Plaintiff v Defendant

2 By summons dated 2 April 2019 and filed 3 April 2019 the plaintiff sought an interim freezing order against the defendant (Freezing Order Application) in connection with debt claims made by the plaintiff against the defendant that are the subject of the allegations in the statement of claim indorsed on the writ filed on 3 April 2019. This summons was supported by the following affidavits:

(a) affidavit of the plaintiff, sworn 2 April 2019 (plaintiff's first affidavit);

(b) affidavits of the plaintiff's solicitor, Mr Michael Jonathan Kenny (Mr Kenny), sworn 3 April 2019 (Mr Kenny's first affidavit); 9 April 2019 (Mr Kenny's second affidavit); and 10 April 2019 (Mr Kenny's third affidavit); and

(c) affidavit of the plaintiff's solicitor, Mr Anish Wilson (Mr Wilson), sworn 9 April 2019 (Mr Wilson's first affidavit).

3 The Freezing Order Application was brought on urgently, on notice to the defendant, and was heard by Justice Robson on 11 April 2019. The plaintiff was represented by counsel and the defendant appeared in person.

4 In the plaintiff's first affidavit he deposed to a series of loans he said he made to the defendant, and the substantial amount of interest said to have accrued. Briefly, the plaintiff's evidence was to the effect that he had made loans to the defendant who, in turn, said he was on-lending the funds to property developers known to the defendant. The plaintiff's evidence was that he had advanced a total of $1,170,000 by way of loans to the defendant and that only a small amount has been repaid. The total amount said to be due and payable is $2,230,700, calculated as follows:

plus $413,800 - interest owed from loans 2, 3, 4, 7, 8 and 9

The plaintiff's first affidavit also referred to, among other things, numerous communications with the defendant in relation to various matters, including: unsuccessful attempts by the plaintiff to obtain repayment; the loans; requests for information; service of the writ and statement of claim; the Freezing Order Application; and the date for the hearing of the Freezing Order Application (being 11 April 2019).

5 In paragraph 19 of Mr Kenny's second affidavit he set out the terms of an email received from the defendant at 12:23pm on 8 April 2019 which, in part, read as follows:

Hi Jonathan,

I read the whole papers you served me regarding your client and I am not here in any way to defend what I did. It was wrong and I am totally at fault. All the information that is in those papers were all lies and stories I made up to buy myself time to try and figure out a solution to the problem I had created for myself due to my compulsive gambling. ...

... I am seeking a chance to be able to return all the moneys I took from him. Like I have said before the only chance I have to do this is if I am able to continue selling real estate.

... I have thought about everything a lot and am very remorseful and would like to sit down and work a way out of this whereby I can pay your client back.

I have no assets at all and my only way is to keep doing what I am doing and work myself out of this.

...

I will day [sic] it again. I am here to rectify this. Should I be made to pay my time through the court system I will have no way to repay your client back.

Please let me know if your client would like to meet to discuss further.[1]

The affidavit also referred to arrangements for the defendant to attend Mr Kenny's office on 10 April 2019 to provide some bank statements.

6 Mr Kenny referred to the meeting with the defendant on 10 April 2019 in his third affidavit. Mr Kenny deposed to the fact that during that meeting the defendant informed him of a number of things, including, in substance, that:

(a) There never were any property developers that borrowed or were to borrow funds from the defendant.

(b) All of the funds received from the plaintiff were used by the defendant to gamble on horse racing.

(c) The defendant had an account with William Hill that he had not used for some time and he also made cash payments with bookies at the racetrack or the TAB but that he did not have an account with the TAB.

(d) In respect of each loan from the plaintiff, the funds were advanced by transfers to the defendant's Commonwealth Bank (CBA) 'Personal Account', which were then transferred by the defendant to a separate account named 'Transfer Trust Account', and then transferred by the defendant back to his 'Personal Account', and from there used for gambling.

(e) The defendant had a gambling problem, which had existed for some years.

(f) The defendant had separated from his wife about three years previously, and that his wife rents a home but he lives from his car.

(g) The balance in the defendant's CBA bank account was close to nothing.

(h) The defendant would provide bank statements for the 'Transfer Trust Account'.

7 Mr Kenny also deposed to the defendant having provided some redacted bank statements for his 'Personal Account', and having observed that the statements showed that various loan funds received by the defendant from the plaintiff into the 'Personal Account' were transferred into the 'Transfer Trust Account',[2] and then transferred back to the 'Personal Account' of the defendant on the same date. Mr Kenny deposed that:

(a) The bank statements showed that during the period 1 January 2017 to 31 December 2018 total credits into the 'Personal Account' were $4,726,246.46 and total debits out of the 'Personal Account' were $4,726,305.52.

(b) The statements showed multiple instances of spending at Crown Casino, restaurants, bars, supermarkets and clothes stores.

(c) If there had been credits into the 'Personal Account' of $4,726,246.46 and only $1,080,000 of unpaid loans from the plaintiff, even if that sum was deposited twice into the 'Personal Account', it meant that $2,566,246.46 constituted deposits into the 'Personal Account' from other sources.

(d) The defendant should explain what was the source of the money and what had become of it.

(e) In paragraphs 96 and 97 of the plaintiff's first affidavit the plaintiff deposed that he had seen a screen shot of the balance in the 'Transfer Trust Account' of $2,109,000 as at 16 April 2018 and a screen shot on 21 June 2018 also showing a balance of the same amount. No amounts of that size were shown to have been transferred out of or back into the 'Personal Account' according to the statements, and 'so if there was $2,109,000 in the "Transfer Trust Account" in April and June 2018, those funds are not accounted for'.

