Seyedabadi v Samimi [2013] NSWCA 279
Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102
Source
Original judgment source is linked above.
Catchwords
Seyedabadi v Samimi [2013] NSWCA 279
Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102
Judgment (2 paragraphs)
[1]
JUDGMENT - EX TEMPORE
Before the Court is an ex parte application by the plaintiff, who is a barrister, for freezing orders under Part 25 of the Uniform Civil Procedure Rules 2005 (NSW).
Under Part 25.11, the Court may make a freezing order as defined in Parts 25.10 and 25.11 "for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied." The more detailed requirements for a freezing order are set out in Part 25.14 of the Uniform Civil Procedure Rules. I will deal with the requirements seriatim in relation to this case shortly.
The background to the matter is that the applicant plaintiff barrister acted for the defendant in Federal Court proceedings which are complex and involve entitlements which the defendant allegedly had concerning an invention.
Before the Court as Exhibit A on the application is a deed of settlement dated August 2024 between the defendant and two parties which referred to a mediation on 1 August 2024 in relation to Federal Court of Australia proceedings to which the parties to the deed of settlement were also party. The deed states in recital C that the parties have agreed to settle the dispute between them and the proceedings on the terms set out in the deed.
Under the deed of settlement, a settlement sum, defined as $200,000, was to be paid within 28 clear calendar days of all parties executing the deed of settlement with the corporate party to pay that sum to the defendant in the current application. It is noted in cl 3(b) of the deed of settlement that the sum was to be paid to a company called Bellator Pty Ltd. Clause 6 of the deed also contemplated consent orders finalising the Federal Court of Australia proceedings.
In these proceedings, which were commenced by Statement of Claim on 3 October 2024, the plaintiff, who is the applicant on the motion, pleads that the parties entered into a direct costs agreement relating to the provision of legal services for the Federal Court proceedings on 19 June 2019, following which services were provided, and then there was another costs agreement in 2023 for additional services.
The settlement of the Federal Court proceedings is pleaded in paragraph 5 with the terms involving the payment of the settlement sum to Bellator Pty Ltd's account. It is alleged that in breach of the costs agreement, the defendant has not paid the plaintiff an amount owing to him of $175,311.46 for the provision of legal services in accordance with the costs agreement. That sum is sought as relief in the Statement of Claim proceedings.
A Notice of Motion seeking interim relief in the nature of freezing orders was filed on 3 October 2024. Today, Mr Campbell, who appears for himself, sought leave, which was granted, to file in court an Amended Notice of Motion dated 4 October 2024. In the course of argument, another slight amendment was made to prayer for relief 1 of the Amended Notice of Motion. In substance, the Amended Notice of Motion seeks freezing orders against the defendant in relation to the sum of $189,983.82.
In support of the application, the plaintiff read his own affidavit dated 3 October 2024. That affidavit sets out the background to the provision of legal services by the plaintiff to the defendant and the agreements made between them in relation to the legal services.
I am satisfied from that affidavit on an interim basis that the following is established:
1. A costs agreement was entered into between the parties on 19 June 2019 for the provision of legal services by the plaintiff to the defendant;
2. On 1 March 2023 a further costs agreement was entered into between the parties which had as a term (cl 8) that an amount of $115,815.21 was owing by the defendant to the plaintiff personally for unpaid fees;
3. Notice was given of an estimate of legal costs for future work in the sum of $130,000 by the plaintiff to the defendant;
4. The defendant confirmed that he had received a disclosure agreement from the plaintiff;
5. Following that, on the face of it, legal services were provided by the plaintiff to the defendant and various invoices which are annexed to the plaintiff's affidavit were provided for the legal services. It is unnecessary for the purposes of this application to refer to the six invoices;
6. There was an agreement between the parties, despite the amount owing being $175,000-odd, that if the defendant paid the plaintiff $100,000 immediately on receipt of funds from the corporate party in the Federal Court proceedings settlement, that that would be taken in full satisfaction without the remaining $75,000-odd being paid. However, it was also clear that should the amount of $100,000 not be forthcoming as agreed, the full amount would be claimed;
7. I am satisfied from the email correspondence that the defendant agreed to that;
8. Although there is some ambiguity it seems that the amount in the Federal Court settlement has been received;
9. On the basis of the company extract before me (Annexure R), the defendant is the controlling mind and will of Bellator Pty Ltd and holds all shares in Bellator Pty Ltd and is the director and secretary of Bellator Pty Ltd;
10. There was a conversation between the plaintiff and the defendant in which the defendant indicated that he did not want to pay the amount owing but he wanted to keep all the money for apparently some Family Court proceedings but was willing to pay interest (paragraph 24).
