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[2011] FCA 602
Federal Court of Australia
2011-06-02
Mr P, Besanko J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 On 26 May 2011 I heard submissions on two applications made by the applicant in this proceeding. First, by notice of motion dated 19 May 2011 the applicant sought a freezing order against the first and second respondents in the proceeding. Secondly, by oral application the applicant sought an order that as to certain issues raised in the pleadings the second respondent be dux litis. In my opinion both orders should be refused.
The application for a freezing order 2 The applicant did not pursue all of the orders sought in her notice of motion dated 19 May 2011. The orders she did pursue were as follows: 1. That the First Respondent, Spencer Holdings Pty Ld ACN 096 497 148 and the Second Respondent be restrained from removing any assets located in or outside Australia and from disposing of, dealing with, or diminishing the value of, those assets other than for legitimate purposes and upon having provided seven (7) days written notice to the Applicant's solicitors. 2. That an ancillary order be made that: 2.1 the First Respondent, Spencer Holdings Pty Ld ACN 096 497 148: 2.1.1 disclose to the Court and to the Applicant its financial statements and accounts, list of current assets and their value including bank statements from 1 July 2008 to date. … 2.2 the Second Respondent, Kelvin James Spencer: 2.2.1 disclose to the Court and to the Applicant his assets and liabilities and those of any entity in which he has an interest as at 31 December 2009 and as at the date hereof. 3 There may be some difficulties with the precise wording of the first order sought (for example, the use of the expression "legitimate purposes"), but those difficulties would not prevent an order being made if there were otherwise grounds to do so. 4 The applicant's notice of motion was supported by an affidavit sworn by the applicant. In that affidavit the applicant refers to and annexes certain public documents concerning the first respondent and a business name it owned and correspondence which has passed between her solicitors and the solicitors for the first and second respondents. Those solicitors also represent the fifth and sixth respondents. The second respondent's wife was previously the third respondent but on 20 January 2011 I made an order that the proceeding against her be dismissed. The fourth respondent is now separately represented and he took no part in the application. In addition to the applicant's affidavit, the applicant tendered a further letter from the respondent's solicitors. For their part the respondents relied on a letter from their solicitors to the applicant's solicitors in which they ask for details of the applicant's ability to meet an undertaking as to damages. 5 The pleadings establish that the first respondent was previously Stanley Thompson Valuers and that on 1 July 2007 that entity became Spencer Holdings Pty Ltd trading as Propell National Valuers. The proceeding names the first respondent as Spencer Holdings Pty Ltd trading as Propell National Valuers (SA). The first and second respondents admit that the second respondent is a director and secretary of the first respondent and a joint shareholder together with his wife. 6 I turn now to the other matters established by the evidence which I received on the application. 7 Spencer Holdings Pty Ltd was incorporated on 11 April 2001. The second respondent is the director and secretary of the company and he and his wife are the shareholders of the company. 8 The business name Propell National Valuers (SA) was registered by Spencer Holdings on 10 August 2007 and it was cancelled on 11 October 2010. This proceeding was commenced in this Court on 18 May 2010. 9 On 1 July 2007 four State-based businesses including Stanley Thompson joined together under the common banner of "Propell". 10 On 1 January 2011 Propell began operating as a single national entity being Propell National Valuers Pty Ltd. This had been envisaged since 2007. The parties to these transactions saw the advantages of a single national entity. In return for its "contribution" to the "overall national business" Spencer Holdings received 13,619 shares in Propell National Valuers Pty Ltd and that shareholding represents approximately 14 per cent of the issued share capital of the company. 11 It seems then that from 2007 to 2010 the first respondent was part of an alliance of four firms operating under a similar business name. That alliance has now been replaced by a national company which operates the businesses previously operated by the four entities. As I understand it, the first respondent now owns shares in a company which conducts a business at a national level rather than a business. 12 The evidence also establishes the first respondent is the trustee of a discretionary family trust called the Spencer Family Trust. 13 The only evidence put forward on the application concerning the second respondent is that he owns a block of land. 14 The first respondent has offered an undertaking that it will not deal with its interest in the national entity without at least 14 days written notice to the applicant and that it will not dispose of its assets other than in the ordinary course of business without at least 14 days written notice. That offer has been rejected by the applicant. 15 The matters which must be established in order to obtain a freezing order are well-known. They are set out in Order 25A of the Federal Court Rules and are conveniently summarised by Tamberlin J in KGL Health Pty Ltd v Mechtler [2007] FCA 1410. Some of the relevant requirements are also reflected in statements in Practice Note CM 9 "Freezing Orders". 16 The first requirement is that an applicant must establish a good arguable case on, relevantly, an accrued cause of action (O 25A r 5). The Statement of Claim and the Defence in this case contain a good deal of detail as to the respective cases of the parties. However, there is no sworn evidence from either party as to that party's case. When I raised that matter with the applicant's counsel in the course of his submissions he applied to call the applicant (who was in court) to give evidence. Counsel for the respondents opposed that course. I did not think that such a procedure should be allowed. Not only would there be questions about the nature and extent of the cross-examination which ought to be permitted but the hearing would have to be adjourned to enable the respondents to prepare its response. The alternative course of adjourning the application to give each party the opportunity to file and serve affidavit evidence is not warranted. I say that because I have reached the clear conclusion that the applicant's application must fail having regard to the next requirement. 17 Order 25A(4) provides as follows: (4) The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur: (a) the judgment debtor, prospective judgment debtor or another person absconds; or (b) the assets of the judgment debtor, prospective judgment debtor or another person are: (i) removed from Australia or from a place inside or outside Australia; or (ii) disposed of, dealt with or diminished in value. 18 With respect to this matter, I do not think that there is any reason to think that the transaction involving the first respondent which occurred in late 2010 was motivated by a desire to remove assets or dispose of, deal with or diminish in value assets. There is no reason to question the statement that the transaction had been envisaged since 2007. If any inference is drawn from a transaction which involved other state-based businesses (as well as the first respondent) and a major national entity it is that it had nothing to do with this proceeding. 19 The applicant pointed to the fact that the national entity may take action which diminishes the value of the first respondent's shares in the national entity. The short answer to that submission is that this is not an application against the national entity. 20 If the transaction involving the first respondent is put to one side (as I think it should be) there is simply no evidence that any judgment the applicant might obtain will be wholly or partly unsatisfied because of any of the matters in O 25A r 5(4)(a) or (b). Even if the national entity did something that diminished the value of the first respondent's shares that could not, without more, justify an order against the first and second respondents about dealings in its assets. 21 The applicant's application for a freezing order must be refused. There is, for the same reasons, no basis for ancillary orders. 22 The respondents raised other objections to the proposed orders. They included a submission that there is no evidence of the likely quantum of damages in the event that the applicant succeeded and a submission that there is no evidence that the applicant would be able to meet an undertaking as to damages. In the circumstances I do not need to address those submissions.