(f) Because he had not seen bank statements for the 'Transfer Trust Account', or bank statements for the 'Personal Account' from 1 January 2019, and because he did not know if there were other accounts, Mr Kenny could not verify the position in relation to the funds.

8 The defendant addressed Justice Robson during the Freezing Order Application hearing on 11 April 2019 and indicated that he would be providing the documents that had been sought in relation to bank statements and that he would be providing information regarding William Hill. In response to Justice Robson stating that what the plaintiff wanted were documents and explanations as to 'where all the money went', the transcript of that hearing (Transcript) records that the defendant said that he understood, and that he was happy to provide statements in full and also the statements for the other accounts and his William Hill betting account so the plaintiff could '... see exactly where it went ...'. The defendant was also informed by Justice Robson about the importance of obtaining legal advice.

9 On that day Justice Robson made a freezing order until 2 May 2019, or further order, and adjourned the Freezing Order Application to 2 May 2019 before the Duty Judge in the Commercial Court. He also ordered that by 4:00pm on 25 April 2019 the defendant file and serve an affidavit in compliance with paragraph 8.1 of the freezing order (April Ancillary Order). Paragraph 8.1 of that order required the defendant, to the best of his ability, to inform the plaintiff in the affidavit of:

(a) all your assets and liabilities in Australia, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of your interest in the assets;

(b) of the whereabouts of the funds received by you as a consequence of the transactions referred to in paragraphs 16, 20, 27, 29, 47, 53, 57 and 61 of the affidavit of Andreas Koulouris sworn on 2 April 2019 (the Funds) including bank statements or any other documents in the possession, power or control of the defendants which evidence the deposit or receipt of the Funds;

(c) of how the Funds have been paid, applied or dealt with up to the date of this Order, including the name and address of each recipient, the amount or amounts paid to each recipient and the date or dates upon which the payments were made;

(d) of your current residential address.

10 On 30 April 2019, the plaintiff filed a further affidavit of Mr Wilson sworn that day (Mr Wilson's second affidavit) exhibiting an email sent to the defendant in which it was stated, among other things, that the defendant had not complied with the April Ancillary Order because he had failed to file and serve an affidavit and that this matter would be brought to the attention of the Court on 2 May 2019. The affidavit also exhibited an email response from the defendant which referred to the defendant proposing to seek legal advice, having been busy with Easter and Anzac Day, and stating that he did not fully understand the orders and what he needed to do so that he did not even realise he had to file the affidavit before 25 April 2019. The email stated that it was the defendant's intention to comply and do everything he could '... to pay the debt back ...' and that he was '... sorry for this latest oversight ...' but would '... attend to it immediately ...'. He also stated he would be in touch once he had sought legal advice over the '... next day or so ...'.

11 In a further affidavit of Mr Wilson sworn 1 May 2019 (Mr Wilson's third affidavit),[3] Mr Wilson deposed to, among other things, having received an email from the defendant at 7:30am on 1 May 2019, also sent to the Court, which stated:

Just informing all parties I will not be able to attend court this Thursday due to personal reasons. ... In the interim I have been seeking legal advice. I will be dropping in all bank statements as per the request of Anish Wilson to the offices of Anish and Jonathan Kenny early next week and will be fulfilling the obligations of the affidavit I have been instructed to provide next week as well. As I haven't had any legal representation to date, I have been unaware of the processes I have needed to take and not being stable menatally [sic] has caused a delay to all processes. My apologies.

12 Upon the further return of the Freezing Order Application on the following day, 2 May 2019, the matter came before me as Duty Judge in the Commercial Court. The plaintiff was represented by counsel and the defendant did not appear and was not represented. At that hearing the plaintiff made an oral application without notice for the Court to issue a warrant for the arrest of the defendant as a result of his alleged failure to file and serve an affidavit in compliance with the April Ancillary Order, and sought an order extending the period of the freezing order until further order. The application for the issue of a warrant was refused. Orders were made extending the period of the freezing order to 4:00pm on 31 May 2019 or further order, adjourning the further hearing of the plaintiff's application until 31 May 2019, listing the matter for directions, and directing that service of the order on the defendant could be effected through his email address, in terms consistent with an order made by Justice Robson on 11 April 2019.

13 As mentioned, the Examination Application was issued on 28 May 2019, being shortly before the directions hearing scheduled for 31 May 2019. It was supported by a further affidavit of the plaintiff (the plaintiff's second affidavit) and a further affidavit of Mr Wilson (Mr Wilson's fourth affidavit), each sworn 28 May 2019. The matters deposed to in these additional affidavits included the following:

(a) An email being sent by the defendant to the Court, copied to the plaintiff's solicitors, referring to his admission to hospital on the night of Sunday 5 May 2019 and the defendant being 'on oxygen'. The email stated that it was to inform those concerned of his situation and that because he was bedridden he could not do anything. It stated that the defendant would be attending to what he needed to do regarding the case once he was given the all clear and was able to breathe on his own and back to mobility, and that he would let people know when this would occur, but the doctors were saying that he would be in hospital for a further two or three days.

(b) An exchange of emails between the plaintiff's solicitor and the defendant seeking to confirm which hospital he was in, which was confirmed as being the Alfred Hospital.

(c) An SMS message being sent to the plaintiff by the defendant referring to the defendant being in hospital and attaching photographs confirming the position.

