Plaintiff/Respondent v Defendants/Applicants

Supreme Court of Victoria|2009-10-21|Before: HARPER J

FREEZING ORDERS - Application to extend freezing orders - Admission by respondent that he has not paid judgment debts - Judgments debts outstanding for an extended period - No satisfactory explanation for failure to pay - Attempted sale of respondent's property by Sheriff pursuant to warrant for sale frustrated by respondent mortgaging the property - Failure to disclose existence of mortgage to applicants - Failure by the respondent fully to disclose assets pursuant to direction of the Court - Application granted.

1 I have before me a number of applications. The first was made on behalf of the defendants in this proceeding. It was instituted by summons issued on 29 September 2009, and seeks a freezing order with ancillary orders. I also have before me an application made by the plaintiff by summons filed on 7 October 2009. This seeks miscellaneous relief. Finally, I must deal with an application, made by the defendants by summons issued on 14 October 2009, to set aside a number of subpoenae filed on 9 October 2009.

2 The freezing order has its origins in an application made to Vickery J on 30 September this year. His Honour then made an interim freezing order returnable in the Practice Court on 16 October. On that date the matter came before me and was thereafter adjourned on subsequent days until today, Wednesday 21 October.

3 The application for an extension of the interim freezing order was accompanied by a very great deal of affidavit material filed on behalf of the defendants/applicants. That material, it has been submitted on behalf of the plaintiff/respondent, has been of such volume that he has been unable in the time available, and given the procedural directions made by me, to be properly tested. I do not accept that submission. The affidavit material is indeed extensive, but that was necessitated (as it seems to me) by the obligation of the applicants to set before the court the full history of the long and convoluted manoeuvrings which have brought the parties to the point at which they now are.

4 The vast majority of the material is uncontentious; and, given that the respondent has exercised his right to respond by affidavit, to give evidence, and to address the court orally in relation to the matters raised in the material, as well as in support of his position, it seems to me that he has had ample opportunity to meet the case which has been put against him.

5 He contests this. And it is true that I have not allowed him unrestricted access to the resources of the Court. I have been acutely aware of the necessity not only to give effect to the right to be heard, but also to ensure that judicial time is not wasted. In restricting the respondent's ability to make submissions and give evidence, I have been guided by the then Chief Justice of Australia, Gleeson CJ, who in the course of delivering the Martin Kriewaldt Memorial Address in Darwin on 12 August 2008 said:

I referred earlier [in this address] to the formal rationing of the time of the High Court through the system of special leave applications, which rests on a legislative foundation. There is an equally effective, and no less frank, but informal, rationing of the time of the High Court. It has been one of my responsibilities, and I have never had any complaint about it. The court allocates to each appeal a certain time - rarely more than a day - for argument. The parties normally agree on a division of that time between themselves. By comparison with the Supreme Court of Canada or the Supreme Court of the United States, the time we allow is generous, but it is limited, and the parties and their lawyers accept that. I do not doubt that in many appeals the lawyers would take several days, if that were permitted. A glance at the reports of argument of cases throughout most of the twentieth century will bear that out. I can understand that trial judges find it much more difficult, without knowing the possible direction of a case, to do the same, especially without the support of a statute. Yet I believe that this kind of rationing of court time, provided it is consistent with a fair hearing, is appropriate, and will become increasingly necessary. Without it, there is an unfair and possibly irrational allocation of scarce judicial resources. Judges do not hesitate to apply time limits to potentially vexatious litigants who waste court time pursuing minor grievances or unmeritorious claims - and rightly so. This is a power that should be exercised more extensively. The principles according to which it may be done, and the kind of legislative backing that may be desirable, could usefully be made the subject of wider consideration by the judiciary and the profession.[1]

6 In my opinion, the respondent is a potentially vexatious litigant. His submissions have been founded on whatever argument he perceives as serving his interests at the moment, without regard for consistency, logic or sound law. In particular, he has sought, time and again, to revisit issues long settled by final judgment. One further example illustrates the point. The respondent contends that he was not given sufficient time to challenge the very large quantity of affidavit material relied upon by the applicants. That material, although substantial, is in the main both uncontroversial and incontrovertible. In the end, the basic facts are stark, and their truth is admitted. The respondent accepts he is indebted to the applicants. He accepts that he has not paid, except in part, a very large number of the many judgment debts which have accrued against him. Some of the judgments upon which those debts are based have been the subject of the respondent's unsuccessful appeals. Others have now passed beyond the point where an appeal can be brought within time or even with any reasonable or likely extension of time.

