Lawrence Lin & Anor v Ian Borrowdale & Ors

Judgment 1MACFARLAN JA: I agree with Whealy JA. 2YOUNG JA: I agree with Whealy JA, but wish to make some comments on one peripheral aspect of the case. As noted by Whealy JA, the District Court judge by consent made an order referring Mr Lin's conduct to the Supreme Court. That order appears to have been made under s 203 of the District Court Act 1973 . 3It should be realised that apart from cases of contempt in the face of the Court dealt with by s 199 of the District Court Act , there is no authority on a District Court judge to refer a contempt to the Supreme Court except under s 203. This was made clear by this Court's decision in Re Matthews, 7 March 1984, unreported (Moffitt P, Hutley and Samuels JJA). Generally speaking judges adjudicate: they do not take action as a quasi litigant to enforce their Court's decisions. 4Following that case, s 203 was enacted. However the procedure that follows the reference must be carried through. The Registrar, usually of the Court of Appeal, becomes the prosecutor in the ordinary case. It may be that the Registrar would require some indemnity against costs from the person seeking that the contempt be prosecuted, but he or she becomes the plaintiff in this Court. After a statement of charge the contempt is summarily tried, though it may be remitted to the Common Law Division for trial. 5I say this because there seems to be some suggestion in what has happened in this case that the mere fact that a District Court judge sends a matter of contempt for determination by this Court means that somehow or other this Court tries an issue between the persons who are parties in the District Court. In my view that is not so. 6WHEALY JA: This is an application under s 69 of the Supreme Court Act 1970 (NSW) seeking to set aside orders made in the District Court by his Honour Judge McLoughlin (the trial judge). These orders were made on various dates in 2009. The first order sought to be set aside is a direction made by the trial judge on 17 th July 2009. This was a direction to the first applicant (" Mr Lin ") and to other members of the firm of the second applicant (" Accentro ") to pay certain monies in Accentro's trust account to the first respondent's (" Borrowdale ") solicitors within 28 days but not otherwise to dispose of the money. The second order was made by the trial judge on 21 st December 2009. On that date, he dismissed an application brought by Lin and Accentro to vary the order made on 17 th July 2009. The third order was also made by the trial judge on 21 st December 2009, purporting to refer both Lin and Accentro to the Supreme Court for contempt. 7The application also seeks to set aside certain consequential costs orders made by his Honour on 21st December 2009. 8The essential question in these proceedings is whether his Honour had any power to make the order he did on 17 th July 2009. If that order were beyond power, it must follow that all of the orders made on 21 st December 2009 must be set aside. Mr Lawson, who appeared for Borrowdale on the hearing of the present application fairly and properly conceded that this was so.

The background 9Sean Clifford (" Clifford ") sold Mr Borrowdale a Beneteau yacht for $207,000. It appears that Clifford was paid $197,000 towards the purchase and that Borrowdale subsequently incurred over $23,000 in transportation costs and repairs in bringing the yacht from the Northern Territory to Callala Bay in New South Wales where he lived. Although Clifford had warranted that he was the sole and unencumbered owner of the yacht, it transpired that it was in fact owned by Esanda Finance Corporation Limited, and that the yacht was subject to a chattel mortgage in favour of the finance company. Borrowdale sued Clifford in the District Court, claiming damages. 10In the early part of the proceedings, it appears that certain interim relief was granted to Borrowdale by the District Court. On 6 th May 2008, a restraining order was made preventing Clifford from selling or otherwise dealing with his interest in certain properties including a property in Red Hill in the Australian Capital Territory. Mr Lin became the solicitor for Clifford on 2nd June 2008. On 2 nd September 2008, the District Court made the following orders by consent:- (1) That all relevant injunctive and/or orders made on 2 nd May an 6 th May 2008 as against [Clifford] be withdrawn... (2) Subject to order 3, that all caveats registered on the defendant's... properties be removed forthwith (3) That [Borrowdale] be entitled to register a caveat on Clifford's property at 82 Monaro Crescent Red Hill... pending resolution of these proceedings (4) That [Clifford] be entitled to deal with all his properties, including the Red Hill property, for the purpose to pay out the relevant loan secured over the subject yacht from Esanda Finance 11On 5 th September 2008, the District Court confirmed these orders and made an order that all the injunctions (freezing orders) be discharged. Thereafter, following the lodgement of the caveat on the title of the Red Hill property, the solicitors for Borrowdale and Accentro entered into correspondence with a view to negotiating an agreement which would enable Borrowdale's caveat to be withdrawn so that the sale of that property might be completed, and Esanda paid out in respect of the loan monies owed for the yacht. 