Thaler v Amzalak (No 4)
[2013] NSWSC 1345
•13 September 2013
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Thaler v Amzalak (No 4) [2013] NSWSC 1345 Hearing dates: 13 September 2013 Decision date: 13 September 2013 Jurisdiction: Common Law Before: Beech-Jones J Decision: Asset freezing order granted.
Catchwords: ASSET FREEZING ORDER - no question of principle. Cases Cited: - Thaler v Amzalak (No 2) 2013 NSWSC 632
- Thaler v Amzalak (No 3) 2013 NSWSC 1315Category: Interlocutory applications Parties: Shlomo Thaler (Plaintiff)
Benjamin Amzalak (aka Binyomin Zeev Amzalak) ( Defendant)Representation: Counsel:
No appearance (Plaintiff)
G.P. Segal, M.A. Friedgut (Defendant)
Solicitors:
Peter M. Wayne & Associates (Plaintiff)
Brown Wright Stein (Defendant)
File Number(s): 2010/361581
EX TEMPORE Judgment
This is an application for an asset freezing order in respect of an order for indemnity costs made by Schmidt J against the two plaintiffs to these proceedings on 12 September 2013 (Thaler v Amzalak (No 3) 2013 NSWSC 1315 ("Thaler No 3"). A very brief background to these proceedings is as follows.
During 2010 a hearing of a tribunal known as the Beth Din took place in Sydney following the signing of an arbitration agreement. Although there is some dispute about who the parties were to that hearing, for present purposes I will proceed on the basis that they were the plaintiff, Mr Thaler, and the defendant, Mr Amzalak.
The outcome of that hearing was an order requiring Mr Amzalak pay Mr Thaler $318,000.
Following that order, proceedings eventually found their way into this Court. Mr Thaler sought to enforce the Beth Din decision and Mr Amzalak sought to set it aside. Eventually Mr Amzalak succeeded and Mr Thaler failed (Thaler v Amzalak (No 2) 2013 NSWSC 632) ("Thaler No 2"). In that judgment, Schmidt J made a number of findings which were adverse not only to Mr Thaler but to a Mr Koncepolski who had apparently been involved in the transaction that gave rise to the dispute, who had "acted" for Mr Thaler in the Beth Din, who had given evidence before Schmidt J and had played an otherwise significant role in the proceedings before her Honour.
Following his success, Mr Amzalak gave notice that he sought an order for costs on an indemnity basis against both Mr Thaler and Mr Koncepolski.
On 12 September 2013, Schmidt J upheld that application. Her Honour stayed the enforcement of the indemnity costs order against Mr Koncepolski for a period of 28 days from the date of the judgment (Thaler No 3). I note the following aspects of her Honour's judgment.
First, her Honour noted Mr Koncepolski's evidence at the trial was that Mr Thaler was in poor financial circumstances (Thaler No 3 at [78]), although her Honour also noted that at a later time Mr Koncepolski sought to suggest that his financial position was much better than that.
Second, her Honour made a number of findings as to the complete control and authority that Mr Thaler had handed to Mr Koncepolski in relation to the relevant aspects of his business affairs including the pursuit of what her Honour described as Mr Thaler's untenable claims (see, for example, Thaler No 3 at [123]).
Third, her Honour recorded in Thaler No 3 by way of summary a number of the severely adverse findings that had been made in respect of Mr Koncepolski in No 2). Thus in Thaler No 3 at [123] her Honour stated:
"So approaching this application, I am satisfied that this is a case where the Court's jurisdiction to make a costs order should be exercised against Mr Koncepolski. That conclusion rests on the way in which Mr Thaler's untenable claim was pursued by Mr Koncepolski and Mr Amzalak's cross-claim resisted. Not only did he have Mr Thaler's complete authority as to the conduct of the Beth Din proceedings on his behalf, but also the conduct of these proceedings. There is no question that Mr Koncepolski exercised that authority, albeit with some reference to Mr Thaler, in the way I have already discussed."
For the purpose of this application, it is only necessary to note the provision of UCPR 25.11 which provides that:
"(1) The Court may make a freezing order upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the Court's process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.
(2) a freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or disposing or dealing with, or diminishing the value of those assets'."
The power enables the application to be made without notice to the respondent. In this case a limited form of notice has been given to Mr Thaler and to Mr Koncepolski in that at the time judgment was handed down and their solicitor was present, a reference was made to the fact that this application would be made. Further, this morning an e-mail was sent to him providing notice of the application and attaching a copy of the Notice of Motion and affidavits. The solicitor has indicated that he had difficulties in attending. I am accordingly dealing with this matter on an ex parte basis, however, it is I think also relevant to note that that form of notice has been given.
An affidavit has been read on behalf of the applicants for the asset freezing order from their solicitor indicating that in approximate terms their costs of the proceedings before Schmidt J exceed $500,000. I am not in a position to judge the accuracy of that estimate. However, the matter occupied ten hearing days and involved a fierce factual contest over a number of issues including the authenticity of a number of documents. In the ordinary course, I would expect the litigation of that kind would be very expensive so that the nominated estimate of the amount in the order of $500,000 does not surprise me.
An outline of submissions has been handed to the Court by counsel for the moving parties, Mr Segal. It points to various passages in judgments interpreting what is, in effect, the test of "a danger that a judgment or prospective judgment of the Court will be wholly or partly 'satisfied'". I do not think it is necessary on this application to consider those in detail. At least so far as Mr Koncepolski is concerned, the severity of the findings that were made against him by Schmidt J, in my view, give rise to a sufficiently arguable basis for the making of an asset preservation order. If Mr Koncepolski is prepared to engage in the conduct that her Honour found then it is quite conceivable that he will engage in some conduct that may be designed to defeat the costs order made against him.
The position of Mr Thaler is a little more elusive because of his lack of involvement in these proceedings. However, it is clear that he left a significant part of his affairs to Mr Koncepolski against whom severe findings have been made. To the extent that he has assets in Australia, they there are likely to be under the control or direction of Mr Koncepolski. The characterisation of Mr Koncepolski to an extent reflects upon the position of Mr Thaler. In those circumstances I think the appropriate test has been met in respect of him as well.
I have been provided with proposed orders. They contain the usual form of restraint that is consistent with that identified in Practice Note SC Gen 14.
One complication in this matter is that most of the main players are of the Jewish faith and there are very significant holidays on the Jewish calendar occurring over the next two weeks. Thus the timetable must, as best it can, accommodate what I am informed are difficulties on Thursday and Friday, 19 and 20 September 2013, and then Thursday and Friday, 26 and 27 September 2013.
Further, I am not prepared to make, effectively ex parte, an asset preservation order that simply operates until further order. Instead I will make one that operates for approximately a fortnight with provision for liberty to apply so that, if they chose to do so, either Mr Thaler or Mr Koncepolski can make an appropriate application. In the meantime there are also the usual orders sought for the provision of affidavits as to their assets. I will make orders to that effect, but the regime will allow them time to apply before any of those obligations are engaged.
Accordingly, upon the provision of an undertaking as to damages by the defendant, I will make order 4 as amended by me, order 5 and order 6 as amended by me. I will also make order 7. I order that the proceedings stand over to 10.00am on Tuesday, 1 October 2013, at 10.00am. I grant liberty to apply to the Duty Judge.
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Amendments
17 September 2013 - Addition of "(No 4)" to judgment title.
Amended paragraphs: Judgment title
Decision last updated: 17 September 2013
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