These proceedings have been made returnable today after the granting of freezing orders against the first defendant, Duncan Ross Munro, and the second defendant, Alroy Pty Ltd, on 3 February 2015. One of the orders (the disclosure orders) made was as follows:
Subject to any proper claim for privilege I order the defendants to file and serve an affidavit setting out their assets and liabilities, including the payment of any amount from the plaintiffs to either defendant between 1 September 2014 and 31 December 2014 with the identification of the bank accounts or other destination of those payments by no later than 12 noon on 11 February 2015. Such affidavit to be filed with my Associate. I grant leave to file it electronically.
Today the defendants appear by their counsel, Ms McDonald, who has previously indicated to the plaintiffs that her clients wish to make a claim for privilege in respect of the disclosure order. Ms McDonald submits that the order for disclosure is beyond power. There are other aspects to the orders with which the Court must deal, but this preliminary point requires adjudication.
The period September to December 2014 in the disclosure order relates to a time during which deliveries of barley to the plaintiff are alleged to have occurred in exchange for which the plaintiff has paid approximately $750,000.
The evidence in support of the application for the freezing orders includes an interview with Mr Munro. In that interview Mr Munro claimed that he delivered the barley; indeed, he indicated to the officer of the plaintiff that the barley was harvested from a property in Moree of which his mother is the registered proprietor.
There is a dispute in respect of some of the matters disclosed by Mr Munro in that interview. On the one hand, Mr Munro claimed that there were some thousands of hectares from which the barley was harvested. On the other, the plaintiff claims that the only property registered in the name of Mr Munro's mother is a much smaller property, with the irresistible inference on the plaintiff's case that the barley could not have been harvested at least from that property.
The evidence in support of the application for the freezing orders contains a number of documents which include signatures that are, on one view of it, unauthorised. Those documents include both receival dockets and sample dockets, which relate to the deliveries during the period September to December 2014.
The affidavit evidence also includes an analysis of the contents of the plaintiff's silo at Boggabilla. There is clearly a prima facie case and a serious issue to be tried. Indeed there is a very serious issue in respect of the veracity of the transactions relating to the documents signed by the weighbridge attendant, the hopper attendant, and others.
The plaintiffs relied upon the alleged inconsistencies, to use a neutral term, in Mr Munro's interview with the plaintiff's officers to justify the application on an ex parte basis; however, the documents were served and on 3 February 2015 there was an inter partes hearing. Although on that occasion the first defendant proffered a without prejudice undertaking not to reduce his assets below the value of $750,000 I was of the view that the better course was to make an order in respect of the assets of both Mr Munro and of Alroy.
Ms McDonald submits that the extent of any disclosure ordered by the Court against Mr Munro and/or Alroy should be limited to the disclosure of the assets and/or liabilities of those two parties. It is submitted that the nature of this case does not support the order that has been made in respect of the requirement for the defendants to disclose the receipt of the moneys from the plaintiff in respect of the "deliveries" and the destination of those payments.
Uniform Civil Procedure Rule 25.12 provides as follows:
25.12 Ancillary order
(1) The court may make an order (an "ancillary order") ancillary to a freezing order or prospective freezing order as the court considers appropriate.
(2) Without limiting the generality of subrule (1), an ancillary order may be made for either or both of the following purposes:
(a) eliciting information relating to assets relevant to the freezing order or prospective freezing order,
(b) determining whether the freezing order should be made.
The combination of the protection given to persons who are the subject of freezing and disclosure orders pursuant to s 128A of the Evidence Act 1995 and the regime for protecting a party whose assets may have been inappropriately taken from them is recognised in such a broad power.
Ms McDonald relied upon the following passage in Vasil v National Australia Bank Ltd (1999) 46 NSWLR 207 at 213 [24] in support of her submissions:
[24] In my opinion, the correct course for a court asked to make an order for disclosure in aid of a Mareva injunction is to mould any appropriate order by reference to the nature and source of the power being exercised, the nature and content of the privilege against self-incrimination, and the factual circumstances.
It seems to me that this passage does not suggest that the power of the Court is so limited in the way for which Ms McDonald contends. It must be remembered that the regime that is now in place for protecting a person who is in receipt of a freezing order and a disclosure order was in part as a consequence of the decision in Vasil. Ms McDonald also relies upon the following passage in Note A & Anor v C & Ors [1981] QB 956 at 959-960:
Now the exercise of this jurisdiction may lead to may problems. The defendant may have more than one asset within the jurisdiction - for example, he may have a number of bank accounts. The plaintiff does not know how much, if anything, is in any of them, nor does each of the defendant's bankers know what is in the other accounts. Without information about the state of each account it is difficult, if not impossible, to operate the Mareva jurisdiction properly; for example, if each banker prevents any drawing from his account to the limit of the sum claimed, the defendant will be treated oppressively, and the plaintiff may be held liable on his undertaking in damages. Again, there may be a single claim against a number of defendants; in that event the same difficulties may arise. Furthermore, the very generality of the order creates difficulty for the defendant's bankers, who may for example be unaware of the existence of other assets of the defendant within the jurisdiction; indeed, if a more specific order is possible, it may give much needed protection for the defendant's bankers, who are after all simply the innocent holders of one form of the defendant's assets.
Ms McDonald submitted that this is a case in which only damages for misrepresentation and equitable compensation are presently pleaded. Ms McDonald points also to the pro forma order that is attached to the Practice Note for freezing orders and submits that it should be limited to assets and liabilities as opposed to delving into the transactional arrangements in relation to the very matter that is the subject of the litigation between the parties. That is ultimately whether the defendant fraudulently took money from the plaintiff in respect of what is alleged by the plaintiff as fictitious deliveries of barley.
If the Court is of the view that it is "appropriate" to make an order in respect of a disclosure of a payment of money for the purpose of ensuring the effectiveness of a Mareva order, it seems to me that such an order is within power. In this instance the payments of approximately $750,000 were made by the plaintiff. Having regard to the events between the interview with Mr Munro and the silence thereafter, the plaintiff is concerned to find where its money went.
Ms McDonald's clients have no objection to setting out their assets and liabilities but seek to have the protection of any claim against self-incrimination in respect of the payment of moneys that have been made. That is a different matter to the submission that the Court has no power.
I disagree with the submission of Ms McDonald that the Court lacks power to make the orders in this instance. I am satisfied that the order should remain as made on 3 February 2015.
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Decision last updated: 16 March 2015