The application for an order that the respondents be dux litis on certain issues 23 It is necessary for me to provide a very brief and general summary of the applicant's claims and the defence. I focus on the first and second respondents. 24 The applicant was employed by the first respondent for a period of about two and a half years between April 2007 and late 2009. The second respondent and his wife were the owners of the first respondent and the second respondent was heavily involved in the first respondent's business. The applicant's case is that the second respondent engaged in conduct towards her which was unlawful conduct by reason of various provisions of the Sex Discrimination Act 1984 (Cth) ("Sex Discrimination Act") including s 28B, s 14(2) and, in relation to later conduct, s 94. It is also alleged that the first respondent engaged in conduct in breach of its contract of employment with the applicant and that the fourth respondent committed an assault. The applicant claims damages for hurt, distress and humiliation, and a psychiatric condition, and damages for economic loss resulting from the respondent's conduct and the cessation of her employment. She makes a substantial claim. 25 One of the respondent's "defences" to the claim is that in fact between June 2008 and August 2008 the applicant and second respondent had an affair involving the exchange of gifts and many acts of sexual intercourse. 26 The applicant denies that she had an affair with the second respondent and she denies having sexual intercourse with the second respondent. 27 It is clear from this very brief summary that the credit of the applicant and of the second respondent will be important issues at the trial. 28 The applicant's counsel formulated the orders she sought in the alternative. He formulated his preferred order as follows: MR HEYWOOD-SMITH: They are as follows: 1) that the second respondent be the dux litis on the issue raised of an affair between himself and the applicant, 2) that the second respondent call his evidence on that issue first - that is, including any witnesses on that issue - thirdly, that the applicant then advances the whole of her case, and finally then, the second respondent, and all other respondents - that the second respondent then has a right of rebuttal against the applicant's case on the affair, and then he and all of the other respondents advance their case in the ordinary course. Supplementary to those orders would be an order that the applicant file all statements in respect of the non-affair part of the case, the respondents then file all of their evidence on the non-affair part of the case, and the applicant file any statement in reply to those matters that will have the HIS HONOUR: Sorry, just so that I'm clear, the applicant file evidence non-affair, and then the second respondent file his evidence on the affair - alleged MR HEYWOOD-SMITH: No, on the non - written statements, in other words, are confined - do not address the affair issue. HIS HONOUR: At all? MR HEYWOOD-SMITH: At all. 29 The applicant did not suggest that this application should be determined by reference to which party bore the legal onus on particular issues. I understood the applicant's counsel to accept that the applicant bore the legal onus on all the elements of the causes of action she pleaded against the respondents. Secondly, the applicant pleads causes of action other than contraventions of the Sex Discrimination Act although there is a body of facts common to all causes of action. 30 The applicant's contention is that irrespective of which party carried the legal onus the second respondent is raising what she described as the central affirmative proposition in the case, that is to say, the affair, and he should begin on that issue. 31 I reject the applicant's contention for a number of reasons. 32 First, O 32 of the Federal Court Rules which deals with the trial, provides: Interpretation For the purposes of this Order - (a) where the burden of proof on any issue lies on the applicant, he shall begin; and (b) where the burden of proof on all the issues lies on the respondent, he shall begin. 33 On the assumption that this Court could dispense with this rule (as to which, see Order 1 Rule 8) no good reason to do so has been shown. 34 Secondly, even if the legal onus of proof is but one consideration it is nevertheless an important one and it suggests that it is the applicant who should begin on all issues. 35 Thirdly, the proposed order and indeed the alternatives identified by the applicant's counsel are not practical. It would be very difficult to determine the evidence which went to the affair and the evidence which went to the "non-affair part of the case", to use counsel's phrase, and which party had the right to respond or call evidence in rebuttal. 36 Both parties referred me to authorities but they were all so different from this case that I do not think they provide any direct assistance. The issue in this case must be decided by reference to general principle. 37 The applicant opposes an order for witness statements whereas the respondents seek such an order. I think such an order should be made. Both the parties and the Court will be considerably assisted if the respective cases are clearly defined before trial and the parties are committed to those cases. I see no reason why those orders should not be staggered, that is, the applicant files and serves her witness statements first, followed by the respondents and, if so advised, a reply by the applicant.
Conclusion 38 The applicant's notice of motion dated 19 May 2011 and her oral application for the second respondent to be dux litis on certain issues must be dismissed. I will hear the parties as to costs. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.
Georgiou
Spencer Holdings Pty Ltd