Waterproofing Technologies Pty Ltd v Perri (No 2)

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FEDERAL COURT OF AUSTRALIA

Waterproofing Technologies Pty Ltd v Perri (No 2) [2022] FCA 1293   

File number: NSD 660 of 2021
Judgment of: ANDERSON J
Date of judgment: 2 November 2022
Catchwords: PRACTICE AND PROCEDURE – application for variation of freezing order – where there is no material change of circumstance since the previous application which warrants the exercise of judicial discretion to vary the freezing orders – application dismissed   
Legislation: Civil Procedure Act 2005 (NSW)
Cases cited:

Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44

Clout (Trustee) v Anscor Pty Ltd [2001] FCA 174

Deputy Commissioner of Taxation v Huang (No 4) [2022] FCA 1618

Hung v Aquamore Credit Equity Pty Ltd [2022] NSWCA 123

Hwang v Lawrie [2014] 1 Qd R 562

Ip v Chiang [2019] NSWSC 1549

Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304

National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900

Permewan Wright Consolidation Pty Ltd v Attorney-General (NSW) (1978) 35 NSWLR 365

PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2020) 145 ACSR 5; [2020] FCA 685

Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297

Waterproofing Technologies Pty Ltd v Perri [2022] FCA 714

Westpac Banking Corporation v Forum Finance Pty Ltd (Freezing Order Variation No 2) [2022] FCA 1206

Young v Jackman (1986) 7 NSWLR 97
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 67
Date of hearing: 26 October 2022
Counsel for the Applicants: Mr A McInerney SC with Mr J Simpkins
Solicitor for the Applicants: McCabes Lawyers
Counsel for the Respondents: Mr W T Houghton KC with Ms M Hargindge
Solicitor for the Respondents: Roberts Gray Lawyers

ORDERS

NSD 660 of 2021
BETWEEN:

WATERPROOFING TECHNOLOGIES PTY LTD (ACN 152 481 215)

First Applicant

POLYSEAL WATERPROOFING VICTORIA PTY LTD (ACN 086 669 650)

Second Applicant
AND:

LUIGI PERRI

First Respondent

MILLENIUM HOMES PTY LTD (ACN 096 371 667)

Second Respondent

CCBM BARE PTY LTD (ACN 162 850 731)

Third Respondent

ORDER MADE BY:

ANDERSON J

DATE OF ORDER:

2 NOVEMBER 2022

THE COURT ORDERS THAT:

1.The application by the First, Second and Third Respondents, dated 14 October 2022, seeking to amend the freezing orders made 21 July 2021, as amended by the orders made on 21 September 2021, will be dismissed.

2.The First, Second and Third Respondents will pay the First and Second Applicants’ costs.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

ANDERSON J:

INTRODUCTION

  1. The First, Second and Third Respondents by interlocutory application dated 14 October 2022, seek orders amending the freezing order made 21 July 2021 as amended by the orders made 21 September 2021.  The amending order sought by the First, Second and Third Respondents is:

    Each order 9(b) of Annexure A, Annexure B and Annexure C of the Freezing Order dated 21 July 2021 directed at…

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Details
Case
[2022] FCA 1293
Decision Date

CaseChat Overview and Summary

The case of Waterproofing Technologies Pty Ltd v Perri (No 2) involves an application by the First, Second, and Third Respondents to vary the freezing orders previously made by the Court. The primary concern of the Court was whether there had been a material change in circumstances since the previous application that would warrant the exercise of judicial discretion to alter the freezing orders. The case was heard in the Federal Court of Australia, which has jurisdiction over matters involving complex commercial disputes and federal laws.

The legal issues before the Court included whether the Respondents had acted in breach of the freezing orders by incurring legal expenses that exceeded the permitted threshold of $250,000 and whether there was a material change in circumstances justifying a variation of the orders. The Court had to determine if the Respondents' actions constituted a sufficient change in circumstances to warrant altering the existing freezing orders. Additionally, the Court needed to assess whether the Respondents had adequately explained the breaches and the delay in disclosing them to the Court.

In its reasoning, the Court found that the Respondents had indeed acted in breach of the freezing orders by paying legal expenses exceeding the permitted amount. The Court observed that Mr Perri, one of the Respondents, had appreciated the breach by June 2022 but failed to disclose this to the Court until October 2022. The Court highlighted the lack of adequate explanation for the breach and the continued non-compliance with the freezing orders. The Court concluded that there was no material change in circumstances since the previous application that would justify varying the freezing orders. Consequently, the application to vary the freezing orders was dismissed.

The final orders of the Court mandated that the application by the First, Second, and Third Respondents to amend the freezing orders would be dismissed, and the Respondents were directed to pay the costs of the First and Second Applicants. This decision underscores the Court's emphasis on the importance of compliance with court orders and the necessity for parties to promptly disclose any breaches.

Orders

Orders of the court

1. The application by the First, Second and Third Respondents, dated 14 October 2022, seeking to amend the freezing orders made 21 July 2021, as amended by the orders made on 21 September 2021, will be dismissed.

