Angas Securities Limited v Adih

1. The applicant's application for a freezing order be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BESANKO J: 1 On 28 September 2017, I refused an application by Angas Securities Limited (Angas Securities) for a freezing order under Division 7.4 of the Federal Court Rules 2011 (Cth) (the Rules). I said that I would deliver reasons for my decision and these are the reasons. 2 Angas Securities relied on a property valuation prepared by Mr Kofi Eugenio Seawador Adih of Kofi Adih Pty Ltd to lend an amount of $2,850,000 to Augusta Developments Pty Ltd (Augusta Developments) secured by way of first registered mortgage. Mr Adih provided various valuations of the property ranging from a market value with development approval of $4,080,000 to a forced sale value of $2,800,000. When Augusta Developments defaulted on the loan, Angas Securities took possession of the property and entered into a contract to sell the property for $1,595,000. 3 Angas Securities alleges that Mr Adih and Kofi Adih Pty Ltd prepared the valuation negligently and in breach of the contract of retainer and the duty of care they owed to Angas Securities. It also alleges that they engaged in misleading or deceptive conduct. 4 When the application by Angas Securities for a freezing order under Division 7.4 of the Rules came on for hearing on 26 September 2017, I expressed concern as to whether it had established a "good arguable case" within r 7.35(1) and "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" within r 7.35(4). Counsel for Angas Securities asked me to adjourn the application for a short period of time so that the applicant might consider whether further evidence as to these matters was available. 5 When the application came back before me on 28 September 2017, counsel for Angas Securities adduced further evidence which satisfied me that it had established a good arguable case. However, I was still not satisfied of the other requirement. The only evidence relating to that requirement seemed to be the marketing of a number of units at Second Valley owned by Mr Adih. There is and remains no evidence that the marketing of these units was prompted in any way by an appreciation by Mr Adih that Angas Securities might make a claim against him or his company. In fact, it seems that the units have been on the market since the beginning of this year. I realise that an applicant for a freezing order is not required to prove that the respondent is acting or proposing to act with the intention of avoiding having to satisfy a prospective judgment debt (see Platinum Mortgage Securities (Vic) Limited [2015] FCA 633 at [8] per Flick J and the cases cited therein). However, a freezing order remains a drastic form of relief and I did not consider that the fact that the respondents had had some property on the market from a time (at least on the evidence as it presently stands) before they became aware of a possible claim against them was sufficient to satisfy the requirements of r 7.35(4). In reaching that conclusion, I had regard to all of the evidence before me, including the fact that that Mr Adih is no longer insured to provide valuations for first mortgage purposes. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.