The plaintiffs, Beryl D'Cruz and Stanislaus D'Cruz, have come before me on an urgent basis as duty judge today seeking leave to file a notice of motion returnable instanter seeking orders for the filing of a statement of claim dated 14 September 2023 commencing these proceedings, an abridgement of time for the service of the notice of motion, supporting affidavits and statement of claim, and for the making of freezing orders against the defendants.
D'Cruz v Coutinho [2023] NSWSC 1221 | Case summary | Zoe
Upon the undertaking of the plaintiffs' solicitor to pay the applicable filing fee, I granted leave to the plaintiffs to file in court the notice of motion, the supporting affidavits, and the statement of claim.
I also propose to make orders to the effect that the defendants can be served by email and express post to the identified email addresses and identified postal addresses in the notice of motion.
In the statement of claim, the plaintiffs, aged 69 and 75 respectively, have set out the material facts supporting claims that they have brought against the defendants, alleging breaches of s 18 of the Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law arising from a set of alleged property investments made by the plaintiffs involving the defendants.
The plaintiffs allege that their losses arising from these breaches are in the order of about $1 million.
The plaintiffs rely on the following evidence:
1. Affidavit of Beryl Clotilda D'Cruz sworn 14 September 2023 and the exhibit to that affidavit;
2. Affidavit of Charbel Azzi sworn 14 September 2023 and the exhibit to that affidavit; and
3. Affidavit of Nazih Touma sworn 18 September 2023.
At the heart of the arrangements made for the alleged property investments is the first defendant, Jude Coutinho, to whom the plaintiffs were introduced by the sixth defendant, Nigel Sequeira. That introduction led to the plaintiffs making payments for what they believed were investments in two properties, the first known as The Meadows in Kangaroo Valley, and the second known as Highlands Estate in Barrengarry.
The plaintiffs have given evidence of a number of representations made to them in meetings in August 2021 to mid‑September 2023 involving Mr Coutinho, Mr Sequeira, and the fifth defendant, Ryan Martinez. At the centre of the allegations is that the plaintiffs were told that for an investment of each $150,000, the plaintiffs would receive a one‑acre lot in a proposed plan of subdivision at The Meadows and Highlands Estate respectively, the value of which would exceed $1 million.
The plaintiffs allege that Mr Coutinho was the sole director of the second defendant, Pinnacle Property Enterprises Pty Limited, trading as Avondale Property Group; the third defendant, Great Southern Agricultural Holdings Pty Limited; and the fourth defendant, QC Project Management Pty Limited. It is alleged that representations were also made on behalf of those corporate defendants. It is also alleged that further representations were made to the plaintiffs in October 2021 regarding the completion of the purchase of interests in The Meadows and Highlands Estate, and the payment of the monies for lots in those properties.
The plaintiffs seek a freezing order against each of the first, second, third, fourth, and fifth defendants, as well as Remedios Group Holdings Pty Limited and Avondale Property Group Holdings Pty Limited, both of which are associated with Mr Coutinho.
The principles regarding the making of freezing orders are well established. They are outlined in Practice Note SC Gen 14, which provides that their purpose is to prevent the frustration or abuse of the process of the court, not to provide security in respect of a judgment or order. In particular, as stated in Lake v Crawford (No 2) [2010] NSWSC 419 at [15]:
"… Such an order should be viewed as an extraordinary interim remedy because it can restrict the right to deal with assets even before judgment. Such orders are commonly granted ex parte. However, while the rules specifically contemplate that applications for freezing orders may be made ex parte, the exceptional nature of the order and its possible adverse consequences make it generally undesirable for an application to proceed in that way unless there are exceptional circumstances for doing so".
The plaintiffs contend that exceptional circumstances do exist in the present case. The plaintiffs point to what was said in Turner v Universal Home Loans Pty Ltd [2004] NSWSC 936 at [20]:
"While it is not appropriate to apply a special standard of proof to a plaintiff's application for a Mareva or asset preservation order, the plaintiff must show that the danger of dissipation of assets is sufficiently substantial to warrant the granting of the injunction. While it is not an essential ingredient of such an application, a prima facie case that the defendant has been dishonest in dealing with the subject matter of the plaintiff's claim will often give rise to a strong inference that the defendant will not, unless restrained, preserve the subject matter of the claim for the benefit of the plaintiff should he be successful in the action."
The matters on which the plaintiffs rest their case is that all of the corporate defendants in this case are the alter ego of Mr Coutinho, a matter which they have expressly pleaded. They point to the apparent dishonesty of Mr Coutinho in the allegations of misleading and deceptive conduct in the statement of claim, but also, they point to their dealings with Mr Coutinho over the repayment of their funds.
