Tesari Pty Ltd v Rebelos
[2018] WASC 352
•15 NOVEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: TESARI PTY LTD -v- REBELOS [2018] WASC 352
CORAM: ACTING JUSTICE STRK
HEARD: 15 NOVEMBER 2018
DELIVERED : 15 NOVEMBER 2018
PUBLISHED : 15 NOVEMBER 2018
FILE NO/S: CIV 2661 of 2018
BETWEEN: TESARI PTY LTD
First Plaintiff
NEED-CORP PTY LTD
Second Plaintiff
AND
GEORGE REBELOS
First Defendant
ANGELA REBELOS
Second Defendant
Catchwords:
Practice and procedure - Freezing orders - Ex parte application for freezing orders and ancillary orders - Whether plaintiffs have a good arguable case - Whether there is danger a prospective judgment will be wholly or partially unsatisfied - Whether discretion should be exercised - Whether a freezing order can extend to include an estimate of costs in the proceeding - Turns on own facts
Legislation:
Limitation Act 1935 (WA)
Limitation Act 2005 (WA), s 13, s 38, s 43
Rules of the Supreme Court 1971 (WA), O 52A, O 59 r 9(2), O 67B r 5
Supreme Court Act 1935 (WA), s 32
Result:
Ex parte application for freezing order granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr R J Price |
| Second Plaintiff | : | Mr R J Price |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Focused Legal |
| Second Plaintiff | : | Focused Legal |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
Case(s) referred to in decision(s):
BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25
Black v Freeman (1910) 12 CLR 105
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Choice Planning Pty Ltd v Midler @ Franklin Street Pty Ltd [2015] VSC 59
Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327
Distinctive FX Pty Ltd v Wright [2015] VSC 299
Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
KGL Health Pty Ltd v Mechtler [2007] FCA 1410
Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 3] [2011] WASCA 203
Perth Mint v Mickelberg (No 2) [1985] WAR 117
Rimex Wheel Pty Ltd v Wulff [2018] WASC 180
Victoria University of Technology v Wilson [2003] VSC 299
Zhen v Mo [2008] VSC 300
ACTING JUSTICE STRK:
The plaintiffs commenced this proceeding by an indorsed writ on 19 September 2018. On 27 September 2018, an order was made pursuant to Order 67B r 5 of the Rules of the Supreme Court 1971 (WA) (RSC), for access to the writ and all documents filed subsequently to be restricted, pending determination of a freezing order application to be made pursuant to RSC O 52A on behalf of the plaintiffs, or further order of the court. On 11 November 2018, the plaintiffs filed an ex parte application for a freezing order.
The defendants have not been served with any documents filed in the proceeding, including the writ. The plaintiffs say that the application was made without notice to the defendants because they feared that the defendants might, with notice, dissipate assets or dispose of the subject matter of the orders prior to the orders being made.
In support of the application, the plaintiffs filed minutes of proposed orders addressed to each of the defendants; a memorandum pursuant to RSC O 59 r 9(2) setting out the grounds for waiver of conferral; three separate undertakings as to damages proffered by the first plaintiff, the second plaintiff and Mr Paul John Needham, respectively; the plaintiffs' outline of submissions and list of authorities in support of the application, together with a supplement in which set out in draft is an outline of claims against the second defendant.
The plaintiffs relied upon five affidavits, being the affidavit of the late Brian John Needham sworn on 13 August 2018; the affidavit of the late Brian John Needham sworn on 16 August 2018; the affidavit of Ian Edmund Appleton sworn on 9 November 2018; the affidavit of Paul John Needham sworn on 9 November 2018; and the affidavit of Wade Christian McDonald affirmed on 9 November 2018. Mr Brian Needham died on 23 August 2018.
To assist the court, the plaintiff also filed a schedule of words and phrases defined in the affidavit of the late Mr Brian Needham sworn on 13 August 2018, and a book of schedules.
At the hearing of the application, only the plaintiffs' version of the facts was before me. The materials before the court were voluminous and very detailed. For the purpose of determining the application, I have accepted the version of facts as presented in the supporting affidavits and I have found that the evidence has met the test set out in RSC O 52A. I am not however making any factual determinations, nor is it necessary for me to do so. Nothing in these reasons should be taken as amounting to any final or conclusive finding of fact.