(d) An email sent to Mr Wilson by the defendant on 16 May 2019 stating that the defendant had been out of hospital since Friday 10 May 2019 and that he had been told by the doctors that it would take him '... 2-3 weeks to get back to normal ...'. The email stated that he proposed to come into the plaintiff's solicitors' offices '... to drop off all documentation asked for on Wednesday of next week ...', being 22 May 2019. The email asked Mr Wilson for a time that suited, and Mr Wilson responded on the same day confirming the date and providing three alternative times.

(e) An email sent by the defendant to Mr Wilson on 21 May 2019 stating that he was now having tests on 22 May 2019 and that he needed to reschedule the meeting, and also referring to having left a message on Friday with the solicitor about that topic. The defendant stated that he would let the plaintiff's solicitors know by the latest on Thursday 23 May 2019 if he could meet on Friday, and otherwise requested that the plaintiff's solicitors let him know what day suited the following week so that he could '... come and drop everything off ...'.

(f) Mr Wilson making enquiries regarding the defendant's reference to having left a message on 17 May 2019, and his belief that no message was left.

(g) Mr Wilson's email sent to the Court late on 22 May 2019 seeking to have the matter urgently listed to apply for an order that the defendant attend court to be examined '... regarding the freezing orders made in this proceeding ...'.

(h) An email from the defendant to Mr Wilson, copied to the Court, stating that Mr Wilson's email failed to mention that: contact had been made by phone, a time to meet had been set, and the defendant had sent a further email. Reference was also made to the defendant's hospital visit being '... nearly fatal ...', and the defendant being unable to attend to matters that he had previously said he would attend to, and making further complaints regarding the content of Mr Wilson's email to the Court.

(i) Mr Wilson not having had any telephone or face to face conversations with the defendant since 26 March 2019, his belief that the defendant did not leave a message for him on Friday 17 May 2019, and Mr Wilson not receiving a response to his email of 16 May 2019 (by which Mr Wilson had proposed various times for a meeting) until he received the defendant's email of 21 May 2019.

(j) The plaintiff attending an address in Bentleigh East where a person informed him that she and the defendant had been separated for about three years, and that the defendant no longer lived at that address.

(k) An SMS message sent by the defendant to the plaintiff on 24 May 2019 referring to the plaintiff's conversation with the person in Bentleigh East and seeking to have a coffee the following Monday 27 May 2019. The message referred to having a plan and wanting to speak about it, with the defendant stating '... I truly want to pay you this money back. All I am asking is for a coffee. Can we do that?'.

(l) The plaintiff not responding to the text message, and the receipt of a further similar text message on 27 May 2019 that the plaintiff did not respond to.

14 On 29 May 2019 at 4:02pm the defendant sent an email to the plaintiff's solicitors, copied to the Court, in the following terms:

Dear all those involved,

I have received all latest documentation and correspondence regarding this matter.

I wish to advise that I ask for all matters be (sic) postponed until after I have had my meeting with my legal representatives that I have set an appointment with for Tuesday 4th June at 1pm.

I was in the process of seeking Legal Aid since I was released from hospital and have been informed I am ineligible for this and consequently have spoken to The Law Institute of Victoria where they have given me referrals to law firms I can seek to use. I have since made an appointment with AIF Lucas & Co and have set an appointment to see the principal Arthur Lucas.

I wish for all matters to be postponed until after this meeting as I have attended court without any representation in the past and I have not understood the ramifications before [sic] me and have not understood what my obligations were with respect to emails that were sent out before and after that court hearing. I didn't understand the documents and my obligations with respect to them.

I am afraid I may have implicated myself through sheer naiveness and will not be undertaking any further action without a legal representative.

In respect to the latest information that has been received by the court regarding the plaintiffs (sic) observations and meetings before and after my hospital stay, I will be submitting my own documents with regards to abusive messages received and facts stated that aren't actually true.

With this in mind, I apologise for my conduct with respect to the court system up until now but it has truly come about from my lack of understanding of how the system works and my naiveness to the entire situation. I have stated all along I am willing to sit down with the plaintiff and his lawyers to discuss an amicable resolution to all this but I have been left with no choice to appoint my legal representation and take this through the court system as upon their advice once I meet with them.

Again, I state that I am happy to sit down and work out a resolution to all this but shall leave that to the plaintiff and his lawyers.

Thankyou and I will have my lawyer make contact after I meet with him on Tuesday.

Niclas Haidaris

15 On 30 May 2019 Mr Kenny swore a further affidavit (Mr Kenny's fourth affidavit) exhibiting an email sent to the defendant that day which referred to the directions hearing that was to occur the following day, Friday 31 May 2019. Mr Kenny referred to the obligations under the Civil Procedure Act 2010 requiring parties to cooperate, and asked if the defendant would be attending the directions hearing and what orders he would be seeking. Mr Kenny also informed the defendant that the plaintiff was proposing to seek an order that the defendant file a defence within 30 days.

16 The defendant sent an email in response at 6:53pm that evening to Mr Wilson, copied to the Court. That email read as follows:

Thank you for your email. After careful consideration and the fact that I am unsure of procedures and my obligations as I am without legal representation until my meeting on Tuesday, I hereby advise I will not be attending the hearing tomorrow.

After my meeting on Tuesday I will consider all options put before me and will advise promptly of my decision as to which way I will be proceeding.

I am not comfortable attending any further court hearings on my own as I feel my actions could be (sic) implicate me without my knowledge.

I hereby advise I will be sending out correspondence after Tuesday with my meeting with a legal representative.

Thank you.

