Riva NSW Pty Ltd v Mark A Fraser and Christopher P Clancy t/as Fraser Clancy Lawyers

The 2017 Judicial Review Proceedings

1. In the meantime, on 7 November 2016, Riva had filed a Notice of Motion in the District Court seeking to have the Freezing Order set aside. On 3 August 2017, the District Court made orders, which were varied on 4 August 2017 (the 2017 Orders), that the motion of 7 November 2016 be dismissed. By summons filed in this Court on 5 September 2017, Riva commenced the 2017 Judicial Review Proceedings, seeking orders that the 2017 Orders be set aside and that, in lieu thereof, the Freezing Order be set aside.
2. On 11 December 2017, Slattery J stayed the Receiver Proceedings and the Damages Proceedings upon Riva consenting to several conditions including an undertaking by the parties to take all reasonable steps to comply with the orders and directions of this Court in the 2017 Judicial Review Proceedings. Slattery J also made orders to the effect of the following:

• Riva was not to dispose of, charge or deal with any assets and undertakings of the Trust or of Riva otherwise than in the ordinary course of business and was not to dispose of certain real property without first giving 21 days' advanced written notice to Fraser Clancy of its intention to do so;
• Riva was to give 21 days' advance written notice to Fraser Clancy of any proposed payment in the ordinary course of business equal to or greater than $20,000 by Riva or by the Trust;
• On or prior to 18 December 2017, Riva was to serve an affidavit on Fraser Clancy disclosing the assets, liabilities, income and usual expenses of Riva and the Trust; and
• The Receiver Proceedings and the Damages Proceedings be stood over to 26 February 2018 for hearing subject to the decision in the 2017 Judicial Review Proceedings, such that if the Court of Appeal has not delivered judgment by 23 February 2018, both the Receiver Proceedings and the Damages Proceedings were to be listed for directions only.

The Security Motion

1. By Notice of Motion filed in the 2017 Judicial Review Proceedings on 19 December 2017 (the Security Motion), Fraser Clancy applied for an order that Riva provide security for their costs of the 2017 Judicial Review Proceedings in the sum of $65,000 or such other amount as the Court may deem fit, either by paying such amount into Court or by way of bank cheque, or direct transfer to the trust account of Fraser Clancy, or some other person, or in such other manner as the Court may deem fit. The Security Motion also applied for an order that the 2017 Judicial Review Proceedings be dismissed if the order for security was not complied with within 21 days of the date of the making of any such order for security.
2. The Security Motion was heard by Simpson JA on 19 March 2018. Riva did not ask that any security that may be ordered be provided by way of bank guarantee. The significance of that matter will appear below. On 22 March 2018, Simpson JA made orders to the effect of the following:

• Within 21 days Riva provide security for Fraser Clancy's costs of the 2017 Judicial Review Proceedings in the sum of $70,000 by paying that sum into Court or, if the parties were able to agree, by way of bank cheque or direct transfer into the trust account of Fraser Clancy;
• In the event of non-compliance with that order, the 2017 Judicial Review Proceedings be dismissed; and
• Riva pay Fraser Clancy's costs of the Security Motion.

1. By email of 22 March 2018, the Registrar of this Court informed the parties that the matter would be listed for mention on 23 April 2018, but that the mention would be vacated if the 2017 Judicial Review Proceedings were dismissed pursuant to the orders made by Simpson JA. Security was not provided in accordance with the orders made by Simpson JA, or at all, and there has been no stay of her Honour's orders. Accordingly, at present, the 2017 Judicial Review Proceedings stand dismissed by the operation of the order made by her Honour that security be provided within 21 days. That time expired on 12 April 2018.

The Variation Application

1. However, by the Variation Application, Riva applied for the following orders in relation to the orders made by Simpson JA on the Security Motion:

• an order extending the time for the making of the application;
• an order granting leave to Riva to adduce additional evidence; and
• an order varying the order made by Simpson JA for the provision of security by extending the time for compliance until 21 days after the vacating of the orders made by Slattery J on 11 December 2017, and by permitting the security for costs to be provided by way of a banker's guarantee lodged with the Court.

1. The Variation Application is the matter presently before this Court. As indicated above, unless an order is now made, nunc pro tunc, extending the time for the provision of security, the 2017 Judicial Review Proceedings are at an end.
2. The basis for the Variation Application is said by Riva to be the change in circumstances since the orders made by Simpson JA. It is therefore necessary to deal with the events that occurred after 22 March 2018.

