Tribuzi v Tribuzi
[2013] VSC 266
•21 May 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
S CI 2011 6721
| LEO TRIBUZI and JOHN TONJAS TRIBUZI | Plaintiffs |
| v | |
| AALTJE TRIBUZI (who is sued in her personal capacity and as Executrix of the last Will of Emidio Tribuzi deceased) | Defendant |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 May 2013 | |
DATE OF JUDGMENT: | 21 May 2013 | |
CASE MAY BE CITED AS: | Tribuzi v Tribuzi | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 266 | |
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PRACTICE AND PROCEDURE – Application for freezing order – Order made.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A G Southall QC with Mr A Bolkas | Duffy & Simon |
| For the Defendant | Ms C H Sparke SC | Lempriere Legal |
HIS HONOUR:
Each of the plaintiffs claims an equitable interest in one-third of the assets of their parents. Their father is deceased. He left all of his assets to his wife, the defendant. Although the prayer for relief in the amended statement of claim is limited to claims for interests in certain land and in a superannuation fund, the pleading itself claims interests in all of the assets. Leave to amend will be given to correct this disconformity.
The present application is for a freezing order over the proceeds of the superannuation fund, a sum of about $3 million.
The plaintiffs contend that there is a danger that this sum will be dissipated before judgment, and that would frustrate the Court’s process by making that sum unavailable should a court declare that they, or either of them, have an equitable interest in the money.
The issue arises in the following context:
(1) By summons filed 21 September 2012, the plaintiffs sought a broad range of further discovery from the defendant. One element of the claim for further discovery related to documents concerning the superannuation fund. Those documents were referred to in the affidavit in support of the application for further discovery.
(2) The application for further discovery was heard by an Associate Justice on 10 October 2012. The Associate Justice reserved her decision. On 19 November 2012, she ordered further discovery, including in respect of documents concerning the superannuation fund.
(3) On 10 December 2012, the defendant provided further discovery, including substantial documents concerning the superannuation fund.
(4) A directions hearing was scheduled for 18 March 2013 before the Associate Justice. Prior to that hearing, on 5 March 2013, the plaintiffs’ solicitors wrote to the defendant’s solicitors enclosing a draft amended statement of claim in which allegations were made that the plaintiffs each had an equitable interest of one-third in the superannuation fund. The defendant’s solicitors did not reply to this aspect of the letter, although they did reply to other aspects of it. In a further letter, dated 14 March 2013, the plaintiffs’ solicitors noted this fact and asked the defendant’s solicitors as to their attitude to the proposed amendments concerning the claims over the superannuation fund assets, failing which an application would be made to the Associate Justice for leave to amend in accordance with the draft provided on 5 March. By letter dated 15 March 2013, the defendant’s solicitors said that they did not consent to the proposed amendment.
(5) Accordingly, the plaintiffs filed an affidavit in support of an application for leave to amend. There was a contested hearing on 18 March 2013 before the Associate Justice. She gave the plaintiffs leave to amend, to include claims for equitable interests in the superannuation fund.
(6) The plaintiffs became concerned that the defendant may be dealing with the assets of the superannuation fund. By letter dated 22 March 2013, the plaintiffs’ solicitors sought undertakings from the defendant that the assets of the superannuation fund would not be used by her, except for her day to day personal requirements, until the hearing and determination of the proceeding. In reply, the defendant’s solicitors informed the plaintiffs’ solicitors, for the first time, that the superannuation fund had been ‘wound up’ by the defendant on 15 March 2013 and that the defendant had ‘invested the proceeds thereof for her personal benefit’. No explanation was given in that letter, or has ever been given, as to why the Associate Justice was not informed of this important fact during the course of the contested hearing on 18 March 2013.
(7) As a result of this development, the plaintiffs’ solicitors sought urgent undertakings. In their letter of 27 March 2013, the defendant’s solicitors did not refuse to give the undertakings, but said only that they were unable to obtain instructions before the deadline of noon the next day. They concluded their letter with the statement: ‘We will refer your letter to our client and respond when we receive her instructions’. No further response was received from the defendant’s solicitors on this issue.
(8) The plaintiffs then made an urgent ex parte application to Cavanough J in the Practice Court for a freezing order. His Honour made ancillary orders, requiring the defendant to file an affidavit concerning transactions with the superannuation fund since 30 June 2012; and to produce all documents relating to the winding up of the superannuation fund and to payments or transfers from the fund, or from moneys derived from the fund, since 30 June 2012.
(9) The defendant swore an affidavit on 9 April 2013 in response to Cavanough J’s orders. She disclosed that she had withdrawn all of the moneys from the superannuation fund ($3,050,000) on 15 March 2013. On that day, those funds were due for redemption or rollover under term deposit with the Bendigo Bank maturing on that day. She disclosed also that approximately $2.8 million of those funds remained in a term deposit with the Bendigo Bank in a Retirement Account maintained by her, and that $250,000 of the funds had been used, for the purpose of purchasing a property for her granddaughter. She also gave some details of her present financial needs and anticipated future needs resulting from a health condition. She contended that an order freezing the balance of the proceeds of the superannuation fund would place her ‘future at risk’.
