The plaintiff, by Notice of Motion dated 26 April 2018, brings proceedings for an ex parte freezing order in relation to the defendant's primary asset, which is a property situated at Saratoga, in the State of New South Wales.
These are proceedings for defamation, which are currently at the stage of discovery and interrogatories. The proceedings were commenced by statement of claim filed on 16 June 2017 and have previously been the subject of a judgment on 12 September 2017 in relation to the contents of the defence: B1 v B2 [2017] NSWDC 252. The defendant was, for some time, unrepresented; however, she is now represented by solicitors who have filed the defence currently in placed on the file. I note that the defences include defences of justification and qualified privilege, which are of importance to the question of whether there is a good arguable case (Agar v Hyde (2000) 201 CLR 552) for the plaintiff.
The basis for the orders sought in the Notice of Motion is that the administration of justice may be frustrated, and that any prospect of judgment in favour of the plaintiff will be wholly or partially unsatisfied, if the defendant is permitted to proceed with the sale of the said property, for which contracts were exchanged without any prior notification of the plaintiff, in circumstances where the silence of the defendant and the evasive answers of her solicitors should invite concern that this is likely to be the case.
These proceedings were last in court on 22 March 2018 when orders for discovery and interrogatories were made. At that time, the property must have been on the market for sale, or about to be put up for sale, but neither the plaintiff nor his legal representatives were informed. It was not until on or about 18 April 2018 that the plaintiff's legal representatives discovered, apparently inadvertently, that the defendant may be liquidating assets and in particular, that the defendant had recently exchanged contracts in relation to the sale of the property in which she was residing with her two children. An undertaking was then sought by the plaintiff to allow his concerns to be met, not only in relation to the potential divesting of a valuable asset by the defendant in these proceedings, but because the plaintiff and defendant are husband and wife, and the defendant had been living in the Saratoga property with the two children of the marriage, with the children enrolled in local schools. The relevance of the schooling is that this (and an implied continued residence in an area near the schools for this reason) formed part of the Family Court orders the parties had entered into in August 2016.
There was no reply to the plaintiff's solicitor's letter to the defendant's solicitors and, on 23 April 2018, a second letter was sent, to which the defendant's lawyers, replying to both letters, stated in correspondence:
"Would you kindly advise on what basis your client intends to persuade the Court that our client should put her life on hold to satisfy an award in the future that your client may or may not obtain?"
The nature of the relationship between the plaintiff and defendant - which includes consent orders they entered into pursuant to the Family Law Act 1975 (Cth) on 28 July 2016 - warranted more than this arch reply. As noted above, those consent orders - which are an exhibit to the affidavit of Mr Mazzone, dated 24 April 2018 - set out that not only did the parties have an agreement as to notification of any change of address of this kind, but that they also had an agreement as to the children attending specific schools in the area. While the conduct of the defendant may not yet have reached the stage of breaching paragraph 29 of that agreement (which required a change of residential address to be notified not less than 14 days prior to such change occurring), it comes perilously close. It was directly as a result of this reply that the plaintiff brings this application before me.
This application is brought ex parte and all of the material put before me has been considered with particular care for this reason, the Court does not make freezing orders lightly, and the obligations relying upon a party seeking such orders, even on a temporary basis, is considerable.
The matter came before the Court this morning following emails sent to my associate on Tuesday 24 April 2018. By reason of Anzac Day intervening, the matter was listed urgently this morning for consideration of the documentation in support of the orders sought.
I first note the Court's jurisdiction, as Mr Lewis informs me that this is the first time, so far as he can discover, that any application for freezing orders has been made in defamation proceedings. In fact, such orders have been sought before in defamation proceedings (see Megna v Marshall [2012] NSWSC 436; Kirkham v Tassone [2015] SASC 6), but they are certainly very rare, no doubt because, until comparatively recently, most defamation actions were commenced against media organisations, rather than individuals who have made publications on the internet or social media. One of the more distressing consequences of the changes in defamation law caused by the internet is that members of the community sued for defamation do not have insurance and the cost of defending defamation proceedings makes the loss of assets such as the family home a real possibility.