Events Subsequent to Simpson JA's Orders

1. On 23 March 2018, Fraser Clancy wrote to Riva's solicitors suggesting that the security would be best placed in Fraser Clancy's trust account on the basis that the monies would be invested but otherwise not utilised by either party except by way of agreement or further order of the Court. By email sent on 4 April 2018, Riva's solicitors said that Riva was prepared to "put forth the security of costs as per orders of [Simpson JA]". They sought the consent of Fraser Clancy to the variation of the orders made by Slattery J on 11 December 2017 "regarding the trust property in order to obtain a charge for the funds to be advanced". Fraser Clancy responded by email on 9 April 2018 requesting a further explanation as to "what Riva's proposal for a charge entails and to whom the charge is to be in favour of". The response from Riva's solicitors later on 9 April 2018 was that funds were "expected to be available via commercial banking sources if a mortgage could be agreed to be given over [an identified property] to secure the quantum of the security".
2. On 11 April 2018, Slattery J made orders in the Receiver Proceedings to the effect of the following:

• Riva will forthwith exercise its right of indemnity as trustee of the Trust and otherwise cause to be paid and pay to Fraser Clancy the sum of $220,844.72 by 4 pm on 26 April 2018;
• In default of that payment, Riva, as trustee of the Trust and otherwise, agrees to the Court appointing a receiver on the terms set out in the summons filed in the Receiver Proceedings;
• Riva, in its capacity as trustee of the Trust and otherwise, is to pay the costs of Fraser Clancy of the Receiver Proceedings;
• Riva will exercise its right of indemnity to assets of the Trust to pay any such costs as are agreed or ordered by the Court; and
• Upon payment of the sum of $220,844.72 by 4 pm on 26 April 2018, the Receiver Proceedings are to be otherwise dismissed and the parties will do all necessary acts and things when the matter is relisted to cause the Receiver Proceedings to be dismissed, with consequent vacation of the orders made on 11 December 2017.

1. At 4.40 pm on 12 April 2018, Riva's solicitors sent a further email to Fraser Clancy noting that the orders made by Simpson JA required security to be provided "today in the form of payment into Court or to your trust account". The email went on to say that it was usual to allow such security to be given in the form of a banker's guarantee and that, given Fraser Clancy's refusal to consent to access to the assets of the Trust, for the purpose of providing that security, it was Riva's intention to make an application to seek a variation of the orders made by Simpson JA, to extend the time for provision of security until 21 days after the orders made by Slattery J on 11 December 2017 are vacated and to permit the security to be given by way of banker's guarantee. It is not insignificant that the email was sent less than an hour before the Registry closed on the last day for payment of the security.
2. Fraser Clancy responded by email on 13 April 2018, saying that they did not agree to any extension of time for compliance with the order for payment of security. The email pointed out that, when the Security Motion was filed and when the orders were made, Riva was aware of the orders that had been made by Slattery J on 11 December 2017. Fraser Clancy requested copies of correspondence in which they were said to have refused Riva access to the assets of the Trust for the purpose of paying security. The email also pointed out that the orders of 11 December 2017 had been varied on 11 April 2018 to enable payment to Fraser Clancy and that there had been no suggestion at that time that a further variation of the orders of 11 December 2017 was sought.
3. The email of 13 April 2018 also went on to say that, because of Riva's previous misrepresentations to Macquarie Bank and threatening letters to banks and its previous involvement in the cancellation of bank cheques, Fraser Clancy did not agree to a bank guarantee. It also said that Fraser Clancy would consent to a variation of the orders made on 11 December 2017 to allow the security to be paid to the Court or to their trust account in accordance with the orders made by Simpson JA. The email of 13 April 2018 appears to have prompted the Variation Application.
4. On 24 April 2018, Fraser Clancy provided to Riva's solicitors particulars of their trust account and requested confirmation that Riva intended to pay the sum of $220,844.72 into that trust account on or before 4.00 pm on 26 April 2018. That sum was, in fact, paid to the credit of that account at 4.10 pm on 26 April 2018.

