Malvina Park Pty Ltd t/as Firths The Superannuation Lawyers v Pollard

A Renewed Application

1. Today, Firths has again applied for a freezing order against the defendant. The principal terms of the freezing order contained in a draft penal notice handed to the Court are these: "(a) You must not remove from bank account with Bendigo and Adelaide Bank Limited (BSB XXX; account XXX) or in any way dispose of, deal with or diminish the value of that account of AU$40,830.39 ("the relevant amount"); (b) If the unencumbered value of your Australian assets exceeds the relevant amount you may remove any of those assets from Australia or dispose of or deal with them or diminish their value so long as the total unencumbered value of your Australian assets still exceeds the relevant amount".

Evidentiary Basis for a Freezing Order

1. The plaintiff relies upon the affidavit of Carl Mickels sworn 15 May 2015 which was placed before Schmidt J. It also relies upon two other affidavits and some additional tendered documents.
2. The affidavit of Mr Mickels deposes to the fact that Firths acted for the defendant in respect to a claim for total and permanent disability benefits under a policy which he held with the MTAA Superannuation Fund ("MTAA"). In that respect, a costs agreement was signed. Firths have delivered a memorandum of costs and disbursements which has not been paid.
3. The first of those additional affidavits is of Mr Lukas. It satisfies me that attempts were made to serve the defendant with the Summons, the orders of Schmidt J on 15 May 2015, and a letter of 18 May 2015.
4. In the first place, an attempt to effect service was made by having those documents delivered to the Grand Hotel, a backpackers establishment in Perth, a place at which the defendant was residing. The documents were left there with an adult staff member and it was confirmed to the process server that the defendant resided there. It is apparent from the conversation which the process server had with the staff member that Mr Pollard, the defendant, left that Hotel on 22 May 2015 for a trip to Bali for a period, it was anticipated, of about a week.
5. Secondly, it is apparent that upon Mr Pollard's return to Perth on 29 May 2015, he was handed an envelope containing the summons and affidavit and Court's order and when he did so, he said to the manager of the premises that he knew what it was about, and said to that manager: "I have a legal dispute with my lawyers for fees that I owe them. I am not going to pay for something that I did myself".
6. Thirdly, on 11 June 2015 Mr Firth, the principal of Firths, had a telephone conversation with the defendant, Mr Pollard, in these terms: "Mr Firth Have you received the summons and affidavit from the Supreme Court in Sydney that I have brought against you?" Mr Pollard: I received a lot of mail, I haven't had a chance to open it all since I got back from holidays Mr Firth: Well I have brought proceedings in the Supreme Court claiming an order that your account be frozen to protect our claim for costs and that summons is before the court again tomorrow. ' No reply was received. Mr Firth: What do you intend to do about paying our account? Mr Pollard: I am not paying it until I get the rest of my money. Mr Firth: What do you mean the rest of your money, didn't they pay you? Mr Pollard: Yes but not the full amount. Mr Firth: This is the first I have heard of that. If you hadn't changed your authority then perhaps we could have done something about that for you. As matters stand I do not even know how much you received." At that point Mr Firth deposes to the fact that the defendant terminated the call.
7. On 12 June 2015 at 2:57 am, Mr Pollard sent an email to Mr Firth indicating that he had just found and read the summons and order. He said that since the order provided for service no later than 4 pm on 22 May 2015 and he was absent from Australia until 26 May 2015, that service of the documents was invalid.
8. On 12 May 2015, Firths sent a letter to Mr Pollard by email enclosing their memorandum of fees and disbursements with respect to his claim against the MTAA, the total of which was $30,830.39.
9. Counsel for Firths submits that in accordance with long-standing authority: Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, the plaintiff has a lien over the fund recovered from the settlement which was occasioned by its legal work, to the extent of its outstanding memorandum of costs and disbursements.
10. There is a difficult question as to whether that lien continues after proceeds of any litigation or settlement have been dispersed by the payer which may be a judgment debtor, or may only be a body which owes money pursuant to a settlement agreement to, a person in this case, the defendant, who might be regarded as either a judgment creditor or alternatively a person entitled by contract or agreement to receive the funds.