The evidence suggests that the plaintiff said that that was not the arrangement between them and that if the $100,000 agreed as the diminished amount was not paid, the plaintiff would pursue the defendant for the full amount which was slightly more than $175,000. It is that danger and risk that the plaintiff particularly relies upon.
It is submitted that the course of behaviour of the defendant in his dealings with the plaintiff; his willingness to make agreements and his unwillingness to perform the agreements, and his desire to keep the money for related family court proceedings and not pay the plaintiff, give rise to a legitimate concern satisfying a danger that the defendant will take steps to diminish, dissipate or otherwise move the funds to ensure that they are available to him and not available to satisfy the agreement said to be between the plaintiff and the defendant.
That takes me back to the statutory position set out in Part 25.14 of the Rules. The first requirement is that the applicant must have "a good arguable case on an accrued or prospective cause of action that is justiciable in the Court." The agreement contractually between the parties is referred to in the pleadings. There is thus proceedings commenced in relation to the contractual claim. On the face of it, the case appears to be a good arguable one and there is a cause of action referred to in the Statement of Claim.
The next requirement is there must be sufficient prospect that any judgment obtained will be registered in or enforced by the Court. The amount in issue is within the Court's jurisdiction and relates to a contractual claim which on the face of it would be within the Court's jurisdiction and it is likely to be given in this Court if the plaintiff is successful, and, if granted, enforced in this Court initially in the first instance.
The next requirement is that the Court may make a freezing order if it "is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied" because of various alternatives including a party absconding or removing, disposing of, dealing with or diminishing in value the assets.
Having regard to the fact that there are other proceedings the defendant is concerned about, I do not consider that there is a risk of him absconding. The real issue is whether there is a danger that the defendant, being a prospective judgment debtor, may remove within Australia money in the account as a result of the settlement of the Federal Court proceedings or dispose of, deal with or diminish in value that asset. Clearly, the facts suggest that the defendant proposes to use or dissipate them in providing costs or other fees in the other proceedings that are referred to.
It is made clear by the Court of Appeal in Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102; (2013) 84 NSWLR 141 that a freezing order is a drastic or exceptional remedy and one that should not be granted lightly: see paragraph 57. Further, the real danger asserted must be established by evidence and not assertion. The test is not whether the plaintiff has established the likelihood in question upon the balance of probabilities. An order may be made even though the risk of dissipation may be assessed as being somewhat less probable than not and what must be established is a sufficient likelihood of risk which in the circumstances of a particular case justifies an asset preservation or freezing order: see Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 per McColl JA at paragraphs 61 to 75; Severstal, above, at paragraphs 57 to 59; and also Frigo v Culhaci [1998] NSWCA 88.
Of relevance are two recent statements by Court of Appeal judges of the general principles. In Care A2 Plus Pty Ltd v Pichardo [2023] NSWCA 156 Simpson AJA emphasised at paragraph 6 that a freezing order is an "exceptional" or "drastic" remedy which should not be granted lightly. Her Honour referred to the need to establish "a good arguable case" but it was not necessary that the applicant establish a better than 50% chance of success.
