Rimex Wheel Pty Ltd v Wulff - [2018] WASC 180

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RIMEX WHEEL PTY LTD -v- WULFF [2018] WASC 180
CORAM:   VAUGHAN J
HEARD:   18 JUNE 2018
DELIVERED          :   18 JUNE 2018
FILE NO/S:   CIV 2013 of 2018
BETWEEN:   RIMEX WHEEL PTY LTD
Plaintiff
AND
JOHN ANTHONY WULFF
Defendant

Catchwords:

Freezing order - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA) O 52A

Result:

Application for freezing order granted

Category: B

Representation:

Counsel:

Plaintiff	:	K L Christensen
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Christensen Partners
Defendant	:	No appearance

Case(s) referred to in decision(s):

Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Commonwealth Bank of Australia v Oswal [2011] WASC 84; (2011) 82 ACSR 626
Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; (2010) 273 ALR 194
Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612
Koolan Iron Ore Pty Ltd v Rizhao Steel Holding Group Co Ltd (No 2) [2010] WASC 386
Manor Electrics Ltd v Dickson [1988] RPC 618
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271
Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG [1983] 1 WLR 1412
Patterson v BTR Engineering (Aust) Ltd & Ors (1989) 18 NSWLR 319
Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Co Pty Ltd [2011] WASC 188
Perth Mint v Mickelberg (No 2) [1985] WAR 117

VAUGHAN J:

Introduction

The plaintiff, Rimex Wheel Pty Ltd (Rimex), commenced these proceedings by a generally indorsed writ on 14 June 2018. On the same date it made an urgent ex parte application for a freezing order.
The defendant, John Wulff, is a former employee of Rimex. Mr Wulff was dismissed from his employment on 16 May 2018. The defendant has not been served with any papers in the proceedings or given notice of them. The hearing proceeded on an ex parte basis. Accordingly, only the plaintiff's version of the facts has been presented to me.
In those circumstances, while for the purpose of the determination of the application I accept the materials as presented in Rimex's supporting affidavit, I am not making any final factual determinations. It is not necessary to do so to determine the application. The evidence only needs to meet the test set out in O 52A r 5 of the Rules of the Supreme Court 1971 (WA) including, relevantly, that Rimex has a 'good arguable case' on an accrued cause of action that is justiciable in the court. Nothing in these reasons should be taken as amounting to any final and conclusive finding of fact.
Often it has not been the practice of the court to give reasons on an ex parte application for a freezing order. That is because the defendant will have an opportunity to contest the continuation of the order after service. However, I consider that, where possible, reasons should…

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.

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Details

Case: [2018] WASC 180
Decision Date: 18 JUNE 2018

CaseChat Overview and Summary

Rimex Wheel Pty Ltd, a manufacturer of wheels and wheel assemblies, brought proceedings against its former Perth branch manager, Mr Wulff. Rimex alleged that Mr Wulff had misappropriated company funds by diverting scrap metal and brass belonging to Rimex, selling it to Runabout Metals, and receiving proceeds of some $59,503.62. Rimex sought a freezing order against Mr Wulff, seeking to restrain him from dealing with assets to the value of $325,000 to satisfy the likely maximum value of the applicant's claim. The Federal Court of Australia was tasked with determining whether a freezing order should be granted to Rimex to restrain Mr Wulff from dealing with assets to the value of $325,000, and if so, what terms and conditions should apply.

The court had to consider the evidence presented by Rimex and determine whether it was sufficient to grant the freezing order. The court also had to consider the amount of assets to be frozen, the amount to be allowed for living expenses and legal costs, and the terms and conditions of the freezing order. The court noted that the amount of assets to be frozen should not exceed the likely maximum value of the applicant's claim, but this may include interests and costs. The court also had to consider the adequacy of the proposed amounts for living expenses and legal costs.

The court found that Rimex had established a prima facie case for the relief sought. The court found that Mr Wulff had admitted to receiving funds from Runabout Metals in relation to the scrap metal dealings and had expressed willingness to cooperate fully and provide any further information relating to the investigation into his actions. The court also found that Rimex had provided sufficient evidence to support its claim. The court noted that the value of the assets covered by a freezing order should not exceed the likely maximum value of the applicant's claim, but this may include interests and costs. The court found that Rimex's estimate of interest was unduly pessimistic and allowed for one year's interest, or an amount of approximately $12,000. The court also found that Rimex's estimate of costs was overly generous and allowed for $50,000. The court allowed for some rounding to arrive at an even number and provided that the value of the unencumbered assets to be the subject of the freezing order is to be $260,000. The court also found that the proposed freezing order departed in some minor respects from the example order that is provided in PD 9.6.1.1 of the Consolidated Practice Directions and required modification of the proposed freezing order so that the order as made conforms with the example order in the Consolidated Practice Directions.

The court granted a freezing order against Mr Wulff but deferred the making of any disclosure order. The freezing order will have a return date of Friday, 22 June 2018. The freezing order will restrain dealings so that Mr Wulff retains Australian assets with an unencumbered value of $260,000. The proposed freezing order excludes dealings as to ordinary living expenses and reasonable legal costs. The court permitted $150 a day on ordinary living expenses and up to $5,000 on reasonable legal expenses. The court required modification of the proposed freezing order so that the order as made conforms with the example order in the Consolidated Practice Directions.

