HIS HONOUR: The first plaintiff (Mr Sharkey) and the defendant (Ms Nissi) are presently embroiled in litigation that is being heard by Robb J as I speak. The issue between them is the entitlement of one or the other to a property, 98 Denison Street, Camperdown (the property). As I understand it, Mr Sharkey (or his family trust company, the second defendant) and Ms Nissi own both that property and the adjacent property 96 Denison Street, Camperdown.
Mr Sharkey and Ms Nissi were in a de facto relationship. Upon the break-up of that relationship, they made what on any view was an agreement as to the two properties. In essence, Mr Sharkey ceded ownership of the property to Ms Nissi and Ms Nissi agreed that Mr Sharkey could have the proceeds of sale of the adjacent property.
Mr Sharkey has commenced these proceedings asserting that, despite the agreement, he is in equity the owner of the property. As I understand it, he wishes to assert that his entitlement arises by reason of his contributions to the acquisition of the property. In respect of the agreement on which Ms Nissi relies, Mr Sharkey says as I understand it that it was signed in circumstances of duress, and that he is entitled in equity to set it aside.
It is necessary to note that the property was mortgaged to St George Bank. After the parties' relationship terminated, Ms Nissi continued to pay amounts owing in respect of that mortgage. However, the mortgage fell into arrears. Ultimately Ms Nissi arranged for the mortgage to be refinanced, and on any view is liable personally for the amount due under the second mortgage.
Ms Nissi applies ex parte before me, as Duty Judge, for an order in the nature of what used to be called a writ of ne exeat colonia. In plain English, Ms Nissi seeks an order that Mr Sharkey be restrained from leaving the country, and ancillary relief.
The general power to make such an order is confirmed by cases such as Glover v Walters (1950) 80 CLR 172 and Cardile v LED Builders (1999) 198 CLR 380. In the former case, Dixon J said (in a consideration of the power of the High Court of Australia) that the writ of ne exeat colonia "is a prerogative writ used for the purpose of preventing a subject quitting the country without giving bail or security to answer a money claim of an equitable nature".
His Honour emphasised that "the writ is not issued except for an equitable debt or demand".
The jurisdiction was affirmed, and the remarks of Dixon J cited with approbation, by the plurality (Gaudron, McHugh, Gummow and Callinan JJ) in Cardile at [39]. I will not set out that paragraph, but I do note that at [40] their Honours referred to this writ as one of the "doctrines and remedies, outside the injunction as understood in courts of equity, to protect the integrity of [the court's] processes once set in motion."
The modern day equivalent of the writ of ne exeat colonia was described by Habersberger J in Talacko v Talacko (No 2) (2009) 25 VR 613 at [23] and following and by von Doussa J in Beach Petrolem NL v Johnson (1992) 9 ACSR 404 at 405-406.
In the latter case, von Doussa J said, at the location I have referred to, that it is not necessary "to show an active intent on the part of the respondent to defeat the applicants from recovering the judgment. It is enough if the applicants establish that, in the absence of relief, there is a danger that assets will be dealt with in a way which will prevent the applicants recovering the judgment".
As I have said, the application is made to me although the case is currently part heard before Robb J. Mr Hyde of counsel, for Ms Nissi, submits that it would be inappropriate for Robb J to hear the application.
It is common ground before his Honour that a determination of the issues of fact will depend largely on his Honour's views as to the credibility of the competing witnesses. The material on which Ms Nissi relies, in this application, could be taken to suggest in effect a dishonest intention on the part of Mr Sharkey to leave the jurisdiction immediately his evidence is finished, without any intention to return at any fixed time and without leaving behind him any assets in the jurisdiction.
Even if that were not found to be dishonest, the very fact that the issues would be canvassed before Robb J could be thought to impinge in an adverse manner on his Honour's assessment of credibility in dealing with the issues before him.
For those reasons, I accept that it is appropriate, in the first instance, for the application to be made to and considered by me.
As the authorities to which I have referred show, it is necessary to demonstrate that there is an equitable debt or demand, and that the respondent to the application is likely to leave the country without giving bail or security to answer that debt or demand.
Whether or not, in respect of the Court's powers under UCPR r 25.14(4), it is necessary to show that the demand is an equitable one is a question that may be left to one side. That rule authorises, among other things, the making of a freezing order or an ancillary order against a prospective judgment debtor if the Court is satisfied that the prospective judgment might be unsatisfied because that prospective judgment debtor "absconds".