12On 14 th October 2008, Accentro wrote to Borrowdale's solicitors the following letter (omitting formal parts):- To mitigate damages and losses, without any admissions and/or to facilitate settlement, we have received further instructions from our client to give you our undertaking to retain the net proceeds of the sale of our client's Red Hill property on receipt of same into our trust account pending resolution of the subject litigation matter and, or as otherwise agreed between the parties (in case the parties settle this issue before resolution of subject litigation matter). Our client put your client on notice that our client shall claim any damages and/or losses (including indemnity costs) suffered as a result of the set net proceeds not being used to pay out the Esanda loan for the subject yacht and/or before the hearing to include such claim (if any damage) in the cross-claim. Kindly now forthwith forward relevant original signed completed withdrawal of caveat for Red Hill property. Kindly further confirm that your clients have removed any other caveats over our client's other properties. The letter was signed, "Accentro Legal - Lawrence L Lin Solicitor-Director." 13It seems that this arrangement was acceptable to Borrowdale and his solicitor. On 14 th October 2008, the solicitor's response was as follows:- Having regard to your undertaking contained in that facsimile, we enclose signed withdrawal of caveat for your client's Red Hill property. The letter was addressed to Accentro. 14The sale of the Red Hill property was completed. The balance of the proceeds was received and paid into Accentro's trust account. On 30 th October 2008, Accentro provided a tax invoice to Clifford for fees and disbursements in the sum of $58,280.70. On 3 rd November 2008, Clifford provided an irrevocable direction and authority to Accentro to transfer from money held in trust to Accentro's office account in the sum of $58,280.70. 15A motion was filed by Accentro in the District Court on Clifford's behalf on 23 rd January 2009 seeking to vary or discharge the undertaking which had been provided by Accentro to Borrowdale's solicitors. The basis of this application, it appears, is that Clifford had found himself in a position where he was presently in need of money for his living expenses, loan and legal fees. As he had not been able to access the money held in Accentro's trust account to meet these commitments, he claimed to have been disadvantaged. 16Mr Lin appeared for Clifford on the hearing of the motion before Judicial Registrar MacDonald. Counsel appeared for Borrowdale. In the exercise of her discretion, after a contested hearing, the judicial registrar declined to grant Clifford's application. 17On 14 th May 2009, Accentro issued a further tax invoice to Clifford for fees and disbursements in the sum of $31,135.50. On the same day, Clifford signed an irrevocable direction and authority to Accentro to transfer from money held in the trust account the amount of $31,135.50. 18On 22 nd May 2009, the principal proceedings between Borrowdale and Clifford came before Judge Rolfe for directions in the District Court. By that time, for whatever reason, Mr Lin had ceased to be the solicitor acting for Clifford. He appeared, however, before Judge Rolfe on that day because Borrowdale's solicitors wanted Mr Lin personally to give an undertaking in relation to the monies held by Accentro in the trust account. Mr Lin made the point that the original undertaking had been given by Accentro, and not by himself personally. The impasse was resolved by Judge Rolfe requiring Clifford (who was appearing for himself on that day) to give the court an undertaking that he would not to seek to withdraw the money from his former solicitor's trust account until the principal proceedings had been resolved. No undertaking was required of or given by Mr Lin. Clifford made clear to the judge that he was in considerable difficulties representing himself, and that he was unable to afford a barrister because of the fact that his funds in the trust account could not be accessed. This plea, it seems, fell on deaf ears. 19The principal action came on for hearing before his Honour Judge McLoughlin on 17 th July 2009. Mr Lawson of counsel appeared for Borrowdale. Mr Clifford appeared for himself. After a brief hearing, the trial judge entered a verdict and judgment for the plaintiff in the sum of $239,830, together with interests and costs. 20Having made those orders, the trial judge, upon the application of Mr Lawson for Borrowdale, gave the direction which is sought to be set aside in this application for judicial review. I shall refer to it as Order 3. 