A freezing order is a drastic remedy. For the following reasons, I intend to grant a freezing order, but of short duration. The defendants will have a full opportunity to contest the continuation of the freezing order or raise any other matter on the return date. Because of the nature of the orders, it is desirable for this decision to be published and available to the defendants as soon as possible, in addition to the transcript of hearing. In the circumstances, these reasons are provided in a somewhat truncated form.
The plaintiffs' version of the facts
The relationship between the parties is described in the plaintiffs' outline of submissions, from which the following paragraphs are largely drawn. The affidavits filed on behalf of the plaintiffs in support of the application verify the following.
From 1981 to August 2007, the first plaintiff was the owner, as trustee, of a business engaged in the supply, installation and servicing of residential and commercial air-conditioning units. Since 15 August 2007, the second plaintiff was the owner, as trustee, of the business. The trust is The Brian Needham Family Trust. The principal trading name of the business is presently Needhamair.
At all material times, the first and second plaintiffs were controlled by the late Mr Brian Needham. Mr Brian Needham was a director of the first plaintiff and sole director of the second plaintiff. At all material times, he was the managing director of the business.
The first defendant was an employee of the first plaintiff from 14 November 1983 to about August 2007. The first defendant was an employee of the second plaintiff, alternatively the first plaintiff, from about August 2007 to 9 May 2016. The first defendant's role was book‑keeper / in‑house accountant for the business. The second defendant is the wife of the first defendant.
The first defendant was not authorised to sign cheques; to make electronic funds transfers (EFT transfers) without the express authority of Mr Brian Needham; nor to make any payment for non-business or personal expenses.
In about late March 2016, the plaintiffs became aware of irregular activity on the part of the first defendant, particularly a transaction where cash of the business appeared not to have been banked. While the first defendant was on annual leave, a limited investigation was undertaken, which focused on aspects of the business' finances associated with the first defendant's role.
A meeting was convened with the first defendant on 9 May 2016. At the meeting, three documents were presented to the first defendant. Those documents were a letter to the first defendant which (among other things) stated that the plaintiffs had discovered that certain misconduct or breaches had occurred, and that they required appropriate restitution; a Restitution Agreement; and a Deed of Release (which did not include a release in favour of the first defendant).[1]
[1] A copy of the letter is attached to the affidavit of Brian John Needham sworn 13 August 2018 as 'E - 7' at 714 ‑ 716. A copy of the Restitution Agreement is attached as 'E ‑ 8' at 717, and a copy of the Deed of Release is attached as 'E ‑ 9' at 718 ‑ 726.
On 9 May 2016, the first defendant signed the document titled Restitution Agreement, by which the first defendant agreed to make restitution in the amount of $135,000.[2] The plaintiffs say that their claims as against the first defendant are not curtailed by the Restitution Agreement, nor the Deed of Release.
[2] Affidavit of Brian John Needham sworn 13 August 2018 par 132, and 'E-8' at page 717.
The claims against the first defendant
The plaintiffs have since undertaken an extensive investigation and identified about 1058 separate transactions associated with a bank account maintained by the business with BankWest (described by the plaintiffs as the Principal Account). The conduct and transactions of the first defendant were grouped by the plaintiffs into 11 categories.
The first six categories relate to cheques which the plaintiffs say contained forged signatures and other unauthorised cheques (including cheques the plaintiffs say were procured by deceit) upon the Principal Account. Scanned copies of the cheques were obtained by the plaintiffs from BankWest.