In KR Properties Global Pty Ltd (ACN 602 693 729) t/as AK Properties Group (ABN 62 971 068 965) v Kazzi [2024] NSWCA 141 Mitchelmore JA set out the principles in significant detail in paragraphs 13 and following. Her Honour repeated that a freezing order was an "exceptional" or "drastic" remedy and that there were two preconditions which must be satisfied. The applicant must have "a good arguable case" and the danger is present "that if an order is not made, a judgment or prospective judgment will be wholly or partly unsatisfied" for any one or more of the reasons stated in Part 25.14 of the Rules. Even when those conditions are satisfied, the making of the order is discretionary, with discretionary considerations including whether the applicant has proceeded diligently and expeditiously in applying for the freezing order: see paragraph 16.
In paragraph 46 her Honour made clear that a good arguable case is one "which is more than barely capable of serious argument, and yet not necessarily one which the judge believes would have a better than 50 percent chance of success."
In relation to the "danger requirement", her Honour made clear in paragraphs 50 to 51 that "[w]hat must be established is a sufficient likelihood of risk which in the circumstances of a particular case justifies" the order. There was a reference to the Court of Appeal in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 325 where Gleeson CJ, later Chief Justice of the High Court, said that:
"Depending on the circumstances, the interests of justice may favour the grant of a freezing order even though the risk of dissipation is less probable than not."
That takes me back to the facts in the present case. In my view, based on the material before me, there is a good arguable case within the analysis of the cases I have referred to and in particular the analysis of Mitchelmore JA in the KR Properties v Kazzi matter. The risk of dissipation in the present case in my view is significant both because of the past conduct of the defendant and because of the indicated wish of the defendant to retain the moneys for the purposes of satisfying costs in other legal proceedings in which he is a party.
For the reasons which I have just given I am satisfied that provided the usual undertakings are given, it is appropriate to grant a freezing order in the form of the standard order in a penal notice on an interim ex parte basis until a return date a few days from now to preserve the position. I will proceed to deal with the applicant in relation to the form of the proposed orders to achieve the objective which I have indicated.
[His Honour proceeded to consider draft orders]
An issue has arisen in relation to the proper analysis of the lien in question and the entitlement of the plaintiff if that is established. The plaintiff relies in particular on the decision of Campbell J as his Honour then was in Firth v Centrelink & Anor (2002) 55 NSWLR 451 and in particular the analysis in paragraph 35.
An equitable lien, commonly called a "fruits of the action" lien (see at p 462), was held to be owed not only over money in the possession of the solicitor but also over money which the client was owed but not paid into court. The quantum of money over which the equitable right exists is that properly owing to the solicitor by the client whether that amount be ascertained by taxation or a bill of costs. The right can also be enforced against people other than the client in certain circumstances. Here, Mr Campbell is a barrister not a solicitor but I am not aware of any cases that make a distinction as to that.
I should note that the case of Firth has been referred to with approval or referred to without disapproval in a number of recent cases: Benjamin & Khoury Pty Ltd v Rahme [2022] NSWSC 766 at paragraphs 71 to 73 per Davies J; In the matter of Benjamin & Khoury Pty Limited [2023] NSWSC 756 at paragraph 20 per Black J; Hunt Leather Pty Ltd v Transport for NSW (No 2) [2023] NSWSC 1243 per Cavanagh J. That matter went on appeal in relation to his Honour's final judgment but as far as I am aware the approval and following of Firth was not questioned. I also mention the decision of Slattery J in Bell v Hartnett Lawyers (No 2) [2021] NSWSC 1270 at paragraph 87.
I desired to assure myself that there was appellate approval of the principle and in Woodlawn Capital Pty Ltd v Motor Vehicles Insurance Ltd [2016] NSWCA 28 the Court of Appeal considered a number of matters relating to costs issues. The primary judgment was given by Ward JA with whom Macfarlan and Gleeson JJA agreed. At paragraphs 159 to 160 Firth was discussed and her Honour noted the contrast drawn by Campbell J between common law possessory and equitable liens, the latter not depending upon the person who has the lien having possession of the property over which the lien exists as compared to a common law lien. Ultimately the full juridical and philosophical basis of an equitable lien and the rights it confers is unnecessary for me to determine for the purposes of today.
[2]
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Decision last updated: 31 October 2024