Royal Australasian College of Physicians Ltd v Yadam & Ors

CASES CITED : Patterson v BTR Engineering (1989) 18 NSWLR 319 Vasil v National Australia Bank (1999) 46 NSWLR 207

Royal Australasian College of Physicians Ltd (plaintiff) Mohit Kumar Yadam (first defendant) Sushma Potu (second defendant) PARTIES : Firm Solutions Pty Ltd (third defendant) National Australia Bank Ltd (fourth defendant) Westpac Banking Corp (fifth defendant) Victorian Teachers Credit Union (sixth defendant)

COUNSEL : P Newton (plaintiff) M Lawson (first defendant)

SOLICITORS : Kemp Strang (plaintiff) Conaghan Hunter Solicitors (first defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST

5151/06 Royal Australasian College of Physicians Limited v Mohit Kumar Yadam & 5 Ors JUDGMENT (ex tempore) 1 HIS HONOUR: The plaintiff Royal Australasian College of Physicians Ltd employed the first defendant Mohit Kumar Yadam, initially from 8 November 2002 as a Project Officer in its Faculty of Public Health in connection with a project called the General Practitioners Public Health Medicine Registrars Program, and subsequently from 18 December 2003 as Senior Executive Officer of the Faculty, for an interim period of six months ending 30 June 2004, when his appointment as Senior Executive Officer of the Faculty was made permanent. The third defendant, now known as Firm Solutions Pty Limited, but previously called InfoAge Consulting Pty Limited, is a Victorian company of which Mario Lyndon Alfonso is a director and shareholder.

2 Mr Yadam's responsibilities as Senior Executive Officer of the Faculty included the approval of invoices for payment. On 14 May 2004, Mr Yadam approved for payment two invoices purporting to be from one Vincent Loiacono, of 1 Lake Street, Glenhuntly, in the State of Victoria, for amounts totalling $5,389.20. Those invoices were subsequently paid by the College to the payee. A recent review by the College's Director of Resources, Richard Francis, reveals that the College does not have any contract with Vincent Loiacono, and that no listing for any such person could be identified in any telephone book or on the Internet.

3 Between 31 May 2004 and 5 July 2006, InfoAge Consulting and subsequently Firm Solutions submitted numerous invoices to the Faculty for services purportedly rendered to the Faculty, totalling in amount approximately $300,000. Each invoice was approved for payment by Mr Yadam and subsequently paid by the College. Tracy Elizabeth Cheffins, who from 29 August 2002 to 31 March 2006 was National Director of Training for the College, and who implemented and directed the Registrars' Program throughout Australia, has deposed in respect of each of those invoices that purport to relate to the Program that she has no knowledge of any such services as described in the relevant invoice being provided, that she was not aware of and had not heard of InfoAge providing any services to the Faculty, and that she believes that the relevant invoice was, therefore, not a legitimate claim against the Faculty in respect of the Program. Searches and inquiries undertaken by Mr Francis have revealed no connection between InfoAge and the Faculty.

4 These matters came to light as a result of the receipt by the College from the Parliamentary Secretary to the Minister for Health and Ageing of a letter to the Parliamentary Secretary from Mr Yadam's wife, who has been joined to the proceedings as the second defendant. After Mr Francis conducted preliminary investigations, the College wrote to Mr Yadam on 25 September 2006, advising him that his employment was suspended and inviting him to provide a detailed response. Although on 28 September 2006 his solicitors wrote to the College indicating that a response would be provided in due course, none has yet been received.