Category 1 concerns three cheques drawn on the Principal Account marked payable to the first defendant. Category 2 concerns 12 cheques drawn on the Principal Account marked payable to the second defendant. Category 3 concerns 32 cheques drawn on the Principal Account marked payable to third parties. Category 4 concerns cheques marked payable to Australia Post to facilitate on‑payments. Category 5 concerns cheques drawn on the Principal Account marked payable to cash. Category 6 concerns cheques drawn on the Principal Account where the proceeds of the cheques were deposited into the Principal Account to mask cash out of the business which was not deposited into that account. Category 7 concerns electronic payments from the Principal Account, made through the business' online banking facility, to the benefit of the defendants and third parties. Category 8 concerns payment from the Principal Account to fund purchases of five motor vehicles which were not acquired for the business. Category 9 concerns direct debit payments from the Principal Account made on a Zurich life insurance policy in the name of the first defendant. Category 10 concerns payments from the Principal Account to the first defendant's superannuation fund with Zurich, which were in excess of the first defendant's entitlements as an employee. Category 11 concerns unauthorised payments made on a BankWest credit card, funded by debits to the Principal Account.
The total amount of loss under categories 1 to 11 is $1,750,977.05. The sum of $135,000 was recovered from the first defendant after the termination of his employment.
Money was lost to the Principal Account. The Principal Account whilst in debit bore overdraft rates, and whilst in credit attracted credit interest rates. The calculation of additional overdraft interest borne by the Principal Account, and the credit interest forgone is very complex. For the purpose of the application, the plaintiffs' solicitor undertook a rough but conservative estimate of interest, (based on 6% per annum as per s 32 of the Supreme Court Act 1935 (WA)), to indicate that a 'simple interest' claim against the first defendant was in the vicinity of $500,000 or more.
The plaintiffs estimate their recoverable costs by trial to exceed $500,000.
The plaintiffs estimate their presently identified claims as against the first defendant, inclusive of interest and costs, to be in the order of $2.6 million.
The claims against the second defendant
The claims against the second defendant concern her receipt of moneys from the Principal Account; her receipt of goods obtained through use of moneys from the Principal Account; and the benefit which she derived from the monthly application of moneys from the Principal Account to reduce indebtedness she incurred under a finance agreement with St George Finance, which finance facilitated the acquisition of a motor vehicle.
While varying relief is sought, the plaintiffs estimate the value of their claims as against the second defendant to be $227,699.14.
For the purpose of the application, the plaintiffs' solicitor undertook a rough but again conservative estimate of interest, (based on 6% per annum as per s 32 of the Supreme Court Act 1935 (WA)), to indicate that a 'simple interest' claim against the second defendant was in the vicinity of $60,000 or more.
The plaintiffs say that the sum of $400,000 is the appropriate figure for inclusion in a freezing order against the second defendant. I infer that, for the purpose of the application, $112,300.86 of that amount is attributable to costs.
Assets available to the defendants
In terms of the assets available to the defendants, there is some evidence that (among other things):
(a)the defendants jointly own a property at 10 Chivers Court, Samson, and a strata property at 14B Chivers Court, Samson;
(b)moneys (amounts unknown) stand in a joint bank account of the defendants;
(c)with respect to the second defendant, moneys (amounts unknown) stand in her bank account;
(d)with respect to the first defendant, moneys stand in his superannuation fund with Zurich; and
(e)motor vehicles are held, including those insured by the second defendant.
Applicable legal principles
The plaintiffs press their application pursuant to RSC O 52A r 5, which relevantly provides as follows.
(1)This rule applies if … an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in … the Court …
(4)The Court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because … the assets of the … prospective judgment debtor … are …disposed of, dealt with or diminished in value.
The purpose of a freezing order is to prevent frustration or abuse of the process of the court, not to provide security in respect of a judgment or order, nor to substitute for the use and methods of execution.[3]
[3] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [43], referring to Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 626, 633, 637; and Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327, 328 - 331.
In the present case, I must be satisfied of the following before the court's discretion to make a freezing order is enlivened.
First, that the plaintiffs have a good arguable case against the defendants on an accrued cause of action that is justiciable in the court.
Secondly, that there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of the defendants might be removed or otherwise disposed of, dealt with or diminished in value.
The remedy is discretionary. The strength of the plaintiffs' case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant the orders sought.[4]
[4] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [142], citing Perth Mint v Mickelberg (No 2) [1985] WAR 117, 119; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, 54 - 55.
