REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS
– REMOVAL – PARTICULAR CASES – where the plaintiffs
allege the
first defendant, a former employee, misappropriated and misapplied funds
Source
Original judgment source is linked above.
Catchwords
REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS– REMOVAL – PARTICULAR CASES – where the plaintiffsallege thefirst defendant, a former employee, misappropriated and misapplied fundsbelonging to them to the benefit of herself andher husband, the seconddefendant, also an employee, either by overpayments of wages or otherunauthorised payments – wherethe plaintiffs lodged a caveat over thedefendants’ family home, which had been purchased prior to the defendantsbeing employed– where the defendants seek the removal of the caveat, inorder to sell the property to fund their legal expenses – whetherthere isa serious question to be tried as to the plaintiffs’ claim to an interestin the propertyPROCEDURE – CIVIL PROCEEDINGS IN STATE ANDTERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZINGORDERS – where the plaintiffs apply for a freezing order, preventing thedefendants from disposing of their assets to the value
of their home property
– where there has been significant and unexplained delay in bringing the
application, since the proceedings
were commenced in January 2020 –
whether on the evidence before the court there has been shown to be a risk of
unjustifiable
disposal of assets
Land Title Act 1994 (Qld), s
127
Bluepoint Property Pty Ltd v Zuri Properties Pty Ltd [2020]
QSC 219
Cousins Securities Pty Ltd v CEC Group Limited [2007] QCA 192
[2007]
2 Qd R 520
Frigo v Culhaci [1998] NSWCA 88
Jedhar Pty Ltd v
Grosse [2003] QSC 330
Palmer v Mullins Investments Pty Ltd (in
liquidation) (inreported, Supreme Court of Western Australia, Murray J,
1992, 26 June 1992)
Parbery v QNI Metals Pty Ltd [2018] QSC 107
(2018) 358 ALR 88
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Re
Jorss’ Caveat [1982] Qd R 458
Wickham Developments Pty Ltd v
Parker [1995] QCA 281
Wickham Developments Ltd v Parker & Anor
[1994] QSC 255
Judgment (65 paragraphs)
[1]
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - REMOVAL - PARTICULAR CASES - where the plaintiffs allege the first defendant, a former employee, misappropriated and misapplied funds belonging to them to the benefit of herself and her husband, the second defendant, also an employee, either by overpayments of wages or other unauthorised payments - where the plaintiffs lodged a caveat over the defendants' family home, which had been purchased prior to the defendants being employed - where the defendants seek the removal of the caveat, in order to sell the property to fund their legal expenses - whether there is a serious question to be tried as to the plaintiffs' claim to an interest in the property
[2]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DETENTION, INSPECTION AND PRESERVATION - FREEZING ORDERS - where the plaintiffs apply for a freezing order, preventing the defendants from disposing of their assets to the value of their home property - where there has been significant and unexplained delay in bringing the application, since the proceedings were commenced in January 2020 - whether on the evidence before the court there has been shown to be a risk of unjustifiable disposal of assets
[1] The first defendant worked for the first plaintiff from February 2013 to September 2019 as the office manager and administrator. The second defendant, the husband of the first defendant, also worked for the first plaintiff, for a shorter period from April 2013 to August 2014, as a labourer and truck driver. The first plaintiff claims that, whilst the first defendant was employed by it, she "transferred, acquired, removed or otherwise dealt with" and "misappropriated and misapplied" funds belonging to the first plaintiff by way of electronic funds transfer from the bank account of the first plaintiff to a bank account in her name, or the defendants' joint names. These alleged payments are pleaded as comprising unauthorised overpayments (of wages) to both the first and second defendants and unauthorised additional payments, for example for the discharge of non-existent liabilities to creditors, and other miscellaneous payments. It is also alleged that the first defendant, in the course of her employment with the first plaintiff, had access to the internet banking facilities of the second plaintiff and also made unauthorised payments from its bank account to her (or their) bank account(s).
[2] By this proceeding, commenced in January 2020, the plaintiffs seek to recover the unauthorised payments on various bases. In addition, the first plaintiff seeks a declaration in the following terms (para 2.1 of the claim filed on 16 January 2020):
[15]
"a declaration that the First Defendant, or alternatively, the First Defendant and the Second Defendant hold on a constructive trust for the first plaintiff fair legal or beneficial interest, if any:
[16]
(a) in all and any sums of money in accounts to be identified through interlocutory steps, including disclosure, in these proceedings; and
[17]
(b) any real property including a property located at [a specified address at Gympie]."