21Mr Lin was not present at, nor did he have any involvement in, the hearing in the District Court on 17 th July 2009. Having been notified, however, in some fashion or other, as to the third order that had been made, Mr Lin, on 7 th September 2009, appeared before the trial judge in an endeavour to clarify the order made in relation to himself and Accentro. The trial judge peremptorily declined to vary or explain the order with the consequence that Mr Lin went away empty handed, and probably none the wiser. 22On 7 th September 2009, the sum of $53,505.47 was paid by Accentro to Borrowdale's solicitors in partial compliance with the order made on 17 th July 2009. Accentro continued to hold the balance of the trust funds being the sum of $89,911.08. It maintained, no doubt, that these monies should be applied to it for its fees, in accordance with the directions given to it by Clifford. This amount stands presently in a separate trust holding account of Accentro Legal, an account dedicated to hold the residue of the proceeds of sale of the Red Hill property. 23On 22 nd September 2009, Borrowdale, by leave of the trial judge, filed a Notice of Motion seeking an order that Mr Lin be referred to the Supreme Court of New South Wales to determine whether he had been guilty of contempt. Ultimately, the contempt motion came on for hearing before the trial judge on 21 st December 2009. On that same day, Mr Lin, by a motion filed a short time earlier, sought a variation of the third order made by the trial judge on 17 th July 2009. 24The trial judge dismissed Mr Lin's Notice of Motion and, by consent, an order was made referring Mr Lin's conduct to the Supreme Court. His Honour also made a number of costs orders against Mr Lin including costs on an indemnity basis. Mr Lin filed a Notice of Intention to Appeal to this court on 15 th January 2010.

A procedural difficulty 25Mr D A Lloyd, who appeared for Mr Lin in these proceedings, has pointed out that his client requires an extension of time owing to the fact that the appeal against the order made on 17 th July 2009 was not instituted until January 2010. The basis on which the extension of time is sought essentially relates to the fact that Mr Lin was unable to obtain the transcript of the primary judge's judgment of 17 th July 2009 until after the middle of December 2009. Mr Lawson, who has appeared in these proceedings for Borrowdale, has not opposed the extension of time sought. In my opinion, for the reasons advanced, the extension of time should be granted.

Submissions of the parties 26Essentially, Mr Lloyd has submitted that the trial judge did not have either express or implied power to make Order 3, as he purported to do on 17 th July 2009. Mr Lloyd argued that the context in which the judge made Order 3 demonstrates that it was made after the delivery of judgment in the action between Borrowdale and Clifford and, in that circumstance, the undertaking which had been given by Accentro in November 2008 was no longer operative. The consequence of the fact that the order was made without power is that it was a nullity. Consequently, neither Mr Lin nor Accentro is bound to comply with the order, and to the extent that there was a non-compliance, this could not justify a referral for contempt. Finally, Mr Lloyd argued that there was no discretionary reason why relief should not be granted to his client. 27Mr Lawson submitted that the context arising from the terms of the undertaking given on behalf of Accentro in November 2008 was markedly different from that argued for by Mr Lloyd. First, in that regard, he submitted that the undertaking still had work to do after the delivery of judgment. This was because its terms, particularly the use of the phrase, "pending resolution of the subject litigation matter", suggested not only that the money would be held to the point of verdict, but that it would be paid out after verdict to whichever party succeeded in the litigation. Counsel argued that this construction of the undertaking was supported by the use of the phrase, "and/or as otherwise agreed by the parties". Secondly, Mr Lawson argued that the context of the undertaking demonstrated that, as at 17 th July 2009, there was not in place an asset preservation order, or any other kind of injunctive order, which accrued for the benefit of his client immediately following the securing of a successful verdict. In that situation, counsel argued, it was appropriate for the judge to make the order he did. 28Against that background, Mr Lawson submitted that there were three bases on which the order made by the trial judge was within power. First, he argued that the order was akin to an order in the nature of a garnishee order. Secondly, that it was a valid exercise of power given to the District Court in express terms by s 46 of the District Court Act 1973 (NSW), namely the giving of injunctive relief. Thirdly, Mr Lawson submitted that the trial judge had power to make the order by virtue of an implied power to do what was necessary to fulfil the court's statutory obligations. In particular, it was argued that the order was necessary to maintain the District Court's supervision of the undertakings which had been given inter-parties in November 2008.