The jurisdiction to make such an order pursuant to ss 44 and 46 District Court Act 1973 (NSW), where there is "an action in the Court", of the kind identified in s 44, is clear. Pursuant to s 44 District Court Act, this Court has jurisdiction to deal with the underlying defamation action, as this was a cause of action in the common law jurisdiction at the requisite date. I consequently have power to make any injunction which the Supreme Court might have granted in those circumstances: Tagget v Sexton [2009] NSWCA 91 at [23]-[27]. I also note the provisions of rr 25.11 to 25.14 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR").
This brings me to a consideration of the threshold requirements for the seeking of a freezing order.
The first requirement is that the party seeking the order must demonstrate what is being called a good, arguable case on the prospective cause of action (UCPR r 25.14(1)(b)) in an action which is justiciable in this court. And the second is that there is a danger that any prospective judgment will be wholly or partly unsatisfied by reason one or more of the items set out in UCPR r 25.14(4). The question of what is a "good arguable case", is one which - as the notes to Ritchie's Uniform Civil Procedure NSW at paragraph 5.14.5 point out - of a lesser standard than the "prima facie cause of action" requirement, and is capable of being satisfied without requiring any prediction about the ultimate success of claim.
It has been said that the "better than 50% chance of success" rate might apply: Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 at [69], referring to the use of this term in Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG "The Niedersachsen" [1983] 1 WLR 1412. A more helpful definition is that set out by the High Court of Australia in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 408, namely a "reasonably arguable case on legal as well as factual matters".
In the present case, looking at the pleadings, it is clear that the plaintiff is identifiable in the matters complained of, which are clearly capable of conveying defamatory meanings, and that publication has been admitted by the defendant. The real issue is - as it is in most defamation actions - whether the defences can be made out which, for the purpose of this application, will principally depend upon the findings of fact made in relation to the justification defence, as the defence of qualified privilege for a social media post potentially readable to a large number of persons in the community may not be as easy to succeed upon.
Without wishing to go into the issues relevant to the defence of justification in any significant detail, I note firstly that the defence had considerable difficulty forming those particulars, resulting in several amended pleadings, and that the currently pleaded case, which has been a matter of concern in other courts. These particulars include a series of allegations of what I would call family or domestic violence. Mr Lewis asks me to note that these allegations appear to directly conflict with the settlement documents the defendant signed in the Family Court on 30 June 2016, namely, a certification that neither the defendant nor any child concerned in Family Court orders sought "has been or is at risk of being subjected to family violence" (affidavit of Mr Mazzone, pp 118 to 121).
I also note, in relation to the defence of qualified privilege, that a Reply in defeasance of malice has been filed. The Reply makes a number of serious allegations about the defendant which include assertions of prior frustrations of Family Court orders by her, including access orders in relation to the children and concerning the agreement for schooling.
Taking all of the above into account, I am satisfied, for the purposes of this interim relief, that an arguable case can be made out on the material before me.
This brings me to the second test, which is that there is a danger that a judgment will go unsatisfied. In Cardile v LED Builders Pty Ltd, the High Court stated at [112]-[121] that this requirement needs to be made out on the whole of the evidence. The plaintiff must establish a sufficient likelihood of danger in the circumstances of a particular case: Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141.
It is not necessary to demonstrate that the defendant's motive in selling the home had a positive intention to frustrate the judgment of the Court, as the High Court pointed out in Cardile v LED Builders Pty Ltd at [26]. This is of particular importance in a case such as the present, where the defendant may, and no doubt will, put before the Court that she is entitled to arrange her financial and lifestyle affairs to suit herself and the children.
Nevertheless, given the pattern of the defendant's behaviour to date, I am satisfied that her prior acts are a better indication of her true matters than explanations of this sort. I note the relevance of prior actions as set out in The Niedersachsen at 406. There is a long history of bitterness and anger between these parties, and the inferences that the Court will draw in those circumstances - particularly where there has been secretiveness and a lack of candour - are more open than might otherwise be the case if this was, for example, an action against a media organisation.
I am satisfied that I may conclude that there is a prima facie danger arising from the sale of this home that any prospective judgment would be partly or wholly unsatisfied. In this regard, I had particular regard to the defendant's conduct to date, as set out in the affidavit material before me, and also in relation to her conduct both in this Court and the Family Court. I am also satisfied that the defendant is likely to dissipate assets in that she has exchanged contracts for the sale of the home at Saratoga, an asset which, it is clear from the Family Court documents, constitutes her principle asset of substance.