2. The First, Second and Third Respondents will pay the First and Second Applicants’ costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

In or around late June or Early July 2022, the First, Second, Third, Eighth and Eleventh Respondents engaged Roberts Gray Lawyers to act for them in these proceedings.THE EVIDENCE In support of their application, the First, Second and Third Respondents rely upon the affidavits of:(a)Bojana Balen dated 12 October 2022 (Balen Affidavit);(b)Joshua Flory dated 13 October 2022 (Flory Affidavit); (c)Luigi Perri dated 13 October 2022 (First Perri Affidavit); and(d)Luigi Perri dated 24 October 2022 (Second Perri Affidavit). In opposition to the application the Applicant relies upon the affidavit of Andrew Joseph James Lacey sworn 25 October 2022 (Lacey Affidavit). In their evidence, the First, Second and Third Respondents accept that they have acted in breach of the Freezing Order by incurring legal expenses in excess of $250,000. The evidence reveals that, by 6 May 2022, in excess of $250,000 for the legal expenses of the First, Second and Third Respondents had been paid to their former solicitors, PCL Lawyers, in breach of the Freezing Order. The First, Second and Third Respondents’ evidence does not explain why the breach of the Freezing Order was not disclosed to the Court on or before 6 June 2022 when I heard, determined and dismissed, the previous interlocutory application made by the First, Second and Third Respondents, to discharge or vary the Freezing Order: Primary Judgment at [54]. Mr Perri concedes that in June 2022 he appreciated that the total amount paid to PCL Lawyers for the legal expenses of the First, Second and Third Respondents exceeded $250,000. Mr Perri concedes that he did not appreciate the seriousness of breaching the Freezing Order nor did he give due consideration to it: First Perri Affidavit at [12]. On 6 June 2022, orders were made which inter alia:(a)granted leave to the Applicants to file a Further Amended Originating Process and Amended Statement of Claim;(b)joined the Eighth to Twelfth Respondents to the proceeding;(c)granted leave for the Respondents to file and serve a Defence to the Amended Statement of Claim;(d)permitted and required actions including in respect of searches, discovery and privilege; and(e)required the Applicants to provide further and better particulars of their loss and damage and breach of duty claimed; and(f)refused to discharge or vary the Freezing Orders made by Thawley J on 21 July 2021 as varied by orders made on 21 September 2021: Primary Judgment at [54]. In my view, a reasonable inference, based on the evidence served by the First, Second and Third Respondents, was that Mr Perri did appreciate, or ought reasonably to have appreciated, that the threshold of $250,000 for their reasonable legal expenses had been exceeded by 6 May 2022. As at 13 October 2022, the first, second and third respondents had paid a total $374,736.52 to their former solicitors, PCL Lawyers, and present solicitors, Roberts Gray Lawyers: Flory Affidavit at [40]. I accept the Applicant’s submission that there is a reasonable basis to infer, from the evidence served by the First, Second and Third Respondents that:(a)on or by 6 May 2022, Mr Perri, and his corporate alter egos, Millenium Homes Pty Ltd (Millenium or Second Respondent) and CCBM Bare Pty Ltd (CCBM or Third Respondent), knew that they had acted in breach of the Freezing Order by paying legal expenses in excess of $250,000;(b)the matters in sub-paragraph (a) were not disclosed to the Court on or before the interlocutory application made to the Court on 6 June 2022 by the First, Second and Third Respondents, to discharge or vary the Freezing Order, the subject of the application heard, determined, and dismissed, by me on 6 June 2022: Primary Judgment at [54];(c)there is no evidence from any principal of PCL Lawyers to explain their conduct in respect of (a)-(b) above;(d)on or by 14 July 2022 Mr Perri was advised by his current solicitors, Roberts Gray Lawyers, that Mr Perri and his wife, Ms Sue-Ann Perri (Eighth Respondent), had paid a total sum for legal expenses in excess of the sum of $250,000 permitted by the Freezing Order: Balen Affidavit at [25]; First Perri Affidavit at [11] and [16];(e)on and after 14 July 2022 PCL Lawyers rendered further invoices for their legal services, and to the knowledge of Mr Perri, were paid for and on behalf of the First, Second and Third Respondents, an additional sum in excess of $48,000 in breach of the Freezing Order;(f)on and after 14 July 2022 Roberts Gray Lawyers rendered further invoices for their legal services, and to the knowledge of Mr Perri were paid for and on behalf of the First, Second and Third Respondents, an additional sum in excess of $31,000 in breach of the Freezing Order;(g)there is no adequate explanation from Mr Perri why, after 14 July 2022, he continued to act in breach of the Freezing Order; and(h)the explanation put forward by each of Mr Joshua Flory and Ms Bojana Balan, both formerly solicitors of PCL Lawyers and now solicitors of Roberts Gray Lawyers, is inadequate to explain the breach of the Freezing Order, and why it is that the breach of the Freezing Order was not brought to the attention of the applicants, or the Court, until 13 October 2022.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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