Resolution of the issues 29In my opinion, there was no basis, either express or implied, on which the trial judge could have made the order he did on 17 th July 2009. It was completely beyond power. 30Mr Lawson's first argument might properly be described as a "context" argument. It is to be distinguished from his primary arguments, which might appropriately be described as "source of power" arguments. 31As I have identified, there were two strands to the context argument. The first requires an evaluation of the submission that the wording of the 14 th October 2008 undertaking demanded not merely the retention of the net proceeds of sale of the Red Hill property in the trust account, but also their payment out in accordance with the ultimate verdict, whether it be for the plaintiff or the defendant. In my opinion, the language of the undertaking cannot sustain the extended meaning sought to be attributed to it by Mr Lawson. The primary obligation was to "retain" the money in the trust account, "pending resolution of the subject litigation matter". Indeed, the following phrase, "and/or as otherwise agreed between the parties" in the event of an early settlement before "resolution of subject litigation matter" reinforces the notion that the obligation undertaken would come to an end upon the entry of a verdict. Mr Lawson argued that the additional phrase was indicative of the parties agreeing to apply the monies in a way that was consistent with the court's determination of the issue. It was not confined, counsel argued, to a mutual intention that the defendant's former solicitor retain the monies until judgment was handed down. 32I cannot see the phrase as having this operation. Indeed, it precisely requires a further agreement between the parties in the event of an early settlement, prior to the matter going to verdict. It says nothing about what will happen upon the entry of a verdict at the conclusion of a hearing. Rather than assist Mr Lawson's argument, it seems to me to run contrary to it. 33As I shall shortly demonstrate, this argument (and importantly, its rejection) has considerable significance in relation to the source of power arguments relied on by counsel. It is true, however, as Mr Lawson submitted, that, at the moment of entry of the verdict in judgment in favour of Borrowdale, there was no asset freezing order or restraint order in existence affecting either Mr Lin or Accentro in relation to the money held in the trust account. 34I turn next to examine the source of power arguments. It should be noted that in Borrowdale's written submissions, there were some five or six possible sources of power identified. A number of these were not pressed upon the hearing of the appeal. Those that I now turn to consider are the only sources of power presently sought to be relied on by Borrowdale in this application. 35Mr Lawson argued, as the most likely source of power, that the direction was given as if it were a garnishee order, or an order akin to a garnishee order. 36Before examining that submission, it is helpful to examine precisely what occurred at the conclusion of the hearing before the trial judge. The transcript of the judgment is headed, "Sentence", though this is obviously a mistake. The trial judge then examined the evidence and submissions. He said he was satisfied there was a breach by the defendant of the contract, and that the plaintiff was entitled to damages. He assessed those damages, and said Borrowdale was entitled to a verdict in the sum of $220,353 plus interest from 5 th March 2008. He announced there would be a verdict for the plaintiff in the action and a verdict for the plaintiff cross-defendant on Clifford's cross-action. Upon the calculation of interest, he announced a verdict in judgment for the plaintiff in the amount so calculated, and ordered costs in favour of Borrowdale, including costs thrown away because of an earlier vacation of hearing dates. He ordered the return of exhibits. 37At that point, the transcript records (relevantly):- Lawson: One last matter. Earlier in these proceedings an undertaking was given by Mr Clifford to my client to pay into his then solicitor's trust account, or to be held by his then solicitor, a sum of money which he obtained on the realisation of a property. Mr Lin has told the court on a number of occasions that sum was $150,000 and had affirmed to the court that he continues to hold that money. It is being held subject to any direction of the court. I ask for a direction that Mr Lawrence Lin of Accentro Legal disburse that money so held by him from the defendant to the plaintiff's solicitor. His Honour: At the expiration of 28 days, Mr Lawson. Lawson: Yes, your Honour. Can I hand up a document that has the legal firm and Mr Lin's name spelt correctly, so that your Honour