Orders

Orders of the court

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Background

Background to the litigation

Background facts Rimex's application was supported by an affidavit of its national operations manager, Adam Hirst. That affidavit verified the following evidentiary matters. Rimex is the Australian incorporated subsidiary of an overseas parent. It is a manufacturer of wheels and wheel assemblies. Its Western Australian operations are carried out in Welshpool. Mr Wulff was employed as Rimex's Perth branch manager. In mid‑May 2018 Rimex became aware of some potentially irregular financial activity when it received a demand for outstanding money from an entity named Runabout Metals. Demand was made as to what was said to be a short delivery of scrap metal. Runabout Metals was then unknown to Rimex. On investigation it became apparent that over a five month period Mr Wulff had diverted scrap metal and brass belonging to Rimex, sold it to Runabout Metals, and received proceeds of some $59,503.62. The connection between the sale activity and Mr Wulff was established as Runabout Metals provided Rimex with proof of payment into a bank account which was the same bank account into which Rimex paid Mr Wulff's salary. Also, on 15 May 2018 Mr Wulff asked Rimex's assistant account manager to pay an invoice said to be an invoice from Runabout Metals. Mr Wulff requested that the invoice be processed that day as it was well overdue and 'we [Rimex] need to place another order with them in the next few days'. The invoice was in the amount of Runabout Metal's overpayment to Mr Wulff. Runabout Metals' director confirmed that the invoice was not issued by it. Mr Wulff was interviewed by Mr Hirst on 16 May 2018 in the presence of Rimex's general manager. In the course of the interview Mr Wulff admitted receiving the funds from Runabout Metals in relation to the scrap metal dealings. A written record of the interview (as created by Rimex) records Mr Wulff as stating:I'll put my hand up and acknowledge I've done wrong, it progressed into something else.…Unfortunately, it got out of control.John explained where the other money has gone, i.e. a legal dispute ...The scrap started purely for the company, saw a way to progress his legal dispute through the courts, was mentally in a bad place and this occurred to him shortly after starting ……Going out on a limb here, can I ask if I can make this right by RIMEX?Happy to pay money back, take a pay cut Following the interview Rimex terminated Mr Wulff's employment. By a 17 May 2018 email to Rimex's general manager and Mr Hirst, Mr Wulff stated:I sincerely apologise for betraying your trust and take full responsibility for my actions. While I understand my actions can not (sic) be undone I'm genuinely willing to cooperate fully and provide any further infomation (sic) relating to the investigation into my actions … Mr Wulff then sent a further email to Mr Hirst on 18 May 2018. Mr Wulff sought to assure Mr Hirst that 'this behaviour is genuinely out of character for me'. Mr Wulff said that he was 'genuinely remorseful' and 'genuinely ashamed of my actions'.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Conclusion I will make a freezing order against Mr Wulff but, as mentioned, will defer the making of any disclosure order. In addition to the usual undertakings on the part of Rimex, as proffered following the hearing and before I made the freezing order as sought, I noted Rimex's undertaking, by counsel, to amend the indorsement on its writ to properly describe the causes of action based on the money paid out on the invoices purportedly issued by HD Plasma and Laser and Full Pen Welding and Inspection Services. Leave was required to amend to add or substitute the new causes of action and I granted that leave at the conclusion of the hearing. The freezing order will have a return date of Friday, 22 June 2018. Rimex sought that the freezing order restrain dealings so that Mr Wulff retains Australian assets with an unencumbered value of $325,000. The difference between the $197,112.17 as claimed in the writ is explained by interest (estimated at $25,000) and costs (estimated at $100,000). The value of the assets covered by a freezing order should not exceed the likely maximum value of the applicant's claim. But this may include interests and costs.[17] Rimex's estimate of interest is based on the action taking two years to get to judgment. The case is relatively simple; two years is unduly pessimistic. One year's interest, or an amount of approximately $12,000, ought to suffice. Similarly, the estimate of costs is overly generous. I will allow $50,000. Allowing for some rounding to arrive at an even number I will provide that the value of the unencumbered assets to be the subject of the freezing order is to be $260,000.[17] Consolidated Practice Directions PD 9.6.1 par 11. The proposed freezing order excludes dealings as to ordinary living expenses and reasonable legal costs. Rimex suggested proposed amounts of $100 per day as to living expenses and $500 as to legal costs. I consider those amounts are too low. The inadequacy is manifest as to the legal costs; but in submissions counsel for Rimex explained that this was a typographical error and the intention was to provide for $5,000. I will permit $150 a day on ordinary living expenses and up to $5,000 on reasonable legal expenses. Otherwise the proposed freezing order departed in some minor respects from the example order that is provided in PD 9.6.1.1 of the Consolidated Practice Directions. The departure is most likely the product of Rimex's solicitors using their precedent rather than the example order in the Consolidated Practice Directions. I have required modification of the proposed freezing order so that the order as made conforms with the example order in the Consolidated Practice Directions.

Ratio Decidendi

Legal Principle Established

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