Determination
Good arguable case
I have had regard to the case that the plaintiffs' say they intend to press against the defendants (as described in oral submissions and as set out in the indorsed writ, the plaintiffs' written outline of submissions, and the draft outline of claims against the second defendant). However, in determining this application, the primary focus must be on the evidence. It is not sufficient to establish a good arguable case that a claim be asserted in an indorsement or a draft pleading.[5]
[5] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [154], citing KGL Health Pty Ltd v Mechtler [2007] FCA 1410 [9] - [12].
On the evidence before me, I am satisfied that the plaintiffs have demonstrated that they have a good arguable case against the defendants on an accrued cause of action that is justiciable in the court. Through the affidavits, the plaintiffs have established that they have a reasonably arguable case on legal and factual matters.[6]
[6]As noted in Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188, [144], in BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 [5], Le Miere J treated the requirement of a 'good arguable case' as equivalent to the general law requirement that the plaintiff must establish that it has a reasonably arguable case on legal and factual matters.
Based on the affidavit evidence, which is very detailed, it is open to find that the first defendant has misappropriated or obtained without authority moneys and property of the plaintiffs in connection with the business. The plaintiffs say that this might give rise to a number of different causes of action including breach of trust, money had and received, breach of fiduciary duty, deceit, and breach of contract. I am satisfied to the requisite degree that, on the evidence before me, the plaintiffs have a good arguable case against the first defendant on each cause of action identified.
Based on the affidavit evidence, it is also open to find that the second defendant:
(a)received moneys misappropriated by the first defendant in circumstances where she received, retained and / or used the moneys when she had such knowledge of facts and circumstances as would be sufficient to render her liable in equity to the plaintiffs;
(b)received property purchased or otherwise acquired by the use of moneys misappropriated by the first defendant, in circumstances where she received the property with such knowledge of facts and circumstances as would be sufficient to render her liable in equity to the plaintiffs; and
(c)received the benefit of misappropriated moneys which were applied to reduce her indebtedness, and which indebtedness was incurred in respect of property purchased or used by the second defendant.
In the supplement to the plaintiffs' outline of submissions, the plaintiffs provided (albeit draft) particulars of the second defendant's knowledge.
The plaintiffs say that such findings might give rise to a number of causes of action as against the second defendant, including knowing receipt, proprietary relief in accordance with Black v Freeman[7] principles, and in money had and received.
[7] Black v Freeman (1910) 12 CLR 105.
While not as straight forward as the claims pressed against the first defendant, I am satisfied to the requisite standard that, on the evidence before me, the plaintiffs have a good arguable case against the second defendant on each cause of action identified.
Are any of the plaintiffs' claims time barred?
Counsel for the plaintiffs addressed in both oral and written submissions the implications of the Limitation Act 2005 (WA), which applies to claims arising from 15 November 2005, whether legal or equitable, and to the implications of the Limitations Act 1935 (WA), which applies to causes of action which arose before 15 November 2005.
There is a six year limitation period applicable for all claims not otherwise provided for in the Limitation Act 2005 (WA).[8] Section 38 (and read with s 43), provides the court with discretionary power to extend limitation periods under the Limitation Act 2005 (WA) if certain criteria are satisfied.
[8] Limitation Act 2005 (WA) s 13.
On 11 November 2018, the plaintiffs filed a chamber summons for an order that the time in which an action against the first and second defendants on causes of action for which the limitation period under the Limitation Act 2005 (WA) has expired (being causes of action arising more than 6 years prior to the issue of the writ), be extended to 1 June 2019, or such other date as the court may determine pursuant to s 38 and/or s 43 of the Limitation Act2005 (WA). The plaintiffs seek that the application for extension of time be determined at the trial of the substantive action subject to any further order of the court.
Based on the evidence adduced on behalf of the plaintiffs, there is a good arguable case for an extension of time under the Limitation Act 2005 (WA). I also find that based on the evidence adduced, there is a good arguable case that the causes of action which arose before 15 November 2005 will not be time barred.
Did the plaintiffs release their claims against the first defendant?
Counsel for the plaintiffs addressed in both oral and written submissions the implications of the Restitution Agreement and the Deed of Release referred to at pars 14 and 15 above.[9] The plaintiffs say that when the first defendant ceased his employment, there was no release by the plaintiffs of any claims they had against him. They assert that neither the Restitution Agreement nor the Deed of Release conferred, expressly or impliedly, any release upon the first defendant.