Niclas Haidaris

17 The directions hearing and the further return of the Freezing Order Application came before me on Friday 31 May 2019. The plaintiff was represented by counsel and there was no appearance for the defendant. On that occasion the plaintiff by his counsel provided a further undertaking and, having regard to the evidence, the content of the defendant's email of 30 May 2019, and the fact that legal advice was proposed to be obtained by the defendant two business days later, orders were made:

(a) extending the freezing order to 11 June 2019, or further order;

(b) adjourning the further hearing of the Freezing Order Application to 10:30am on 11 June 2019 and listing the matter for directions more generally;

(c) adjourning the hearing of the Examination Application from 5 June 2019 (its original return date) to 10:30am on 11 June 2019;

(d) making some procedural directions in relation to the filing and service of any further affidavit material and an outline of submissions in support of the Examination Application;

(e) directing that service of a copy of the order and certain documents referred to in it could be effected by email transmission to the defendant; and

(f) reserving costs and liberty to apply.

18 On Saturday 1 June 2019 at 5:09pm the defendant sent an email to the Court, copied to the plaintiff's solicitors. In that email he made statements regarding the plaintiff having visited his female business colleague at a time that he was present. He made statements in the email regarding what he said was a strongly worded verbal threat made to him by the plaintiff, and he said that he felt '... threatened and unsafe ...'. He said further that he would be '... seeking legal advice around this at [his] appointment with [his] legal representatives as well as other things ...'. He referred again to his messages regarding his willingness to sit down with the plaintiff and his lawyers to discuss a plan and requested that the plaintiff's lawyers 'refrain' the plaintiff from directly approaching family, friends or colleagues.

19 On 4 June 2019, the plaintiff filed an outline of submissions in support of the Examination Application.

20 On 7 June 2019, the plaintiff filed an affidavit sworn that day (plaintiff's third affidavit). In that affidavit the plaintiff responded to the statements made in the defendant's email sent to the Court at 5:09pm on 1 June 2019 and, among other things, denied that he did or said anything to make any person feel intimidated, scared, threatened or unsafe, and denied specific allegations made by the defendant in his email regarding the threat said to have been made by the plaintiff. He also gave an account of the conversation he had on 1 June 2019 with a co-director of the defendant in the real estate company they were involved in. In substance, the evidence was to the effect that when the plaintiff visited the co-director, at a residential address, he heard the defendant's voice whilst at the front door and, because he did not wish to speak to the defendant, he left the premises. He said that by the time he got to the car the defendant had come outside and was yelling out to him, but he could not 'make out' what was being said. He said that whilst he was driving he received calls and voicemails from the defendant, which he did not answer, and that he also received various SMS messages, which were exhibited. Among other things, they reveal a high level of acrimony and tension between the parties.

21 On the public holiday of Monday 10 June 2019, at 6:36pm, the defendant sent an email to the Court in relation to the hearing of the Examination Application scheduled for the following day.[4] In that email the defendant stated that: it was his intention to seek an adjournment at the hearing; he had an introductory meeting with Mr Arthur Lucas (Mr Lucas) who he was looking to appoint as his lawyer moving forward; he had a free half-hour meeting with Mr Lucas last week and spoke to him earlier on Monday and would be seeing him after the hearing; because he had not had a chance to go through all of the material with Mr Lucas and he would be seeking to adjourn the hearing until he was able to do this; and that he had concerns about the content of the affidavits filed on behalf of the plaintiffs and he would be filing his own submissions and declarations once he presented all the material and evidence to his appointed lawyer.

22 The plaintiff relied upon a written outline of submissions filed 4 June 2019 which it supplemented orally at the hearing on 11 June 2019. As had occurred on a previous occasion in submissions to the Court, in the opening parts of the written outline the plaintiff made reference to the orders of Justice Robson and, in particular, the April Ancillary Order, and emphasised the fact that the freezing order made on 11 April 2019 '... had endorsed [sic], a Penal Notice in clear and precise and terms as to the consequences of non-compliance.' In the outline of submissions the plaintiff also submitted that:

(a) The defendant had failed to comply and was in breach of paragraph 3 of Justice Robson's order and paragraph 8.2 of the interim freezing order[5] and that the defendant's persistent failure to comply with the order amounted to a serious abuse and frustration of the court process.

(b) Orders of the Court '... must be obeyed ...' and were the '... cornerstone ...' of the administration of justice and that there could be '... no separate rule for self-represented litigants who approbate and reprobate when it suits their purpose ...'.

(c) The circumstances were not dissimilar to those identified in Patterson v Khalsa (No.4).[6] It was submitted that in that case Justice Garling made a series of orders against Ms Khalsa with respect to the freezing of her assets and the provision of information and that because she did not provide the information '... His Honour at the request of the plaintiff ordered that Ms Khalsa attend court on a specified date to be examined on oath with respect to compliance with the freezing order and other ancillary and related issues.' The plaintiff submitted that the Court should '... adopt the same approach in this case as was taken by Garling J ...'.

(d) The object and purpose of the disclosure order was to render a freezing order effective and that to date the freezing order first made on 11 April 2019 was ineffective.

(e) The freezing order was not made lightly and that it was to ensure that there was not an abuse of the court's process and to prevent a stultification of the administration of justice by the removal of assets from the plaintiff's reach, and to maintain the status quo.

(f) The case did not involve an instance where there were concerns about the sufficiency of the affidavit because there was no affidavit. Further, it was submitted that absent an order in the terms sought there was nothing to suggest that there ever would be any sworn evidence about the defendant's assets and their location, or the matters referred to in paragraph 8.1(c) of the freezing order said to have been added at Justice Robson's direction to the draft form of order that had been submitted to the Court.