7 The fact of the respondent's indebtedness to the applicants is therefore undoubted. The fact that that indebtedness, or at least a considerable part of it, has been outstanding for a very long time, and that the respondent has had ample opportunity to meet his obligations, remains uncontentious and incontestable. The fact that he has failed to make any more than part payment of the amount in question falls into the same category.

8 In those circumstances the initial basis for an application for a freezing order is in my opinion made out. I accept that a freezing order is by its nature a drastic remedy. I accept that a court must exercise a high degree of caution before taking a step which will interfere with a party's capacity to deal with his or her assets. I accept that a freezing order is not designed to provide security for an applicant's claim. It is solely directed to preserving assets from being dissipated, and to ensure that the court's processes are not frustrated.

9 I accept too that the applicant bears the onus of satisfying the court that the order should be made or, if made, continued. The applicant also bears the onus of satisfying the court about the amount which should be the subject of the order. Of course, an order can only be made on the basis of admissible evidence, and evidence which supports the contentions of the applicant.

10 I also accept that, before a freezing order is made, the balance of convenience must favour the granting of the order; and that the order must be framed according to the circumstances of the case. That includes the restriction that the order must not unnecessarily tie up the respondent's assets or property.

11 In my opinion each of the principles to which I have just adverted has been made out in this case. There is evidence before me, which I accept - and which it is not possible to contradict - that the respondent has on numerous occasions unsuccessfully sought the aid of the court in support of one or other means of resisting the claims of the applicants. After all these endeavours, he has but one order for costs in his favour. In every other instance when a costs order was made, he was required to pay the costs of the applicants.

12 Consistently with this, in every other but that one instance, whether at initial hearing or on appeal, the respondent has also failed to persuade the court of the merits of the case he sought to put. In addition, the respondent on 27 March 2008 entered into terms of settlement with the applicants, which terms he has not fulfilled. There is a suggestion in the respondent's evidence that he was in some way the subject of undue influence or unconscientious behaviour in the making of those terms; but that suggestion did not surface when, within a week or so of the making of the agreement, the respondent swore an affidavit in which he made no reference at all to any unfairness in the negotiation or expression of the terms of that settlement. I accordingly proceed upon the basis that the settlement was one into which the respondent entered freely, and by which he was bound. Indeed, such a finding is consistent with the findings made by the court when an application was heard by Judd J on 2 June last year, and on appeal from that judge's orders to the Court of Appeal.

13 There is other evidence, put before me by the applicants, of steps taken by the respondent which have frustrated the applicants' attempts to execute upon their judgment debts. In particular, there is evidence, largely if not wholly uncontested, that the applicants issued a warrant for the sale of one of four of the respondent's properties, and that shortly before the sale was to take place the respondent mortgaged the property.

14 That mortgage was in breach of undertakings given by the respondent to the court, unless it were for the sole purpose of enabling him to discharge his indebtedness to the applicants. The respondent says that that was his purpose; but if it was, the outcome was the opposite of that which he intended. The applicants received nothing from him, and the sale set in motion by the sheriff on behalf of the applicants could not take place, because in the meantime the property had been mortgaged

15 The end result was that, by that process, the respondent did not facilitate discharge of his indebtedness. He frustrated that discharge. It may not have been the respondent's intention to have that consequence. But his failure to inform the applicants of his intention to grant the mortgage, let alone his failure to tell them that the mortgage had been granted, was inexcusable. Given these failures, the question whether he intended to frustrate the applicants is an issue which I do not need to decide. The authorities establish that, in these circumstances, the respondent's intention, or the intention of someone in the position of the respondent, is in this respect irrelevant. What is relevant is the effect of what the respondent does. And in this case, it was to frustrate a sale which might have resulted in payment of some or all of the judgment debts which are owing, and which have long been beyond appeal, or further appeal.