Disposition of the Variation Application

1. In Riva's written submissions filed in support of the Variation Application, it was asserted that the interests of justice would be best served by extending time for compliance with the order for provision of security to enable the assets of the trust to be deployed in providing that security. The written submissions stated that Riva intended to make an application to discharge the Freezing Order upon payment of the sum of $220,844.72. Notwithstanding that that sum was paid on 26 April 2018, no such application has been made by Riva. Riva's submissions also asserted that the Variation Application was made once it became clear from the orders made by Slattery J on 11 April 2018 that "a demonstrable pathway could be shown for [Riva] to access assets of the Trust for the purposes of providing the security ordered by Simpson JA". The submissions asserted that "that occurred shortly after the time permitted under Uniform Civil Procedure Rules 2005 (NSW), r 51.58(1)(a)" for the making of an application for review.
2. It is not possible to discern just what the change of circumstances was that would justify the variation now sought by Riva. It was not suggested to Simpson JA that, if security were to be provided, it would be appropriate for it to be provided in the form of a bank guarantee rather than by a payment into Court or into the trust account of Fraser Clancy. Any inconvenience occasioned by payment into Court or into the trust account of Fraser Clancy must have been apparent to Riva, and to those advising it, at the time of the hearing before Simpson JA. Accordingly, there appears to be no basis upon which the orders made by Simpson JA as to the manner of provision of security should be varied.
3. In the course of argument on the hearing of the Variation Application, counsel for Fraser Clancy accepted that, in the light of the payment of the sum of $220,844.72 into their trust account, the Freezing Order should be discharged, since it was granted in aid of Fraser Clancy's claim to be paid costs that have now been paid. Counsel offered no satisfactory explanations as to why Fraser Clancy have made no application for such a new freezing order notwithstanding the payment made on 26 April 2018 other than to say that they did not wish to consent to the discharge of the Freezing Order until they had obtained a further freezing order in relation to the Macquarie Bank Account in aid of their claim against Riva for further costs.
4. One might have expected that, if the Freezing Order were to be discharged, there would be no utility in prosecuting the 2017 Judicial Review Proceedings, since their underlying object is to have the Freezing Order set aside. That is something that, by the 2017 Orders, which are the subject of the 2017 Judicial Review Proceedings, the District Court declined to do. However, it seems that Riva seeks to establish that the Freezing Order was beyond the jurisdiction of the District Court such that it is entitled to make a claim on the undertaking as to damages given by Fraser Clancy as a condition for the making of the Freezing Order. Thus, there is an overlap between any relief that Riva might be entitled in that regard and the relief sought in the Damages Proceedings. Counsel for Riva acknowledged in the course of argument that Riva will, at some stage, have to decide which of those claims for relief it proposes to pursue, since it would be inappropriate to pursue both. That is a matter that tends to tell against the prospects of Riva prosecuting the 2017 Judicial Review Proceedings to a successful conclusion.
5. Neither party made any attempt to bring before this Court, on the hearing of the Variation Application, the merits of the 2017 Judicial Review Proceedings. Thus, the Court has no basis for forming a view as to the likely result of the 2017 Judicial Review Proceedings if they are prosecuted to judgment. That, of course, is a relevant consideration in the exercise of discretion in relation to the indulgence now sought by Riva. In that regard, it is material that, on 19 October 2014, this Court summarily dismissed the 2014 Judicial Review Proceedings in relation to the Freezing Order. Riva made no application for review of that summary dismissal. It is difficult to conclude that Riva has much prospect of success in the 2017 Judicial Review Proceedings.
6. Significantly, Riva has not adduced any evidence to explain why it failed, prior to the time ordered by Simpson JA for the provision of security, to make an application for extension of the time to provide the security in accordance with her Honour's orders. For example, it might have been possible to adduce evidence to the effect that time was allowed to pass because of an expectation on the part of those advising Riva that Fraser Clancy would consent to an extension of time. However, no request for an extension of time was made until less than an hour before the Registry closed on the last day for payment. In the circumstances, there is no justification for making an order nunc pro tunc for an extension of the time for providing the security.

Conclusion

1. In the circumstances outlined above, the Variation Application must be refused and should be dismissed with costs. It follows that the 2017 Judicial Review Proceedings stand dismissed in accordance with the orders made by Simpson JA.
2. No order has been sought in relation to the costs of the 2017 Judicial Review Proceedings, as distinct from the Security Motion. That is scarcely surprising, since the premise of the application for security for costs was the difficulty or impossibility of enforcing a costs order. In the absence of such an application, the Court will make no order as to the costs of the 2017 Judicial Review Proceedings beyond the order already made by Simpson JA in the Security Motion.

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: 17 August 2018