[9] Plaintiffs' submissions filed 11 November 2018, par 137 ‑ 140 and 159 ‑ 161.
At trial, the proper construction of the documents, and whether the plaintiffs' claims were released, may be considered. However, it is not appropriate on an application of this character to attempt to resolve what may be potential competing cases on this point. Whether an argument concerning release (if pressed) is made good at trial will depend upon findings of fact made by reference to the evidence adduced, and the resolution of issues with respect to the construction and effect of the documents determined in that context.[10] For the purposes of this application, the plaintiffs must establish that they have a reasonably arguable case on legal and factual matters.[11] The plaintiffs' case must be more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success.[12]
[10] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 3] [2011] WASCA 203 [10].
[11] BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 [5].
[12] Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398 (404).
In my view, I find that the plaintiffs have a good arguable case against the defendants. Of course, this view is formed based on the materials before me and with the benefit of submissions made on behalf of the plaintiffs' counsel only. The defendants will have the full opportunity to contest this finding on the return date.
Danger that the prospective judgment will be wholly or partially unsatisfied
The affidavit evidence relied upon by the plaintiffs in seeking to establish an arguable case against the defendants may also be relied upon to demonstrate that there is a danger that a prospective judgment will be wholly or partially unsatisfied because assets of the defendants might be removed or otherwise disposed of, dealt with or diminished in value. Where the allegation made against a defendant concerns serious dishonesty, that evidence of itself may satisfy the court that the requisite danger exists.[13]
[13] Plaintiffs' submissions filed 11 November 2018, par 142, Distinctive FX Pty Ltd v Wright [2015] VSC 299 [39], citing Victoria University of Technology v Wilson [2003] VSC 299 [33]; and Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, 325F-326A.
The affidavit evidence strongly suggests apparent dishonesty on the part of the first defendant over many years. Further, there is an apparent admission by the first defendant on 9 May 2016 of dishonest conduct by various comments attributed to him by Mr Brian Needham,[14] and by the first defendant's agreement to make restitution in the amount of $135,000.
[14] Affidavit of Brian John Needham sworn 13 August 2018 par 122 - 132.
As to the second defendant, I find that the affidavit evidence again justifies the inference that there is a real danger that a prospective judgment could be wholly or partially unsatisfied unless freezing orders are granted.
I am satisfied, to the requisite degree, that there is a danger that the prospective judgment will be wholly or partially unsatisfied because assets of the defendants might be removed or otherwise disposed of, dealt with or diminished in value.
Discretion
There may be discretionary considerations which mitigate against the granting of a freezing order, such as delay in bringing an application, or a lack of candour in the materials placed before the court.[15]
[15] Zhen v Mo [2008] VSC 300 [30].
As to delay, the plaintiffs say that it is but one factor to be considered in the exercise of discretion, and it is seldom determinative. For delay to be a decisive factor, there must be both unreasonable delay and substantive injustice to the defendant or third parties, so that it becomes practically unjust to grant the remedy sought.[16]
[16] Plaintiffs' submissions filed 11 November 2018, par 150, citing Choice Planning Pty Ltd v Midler @ Franklin Street Pty Ltd [2015] VSC 59 [39].
The plaintiffs say that identifying the transactions which they believe caused loss to the business, categorising the various forms of unauthorised transactions, collating them into schedules, and explaining the methods used to effect them, took more than a year.[17]
[17] Affidavit of the late Brian John Needham sworn on 13 August 2018, par 19.
In all of the circumstances, delay does not weigh in the balance.
As to candour, the evidence presented on behalf of the plaintiffs is voluminous and very detailed. However, as previously noted, the defendants will have a full opportunity to contest the continuation of the freezing order or raise any other matter, including any lack of candour, on the return date.
The exercise of discretion requires a balancing of interests. In all of the circumstances, I find that it is appropriate to grant the freezing orders ex parte. I am prepared to do so on the basis that a prompt return date is fixed, that the defendants have liberty to apply at short notice, and that the orders include the usual carve outs for ordinary living expenses and reasonable legal expenses. In the exercise of discretion, I have also weighed the protection afforded to the defendants by undertakings as to damages.
