Linney v Solomou

Mr Solomou's submissions

Mr Solomou takes issue with the submission by Ms Linney that the substantive proceeding concerns the distribution of the estate; rather, he says that the principal question in the proceeding is one of construction of cl 7 of the Deed.
As noted, Mr Solomou has filed an affidavit sworn 3 February 2020. In that affidavit, Mr Solomou deposes that the summons is not maintainable on any, or all, of the following grounds: that the claim for rectification is statute barred by s 16 of the Limitations Act 1969 (NSW); that the claim for rectification is futile since, even if cl 7 of the Deed is rectified as sought in the summons, cl 7 cannot operate (because Mr Solomou did not convey the property which is the subject of the Deed to a bona fide purchaser for consideration, as required by cl 7); and that, even if Ms Linney was mistaken as to the terms of the Deed, there was no common mistake.
As to the relief sought in the notice of motion, Mr Solomou says that order 2 cannot be made as it seeks the continuation of a state of affairs which does not currently exist (namely that certain funds held in the estate "remain" held on trust for both parties). Mr Solomou maintains that Ms Linney has adduced no evidence that any funds in the estate are presently held on trust for her, whether jointly or otherwise (referring to Ms Linney's affidavit, sworn 2 March 2020). (Pausing here, it may be that Ms Linney is attributing a particular significance to the status of the moneys being held in a controlled money account, see the definition in s 128 of the Legal Profession Uniform Law (NSW); or otherwise by reference to the holding of funds in the capacity of an executor, but this is mere supposition on my part. Mr Solomou says that Ms Linney is a stranger to the estate, being neither a beneficiary of the estate nor a person with a notified claim on the estate; and that her claim in this proceeding is against Mr Solomou personally.
Mr Solomou characterises Ms Linney's present application as being in the nature of an application for freezing orders (see rr 25.11 and 25.14 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)), noting that the effect of the orders sought would be to prevent the distribution to Mr Solomou out of the estate of any funds exceeding the nominated sum. It is said that the amount of the funds which would be subject to the orders sought by Ms Linney is not specified, nor have any calculations been provided as to how much money Ms Linney says she would be entitled to if the proceeding were successful.
Mr Solomou points to Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 as to the principles applicable to the making of freezing orders and notes that a freezing order is an exceptional remedy and one that should not be granted lightly (citing Severstal Export GmbH v Bhushan Steel Ltd (2013) 84 NSWLR 141; [2013] NSWCA 102 at [57], per Bathurst CJ, Beazley P, as Her Excellency then was, and Barrett JA agreeing).
It is submitted that Ms Linney has not satisfied the demanding threshold for an order of this nature, as set out in rr 25.11 and 25.14 of the UPCR: namely, that she has (which Ms Linney does dispute) not proved that judgment has been given in her favour (which cannot be disputed); nor has she established that she has a good arguable case (see r 25.14(1) of the UCPR); that she has not sought to argue the merits or otherwise of the summons (referring to her submissions at [16] in which Ms Linney disavows any such attempt); and that she has not identified the clause of the deed of which she seeks rectification or the grounds on which she contends her action for rectification will succeed.
It is submitted that Ms Linney wrongly conflates Mr Solomou's failure to seek summary dismissal of the summons with an acknowledgement that she has a prima facie case. Mr Solomou says he makes no such acknowledgement. In that regard, Mr Solomou says that the dispute is confined to a narrow question of construction; and notes that the hearing has now been listed for 8-9 October 2020. It is said that, in these circumstances (where it is not inconceivable that a summary dismissal application might take up a similar amount of the Court's time as the substantive proceedings), nothing can be drawn from the fact that there has been no application for summary dismissal.
Indeed, Mr Solomou here asserts that the claim for rectification of cl 7 of the Deed is hopeless and maintains that, even if Ms Linney were to succeed, she has no prospects of obtaining a money judgment (reiterating the futility argument referred to at [17] above).
It is submitted by Mr Solomou that there is no evidence that there has been any mismanagement of the estate; nor that the estate would be ordered to bear any judgment in this proceeding. Further, it is said that there is no evidence before the Court that there is any danger that Mr Solomou could not satisfy a money judgment; or that there is any risk that he might abscond, or remove assets from this State. (In this regard, it appears that Mr Solomou relies on the fact that Ms Linney does not oppose payment out to him of funds totalling $1,247,668.45 as an acknowledgement that she has no claim to them.)
It is said that, at the highest, Ms Linney's submissions contain bare assertions (unsupported by evidence) that because Mr Solomou denies her claim in these proceedings, if he were "granted unfettered access", he may expend those moneys pending a resolution of the proceedings so as to render futile any order sought by her (referring to Ms Linney's submissions at [18] and [20]).
It is submitted that even if Mr Solomou were to "expend" the "unspecified" amount of money which is the subject of the (freezing) orders sought by Ms Linney in the present application, he would still have at least the $1,247,668.45 which it is said Ms Linney "admits should be released to him". He says that there is no evidence before the Court of any risk that these moneys would be transferred out of the jurisdiction or otherwise put beyond the reach of the Court.
Further, Mr Solomou complains that Ms Linney has made no attempt to comply with the relevant Practice Note governing freezing orders (Practice Note SC Gen 14). In particular, it is said that none of the matters set out at [20] of the Practice Note has been addressed in Ms Linney's affidavit in support of this motion; noting that Ms Linney has not specified: the basis of the claim for substantive relief; the amount of the claim; and the nature and value of Mr Solomou's assets, so far as they are known to Ms Linney, within and outside Australia; or the matters referred to in r 25.14 of the UCPR; and that Ms Linney has not offered any undertaking as to damages.
As to the caveat which Ms Linney placed on the grant of probate (which appears to have been allowed to lapse on 2 October 2019), it is said that in her submissions Ms Linney acknowledges that Mr Solomou is entitled to moneys (insofar as she refers to the distribution of moneys that "are not in dispute between" the parties) which Mr Solomou says would more than satisfy any judgment against him in these proceedings. It is further said that Ms Linney fails to acknowledge (when she deposes to her reluctance to file any further caveat) that she would have been placing herself at risk of a cost order and a claim for damages if she filed a further such caveat (it being contended that Ms Linney had no right to file a caveat in the first place because she does not raise any issue as to the validity of the Will).
While Mr Solomou accepts that, as a daughter of the deceased, Ms Linney may have had a potential family provision claim, he says that this is an insufficient interest to justify placing a caveat on the grant of probate (citing Poulos v Pellicer; In the Estate of Culina [2004] NSWSC 504 at [13], per Windeyer J).