can get the spelling right? His Honour: Does Mr Lin consent to that? Lawson: Mr Lin was the solicitor previously on the record - His Honour: (Speaking to the defendant) Do you object to that course? Defendant: Twenty eight days, yes of course, but your Honour you understand that this money they have held up, they put freezing accounts on several of my properties and held this up for some period of time. It's the reason - one of the reasons - I haven't been able to afford legal counsel here, your Honour, is that they have held this money up, so I think I reserve the right to - His Honour: That's why I've got the expiration of 28 days from today. Defendant: Yes, thank you. His Honour: I direct that Mr Lin, director of Accentro Legal, and all other persons from that firm, at the expiration of 28 days from today, pay to the solicitor of the plaintiff the subject monies held on behalf of the defendant. Lawson: Would your Honour add, "but not otherwise to disburse it"? His Honour: But not otherwise to disburse the monies. Defendant: Your Honour, I would like to question that. I mean I have this period of time now to organise my, I've got properties here. I need to reorganise things to try and pay these monies. By not being given the ability to pay lawyers and not to reorganise things, then I just simply have no chance to get things, to get my finances in order, I suppose your Honour. So I just ask that I can be - to use my monies as my money - so I can get my lawyers and accounting fees done and get my tax returns done and get money paid to these people. His Honour: Those monies are to be paid in partial satisfaction of the judgment that has just been entered against you. 38It was in those circumstances that his Honour made the four orders reflecting the entry of verdict and judgment for the plaintiff with costs. It should be said immediately that, in relation to Order 3, there were a number of inaccuracies concerning the basis on which the trial judge had been invited to act. I shall mention these shortly. I turn first, however, to the garnishee provisions. 39Section 117 of the Civil Procedure Act 2005 (NSW) (" CPA ") enables a judgment creditor to obtain a garnishee order. Subject to the Uniform Civil Procedure Rules , a garnishee order operates to attach, to the extent of the amount outstanding under the judgment, all debts that are due or accruing from the garnishee to the judgment debtor at the time of service of the order. 40Section 123 of the CPA requires that a payment under a garnishee order must be made in accordance with, and to the judgment creditor specified in, the order. Section 124 enables a judgment creditor to apply to the court to complain that a garnishee order has not been complied with. The court hearing the application may hear and determine any question as to the liability of the garnishee to pay the debt, wage or salary sought to be attached by the garnishee order, and may give judgment in favour of the judgment creditor against the garnishee in the appropriate case. 41Rule 39.34 of the Uniform Civil Procedure Rules 2005 (" UCPR ") requires that an application for a garnishee order in respect of a judgment is to be made by way of a Notice of Motion. Unless otherwise ordered, a Notice of Motion may be dealt with in the absence of the parties, and need not be served on the judgment debtor or proposed garnishee. Rule 39.35 requires that an affidavit in support of the application be filed and that it contain certain prescribed information, including identification of "any debts that appear to be owed by the garnishee to the judgment debtor". Rule 39.36 stipulates that a garnishee order for debts must direct the garnishee to pay to the judgment creditor... all money (a) held by the garnishee for or on behalf of the judgment debtor, or (b) owed by the garnishee to the judgment debtor. The order takes effect when it is served on the garnishee (UPCR 39.39). A garnishee who disputes the existence of a debt may file an affidavit to that effect (UCPR 39.40). The court is given the power to hear and determine the garnishee's claim and to give such judgment as the nature of the case requires. 42Forms 69 and 70 are the relevant forms in relation to the issue of a garnishee order. Form 70 contains "important information for the garnishee" and notifies the garnishee that "it has the right to serve a statement disputing the issue as to whether a debt is payable and if so how much". It provides information as to the appropriate forms for raising such a dispute. In particular, it enables the garnishee to raise the issue as to whether any debt sought to be attached by the garnishee order is effected by a claim by another person to any part of the monies, including any person claiming a charge, lien or other interest in any such money or debt.