It is not so much the defendant's lack of candour, but her willingness to breach Family Court orders that causes me concern. Courts are always strongly motivated by the discovery that a party has not complied with a court order because it is an indication of a likelihood of such conduct continuing in future. There is also correspondence from the defendant's solicitors is of no assistance to the defendant, in that I am satisfied that the contents are, at best, argumentative and at worst, evasive in a manner that is of some concern, given the nature of the consent orders between the parties in relation to the welfare of the children, and the obligations not only of the parties but also of their legal representatives to comply with the provisions of the Family Law Act 1975, s 64 of which sets out in terms of the outmost clarity, that the paramount consideration in all Family Court proceedings is the welfare of the children.
I am satisfied that by reason of the conduct of the defendant to date as well as that of her solicitors, that she has no intention of preserving the liquid assets left from the sale of the house in any form, accessible to the plaintiff. I am also satisfied that if the plaintiff puts the defendant on notice of the concerns, the subject of this ex parte application, she may take those steps immediately. I am particularly concerned that the defendant's legal representatives have not sought to allay these concerns in any way, or for that matter, offered any explanation for the defendant's conduct.
Taking all of the above, I have made the orders sought in the notice of motion, with some minor amendments in relation to costs and the return date. I note that those orders contain the usual undertaking as to damages.
I make the following additional observations. I have stood these proceedings over to the next defamation list on Thursday 3 May 2018 and I have required the plaintiff's legal representatives to notify the defendant through her legal representatives by 5pm today of these orders. This means by the time that the notice is received, these orders are already in force, in that they would have been entered on JusticeLink no later than midday today.
The defendant and her solicitors should be present in court on the next occasion before me and ready to argue the plaintiff's application for the freezing orders to continue. I note the contents of Practice Note 6 in relation to hearings in the District Court but, if this is too difficult to comply with in the short time frame, I am prepared to be flexible in this regard.
The solicitors for the defendant should be under no illusion as to the seriousness with which I have viewed the allegations made and the factual material tendered. They should not assume that these are orders that will be set aside lightly or without full and proper consideration of the merits of both cases.
There are other steps that this Court can take to ensure that the parties continue to be able to comply with case management orders. When the matter is next before the Court, I intend to make an order for referral of the parties to mediation. This Court provides an excellent mediation service without any fee being charged to the parties, and I would hope that the parties would be able to put aside their concerns in the interests of some form of resolution of these proceedings.
I should indicate that in order to assist the parties in this regard, I also propose - when the matter is next before the Court - to refer the parties to the list judge to obtain a hearing date, as I have found that the presence of a hearing date often assists parties in a successful conduct of the mediation.
Finally, I note that the District Court - which is not only Australia's busiest trial court but also, according to the Productivity Commission, the fastest intermediate civil court in Australia - is highly flexible and able to respond quickly to applications of this nature. This is as a result of having JusticeLink available literally 24 hours a day and facilities open to parties who have urgent applications such as the present. Orders can be made at very short notice, including outside normal court hours where this is considered appropriate.
The best course for any party is always compliance with court orders. But those who do not comply should be aware that this Court's business sitting hours and busy workload does not mean that the wheels of justice cannot turn quickly enough in order to deal with the consequences.
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Orders
I make orders as follows:
1. An order that the Court grant leave that this motion may be filed in Court.
2. An order that this motion be returnable instanter.
3. An order that:
1. The time for service of this motion and supporting affidavits is abridged and service is to be effected by 5pm on Thursday 26 April 2018.
2. Service on the defendant is deemed to be effective if sent by email to the attention of the Defendant's solicitor.
1. An order that this motion shall be further listed for hearing at 9 am on Thursday 3 May 2018 for a further hearing in respect of this motion before Judge Gibson.