(g) There were cases involving a court ordering cross-examination where the deponent had disclosed assets in affidavits in a piecemeal, late, untruthful and manifestly incomplete basis, but in the present case the need for an order for cross-examination was even stronger given that no affidavit had been provided.

(h) The Court ought not to have any concern about the purpose of the order providing the plaintiff with some sort of forensic advantage, and that the plaintiff had a proper claim on foot with the defendant having made admissions in relation to the plaintiff's claims, including before Justice Robson.

(i) The defendant's actual conduct stood in contrast to that which was conveyed by the defendant to Justice Robson on 11 April 2019 and showed that the defendant had '... not cooperated at all, and has breached orders and delayed and frustrated the processes of the court.'

(j) The orders should be made to ensure the court's processes will not continue to be frustrated and abused and that absent the order being made the purpose of the original order would be defeated, what were presently unknown facts and matters that would have been exposed by the provision of an affidavit will remain concealed from both the Court and the plaintiff, and the plaintiff will suffer further prejudice as the plaintiff is presently shut out from being able to determine if he has a tracing claim and against whom such a claim might be made.

23 Many of these points were addressed and emphasised in the plaintiff's oral submissions, including the allegations of breach, non-compliance, and the terms of the penal notice. Submissions were also made in relation to what were said to be intentional 'delaying tactics' and the Civil Procedure Act 2010 (Vic), although there was no application before the Court under that Act.

24 The defendant appeared in person and opposed the application.[7] He referred to his email sent to the Court on 10 June 2019 and said that he was present because he wanted to co-operate. He stated that he did not understand all the documents and what was required of him and that he would be seeing his lawyer later in the afternoon or the following day.[8] He said that he had not been trying to delay and wanted to comply and that was why he was seeking legal advice to have things explained to him. He said that he had no problem giving a statutory declaration and that if he had breached any orders he did not do so intentionally. He also said that he had no difficulty with the freezing order being extended until trial or further order.[9]

25 Rule 37A.01 defines 'freezing order' as having the meaning given by r 37A.02(1) and 'ancillary order' as having the meaning given by r 37A.03(1).

26 Rule 37A.02(1)-(4)[10] provides as follows:

(1) The Court may make an order (a freezing order), upon or without notice to the respondent, 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.

(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.

(3) A freezing order may be in Form 37AA.

(4) In making a freezing order or an ancillary order, the Court shall have regard to the practice note concerning freezing orders.

27 Rule 37A.03 is headed 'Ancillary order' and provides as follows:

(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 paragraph (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.

28 The principles to be applied in determining whether a freezing order ought to be made were conveniently summarised by Justice J Forrest in Zhen v Mo[11] as follows:

1. First, that a freezing order, by its very nature, is a drastic remedy and 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.[12]
2. Second, the order is not designed to provide security for the applicant's claim.[13] It is solely directed to preserving assets from being dissipated, thereby frustrating the court process.[14]
3. Third, the applicant bears the onus both in satisfying the Court that the order should be continued and in satisfying the Court as to the amount which is to be the subject of the order.
4. Fourth, that an order can only be made on the basis of admissible evidence which supports the contentions made by the party seeking the order. Speculation and guesswork is no substitute for either the facts or inferences properly drawn from proved facts.[15]
5. Fifth, that before such an order can be made it is necessary that the applicant establish -

(a) an arguable case against the defendant[16]; and

(b) that there is a danger that the prospective judgment will be wholly or partly unsatisfied as a result of the defendant's actions in either removing the assets or disposing or dealing with them so as to diminish their value.[17]

1. Sixth, the balance of convenience must favour the granting of the freezing order.[18]
2. Seventh, that there is no set process determining the exact nature of an order. The order will be framed according to the circumstances of the case.[19]
3. Eighth, the applicant must establish with some precision the value of prospective judgment. The order should not unnecessarily tie up a party's assets and property.[20]
4. Finally, there may be discretionary considerations which militate against the granting of a freezing order, such as delay in bringing the application on before the court or a lack of candour in the materials placed before the court.[21]

29 In Distinctive FX Pty Ltd v Wright,[22] Justice Elliott added that the evidence relied on by a plaintiff in seeking to establish an arguable case against a defendant may also be relied upon to demonstrate that there is a danger a prospective judgment will be wholly or partially unsatisfied as a result of the removal, disposal or diminishing of assets. His Honour also observed that where the allegations made against a defendant contain allegations of serious dishonesty, evidence of that itself may satisfy the Court that the requisite danger exists.[23]

30 With respect to ancillary orders, Justice J Forrest observed as follows in Deputy Commissioner of Taxation v AES Services (Aust) Pty Ltd (No 2):[24]

1. It is now well settled that a Court has the power to make ancillary disclosure orders in conjunction with the imposition of freezing orders.[25]
2. The Court has the power to make orders that will achieve the objective of the freezing order. In Hospital Products Ltd v Ballabil Holdings Pty Ltd, Rogers J said:

...Mareva injunctions are granted to preclude the disposal of assets designed to render a defendant judgment proof. An affidavit of discovery of assets may be ordered in every case where the information in such affidavit will further the court's purpose in defeating such a stratagem... The object must remain throughout to prevent disposal of assets in furtherance of the illegitimate aim of making oneself judgment proof and of stultifying the order of the court. Whatever needs to be done to achieve that objective, the court has power to order as part of its inherent jurisdiction.[26] (Emphasis added.)