5 On 3 October 2006, the College obtained leave from Gzell J to file a summons and was granted ex parte Mareva relief in the following terms: 4. Upon the Plaintiff by its counsel giving to the Court the usual undertaking as to damages, an order that until the hearing and determination of this proceeding, or until further order, the First Defendant be restrained by himself, his servants or agents from: (a) selling charging mortgaging or otherwise dealing with or disposing of, or causing or permitting to be sold charged, mortgaged or otherwise dealt with or disposed of, all of any of his assets, including any assets held by him jointly or in common with any other person or entity, and whether such assets are situated within or outside of New South Wales, including, but without affecting the generality of the foregoing:

(iii) cash, deposits or other valuables; (b) in the case of any such assets within New South Wales removing such assets from New South Wales;

provided that this order shall not prevent the First Defendant from: (i) Paying ordinary living expenses up to an amount of Five hundred dollars ($500.000) per week;

(ii) Paying costs reasonably incurred in defending these proceedings.

6 Relief was also granted against the second defendant Sushma Potu, the third defendant Firm Solutions, and against three financial institutions which had been joined as fourth, fifth and sixth defendants.

7 The proceedings returned before the Court on 4 October 2006. The orders which had been made against the fourth, fifth and sixth defendants had been limited to 5.30pm on 4 October, and were extended to 5.30pm today. No application is made for their further extension. As I understand it, the proceedings as against those defendants, and as against the second defendant, are to be discontinued.

8 The orders against the first and third defendants were expressed to be until further order. The third defendant does not oppose the further continuation of the order against it. So far as the first defendant is concerned, on 4 October 2006 the interlocutory application as against him was stood over for hearing today, and a direction made that he serve all affidavit evidence upon which he intends to rely in relation to the interlocutory orders sought against him by 21 October 2006.

9 Mr Yadam has tendered no evidence on this application. Although the existing Mareva order is expressed to be until further order, I accept that, no contested interlocutory application having yet taken place, and in circumstances where the original order was made ex parte, the plaintiff/applicant bears the onus of sustaining its claim for an interlocutory injunction rather than the first defendant bearing any onus of displacing the order already in place. Therefore, I approach the matter as if determining now for the first time whether the orders sought should be made against the first defendant.

10 An applicant for an asset preservation order, generally speaking, is required to show a seriously arguable case for final relief, and a greater than ordinary risk that the respondent will dissipate or otherwise deal with its assets in a manner calculated to produce the result that the applicant, if successful, will not be able to obtain satisfaction of a judgment in its favour.

11 Mr Lawson, for the first defendant, has made no submission against the proposition that there is a seriously arguable case for final relief. To the extent that the strength of any such case is relevant to the other considerations that arise, that case appears, on the information presently before the Court, to be a strong one.

12 So far as the risk of dissipation is concerned, it is true that the plaintiff has not adduced evidence of any threat by Mr Yadam to alienate or encumber such assets as he might have. However, this is a case in which, prima facie, Mr Yadam has engaged in a course of conduct which seems to be fraudulent or dishonest. No evidence has been put before the Court that would put any other colour on the course of conduct which the plaintiff's evidence discloses.

13 Where the matters which give rise to the case for final relief themselves suggest that the defendant has acted dishonestly, that can be highly relevant to an assessment of the risk of dissipation of assets, as the Court of Appeal made clear in Patterson v BTR Engineering (1989) 18 NSWLR 319. On that basis, I am satisfied that in this case there is a more than ordinary risk of dissipation.

14 So far as the balance of convenience is concerned, it is plain that if an injunction is not granted the risk of injustice is that the plaintiff's claim may be defeated, whereas Mr Yadam has pointed to nothing which would weigh in the balance of convenience if the injunction were wrongly granted against him. Accordingly, I am satisfied that the relevant criteria for grant of an asset preservation order have been established.