11. I do not need to resolve that difficult question because I am content to proceed, for present purposes on the basis that a lien exists to the extent claimed of the unpaid memorandum of costs and disbursements over any fund of money which can be shown to exist in the hands of the defendant, which fund is derived from the proceeds of the settlement of the claim against MTAA.
12. However, there are a number of other matters which Firths needs to prove to the Court, and about which the Court needs to be satisfied, before a freezing order of the kind sought can be made. In respect of a number of those matters, I am not satisfied that the plaintiff has discharged the burden falling upon it.
13. First, the only evidence as to the whereabouts of the payment by MTAA Super, which is the business name of the MTAA Superannuation Fund, the trustee of which is the Motor Trades Association of Australia Superannuation Fund Pty Ltd, is to be found in the note of a telephone conversation annexed to the affidavit of Mr Mickels, which indicates that a payment was made by MTAA by electronic funds transfer on 8 May 2015 in accordance with instructions given by Mr Pollard.
14. There is no evidence at all as to where the payment was made, in what sum it was made, nor as to whom it was paid. There is no evidence that the transfer was made into the bank account at the Bendigo and Adelaide Bank nominated in the Summons or in the draft freezing order. Indeed, there is no evidence that the nominated account continues in operation at the Bendigo and Adelaide Bank.
15. I am not satisfied that the Court should make any order on the basis of any inference that the money has been paid into that particular account at the Bendigo and Adelaide Bank. The evidence simply is insufficient to establish that fact. An order, in terms of that sought in Order 1 of the Summons, simply cannot be made.
16. The second matter which an applicant for a freezing order is obliged to demonstrate is that there is some danger or risk of disposal of assets by the defendant in a way which would have the effect of avoiding a judgment, if one has been entered, or the consequences of proceedings which may be on foot, or else, disposed of in a way deliberately intended to avoid paying a debt which is due, and in respect of which proceedings are to be commenced.
17. As I have earlier pointed out, Schmidt J concluded on 15 May 2015 that she was not satisfied that there was any such risk demonstrated on the material placed before her.
18. Here, in addition to the material that was before her Honour, Mr Goodridge, counsel for the plaintiff, points to evidence demonstrating that there has been a difficulty in service of the documents on the defendant, that the defendant has not appeared to resist the order, that a conversation has taken place with Mr Firth to the extent which I have earlier quoted, and the fact that a conversation took place between the manager of the establishment where Mr Pollard was living, with Mr Pollard indicating that there was a dispute about the legal costs incurred in respect of the claim against MTAA.
19. None of those matters in my view constitute any evidence at all sufficient to demonstrate that there is any risk, or danger, of disposal of assets in a way which would give rise to an entitlement to a freezing order.
20. Counsel for the plaintiff, as well, pointed to the fact that the defendant had gone on a trip overseas in May. So much may be accepted. It was a short trip, and there is no evidence that the cost of that trip had any impact at all on the sufficiency of the asset position of the defendant which would affect the claim by the plaintiff.
21. It is beyond argument that a freezing order of the kind sought by the plaintiff is not intended to provide a plaintiff or a judgment creditor with security for its judgment in advance of execution: Finn v Carelli [2007] NSWSC 261 at [4]-[5]. There has to be evidence of a kind which suggests that assets are being dissipated or disposed of in order to frustrate a judgment which exists or, as I have said earlier, a claim which has been made or a debt which is due.
22. I am of the same view as Schmidt J was in May 2015, that the evidence does not demonstrate that there is a risk that the defendant will dispose of his assets or diminish their value to an extent that would preclude any judgment which may be given in favour of the plaintiff for its costs from being enforced.
23. A mere dispute with respect to a bill for legal costs is not a basis for an inference of undue disposition of assets of a kind that would give rise to an entitlement to a freezing order.
24. This is a second and entirely sufficient basis for an order dismissing the Summons.
25. In those circumstances, I make an order that the Summons filed on 15 May 2015 be dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 June 2015