Was Order 3 a garnishee order? 43I do not accept that the order made by the trial judge was a garnishee order or an order akin to a garnishee order. First, the order was not made as a consequence of a motion and affidavit in support filed in accordance with the garnishee rules and procedures. Secondly, the order could not conceivably be described as a garnishee order, as stipulated in the Rules. There was no document of any kind served on either Mr Lin or Accentro, and no direction that any such notification be made to them. There was no direction made that either Mr Lin or Accentro should be notified of any right to dispute the binding nature of the direction upon them, or to raise any issue as to whether they, or any other person or entity, had a claim to the monies held in the trust account. 44Secondly, the way in which the direction was given was completely contrary to any notion that an order akin to a garnishee order had been made. No evidence of any kind was placed before the trial judge. His Honour was invited to move on the statement from the bar table by Mr Lawson that Mr Lin had "affirmed" to the court that he continued to hold the money, and that it was being held "subject to any direction of the court". Quite apart from the fact that the trial judge was not entitled to act upon a statement made from the bar table (as opposed to evidence), the statement was not correct. The monies were not being held "subject to any direction of the court". Secondly, the only undertaking that was referred to was one that had been given by Mr Clifford, and that was neither properly nor accurately described in the statement made to the judge. Mr Lin had never given an undertaking, but this was not mentioned by the judge. Apart from the passage I have recited, there was no other basis given for the proposition that the trial judge should give the direction that was sought. 45Further, there was no indication that Mr Lin consented to the direction, and there was no consideration given as to whether he should be given notice of the proposed direction, so that he could address it. Mr Clifford was asked whether he objected to the course and, in the end, queried the order that was to be made, but the trial judge simply overrode that, and indicated, as the transcript records:- Those monies are to be paid in partial satisfaction of the judgment that has just been entered against you. 46It is impossible to know on what basis the trial judge thought he had power to make the order. It is clear, however, that neither counsel for the plaintiff nor the trial judge gave the slightest indication that what was involved was the making of an order akin to a garnishee order. 47Further, it may well be that the monies standing in the trust account as at the date the direction was made could not fall within the notion of a debt that was owed by the garnishee to the judgment debtor. If that were so, it would have been a further reason to conclude that there was no power to make a garnishee order in any event. There was, of course, no evidence before the trial judge as to precisely what that amount was, or whether there were claims by other persons in relation to the trust funds. There was simply no information upon which the judge could operate, even if a garnishee application had been made to him. There is no need to resolve this matter, including the effect upon the situation of the requirements of the Legal Profession Act 2004 (NSW), as the matter was not argued in the present application. Putting that issue to one side, however, I am perfectly satisfied, for the reasons already given, that the first argument advanced by Mr Lawson for an alleged source of power cannot succeed.

Was Order 3 an injunction? 48The second argument suggests that the source of power was s 46 of the District Court Act 1973 (NSW). This section provides:- (1) Without affecting the generality of Division 8, the Court shall, in any action, have power to grant any injunction (whether interlocutory or otherwise) which the Supreme Court might have granted if the action were proceedings in the Supreme Court. (2) In relation to the power of the Court to grant an injunction under this section: (a) the Court and the Judges shall, in addition to the powers and authority otherwise conferred on it and them, have all the powers and authority of the Supreme Court and the Judges thereof in the like circumstances, ... (c) the practice and procedure of the Court shall, so far as practicable and subject to this Act and the rules, be the same as the practice and procedure of the Supreme Court applicable in the like circumstances, and (d) without affecting the generality of the foregoing provisions of this section, the powers, authority and duty conferred by paragraphs (a) and (b), and the practice and procedure of the Court referred to in paragraph (c) shall, subject to the rules, extend to the enforcement of any order of the Court made in connection with proceedings for the grant of the injunction. 49It might be noted that there is also a provision for the court under s 140 of the District Court Act to issue temporary injunctions to restrain "(a) a threatened or apprehended trespass or nuisance, or (b) the breach of a negative stipulation in a contract the consideration for which does not exceed $20,000... " 50In my opinion, there was no power to make an order under s 46 of the District Court Act , in the terms the direction was given, for two reasons. First, the injunctive remedy to which provision is made in s 46 is ancillary to the exercise of the jurisdiction of the District Court to hear and dispose of the type of action specified in s 44. While the legal rights of Borrowdale, in respect of which he had brought his action in the District Court, were rights of the nature specified in s 44, they merged, however, in the judgment he had recovered in that court ( Pelechowski v The Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 