Undertakings as to damages
Each of the plaintiffs proffered undertakings, which are supported by assets of The Brian Needham Family Trust and a personal undertaking from Mr Paul Needham (a director of the first plaintiff).
Mr Ian Edmund Appleton, a senior accountant and current director of each of the plaintiff companies, deposes to the steps taken by the plaintiffs to ascertain and demonstrate that the undertakings proffered by the plaintiffs have substance or are otherwise supported.[18] Mr Paul Needham deposes to his capacity to satisfy compensation that may be payable pursuant to his undertaking as to damages.[19] The financial information proffered does not disclose information which might cast doubt on the ability of the plaintiffs and Mr Paul Needham to together meet the undertakings from assets within Australia.
[18] Affidavit of Ian Edmund Appleton sworn 9 November 2018.
[19] Affidavit of Paul John Needham sworn 9 August 2018, par 7 - 16.
Ancillary orders
The plaintiffs also seek ancillary orders pursuant to RSC O 52A r 3. The ancillary orders concern the provision of information and the retention of documents.
The plaintiffs seek that, before the return date, the defendants to the best of their ability inform the plaintiffs in writing of all of their assets, including their value, location and details.
In the exercise of my discretion, I do not intend to make disclosure orders in the terms proposed on behalf of the plaintiffs on an ex parte basis. The question of whether the proposed disclosure orders are appropriate may be pressed on behalf of the plaintiffs on the return date.
The defendants also seek an order that, until 4.30pm on the return date, the defendants must not destroy, tamper with, cancel or part with possession, power, custody or control of the documents listed in Schedule C to the minutes of proposed orders, as are in the defendants' possession, power, custody or control at the time the order is served on them, otherwise than in accordance with any further order of the court.
In the exercise of my discretion, I am prepared to make an order in the terms proposed on behalf of the plaintiffs on an ex parte basis, save that the order will have effect until 6.00 pm on the return date. The defendants will have the opportunity to contest the continuation of that order on the return date.
Conclusion
For the reasons set out above, I will make freezing orders against the defendants. The freezing orders will have a return date of 21 November 2018 at 2.15 pm, although there will be liberty to apply. I will also make an ancillary order concerning the retention of documents, but the question of whether the proposed disclosure orders are appropriate will be deferred to the return date.
As to the value of assets to be covered by the freezing orders, I note that the plaintiffs estimate their presently identified claims as against the first defendant, inclusive of interest and costs, to be in the order of $2.6 million. The plaintiffs say that the sum of $2.6 million is the appropriate figure for inclusion in a freezing order against the first defendant.
The value of assets covered by a freezing order should not exceed the likely maximum value of the plaintiffs' claim, but this may include interest and costs.[20]
[20] Rimex Wheel Pty Ltd v Wulff [2018] WASC 180 [48], referring to Consolidated Practice Directions PD 9.6.1 par 11.
I am prepared to fix the sum of $2,191,000 as the figure for inclusion in the freezing order against the first defendant, allowing $1,616,000 as the likely value of the plaintiffs' claims, interest estimated at $500,000, and $75,000 for costs. In my view, on the materials before me, fixing the amount so as to include $500,000 for costs would go beyond what is in reasonable protection of the plaintiffs' rights.
The plaintiffs say that the sum of $400,000 is the appropriate figure for inclusion in a freezing order against the second defendant. I am prepared to fix the sum of $362,000 as the figure for inclusion in the freezing order, allowing $227,000 as the likely value of the plaintiffs' claims, interest estimated at $60,000, and $75,000 for costs.
Ordinary living expenses and reasonable legal expenses will be excluded from the freezing orders. I have fixed the amounts for each defendant at $600 per week and $20,000, respectively.
The order made on 27 September 2018, for access to the writ and to all documents filed subsequently to be restricted pursuant to RSC O 67B r 5, pending determination of the freezing order application, or further order of the court, will be vacated upon the plaintiffs giving notice to the court that the freezing orders have been served on each of the defendants.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AB
RESEARCH ASSOCIATE/ORDERLY TO THE HONOURABLE ACTING JUSTICE STRK
15 NOVEMBER 2018
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