15 As to the terms of the order, Mr Lawson has raised three main issues. First, he submitted that the order should be limited to assets in New South Wales. He refers to a number of authorities which suggest that while there is jurisdiction to grant an order against a defendant present in New South Wales in respect of assets outside New South Wales, the Court will do so only in exceptional cases. I rather think that that overstates the position, and that where the defendant is present in the State (at the time of service of the originating process) so as to be amenable to in personam jurisdiction, the geographical reach of an injunction will always be a matter of discretion, having regard to the particular circumstances of the case, and not of jurisdiction. I do not accept that such an injunction will be granted in respect of foreign assets only in "exceptional" circumstances. It may be appropriate to limit an injunction to assets in New South Wales - or, for that matter, in Australia - if there are sufficient assets within the jurisdiction to satisfy the prospective judgment, because then there is no reason to constrain the defendant's ability to deal with his or her assets beyond the jurisdiction.

16 However, where there is a prima facie case of fraud, in which no evidence has been adduced by the defendant that he has any assets in New South Wales or Australia, I do not see any reason why the injunction should be limited in the way Mr Lawson submits. It might well be another matter if Mr Yadam pointed to assets in New South Wales and adduced evidence showing that they were apparently sufficient to satisfy the plaintiff's claim if it were to succeed, but that has not happened.

17 Next, Mr Lawson submitted that the requirements of the order sought in paragraph 7 in the summons went beyond what was necessary by way of discovery in aid of a Mareva order. The effect of that order would be to require disclosure of what moneys Mr Yadam has received from the College, where they are, and what has become of them, including to whom if anyone else they have been paid. That is an entirely legitimate exercise by a plaintiff, which has established a prima facie case that it has been deprived of its property by deception by the first defendant, to endeavour to trace those funds with a view to recovering them.

18 Thirdly, Mr Lawson submitted that the effect of the proposed disclosure order was to require a defendant who wished to put the plaintiff to proof to go into evidence, and perhaps to incriminate himself. First, it does not require the defendant to go into evidence; it requires the defendant to provide information, which might then be tendered by the plaintiff as an admission. That is the ordinary function of all processes of discovery, whether of documents, or of information by way of interrogatories. That is not an objection to making such an order.

19 I was more troubled for a while by the self-incrimination point, particularly having regard to the judgment of the majority of Court of Appeal in Vasil v National Australia Bank (1999) 46 NSWLR 207, in which Fitzgerald and Stein JJA (over the dissent of Meagher JA) held that an order for disclosure in aid of a Mareva injunction, should not be made if it is inconsistent with the privilege against self-incrimination, and that a party against whom such an order was made where the privilege against self-incrimination would be infringed by compliance with it was entitled to have it set aside. Meagher JA dissented, holding that a disclosure order did not abrogate or modify the privilege against self-incrimination, which was still available to be claimed in the affidavit filed pursuant to the disclosure orders. However, I think any difficulty is overcome, as it routinely is in practice, by including in the disclosure order - as the proposed order does - a provision to the effect that, if the respondent considers that compliance with the orders may be self-incriminatory, he or she is excused from compliance to that extent, but must instead file an affidavit setting out the claim for privilege.

20 For those reasons I consider that the College is entitled to Mareva relief, in respect of Mr Yadam's assets whereever situate. As the Mareva order is already in place and expressed to be until further order, no further order is required in that respect.

21 I make an order in terms of paragraph 7 of the summons, subject to the following modifications: · insert in sub-paragraph (a) at the end of that paragraph "salary or wages"; · insert in sub-paragraph (b) before "moneys" the word "such"; · delete from sub-paragraph (c) the word "the" where first appearing and substitute "such"; · delete in sub-paragraph (d) the word "the" where first appearing and substitute "such"; · insert in sub-paragraph (j) in lieu of the matter "xx" the matter "(i)".

22 I make an order in terms of paragraph 8 of the summons, subject to the following modification: · delete "7 days" and substitute "14 days". 23 I order that the costs of the application be the plaintiff's costs in the proceedings.

24 I direct that the solicitors for the first defendant file a Notice of Appearance within 24 hours.

25 I stand the proceedings over before the Registrar for directions on 30 October 2006 at 9.30am.

26 I grant leave to the plaintiff to file in the Registry Notices of Discontinuance against the second, fourth, fifth and sixth defendants.

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