1. In Bax Global(Australia) Pty Ltd v Evans,[27] Austin J said:

Since the source of the jurisdiction to make Mareva orders is the Court's inherent power to prevent abuse of its processes and stultification of the administration of justice by the removal of assets from the plaintiff's reach, the Court must also have the power to order disclosure of the nature and location of particular assets or assets of a class so that the Mareva relief is effective and not oppressive. As Robert Goff J pointed out in A v C (at 351), if the plaintiff does not know the number and location of (say) the defendant's bank accounts, a Mareva order in respect of bank accounts generally could be oppressive both to the defendant and to the bankers who are required to act in accordance with it, especially where there is more than one account or several defendants. Without information about the nature and location of the defendant's assets, the plaintiff may be unable to make the risk assessment which is necessary in order to give the undertaking as to damages, or if the undertaking is given, it may lead to an unexpected exposure. Robert Goff J concluded, as do I, that considerations such as these point to the conclusion that in the special cases where the court decides to make Mareva orders, it may make such disclosure orders as are necessary to ensure that the Mareva jurisdiction is properly and effectively exercised.

1. It follows that any disclosure order should be made for the purpose of rendering the freezing order effective. In Turner v Universal Home Loans,[28] for example, Austin J found that it was inappropriate for the plaintiffs to seek an affidavit of assets and income, when it was plain that the purpose of requiring the affidavit would be related to the allegation of breach of the asset preservation orders, rather than to make the asset preservation orders effective.[29] His Honour concluded that such disclosure would go "outside the jurisdictional basis for ancillary disclosure orders".[30]
2. In Universal Music Australia Pty Ltd v Sharman License Holdings Ltd,[31] Moore J said:

Ancillary orders can be made to make the Mareva order more efficacious. One such order involves directing the party bound by the Mareva order to file an affidavit disclosing assets on which the Mareva order operates: see generally the judgment of Conti J in Kuan Han Pty Ltd v Oceanview Group Holdings Pty Ltd [2003] FCA 1063 at [45] and following. The reasons why such an affidavit can render the Mareva order more efficacious are helpfully described by Peter Biscoe QC in Mareva and Anton Pillar Orders: Freezing and Search Orders, LexisNexis Butterworths, Sydney, 2005, at [3.3]:

There are several reasons why an assets disclosure order is important to the efficacy the other freezing order. First, disclosure of the assets upon which the freezing order operates makes it more difficult for a respondent surreptitiously to disobey the freezing order. Secondly, disclosure identifies third parties such as banks who have custody of the assets and enables notice of the order to be given to them so as to bind them to the order, for third parties will be guilty of contempt of court if they knowingly assist a respondent to breach the order. Thirdly, disclosure may enable the freezing order to be framed by reference to specific assets rather than as a maximum some [sic] order, thereby minimising oppression to the respondent, and unnecessary exposure of the applicant to risk under its undertaking as to damages. Fourthly, disclosure assists an applicant to make a rational decision whether to continue its undertaking as to damages.[32]

1. Courts have been careful to ensure that disclosure does not exceed what is necessary to make the freezing order effective. In Iraqi Ministry of Defence v Arcepey Shipping Co SA,[33] for example, Goff J said that the Mareva jurisdiction should not "improve the position of claimants". Rather, it should prevent the injustice of a defendant removing his assets from the jurisdiction which may have otherwise been available to satisfy a judgment. In Australia and New Zealand Banking Group Ltd v Bank of Melbourne Ltd,[34] Ashley J said:

It is no doubt very important that the intention of a Mareva injunction be not frustrated by a concealment or an inadequate disclosure of assets. As against that, a defendant is not to be treated as a "debtor in advance"; and the court should not sanction what appears to be a fishing expedition.

1. In keeping with these principles, in Macquarie Bank v Riley Street Nominees,[35] Campbell J ordered that the contents of an asset disclosure affidavit should not be disclosed except to the applicant's legal advisers His Honour's intent being to ensure that information went no further than was needed for the purpose of the freezing order.[36]
2. There are cases in which an ancillary order may be utilised, for example where there is a prima facie case of deprivation of property, to trace funds "with a view to recovering them".[37] Indeed, in this case, when making my initial orders, I concluded:[38]

Here, there is a strong prima facie case that ATO has been deprived of many millions of dollars by the conduct of AES and the directors. It is appropriate that orders be made in relation to both the directors and, as subsequently considered, the third parties, so that AES's funds can be traced and, if it becomes necessary, recovered.

31 Justice J Forrest also made observations in the same case regarding the importance of caution given the nature of such ancillary orders, and stated that he was not intending to convey '... that there could be an open ended inquiry forcing the third parties to provide information as to the ultimate source of the funds. That is not the purpose of the ancillary orders as the authorities I have referred to demonstrate'.[39]

32 Having considered the evidence, the submissions, and applicable principles and observations, I do not propose to make an order of the kind sought in the Examination Application, being an order that, pursuant to r 37A.03(1) and (2)(a) of the Rules, the defendant be required to attend the Court on a date to be fixed to be examined by the plaintiff before the Court.