44-45, per Gaudron, Gummow and Callinan JJ). True it is that Order 3 was made at the same time as the other orders, but the context of its making, as the transcript shows, was that it was in reality a post-judgment remedy. It could not, strictly speaking, be described as either an injunction or an injunction "in an action" for the purposes of s 46. Secondly, and more importantly, it was not an injunction to preserve assets pending execution because it was an order that an amount of money be paid to the judgment creditor, in partial satisfaction of the judgment. Thus, in its terms, it could not be described as an injunction of that kind. 51The Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 now provide for freezing orders and ancillary orders as part of the interim preservation provision of the Act and Rules. In certain circumstances, a freezing order may be made against a third party (UCPR 25.11, 25.13 and 25.14). This court has held that the District Court has an implied power to make a freezing or restraining order in respect of the assets of a third party where there is evidence that a judgment debtor has taken steps to alienate property to a third party, when that property would otherwise have been available for execution at the instance of the judgment creditor ( Tagget v Sexton [2009] NSWCCA 91; (2009) 255 ALR 522). The power to make such orders after judgment is, however, circumscribed in that the orders must be incidental and necessary to the enforcement jurisdiction. 52The order made by the trial judge here could not conceivably be described as a power falling within the express powers contained in Rule 25 of the UCPR. Nor can it be said to be an order that falls within the implied power to make orders in aid of the enforcement jurisdiction. It is quite clear that the order was not in aid of enforcement, but was an enforcement order itself, one not authorised by any of the statutory avenues I have examined. 53There seems little doubt that the trial judge might have made a temporary freezing order requiring Accentro to retain the monies in the trust account for a brief period, to enable one of the express enforcement measures recognised by the legislation to be implemented. That, however, was not what the order purported to do. As I have said, it simply directed Accentro to pay whatever monies it had in the trust account directly to the judgment creditor in partial satisfaction of the judgment. 54In Jackson v Sterling Industries Ltd (1987) 162 CLR 612, the respondent to an application for damages for breach of s 52 of the Trade Practices Act 1974 (Cth) had been ordered to pay $300,000 into court as security for the satisfaction of any judgment that might be entered against him in the application. The High Court, by majority, held that the order should not have been made. Mason CJ, Wilson and Dawson JJ agreed with the reasoning of Deane J. In his Honour's decision at 625, Deane J said:- There are three related grounds upon which these combined orders are susceptible of attack. First, they required the appellant to pay into court not money identified as being within his possession but money which he was required to provide or obtain regardless of source. Secondly, they go beyond a mere order for the preservation of assets pending judgment or execution in that they specifically required that the money be paid into court as "security". Thirdly, they failed to identify either what the money paid "to any Registrar" was to secure or what the entitlement of the appellant (or any one else) was in relation to it after it has been so paid. Put in positive form, it appears to me that, when an order for the preservation of assets goes beyond simply restraining the defendant from disposing of specific assets until after judgment, it must be framed so as to come within the limits set by the purpose which it can properly be intended to serve. That purpose is not to create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him. Nor is it to introduce, in effect, a new vulnerability to imprisonment for debt, or rather for alleged indebtedness, by requiring a defendant, under the duress of the threat of imprisonment for contempt of court, to find money, which he may or may not have (whether or not at some point of time it may have been available to him), to guarantee to a plaintiff that any judgment obtained will be satisfied. It is to prevent a defendant from disposing of his actual assets... so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action. It may be appropriate in a rare case that such an order requires the defendant actually to deliver assets to a named person or even to the court itself or (in "a most exceptional case") extends to the appointment of a receiver of all or part of the assets of a defendant company... Even in such cases however, the order must be confined to preserving assets until after judgment or, arguably, until there has been an opportunity to seek execution: it should not purport to create security over them in favour of the plaintiff and it should make clear that it goes no further than to deprive the defendant of possession of them for the purpose of precluding his disposal of them so as to defeat a judgment. Although Deane J's comments address a slightly different area from that involved in the present matter, there is considerable force in the remarks that have relevance to the issues in the present application. In short, it seems to me that, with all due respect, the trial judge completely misunderstood the ambit of any order he might make in aid of the enforcement of the judgment he had pronounced. It is probable that considered reflection was simply not given to the proper basis on which an interim protection order might have been made, or the evidence necessary to support it. As I have said, the order that was made went well beyond any notion of preserving assets until there had been an opportunity to seek execution.

