Thomas v SMP (International) Pty Ltd

[2010] NSWSC 616

CITATION:	Thomas & Ors v SMP (International) Pty Ltd & Ors [2010] NSWSC 616
HEARING DATE(S):	3 June 2010
JUDGMENT DATE :	3 June 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
EX TEMPORE JUDGMENT DATE:	3 June 2010
DECISION:	Freezing orders discharged; Second Plaintiff to pay costs on indemnity basis.
CATCHWORDS:	FREEZING ORDERS – EX PARTE APPLICATION – Whether full and frank disclosure made in ex parte application – whether freezing orders should be discharged and new interlocutory application refused.
CATEGORY:	Procedural and other rulings
PARTIES:	Eric Clyde Thomas (First Plaintiff) Softsand Design Investments Pty Ltd (Second Plaintiff) John Leslie Sullivan (Third Plaintiff) SMP (International) Pty Ltd (First Defendant) Eugene King (Second Defendant) David Joseph King (Third Defendant) Gregory Paul Willett (Fourth Defendant) Deborah Willett (Fifth Defendant)
FILE NUMBER(S):	SC 2003/085446
COUNSEL:	P. King (Second Plaintiff) I.R. Pike (Fourth Defendant) F. Kalyk (Fifth Defendant)
SOLICITORS:	Hayes Partners (Second Plaintiff) Moray & Agnew (Fourth Defendant) Bartier Perry (Fifth Defendant)

2003/085446 Thomas & Ors v SMP (International) Pty Ltd & Ors

JUDGMENT – Ex tempore

3 June , 2010

1 On 31 May 2010, Mr P. King of Counsel, who appears for Mr Sullivan, the Second Plaintiff in these proceedings, applied to me in the Duty List for urgent ex parte freezing orders against the Fourth and Fifth Defendants, Mr and Mrs Willett. Relying on an affidavit in support of the application sworn by Mr Sullivan, and on submissions made to me by Mr King, I granted the application and made freezing orders limited to today, when the Notice of Motion was made returnable.

2 When the matter was called, Mr Pike, of Counsel, appeared for Mr Willett and Mr Kalyk of Counsel appeared for Mrs Willett. They opposed continuation of the freezing orders. The affidavit evidence filed on behalf of Mr and Mrs Willett showed a situation, the full extent of which had not been frankly disclosed to me on the ex parte application. I made that plain to Mr King.

3 Mr King then informed me that he did not press the continuation of the freezing orders. He sought to make a fresh application for freezing orders, to the same extent as he had previously sought. Evidence was taken in the form of affidavits from Mr Sullivan, Mrs Willett and Mr Hayes, and Mr Denham and Mrs Willett have been cross examined, as has Mr Sullivan.

4 I am far from persuaded that there is any basis at all either for the ex parte relief which was granted on 31 May 2010 or the relief sought today. My reasons are as follows.

5 The affidavit of Mr Sullivan which was sworn in support of the application made ex parte deposed to the following effect. Proceedings had been on foot between Mr Sullivan, as one of three plaintiffs, on the one hand, and five defendants on the other, two of whom are Mr and Mrs Willett. Those proceedings are to come on for hearing in July this year. In paragraph 6, it is said that Mr and Mrs Willett were ordered to file and serve evidence in this matter by 24 April and 6 May. No evidence has been served. No further elaboration of the interlocutory stages of the proceedings was given. That paragraph suggested, in itself, and to the uninformed reader, that Mr and Mrs Willett were taking no active steps to meet the case against them.

6 Further, the affidavit relied on two statements attributed to Mr Willett and Mrs Willett, to evidence an intention to dishonestly dissipate assets to avoid recovery of a judgment.

7 The first statement was said to be made by Mr Willett to Mr Sullivan in July 2002, that is, some eight years ago. The statement was supposedly made in the context of a discussion about a dispute between one of the present Plaintiffs, Mr Thomas, and Mr Willett about repayment of loans. Mr Willett is supposed to have said to Mr Sullivan, "They can all sue me if they like but even if you win, you will never see a cent of it, because the money will all be gone”.

8 A second statement relied upon as evidence of a dishonest intention to dissipate assets, is a statement allegedly made by Mrs Willett to a Ms Anderson reported by Ms Anderson to Mr Sullivan on 5 May this year. According to Mr Sullivan, Ms Anderson said to him: "Deb (meaning Mrs Willett) has sold her property. They have told me, 'You'll never get any money out of them as they're moving to France’”. The sale of the property referred to is the sale of a property at Buraneer which is registered in the sole name of Mrs Willett.

9 In summary, Mr Sullivan's affidavit suggested that the defendants, Mr and Mrs Willett, were taking no steps to prepare themselves for the forthcoming trial, and it reported statements said to evidence a dishonest intention to take their assets overseas beyond the reach of a judgment execution. On the hearing of the ex parte application, Mr King said:

“The matter is fixed for hearing for six weeks before Pembroke J, commencing on 20 July. The fourth and fifth defendants, amongst others, have been ordered to file material. They are now, however, a month late. We are concerned about that but, more importantly, we have received information that significant assets of the defendants, held in the name of the fifth defendant, have been sold and there is evidence the defendants may be about to decamp. I know it is unusual to do it ex parte, but the purpose of the order would be defeated if notice was given.”

10 That submission and the affidavit of Mr Sullivan created the distinct impression that Mr and Mrs Willett did not intend to contest the trial in July and, instead, intended to realise assets immediately and leave the country with those assets in order to avoid having to meet a judgment.

