must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the applicant and you, and the Court may order that the exceptions are varied accordingly.

2. (a)   This order will cease to have effect if you:

1. pay the sum of $699,077.93 into Court; or

2. pay that sum into a joint bank account in the name of your solicitor and the solicitor for the applicant as agreed in writing between them; or

3. provide security in that sum by a method agreed in writing with the applicant to be held subject to the order of the Court.

(b)   Any such payment and any such security will not provide the applicant with any priority over your other creditors in the event of your insolvency.

(c)   If this order ceases to have effect pursuant (a), you must as soon as practicable file with the Court and serve on the applicant notice of that fact.

COSTS

1. The costs of this application are reserved to the judge hearing the application on the return day.

PERSONS OTHER THAN THE APPLICANT AND RESPONDENT

1. Set off by banks

This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave you before it was notified of this order.

1. Bank withdrawals by the respondent

No bank need inquire as to the application or proposed application of any money withdrawn by you if the withdrawal appears to be permitted by this order.

1. Persons outside Australia

(a)   Except as provided in subparagraph (b) below, the terms of this order do not affect or concern anyone outside Australia.

(b)   The terms of this order will affect the following persons outside Australia:

1. you and your directors, officers, employees and agents (except banks and financial institutions);

2. any person (including a bank or financial institution) who:

(A)   is subject to the jurisdiction of this Court; and

(B)   has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and

(C)   is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience breach of the terms of this order; and

1. any other person (including a bank of financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person’s assets.

1. Assets located outside Australia

Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and you, provided that in the case of any future order of a court of that country or state made on your or the third party’s application, reasonable written notice of the making of the application is given to the applicant.

SCHEDULE A

UNDERTAKINGS GIVEN TO THE COURT BY THE APPLICANT

1. The applicant undertakes to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order.

2. As soon as practicable, the applicant will file and serve upon the respondent copies of:

(a)   this order;

(b)   the summons or notice of motion to be relied on at the hearing on the return day;

(c)   the following material in so far as it was relied on by the applicant at the hearing when the order was made:

1. affidavits (or draft affidavits);

2. exhibits capable of being copied;

3. any written submission; and

4. any other document that was provided to the Court.

(d)   a transcript, or, if none is available, a note, of any exclusively oral allegation of fact that was made and of any exclusively oral submission that was put, to the Court;

(e)   the originating process, or, if none was filed, any draft originating process produced to the Court.

1. As soon as practicable, the applicant will cause anyone notified of this order to be given a copy of it.

2. The applicant will pay the reasonable costs of anyone other than the respondent which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondent’s assets.

3. If this order ceases to have effect the applicant will promptly take all reasonable steps to inform in writing anyone who has been notified of this order, or who he has reasonable grounds for supposing may act upon this order, that it has ceased to have effect.

4. The applicant will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than this proceeding.

5. The applicant will not, without leave of the Court, seek to enforce this order in any country outside Australia or seek in any country outside Australia an order of a similar nature or an order conferring a charge or other security against the respondent or the respondent’s assets.

Decision last updated: 26 September 2023