2. An order that orders (6) to (20) inclusive to have effect up to and including Thursday 3 May 2018.
3. Pursuant to s 46 of the District Court Act 1973 (NSW) and r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") and upon the applicant giving an undertaking as to damages, as the Court considers appropriate:
1. A freezing order restraining the Defendant from removing any assets located in Australia or from disposing of dealing with or diminishing the value of those assets ("Australian assets") up to the unencumbered value of $250,000 (the "Relevant Amount") until further order;
2. If the unencumbered value of the Defendant's Australian assets exceeds the Relevant Amount, the Defendant may remove any of those assets from Australia or dispose of or deal with them or diminish their value so long as the total unencumbered value of the Defendant's Australian assets still exceeds the Relevant Amount;
1. For the purposes of these orders:
1. Assets include:
1. all of the Defendant's assets, whether or not they are in her name and whether they are solely or co-owned;
2. any asset which the Defendant has the power, directly or indirectly, to dispose of or deal with as if it were her own (the Defendant to be regarded as having such power if a third party holds or controls the asset in accordance with her direct or indirect instructions); and
3. the following assets in particular: (A) the proceeds of sale of the property at 210 Steyne Road, Seratoga NSW
1. the value of assets is the value of the interest the Defendant has individually in the assets;
2. unencumbered value means value free of mortgages, charges, liens or other encumbrances.
1. Order (6) will cease to have effect if the Defendant:
1. Pays the relevant amount into Court; or
2. Pays the relevant amount into a joint controlled monies account in the name of the Defendant's solicitor and the Plaintiff's solicitor as agreed in writing between them; or
3. Provides security in that sum by a method agreed in writing with the Plaintiff to be held subject to the order of the Court.
1. If order (6) ceases to have effect pursuant to order 8(a) (above), the Defendant must as soon as practicable file with the Court and serve on the Defendant a notice of that fact.
2. Any payment made or any security provided pursuant to order (8) will not provide the Plaintiff with any priority over the Defendant's creditors in the event of the Defendant's insolvency.
3. An ancillary order pursuant to r 25.12 UCPR that the Defendant inform the Plaintiff in writing of all of her Australian assets, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the Defendant's interest in the Australian assets and to swear or affirm and serve on the Plaintiff an affidavit setting out the above information on or before the Return Date.
4. This order (12) applies if the Defendant objects to complying with order (11) on the grounds that some or all of the information required to be disclosed may tend to prove that the Defendant:
1. has committed an offence against or arising under an Australian law or a law of a foreign country; or
2. is liable to a civil penalty.
3. The Defendant must:
1. disclose so much of the information required to be disclosed to which no objection is taken; and
2. prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and
3. file and serve on the Plaintiff a separate affidavit setting out the basis of the objection.
1. Subject to the conditions noted in orders (14) to (17) these orders does not prohibit the Defendant from:
1. paying her ordinary living expenses;
2. paying her reasonable legal expenses up to $20,000;
3. dealing with or disposing of any of her assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and
4. in relation to matters not falling within paragraph (13) (a), (b) or (c), dealing with or disposing of any of her assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so the Defendant gives the Plaintiff, if possible, at least two working days written notice of the particulars of the obligation. Conditions to the exceptions offered above.
1. In so far as the Defendant is not prohibited from paying ordinary living expenses pursuant to order 13(a) above, until further order of the Court the Defendant shall keep a written record of all such expenditure.
2. Insofar as the Defendant is not prohibited from paying reasonable legal expenses pursuant to order 13(b) above, until further order of the Court the Defendant shall instruct any lawyer acting on her behalf to produce, as and when you require, a statement of legal expenses incurred and, a statement that they have been reasonably and properly incurred by the Defendant.
3. Insofar as the Defendant is not prohibited from dealing with or disposing of any assets in the ordinary and proper course of your business pursuant to order 13(c) above, until further order of the Court the Defendant shall keep a written record of all dealings and any such dispositions.
4. The Defendant and the Plaintiff may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case, the Defendant or the Plaintiff must as soon as practicable file with the Court and serve on the other a minute of the proposed consent order recording the variation signed by or on behalf of the Plaintiff and the Defendant and the Court may order that the exceptions are varied accordingly.
5. Order (13) shall not apply if the unencumbered value of the Defendant's Australian assets exceeds the Relevant Amount.
6. Anyone served with or notified of this order, including the Defendant, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.
7. The court notes the undertaking of the solicitor for the Plaintiff pay the filing fee of the notice of motion within 7 days.
8. Costs reserved to Thursday 3 May 2018.
9. Stand over the plaintiff's notice of motion for hearing on Thursday, 3 May 2018 at 9am in the Defamation List (estimate of 1 hour plus).
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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 03 May 2018