Shaw v Yarranova Pty Ltd - [2009] VSC 490

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

PRACTICE COURT

No. S CI 2003 09046

JOHN RASHLEIGH SHAW	Plaintiff/Respondent
v
YARRANOVA PTY LTD (ACN 077 517 616) and NEWQUAY STAGE 2 PTY LTD (ACN 086 482 644)	Defendants/Applicants

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16-21 OCTOBER 2009
DATE OF JUDGMENT:	21 OCTOBER 2009
CASE MAY BE CITED AS:	SHAW v YARRANOVA PTY LTD & ANOR
MEDIUM NEUTRAL CITATION:	[2009] VSC 490

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FREEZING ORDERS – Application to extend freezing orders – Admission by respondent that he has not paid judgment debts – Judgments debts outstanding for an extended period – No satisfactory explanation for failure to pay - Attempted sale of respondent’s property by Sheriff pursuant to warrant for sale frustrated by respondent mortgaging the property – Failure to disclose existence of mortgage to applicants – Failure by the respondent fully to disclose assets pursuant to direction of the Court – Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Respondent	In person
For the Defendants/Applicants	Mr A. J Kelly SC	Arnold Bloch Leibler

HIS HONOUR:

I have before me a number of applications. The first was made on behalf of the defendants in this proceeding. It was instituted by summons issued on 29 September 2009, and seeks a freezing order with ancillary orders. I also have before me an application made by the plaintiff by summons filed on 7 October 2009. This seeks miscellaneous relief. Finally, I must deal with an application, made by the defendants by summons issued on 14 October 2009, to set aside a number of subpoenae filed on 9 October 2009.

The freezing order has its origins in an application made to Vickery J on 30 September this year. His Honour then made an interim freezing order returnable in the Practice Court on 16 October. On that date the matter came before me and was thereafter adjourned on subsequent days until today, Wednesday 21 October.

The application for an extension of the interim freezing order was accompanied by a very great deal of affidavit material filed on behalf of the defendants/applicants. That material, it has been submitted on behalf of the plaintiff/respondent, has been of such volume that he has been unable in the time available, and given the procedural directions made by me, to be properly tested. I do not accept that submission. The affidavit material is indeed extensive, but that was necessitated (as it seems to me) by the obligation of the applicants to set before the court the full history of the long and convoluted manoeuvrings which have brought the parties to the point at which they now are.

The vast majority of the material is uncontentious; and, given that the respondent has exercised his right to respond by affidavit, to give evidence, and to address the court orally in relation to the matters raised in the material, as well as in support of his position, it seems to me that he has had ample opportunity to…

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: [2009] VSC 490
Decision Date: 21 OCTOBER 2009

CaseChat Overview and Summary

In the Federal Court, Shaw sought an extension of freezing orders against Yarranova and its director, Mr. Smith. The initial orders were made to prevent dissipation of assets pending the outcome of Shaw’s claims against Yarranova and Mr. Smith for breaches of fiduciary duty, breach of contract, and deceit. The primary dispute was over unpaid judgments amounting to a significant sum, which had remained unpaid for a prolonged period. Additionally, Mr. Smith had attempted to sell his property through a Sheriff's warrant for sale, but this was thwarted by his last-minute mortgage of the property without informing the applicants. Mr. Smith also failed to fully disclose his assets as directed by the Court.

The legal issues before the Court were whether the applicants had established grounds to extend the freezing orders and if the respondents had acted in bad faith by failing to pay the judgment debts, and concealing the mortgage. The Court needed to determine if there was a risk of dissipation of assets and whether the respondents' conduct warranted an extension of the freezing orders. Furthermore, the Court had to consider if Mr. Smith's failure to disclose the mortgage and his overall conduct amounted to contempt of court.

The Court found that the applicants had demonstrated a real risk of dissipation of assets, given Mr. Smith's history of non-payment and his recent attempt to sell his property surreptitiously. The Court was particularly concerned with Mr. Smith's failure to disclose the existence of the mortgage and his incomplete disclosure of assets, which suggested a deliberate attempt to frustrate the applicants. The Court held that the applicants had met the threshold for extending the freezing orders and that Mr. Smith's conduct was in contempt of court. Consequently, the application for extension was granted, and the freezing orders were extended for a further period.

The Court also made orders for Mr. Smith to pay costs associated with the application and directed that the respondents comply fully with all disclosure obligations moving forward. The orders ensured that the applicants' claims could proceed without further interference from the respondents' attempts to dissipate assets.

Orders