33 It is apparent from the plaintiff's written and oral submissions that part of the purpose of the proposed order that the defendant attend for examination is to allow the defendant to this civil proceeding to be examined before the Court with respect to alleged breaches of, or non-compliance with, the April Ancillary Order and related issues. This was underscored in various parts of the written and oral submissions, including: the emphasis on the freezing order having indorsed on it '... [a] penal notice in clear and precise terms as to the consequences of non-compliance'; statements regarding non-compliance and the defendant being 'in breach' of the order; the 'failure to comply with the order' amounting to a 'serious abuse' of the court process; the emphasis on the importance of court orders being 'obeyed'; the Court being 'urged' to adopt the same approach as Justice Garling in Patterson v Khalsa (No.4), where it was said an examination order was made compelling the defendant to be examined on oath with respect to compliance with the freezing order and other ancillary and related issues; the statement that, in this regard, there '... can be no separate rule for self-represented litigants who approbate and reprobate when it suits their purpose'; the breadth of the order as reflected in the proposed form of order handed up to the Court; and not seeking a limited and confined order directed only to the information the subject of the April Ancillary Order.[40]

34 The importance of compliance with court orders is, of course, accepted and difficult to overstate. However, important and appropriate processes and mechanisms within the court system exist that facilitate the consideration and addressing of issues that may arise from time to time regarding (relevantly) matters such as alleged breaches of, or non-compliance with, court orders, enforcement of orders and judgments, or allegations of contempt.

35 The application before the Court is for an ancillary order pursuant to r 37A.03 and, as the terms of the rule itself and the observations regarding ancillary orders referred to above reinforce, it is not the function or purpose of orders ancillary to freezing orders to provide a substitute or parallel mechanism or process for addressing or dealing with alleged or established past breaches of court orders or alleged contempt.[41] Issues between parties in civil litigation regarding matters such as alleged breaches of court orders, alleged contempt, sanction, or enforcement of judgments and orders, can and are dealt with by the Court in various ways that preserve and well serve the integrity of its processes, as is apparent, for example, from Order 75 of the Rules. I add that in the context of an application for what was submitted to be an ancillary order, the plaintiff's emphasis upon the penal notice and consequences of non-compliance with the order was not well placed. Notices of the kind indorsed on the freezing order are included for particular purposes as is apparent from, for example, r 66.10(3).

36 Where the purpose or part of the purpose of an order compelling a party to attend court to be examined before a judge can be seen to be to provide the opposing party with an opportunity to cross-examine the proposed examinee regarding what are alleged to be serious breaches or instances of non-compliance with existing court orders, as is said to be the case here, in my view such an order cannot correctly be characterised as an order ancillary to a freezing order, whether under r 37A.03 or the statutory or inherent jurisdiction of the Court.[42]

37 Each case must depend on the particular facts and circumstances involved, but having regard to the circumstances of this case as revealed by the evidence and the submissions, in my view this aspect alone is sufficient reason for refusing the application. Whilst circumstances might arise where it may be appropriate to make a specific, directed and confined ancillary order for examination regarding particular identified matters in support of a freezing order, that is not the kind of order that is sought or reflected in the submissions in this case.

38 That is not to suggest that the plaintiff's concern regarding the absence of the information the subject of the April Ancillary Order is misplaced. Although such concern is understandable and is a serious matter, it does not in my view give rise to a sound basis for ordering, in a more summary way pursuant to the Court's power to make an ancillary order, that the defendant attend the Court to be examined by the plaintiff with respect to additional matters, such as the alleged breaches of, or non-compliance with, the April Ancillary Order. If the plaintiff desires to invoke the Court's processes regarding the alleged failure of the defendant to 'obey' or comply with the April Ancillary Order, there are established and appropriate procedures available, the existence and operation of which are also central to the integrity of the court process.

39 In any event, even if an order of the kind sought in the circumstances of this case could correctly be characterised as an ancillary order to a freezing order, in the particular circumstances before me there are a number of matters that, notwithstanding the content of the evidence relied upon by the plaintiff, tip the balance against exercising my discretion in favour of the making of such an order. Briefly, they are as follows.

40 First, there are the matters to which I have referred above regarding part of the purpose of the examination order.

41 Second, the evidence reveals that the circumstances in the proceeding involve allegations of serious dishonesty, and this reinforces the importance of appropriately recognising the nature of the orders sought and the importance of preserving the integrity of other relevant aspects of the court's processes.

42 Third, the April Ancillary Order has been made and there are other avenues open to the plaintiff in relation to what the plaintiff contends are very serious breaches or incidents of non-compliance.

43 Fourth, contrary to the submissions of the plaintiff, the circumstances in this case are in fact 'dissimilar' to the circumstances in Patterson v Khalsa (No.4),[43] and in my view materially so. Brief further research revealed that the facts in that case involved an order for examination of a defendant after judgment had been given against the defendant in the proceeding, and that it was not an application for an ancillary order to a freezing order made in analogous circumstances to the application before me.[44] There were also other points of difference, including the defendant in that proceeding seeking to depart the country whilst taking a substantial sum of money with her.

44 Fifth, having regard to the observations made above regarding part of the purpose of the proposed examination, and noting the acrimony between the parties revealed in the evidence, it is difficult fully to accept the submission that the Court should not have any concern about the purpose of the order providing the plaintiff with some sort of forensic or other advantage.

45 Sixth, if the plaintiff is correct in characterising the alleged breaches of the order as having the gravity and seriousness referred to in his submissions, having regard to the matters I have referred to above, this militates against, rather than in favour of, making an order for the examination of the defendant before the Court in the manner now sought.

46 Seventh, there is some evidence before the Court regarding the defendant suffering from some physical and mental health challenges, and not fully understanding what is required of him, that has been said to have contributed, at least in part, to his conduct to date in connection with the April Ancillary Order. He has also been unrepresented.

47 Finally, the defendant has appeared before the Court on the application and informed the Court that he wishes to co-operate and is obtaining further legal advice because of his lack of understanding, and that this is to occur within a very short time. He has also stated that he is willing to provide a 'statutory declaration'.

48 As I have said, even if the order sought in the present circumstances could be correctly characterised as an order ancillary to a freezing order, having regard to the matters referred to above, I do not propose to make an order requiring the defendant to attend court to enable him to be examined by the plaintiff before the Court.