The word "absconds" might be thought to have a pejorative flavour. However, it seems to me, someone "absconds" in the relevant sense if they leave the country with any judgment or prospective judgment likely to be unsatisfied, because they have left no assets behind them. As I have said, it is not necessary to pursue this.
The equitable debt or demand that Ms Nissi asserts is, in the event that Mr Sharkey succeeds in relation to his claim to be the beneficial owner of the property, a right to be recompensed or recouped by him for the amounts paid by her to preserve the property against the demands of the two mortgagees. Ms Nissi would say, in substance, that if Mr Sharkey is to be declared the beneficial owner of the property, and be given relief accordingly, he must do equity by recompensing her for the payments that she has made. That seems to me to satisfy the requirement of an equitable debt or demand.
Mr Sharkey in his pleadings admits that if he is found to be the true beneficial owner of the property, he is liable to repay the amount expended by Ms Nissi: said to be $547,090.
In those circumstances, I am satisfied that Ms Nissi has made out a good arguable case as to her equitable cause of action. Of course, that case is predicated on an event which she does not accept: namely, that Mr Sharkey should be found in equity to be the beneficial owner of the property. However, since that is the case that Mr Sharkey brings, he can hardly be heard to dispute that it is in the relevant sense a good arguable case.
It seems to me to follow that if that case is made good, then inevitably the equity of recoupment which Ms Nissi asserts, will be made out. As I have said, that is admitted by Mr Sharkey.
Mr Sharkey has been cross-examined on Monday and yesterday. I have been taken to passages in his cross-examination. It is apparent from those passages that Mr Sharkey has been engaged in the practice that he describes as "asset planning". Whether or not that is a euphemism for putting his assets beyond the reach of creditors or the Court is a matter that is open to question.
In any event, it is clear that Mr Sharkey, on his own admission, has been engaged in conduct that could be regarded as deceptive, with a view to putting his assets beyond the reach of his creditors. It is equally clear that Mr Sharkey, on his own admission, has engaged in conduct vis-à-vis Ms Nissi, in relation to the property itself, that could be regarded as deceptive. Specifically, it would appear, Mr Sharkey may have entered into the agreement as to the beneficial entitlements to the two properties not with the intention of honouring it but, rather, with the intention of challenging it when it suited him to do so. Finally, in this context, the transcript shows beyond doubt that, as Mr Sharkey has conceded, he no longer has any assets of relevance in Australia.
Thus, if Mr Sharkey succeeds in his claim, he would be entitled to the property but may not be in a position to recompense Ms Nissi for the amounts expended by her.
It may very well be that, in the hypothetical universe which I am considering, Ms Nissi would have an equitable lien on the property to secure repayment of that amount. However, without knowing the value of the property and the amount presently secured by the existing mortgage, I have no way of understanding whether that equitable lien (should it be made out) would be sufficient to recoup her for the amount that she has spent.
In those circumstances, I think it is justifiable to make the order sought. It is clear that Mr Sharkey intends to leave the country once his evidence is completed. He is said to be booked on a flight at 2.15pm today. In my view, those circumstances justify an order that he be restrained from leaving the country, and that he surrender his passports, until he makes appropriate arrangements to secure payment to Ms Nissi of the sum for which he has, as it were conditionally upon his succeeding, admitted liability. I am satisfied on the evidence that this sum is likely to be no less than $547,090.
For those reasons I make the following orders:
1. I note that the applicant by counsel gives to the court the usual undertaking as to damages.
2. I make orders in accordance with paragraphs 1 and 2 of the form of order initialled by me and dated today's date.
3. I stand over for further consideration the orders sought by prayers 3 to 6 of the notice of motion filed in court today.
4. I direct that the notice of motion and a copy of these orders be served by 12 noon today and I abridge the time for service accordingly.
I stand the matter down to 2pm today on the basis that it may be mentioned once Mr Sharkey's cross-examination and re-examination have been completed.
I direct that these orders be entered forthwith.
I grant liberty for service to be effected within the precincts of the Court.
[3]
Amendments
03 March 2015 - Catchwords.
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Decision last updated: 03 March 2015