(10) Significantly, the defendant’s affidavit does not give any explanation as to why she decided to terminate the superannuation fund on 15 March 2013 and to distribute all of the trust fund to her on that day. Nor did it produce any documents relating to the winding up of the fund.
In these circumstances, the plaintiffs contend that a clear inference arises to this effect: that the defendant wound up the superannuation fund when she did in an endeavour to liquify its assets and distribute them to third parties before their claims for an equitable interest in those funds are determined by the Court. They point in particular to the following matters:
(1) recent transactions in which the defendant has given about $1.7 million from other funds to their brother, Jason Tribuzi, to enable him to purchase a property with his wife;
(2) the defendant’s failure to inform the Court on 18 March 2013, during the contested hearing, that the superannuation fund had been terminated a few days earlier;
(3) the pattern of obfuscation in solicitor’s correspondence once undertakings were sought;
(4) the obvious haste with which the decision to terminate the superannuation fund was made. In that regard, they rely particularly on the fact that the defendant has been unable to produce any document evidencing the termination of the superannuation fund – notwithstanding the legal and regulatory requirements to be undertaken to formally terminate a superannuation fund and document that process; and
(5) the apparent inconsistency between the defendant’s claim to need the proceeds of the terminated superannuation fund to maintain her own future and the fact she has recently made a gift of approximately $1.7 million to her son, Jason, and his wife; and has recently purchased a property for her granddaughter.
The defendant contends that the plaintiffs have not satisfied the onus upon them to establish a danger that any judgment they obtain will be wholly or partly unsatisfied if a freezing order is not made.[1] Before dealing with the submissions made on behalf of the defendant in this regard, I should first note that the plaintiffs did not, as required by r 37A.05(1)(b), adduce evidence that they had a good arguable case for the relief they seek. When this was pointed out to senior counsel for the plaintiffs, he contended that such evidence was not a necessary pre-condition to the making of a freezing order under r 37A. I do not agree. Counsel for the defendant, however, took a pragmatic course. She did not seek to have the application defeated on this basis, recognising that an adjournment to enable the plaintiffs to verify the fully particularised statement of claim on oath would be straight-forward and would not advance matters much further, as cross-examination would not be permitted on an application such as this. She maintained that all allegations in the statement of claim are denied. This pragmatic approach by the defendant’s senior counsel was appropriate in the circumstances of this particular case, and is one which furthers the overarching purpose contained in the Civil Procedure Act 2010.
[1]Supreme Court (General Civil Procedure) Rules 2005, r 37A.05(4).
The defendant contends that the inferences relied upon by the plaintiffs should not be made by the Court. It was submitted that there were other inferences available on the facts which pointed in a different direction. Particular reliance was placed upon the recent gift of about $1.7 million to the defendant’s son, Jason, and the gift of a property to the defendant’s granddaughter. It was contended that the Court could infer that these gifts have placed the defendant in a position where she needs money to live and for security in the immediate future having regard to her health and other needs; thus providing an explanation for the recent winding-up of the superannuation fund. In my opinion, if that is the explanation for the hasty decision to terminate the superannuation fund on 15 March 2013, at the time when an application to amend the statement of claim to include a claim for an equitable interest over that fund was due to be heard on 18 March 2013, it should have been deposed to on affidavit. In the absence of an explanation to that effect, I find that the inference relied upon by the plaintiffs is more probable. I infer that the termination of the superannuation fund was undertaken for the predominate purpose of defeating the plaintiffs’ claims to an equitable interest in the assets of the superannuation fund if such claims are established.
On this basis, I find that there is a danger that any judgment of the Court declaring the plaintiffs or either of them to have an equitable interest in the proceeds of the superannuation fund will be wholly or partly defeated if those proceeds, or a large proportion of them, are disposed of for purposes other than the defendant’s genuine personal needs. The defendant contended that, if the Court so concluded, there was no demonstrated need for a freezing order, because a one-third interest in the land which is the subject of the plaintiffs’ claims is sufficiently valuable to meet any successful claim to the proceeds of the superannuation fund. I do not accept that submission, as this is not a monetary claim but one to enforce an alleged equitable interest in both the land and the proceeds of the superannuation fund; and because such an approach may prejudice others with an ultimate claim on the defendant’s assets – in particular Jason Tribuzi.
I am not, however, prepared to make the order which was sought by the summons. In argument, it was recognised on behalf of the plaintiffs that the maximum claim which they could maintain is for an interest in two-thirds of the proceeds of the superannuation fund. In these circumstances, I will limit the freezing order to $1.8 million only, leaving the defendant to deal with the remaining amount of $1 million or thereabouts for her own purposes. I will not make an order freezing $2 million, as I take the view the $250,000 spent towards the purchase of a house for the first plaintiff’s daughter, the defendant’s granddaughter, is well explained and is within the scope of the understandings pleaded in the statement of claim.
I will hear the parties as to the form of the order and as to costs. I will also make further directions to enable this matter to be fixed for trial as soon as possible. On that issue, it seems to me that Jason Tribuzi should be joined as a necessary party before the Court, to enable all matters in controversy to be dealt with at the one time and to avoid multiplicity of proceedings in the event that the plaintiffs or either of them have any success. Jason’s interests may be directly affected by the terms of any declarations or orders made by the Court at trial.
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