[18]
[3] On 7 July 2020, an order was made, by consent, for disclosure to occur in accordance with a document plan agreed between the parties and set out in that order. In addition, it is apparent from the court file that notices of non-party disclosure were issued in October and December 2020, and January and February 2021, variously to the ANZ Bank and the National Australia Bank, seeking bank statements for particular bank accounts (including those specifically referred to in the statement of claim, as amended). Bank statements were produced (I infer, to the plaintiffs' solicitors) by both banks in response to these notices.[1] Although it appears they may not have been provided to the defendants' (or at least the second defendant's) solicitors.[2]
[4] On 5 February 2021, the plaintiffs lodged a caveat over the Gympie property.
[5] A further amended statement of claim was filed on 12 March 2021. Although the claim for declaratory relief, as set out above, was part of the original claim, this was the first time a "claim for equitable interest in property" was pleaded. In that regard, paragraphs 39-43 of the further amended statement of claim are as follows:
[19]
"39. From on or about 28 October 2008 and as at the date hereof the Defendants are the registered proprietors of real property located at [the address in Gympie].
[20]
40. In the premises particularised herein, Robinson [the first defendant] transferred money by electronic funds transfer from the bank account conducted by TLB Excavations [the first plaintiff] particularised at paragraph 6 hereof and the bank account conducted by BC Projects [the second plaintiff] particularised at paragraph 7 hereof to an account conducted by Robinson particularised [at] paragraph 8 hereof[3] on the days and in the summons [sic, sums] particularised in Schedule A hereto (the Transferred Monies).
[21]
41. On the days and in the sums particularised in Schedule A hereto Robinson transferred money being partly or wholly comprised of the Transferred Monies from the account conducted by Robinson particularised at paragraph 8 hereof to an account conducted by Robinson at the National Australia Bank being Account ... #740 particularised at paragraph 8B hereof.[4]
[22]
42. On the days and in the sums particularised below Robinson transferred money, being partly or wholly comprised of the Transferred Monies, by electronic funds transfer from the account conducted by Robinson at the National Australia Bank being Account #740 particularised at paragraph 8B hereof for the purposes of effecting improvements to the Property:
[23]
43. In the premises, the Defendants hold the Property on a constructive trust for the Plaintiffs."
[24]
[6] These paragraphs are unchanged in the second further amended statement of claim which was filed on 22 June 2021, which is the most recent version of the pleading (save that the numbering has changed, they are now paragraphs 38 to 42). The claim as now particularised in this version of the pleading is for $1,338,249.25 against the first defendant and $288,362.22 against the second defendant.
[7] The current defence of the first defendant (the further amended defence, filed on 1 April 2021) pleads that the first defendant and the sole director of each of the plaintiffs, Mr Byrne, commenced an intimate relationship in 2016; that the account ending in 785 [which is the account referred to in paragraph 8 of the statement of claim] was opened at the director's suggestion, for the purpose of enabling money to be transferred to the first defendant in a manner which would conceal the transfers from the company accountants, the director's wife and the second defendant; and that the various payments alleged were all effected at the direction of, or with the authority, assent or consent of, the director. Mr Byrne denies this and describes it as a "fabrication".[5] The first defendant denies paragraph 43 of the further amended statement of claim,[6] on the basis that "no factual or legal basis has been pleaded to establish that the Plaintiffs are entitled to a constructive trust over the Property which was owned by the Defendants since 2008" (see paragraph 32 of her defence, filed on 1 April 2021).
[8] The second further amended defence of the second defendant, filed on 8 July 2021, essentially mirrors that of the first defendant, although includes more detail.
[9] On 13 August 2021, the first defendant applied for orders, first, for the removal of the caveat and, secondly, that the proceeding be stayed pending the hearing and determination of criminal proceedings against the first and second defendants in relation to charges which had then been brought against them, arising out of the allegations the subject of these proceedings.
[10] An order was made, on that day, by consent, that the proceeding be stayed pending the hearing and determination of the criminal proceedings. The application was otherwise (that is, in so far as it sought removal of the caveat) adjourned.
[11] The plaintiffs' current solicitors filed a notice of change of solicitor on 15 September 2021.
[25]
(a) paragraph 1 of the first defendant's application filed 13 August 2021 - seeking removal of the caveat; and
[26]
(b) an application filed by the plaintiffs on 12 October 2021, seeking a "freezing order".
[27]
[13] All parties consented to leave being granted to hear and determine these applications, notwithstanding the proceedings are otherwise stayed.
[28]
[14] The defendants are the owners of the Gympie property. It was uncontroversial that it is their "family home" and that they do not own any other real property. They became the owners of the property in October 2008, about four and a half years before the first defendant started working for the first plaintiff.
[15] The caveat was lodged by the plaintiffs on 5 February 2021. The "interest being claimed" is described as "an equitable interest in Fee Simple in the property". The "grounds of claim" are:
[29]
"Pursuant to a constructive or, alternatively, an implied trust or, alternatively, a resulting trust, arising out of financial contributions of the caveat or [sic] to the acquisition and improvement of the property..."[7]
[30]
[16] The basis of the claim is what appears in paragraphs 39 to 43 of the further amended statement of claim (set out at paragraph [5] above).