The evidence demonstrates that Mr Coutinho had assured the plaintiffs that they would be paid back, but then by early 2023, he was asserting that it was not part of the deal that they be paid back. While labouring under Mr Coutinho's reassurances, the plaintiffs understandably did not take any action to seek to recover their funds.
The plaintiffs rely on these two aspects of dishonesty to assert that the strong inference is that the defendants will not, unless restrained, preserve the subject matter of the claim for their benefit. There has, however, been delay by the plaintiffs in bringing the proceedings and especially in bringing the application for a freezing order.
The evidence reveals that the plaintiffs sent a letter of demand on 13 February 2023 to the solicitors to whom they paid the funds, KPA Solicitors. It also reveals that in early 2023, the plaintiffs instructed solicitors to investigate Mr Coutinho and his companies and whether they had any interest in the properties forming The Meadows and Highland Estate. The plaintiffs did not attempt to explain their delay other than to assert that they were preparing the claim which is now before the Court.
The matter is finely balanced. While I am satisfied that there is evidence of dishonesty by Mr Coutinho which gives rise to the strong inference of the likelihood of dissipation of assets by the defendants, this is to be balanced against the plaintiffs' delay in making the application for freezing orders on an ex parte and urgent basis.
Ultimately, I am satisfied that the effect of the freezing order can be ameliorated by ensuring that it only remains in place for a relatively short period of time and that the matter comes back before me within that short period. At that hearing, I would expect that the defendants would be present so that any continuation of the freezing order will be dealt with inter partes.
For those reasons I am prepared to make the orders contained in the short minutes of order, as follows:
1. Upon the undertaking of the plaintiffs' solicitor, Mr Azzi, to pay the applicable filing fee, the Court grants leave to the plaintiffs to file in court:
1. this Notice of Motion;
2. the affidavit of Charbel Azzi sworn on 14 September 2023 (Azzi Affidavit);
3. the affidavit of Beryl Clotilda D'Cruz sworn on 14 September 2023 (D'Cruz Affidavit);
4. the affidavit of Nazih Touma sworn on 18 September 2023; and
5. the Statement of Claim signed and dated 14 September 2023.
1. The time for service of the documents in Order 1 above is abridged and service is to be effected by 10.00am on 19 September 2023.
2. Order that a copy of the documents referred to in Order 1, together with the corresponding Exhibits to the Azzi Affidavit and D'Cruz Affidavit and a copy of the court's orders made on 18 September 2023 (including the freezing order referred to in Order 5), be served on the defendants, Remedios Group Holdings Pty Ltd and Avondale Property Group Holdings Pty Ltd in accordance with Order 2 above.
3. Service in accordance with Orders 2 and 3 above may be effected:
1. upon the first, second, third and fourth defendants:
1. by email to "jude@avondalepropertygroup.com.au" and "jude@qcpm.com.au"; and
2. by express post to C/- Henry Assaf & Co, Level 1, 157 Queen Street, Campbelltown NSW 2560 and 5 Condamine Street, Campbelltown NSW 2560.
1. upon the fifth defendant:
1. by email to "ryan@avondalepropertygroup.com.au" and "ryan@qcpm.com.au"; and
2. by express post to 42 Crampton Drive, Springwood NSW 2777.
1. upon the sixth defendant by email to "nsequeira@myloanpaysme.com.au" and "support@myloanpaysme.com.au".
2. upon Remedios Group Holdings Pty Ltd and Avondale Property Group Holdings Pty Ltd:
1. by email to "jude@avondalepropertygroup.com.au" and "jude@qcpm.com.au"; and
2. by express post to Level 1, 157 Queen Street, Campbelltown NSW 2560.
1. Upon the plaintiff providing the usual undertaking as to damages, pursuant to rules 25.11 and 25.14 of the Uniform Civil Procedure Rules 2005 (NSW), the Court makes the freezing order against the first, second, third, fourth and fifth defendants and Remedios Group Holdings Pty Ltd and Avondale Property Group Holdings Pty Ltd on the terms set out in the Penal Notice attached to this Notice of Motion (Freezing Order).
2. Order that the Freezing Order expires at 5.00pm on 22 September 2023 or until further order of the Court.
3. Order that the first, second, third, fourth and fifth defendants and Remedios Group Holdings Pty Ltd and Avondale Property Group Holdings Pty Ltd disclose, in the affidavit required by paragraph 8 of the attached Penal Notice, the whereabouts (or last known whereabouts) of the funds referred to in paragraphs 12 and 18 of the Statement of Claim, the identity of third parties into whose hands the funds can be traced and any assets acquired with such funds.
4. List the Notice of Motion for hearing in relation to the substantive interim relief sought in the Notice of Motion at 10.00am on 22 September 2023.
5. Reserves the question of costs.
6. Liberty to apply on 48 hours' notice.
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Decision last updated: 12 October 2023