49 With respect to the plaintiff's application to extend the freezing order until trial or further order, having regard to the evidence, the applicable principles referred to above, the previous orders made, and the fact that the order is not opposed by the defendant, subject to a further appropriate undertaking being provided by the plaintiff, it is in my view appropriate to extend the freezing order until trial or further order, but with liberty to apply being expressly reserved.

50 Subject to hearing from the parties regarding the precise form of orders and in relation to costs, and the plaintiff providing an acceptable undertaking in connection with the proposed freezing orders, it is proposed that orders be made to the following effect:

(a) The freezing order referred to in paragraph 1 of the orders of Justice Connock made on 2 May 2019 be extended until trial, or further order.

(b) The plaintiff's application by summons filed on 28 May 2019 be dismissed.

(c) By 4:00pm on 2 July 2019, the defendant file and serve his defence.

(d) To the extent necessary, the defendant has leave pursuant to r 8.02 of the Rules to file and serve his defence.

(e) The proceeding is listed for further directions at 10am on 9 August 2019 before Justice Connock.

(f) Service upon the defendant of a copy of this order may be effected by email transmission to the defendant's email address.

(g) There is liberty to apply.

[1] This email was exhibit 'MJK-16' to Mr Kenny's second affidavit.

[2] With the reference 'Transfer Trust Acc'.

[3] Mr Wilson's third affidavit exhibited, among other things, the Transcript.

[4] The further return of the plaintiff's summons filed 3 April 2019 and directions hearing were also scheduled for that day.

[5] The form of the orders made by Justice Robson comprised an order made 11 April 2019 attaching an 'interim freezing order'.

[6] [2014] NSWSC 35 at [1] and [2].

[7] Initially the defendant applied to have the application adjourned, but that adjournment application was refused.

[8] Shortly after the hearing (during which my ruling was given) the Court received an email from the defendant dated 11 June 2019 (at 12:51pm) stating that 'I hereby confirm an appointment set with lawyer Mr Arthur Lucas at 1:30pm tomorrow, Wednesday 12th as indicated I would do during the hearing today.'

[9] Subject to the reservation of liberty to apply.

[10] Rule 37A.02(5) addresses the content of affidavits to be relied upon in support of an application for a freezing order.

[11] [2008] VSC 300, [22]-[30]. Footnotes included in the form included in the extract from the reasons of J. Forrest J.

[12] Cardile v LED Builders Pty Limited (1998) 198 CLR 380, [51] (Cardile); Practice Note 3 of 2006.

[13] Jackson v Sterling Industries [1987] HCA 23; (1987) 162 CLR 612, 621, 625.

[14] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1, [73].

[15] Hartwell Trent (Aust) Pty Ltd v Tefal Societe Anonyme [1968] VicRp 1; [1968] VR 3, 13.

[16] Glenwood Management Group Pty Ltd v Mayo [1991] VicRp 45; [1991] 2 VR 49, 49.

[17] R. 37A.02(1) Under the general law the plaintiff must establish that there is a real risk of assets being disposed of: Cardile [122].

[18] Consolidated Constructions Pty Ltd v Bellenville Pty Ltd [2002] FCA 1513.

[19] Jackson v Sterling Industries [1987] HCA 23; (1987) 162 CLR 612, 621.

[22] [2015] VSC 299, [39].

[23] Referring to Victoria University of Technology v Wilson [2003] VSC 299, [33] (Redlich J); Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, 325f-326A (Gleeson CJ, with whom Meagher JA and Rogers AJA agreed).

[24] [2009] VSC 527. Footnotes included. I refer also to the helpful discussion by Justice Peter Biscoe in Mareva and Anton Pillar Orders: Freezing and Search Orders (LexisNexis Butterworths, 2nd ed, Sydney, 2005) and in particular, chapter 3, which deals with ancillary orders. This includes references to numerous authorities addressing the need for exceptional circumstances before an order would be made requiring a respondent to attend court for cross-examination in relation to a disclosure of assets affidavit or statement - see, for example, paragraphs 3.28 to 3.37. I refer also to chapter 9 'Sanctions for Disobedience'.

[25] See, eg, A v C (1980) 2 All ER 347, Hospital Products Limited v Ballabil Holdings Pty Ltd (1984) 2 NSWLR 662, 669.

[26] (1984) 2 NSWLR 662, 669.

[27] (1999) NSWSC 815 [23].

[28] [2004] NSWSC 200.

[31] [2005] FCA 1587.

[33] [1981] QB 65.

[34] Unreported, Victorian Supreme Court, 26 June 2005.

[35] [2005] NSWSC 162.

[37] Royal Australian College of Physicians Ltd v Yadam [2006] NSWSC 1463.

[38] [2009] VSC 418 [47].

[39] At [28]. His Honour also recognised and emphasised that ancillary orders are not intended to constitute interrogation or specific discovery where that would not be truly facilitative of the freezing orders in question - at [29] and in the particular circumstances there described.

[40] It is recognised that part of the purpose of the examination order sought was to address the absence of information.

[41] Whether made pursuant to r 37A.03 or the statutory or inherent jurisdiction of the Court.

[42] I note that a similar observation was made by Justice Austin in Turner v Universal Home Loans, [2004] NSWSC 200. This is referred to in the extract from Deputy Commissioner of Taxation v AES Services (Australia) Pty Ltd (No 2) above.

[43] [2014] NSWSC 35.

[44] See Patterson v Khalsa [2013] NSWSC 336 at [20]-[26] (Garling J).