16 Given those facts, and the very long period over which or during which the applicants have been waiting to be paid, it seems to me that it is now appropriate for a freezing order to be made. In taking that step, I also take into account the unsatisfactory nature of some of the evidence put forward by the respondent.

17 One example is that, in a succession of affidavits, the plaintiff described himself as unemployed when in fact he is a project engineer who may from time to time be awaiting his next project, but who has not been unemployed for any significant or relevant period. Another is that it was not until he served, out of time, an affidavit as to his assets that it was revealed that he owned not three parcels of land, but four. Shortly before the affidavit of assets was filed, he filed another affidavit in which he referred to three properties, but with no reference to a fourth. It is also, on the evidence, plain that his account of his assets is very different to his bank's - the National Australia Bank's - belief about his asset position.

18 The explanation proffered by the respondent for the discrepancy is, in effect, that the bank filled out the relevant forms itself without any, or any appropriate, discussion with the respondent beforehand. I am not satisfied with that explanation. It does not seem to me to be credible that there should be such a discrepancy between the information held by the bank and the evidence given by the respondent concerning his asset position. In that regard, I refer particularly to the superannuation to which the respondent is entitled. He failed, in his affidavit of assets, to disclose that he had that entitlement.

19 The applicants seek to include, in the amount of assets with which the respondent cannot deal, assets up to the value of $400,000. The respondent contends that that is an amount which does not reflect appropriately the applicants' entitlement.

20 In my opinion, although that amount does include sums which are presently inchoate, in that they have not yet been the subject of a taxation, it also appropriately reflects costs which the applicants can reasonably expect to have taxed in their favour. A freezing order can, of course, be made in respect of a prospective judgment. It follows that it can also be made in respect, as it is here, in part, of prospective orders made following a taxation for costs. In my opinion, the sum of $400,000 does represent a realistic sum to which the applicants are likely to be entitled once the process of taxation has been completed.

21 The respondent's failure to pay amounts undoubtedly due by him to the applicants is egregious. The excuses he has put forward for his failure to pay, or at least some of those excuses, are risible. His desire to procrastinate is unquenchable. His capacity to frustrate legitimate expectations is, and will unless a freezing order is made remain, undiminished.

22 For these reasons, I intend to make, with the minor amendments which I have discussed with the respondent and with counsel, orders in the form of the minutes which have been handed to me. In particular, those amendments apply to paragraph 8, which will refer to Friday 30 April 2010 as the date by which the respondent must file and serve an affidavit setting out the matters the subject of subparagraphs (a) to (j) of that paragraph. Again, in paragraph 10, the respondent will have the right to pay for his reasonable legal expenses of and incidental to these proceedings.

23 The respondent's summons of 7 October must I think be dismissed. I have been through that summons with the respondent in detail, taking every paragraph in turn, and I have expressed my reasons for coming to the conclusion that those paragraphs cannot be sustained. Those reasons are recorded in the transcript. I briefly recount them here.

24 The first head of relief is the lifting of a stay granted by Judd J on 2 June 2008. His Honour was then of the view, which the Court of Appeal subsequently endorsed, that an appeal which the respondent had instituted from a damages assessment of Daly AsJ should be stayed. Nothing has changed since which would give me jurisdiction to deal with a matter already dealt with by another member of this Court and upheld on appeal.

25 The respondent next seeks what he describes as a "slip rule" amendment to the orders Judd J made on 2 June 2008. But the amendment is only warranted if his Honour failed in one of the orders then made to say what his Honour meant. Even if the alleged difficulty of construction exists, which the applicants deny, it is not for me to make such an amendment when the primary judge could, were he so minded, make it.

26 The respondent also seeks, by his summons of 7 October, leave to appeal certain orders made by Wood AsJ, and to stay those orders in the meantime. The most recent of them was made on 18 February last year. No explanation, certainly none of any sufficient plausibility or relevance, has been given for the delay in making the current application. Nor am I satisfied that the respondent has an arguable case on appeal. Accordingly, this relief cannot be granted.

27 In my opinion the summons of 7 October 2009 should be dismissed, and the subpoenas filed on 9 October 2009 should (again, for the reasons recorded in the transcript) be set aside.

[1] Reproduced in (2009) 83 ALJ 601 at 606

At a glance

Court

Decision date

Before

Source

Judgment (31 paragraphs)

Parties