An implied power? 55Mr Lawson's third argument suggested that the order was made pursuant to an implied power to protect the inter-parties' undertakings of 14 th October 2008. Those, however, were purely contractual undertakings, and a breach of them sounded only in damages. They were not undertakings to the court. 56Mr Lawson referred to the decision of the judicial registrar in February 2009, where she had taken the view, apparently, that to some extent the undertakings by the solicitors' firm should remain under the supervision of the court. A reading of the judicial registrar's decision, however, indicates that she was under the misapprehension that there was still in existence a freezing order, and that this order remained under the supervision of the court. That, of course, was not the situation. But, in any event, it does not appear that the trial judge had that consideration in mind when he made the order that the monies in the trust account should be paid directly to the judgment creditor in partial satisfaction of the judgment debt. On this third basis, it could not be said that any power to make the order arose. The undertaking that had been given by Mr Clifford to the court was of no moment in relation to the present matter, because the irrevocable authorities and directions provided by Clifford to Accentro had been given before his undertaking was made to the court. Moreover, it could not be said that Clifford was in breach of that undertaking at the time the trial judge made his order on 17 th July 2009. 57The third basis argued by Mr Lawson for the source of the power must be rejected.

What consequences flow from the fact that the order was made without power? 58In the events which followed July 2009, the trial judge was later to refuse to vary the order he had made immediately following the judgment and verdict for Borrowdale. Secondly, on the same day - 21 st December 2009 - he referred Mr Lin's conduct to the Supreme Court for contempt, for failing to comply with the orders of 17 th July 2009. Finally, the trial judge made a series of costs orders against Mr Lin and Accentro. The finding I have made is that the order of 17 th July 2009 was a nullity. It was made absent any power, whether express or implied. In Attorney-General for New South Wales v Mayas Pty Ltd (1988) 14 NSWLR 342, McHugh J said:- If an inferior tribunal exercising judicial power has no authority to make an order of the kind in question, the failure to obey it cannot be a contempt. Such an order is a nullity. Any person may disregard it. 59As the order made by the trial judge was a nullity, Mr Lin and Accentro were entitled to disregard it. The order could not be varied, because it was void from the outset. Moreover, a failure to obey it could not found proceedings for contempt. It must follow that all of the orders made by the trial judge on 21 st December 2009 should be set aside. No discretionary matter has been raised on behalf of Borrowdale as to why the court should not grant the relief sought by the claimant. I propose the following orders: (1) Set aside Order 3 made by the third respondent on 17 th July 2009, as follows: "The Court directs Mr Lawrence L Lin of Accentro Legal (or other persons at that firm) pay to solicitors for the plaintiff money held on behalf of the defendant in part payment of the verdict, but not to otherwise dispose of the money within 28 days." (2) Set aside the order of the third respondent made on 21 st December 2009, dismissing the applicant's application to vary Order 3 made by the third respondent on 17 th July 2009 (3) Order that the decision of the third respondent made on 21 st December 2009 granting Order 1 of the first respondent's Notice of Motion filed on 22 nd September 2009 be set aside (4) Order that the following orders made by the third respondent on 21 st December 2009 be set aside: (a) The order that the applicant pay the first respondent's costs of the Notice of Motion filed on 18 th December 2009 on an indemnity basis; (b) That the applicants pay the first respondent's costs of the Notice of Motion filed on 22 nd September 2009 on an indemnity basis; and (c) That the first applicant pay the first respondent's costs of 11 th September 2009, 30 th October 2009, 5 th November 2009, 7 th December 2009 and 17 th December 2009 on an indemnity basis. (5) The first respondent is to pay the applicant's costs of this Summons, and each of the proceedings in the District Court of New South Wales involving the Notice of Motion filed by the applicant in the District Court of New South Wales on 18 th December 2009, and the first respondent's Notice of Motion filed in the District Court of New South Wales on 22 nd September 2009.

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