11 The evidence which the Defendants filed today demonstrates that, quite to the contrary of that picture, the Defendants have been, for a long time, preparing for this case on a very serious basis. They have already incurred hundreds of thousands of dollars of costs to their own solicitors in preparing their Defence. The evidence also shows that there have been frequent interlocutory skirmishes between the parties about late filing of evidence and about the adequacy of evidence and so on. It is not necessary to go into the details of those interlocutory contests. What is sufficient to note is that there is every indication from that evidence that Mr and Mrs Willett are preparing to meet the case against them very energetically, with the benefit of properly instructed counsel and solicitors, and that that position has been well known to Mr Sullivan since the commencement of the proceedings. However, that was certainly not the picture that was presented to me on the ex parte application that was made on 31 May 2010. I now come to the statements attributed to Mr and Mrs Willett.

12 Firstly, I observe the statement attributed to Mr Willett occurred in a conversation some eight years ago, not concerning these particular proceedings. Rather than giving any credence to that statement, the conduct of the Defendants since then has been the very opposite. They have spent, as I have said, hundreds of thousands of dollars in costs, already incurred and to be incurred, in preparing a defence to the proceedings against them. There is no suggestion in the evidence that they have removed assets from the jurisdiction in the eight years since Mr Willett was supposed to have made a statement attributed to him. I come now to the statement attributed to Mrs Willett on 5 May.

13 Firstly, Mrs Willett has strongly denied that she ever made such a statement to Ms Anderson. Secondly, Ms Anderson herself has not been called to substantiate the making of the statement. It remains hearsay. Thirdly, the statement itself is very vague in its terms. Miss Anderson apparently said: "They have told me you will never get any money out of them, as they are moving to France". Who made this statement to Ms Anderson and when it was made is not revealed.

14 When one looks at the totality of the evidence now before the Court, the length of time these proceedings have been on foot, the degree of preparation that Mr and Mrs Willett have put into meeting the case, the expenses they have incurred in doing so, and the evidence put forward by Mrs Willett as to the strong necessity for her remaining in this country to look after her aged and infirm mother and to be with her children, there appears to be no basis whatsoever to suggest any dishonest intent by Mr and Mrs Willett to act precipitately in disposing of proceeds of sale of the property owned by Mrs Willett in order to defeat the execution of any judgment which Mr Sullivan might obtain.

15 The sale of Mrs Willett’s property at Burraneer is to be completed in about two weeks, so Mrs Willett says. She has itemised the manner in which the proceeds of sale, after discharge of encumbrances, are to be utilised. Most of the balance of proceeds goes to pay existing debts or liabilities and, in particular, a large sum is to go to her solicitors for the payment of legal costs in these proceedings. In short, there is no basis in the evidence for any real apprehension that the proceeds of sale of that property will be made to disappear in such a way as to frustrate the execution of a judgment, if Mr Sullivan is ultimately successful.

16 For those reasons, the freezing order granted on 31 May 2010 is not extended further and will lapse immediately and the oral application for a new freezing order is refused.

17 Mr and Mrs Willett seek costs on the indemnity basis in respect of these two applications, the first being by way of Notice of Motion, the second being the oral application today. Mr King opposes such an order, although he wishes to say nothing about costs on the party/party basis.

18 In opposition to costs on the indemnity basis, Mr King applies for an adjournment in order that he may put on evidence to meet that issue. I refuse the application. The basis upon which an indemnity costs order is sought is quite clear and no new evidence could explain away the circumstances, except by way of a hearing of the application de novo. Both applications were bound to fail because of the inadequacy of the evidence of dishonest intention to dissipate assets to defeat a judgment, and Mr and Mrs Willett have been brought to Court today only because Mr Sullivan failed to make full and frank disclosure of the circumstances said to justify the granting of the ex parte freezing order.

19 Another circumstance compels me to the view that the applications were not only doomed but improperly made. That circumstance is the failure, on the part of Mr Sullivan’s solicitors, to seek from Mrs Willett’s solicitors prior to making an ex parte application, an undertaking or assurance that the proceeds of sale would not be removed from the jurisdiction so as to defeat a judgment or otherwise dissipate it in order to defeat a judgment.

20 It is not the case that a plaintiff in a proceeding is entitled, as of right, to control the way defendants deal with their assets in the ordinary course so as to preserve for the plaintiff sufficient assets against other contingencies and demands in order to meet a judgment in favour of the plaintiff. The court does not interfere at an interlocutory stage to restrain defendants dealing with their assets, except in cases where it is proved to the court's reasonable satisfaction that there is a real risk of some dishonest action to remove assets so as to defeat a judgment.

21 In this case, no prior warning of this application was given to the solicitors for Mrs Willett. No assurance was sought as to how the proceeds of sale would be employed. The case was put forward simply as one of extreme urgency in which there was a real prospect, based upon admissions said to have been made, that the Defendants would leave the country precipitately, taking with them assets in order to defeat a judgment. For the reasons I have given, that application was improperly made.

22 The costs of the application by way of Notice of Motion, and the costs of the application orally made today by Mr King, will therefore be paid by Mr Sullivan on the indemnity basis.

23 The issues in this application are quite separate and distinct from the issues in the proceedings which are about to come on for hearing in July of this year. Accordingly, it is proper that the costs now ordered against Mr Sullivan should be assessed forthwith and paid forthwith. I so order.

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