Determination

As Mr Solomou has noted, the power here sought to be invoked by Ms Linney is not specified in her application. Insofar as it purports to operate as a restraint on the distribution of estate funds to Mr Solomou (who, as I understand it, is the beneficiary of the estate), and he (as executor) is in control of those funds, I accept it is tantamount to an application for a freezing order. That this is the case appears to be demonstrated by the concern raised by Ms Linney in her submissions that her claim may be rendered futile if Mr Solomou were to expend what she has described in her submissions as the balance of the Fund.
Rule 25.11 of the UCPR provides that a freezing order may be made "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". As Mr Solomou has noted, r 25.14 of the UCPR applies if, inter alia, an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court. In those circumstances, sub-r 25.14(4) provides that the Court may make a freezing order or an ancillary order or both against a 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, among other things, the assets of the prospective judgment debtor or another person are "disposed of, dealt with or diminished in value". I note that sub-r (6) provides that "[n]othing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so".
In the present case, even leaving aside the difficulty that there is no clear articulation on the present application of what is said to be the "good arguable case" that Ms Linney maintains in the substantive proceeding (in that I am left to speculate as to the basis on which, and precisely how, the rectification claim is brought), I am not persuaded that there is sufficient evidence to warrant the making of what in effect would be a freezing order in respect of what I understand would represent half of the remaining proceedings of sale of the Burwood Property.
What must be shown is a basis for apprehension that there would otherwise be a dissipation of Mr Solomou's assets so as to give rise to a real risk that any judgment in the proceedings would be unsatisfied (see for example the case after which freezing orders were commonly so-called - Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213). There is nothing to support such a finding here, other than the refusal of Mr Solomou to consent to a process by which the balance of the Fund be retained in a controlled moneys account. That, to my mind, is insufficient to give rise to a real apprehension that, absent the orders sought, Mr Solomou will take steps to dispose of the funds in order (or calculated so as) to frustrate any adverse judgment.
It is well known that the jurisdiction to grant freezing orders is not intended to provide a plaintiff with security for judgment; rather, it has been said to be founded on the jurisdiction to prevent abuses of the court's process by preventing a defendant from embarking on a course of conduct which would have the effect of frustrating the processes of the court or defeating the court's jurisdiction (see Ritchie's Uniform Civil Procedure NSW at [25.11.17] and Re C & L Cameron Pty Ltd [2012] NSWSC 676 at [201]).
It is, as has been noted by Mr Solomou, to be viewed as an extraordinary remedy and, ordinarily, as a condition of the making of a freezing order, appropriate undertakings would be required (including the usual undertaking as to damages). No such undertaking has here been proferred.
I am therefore not persuaded that Ms Linney has established a basis for the making of such an order in the present case. In saying that, it may well be that, if steps were to be taken by Mr Solomou between now and the hearing in October this year that gave rise to a reasonable apprehension of the dissipation of assets so as to frustrate any subsequent judgment Ms Linney might obtain, then a fresh application for such an order (supported by the appropriate evidence and accompanied by the usual undertaking as to damages) would meet with a different result. However, at present, I am not persuaded that such relief would be appropriate.
In those circumstances, I dismiss the notice of motion filed 2 March 2020 by Ms Linney. I see no reason not to follow the ordinary rule and order that she bear the costs of the application. Even if she is successful on her substantive claim, this application was not supported by the evidence.

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