[17] It is apparent that only a constructive trust is claimed (not an implied or resulting trust). It is also apparent that the plaintiffs cannot have made any financial contribution to the initial acquisition of the Gympie property, given that it was purchased over four years before the first defendant's employment began.
[18] The defendants' home is the subject of a registered mortgage in favour of the National Australia Bank.
[19] The first defendant started working for the first plaintiff in February 2013. The evidence, in the home loan bank statements exhibited to her solicitor's affidavit,[8] is that at that time, the balance owing on the loan was about $143,000. The first defendant ceased working for the first plaintiff in September 2019. The home loan bank statements show that, at this time (six and a half years later), the amount owing on the mortgage was about $11,550.
[20] The objective evidence contained in the home loan bank statements is inconsistent with Mr Byrne's evidence, in his affidavit, of what he says he was told by the first defendant about the defendants' home loan (that, at the time she commenced employment in 2013 the balance of the loan was "over $400,000" and that by early 2019 she and her husband had reduced the loan to about $100,000).[9]
[21] A real estate agent's estimate of the value of the property, in August 2020, was $440,000. That was not the subject of any dispute before me.
[22] The evidence on behalf of the first defendant is that the defendants wish to sell the Gympie property, but cannot do so while the caveat remains on the property; and that the first defendant wishes to use some of the funds from the sale of the property for her legal fees for this proceeding and the related criminal proceeding.[10] The estimate of the first defendant's legal fees for the criminal proceedings is $152,465.[11]
[23] The solicitor for the second defendant provides an estimate of the second defendant's legal fees, both for defending the criminal proceeding (about $88,000) and this proceeding (about $131,000), and says that the second defendant will require access to the equity in his home to pay these fees.
[31]
(1) A caveatee may at any time apply to the Supreme Court for an order that a caveat be removed.
[32]
(2) The Supreme Court may make the order whether or not the caveator has been served with the application, and may make the order on the terms it considers appropriate."
[33]
[25] On an application to remove a caveat, the caveator bears the onus and must first satisfy the court that, on the evidence presented to it, the claim to an interest in the property does raise a serious question to be tried, in the sense of a sufficient likelihood of success to justify in the circumstances the preservation of the status quo; and, having done so, must go on to show that on the balance of convenience it would be better to maintain the status quo until the trial of the action, by preventing the caveatee from disposing of the property.[13]
[26] I have underlined those words in the previous paragraph to emphasise the relevant question. In the submissions on behalf the plaintiffs, this issue and the first element to consider in relation to the application for a freezing order (whether the plaintiffs have a good arguable case in respect of their underlying cause of action) have been addressed as though they concern the same thing. They do not. In the context of the application to remove the caveat, the focus is on the caveator's claim to an interest in the property the subject of the caveat - here the purported constructive trust. In the context of the application for a freezing order, the focus is on the plaintiffs' claim more broadly.
[27] The first question is whether the plaintiffs have a caveatable interest in the Gympie property.
[28] The second defendant submitted they did not, on the basis that what the plaintiffs claim is an equitable remedy, in the form of a constructive trust, the discretionary nature of which makes it difficult for them to assert they hold an interest in the Gympie property capable of supporting their caveat.[14]
[29] Although that point was alluded to in the Jedhar decision cited by the second defendant, it was found unnecessary to decide whether there was a caveatable interest in that case.
[30] On the other hand, in Palmer v Mullins Investments Pty Ltd (in liquidation),[15] it was held that a caveatable interest in land by way of constructive trust could, in principle, arise in circumstances where it was claimed moneys received by a director in breach of the fiduciary duties owed by him to the company were invested by the director in the purchase of real property. Notwithstanding the discretionary nature of the equitable remedy, Murray J considered it clearly arguable that in those factual circumstances a declaration of constructive trust may be made, such that the claim to a caveatable interest would be sufficient to support it, pending resolution of the claim. His Honour observed that when a court makes a declaration as to a constructive trust, it does not create the trust at the time of the order, but declares that the circumstances are such that the trust arose upon the breach (relevantly) of the fiduciary duty. For that reason, his Honour rejected the argument that the concept of a constructive trust is "purely remedial and incapable of giving rise to a proprietary interest until its declaration". Whilst accepting the theoretical possibility, Murray J found that the evidence did not support a conclusion that the director received the moneys in breach of a fiduciary duty. On the evidence before him, his Honour was not satisfied there was a serious question of relevant breach of fiduciary duty to be tried and therefore there was no serious question to be tried as to the existence of the caveatable interest by way of constructive trust asserted or claimed to support the caveat.
[34]
(a) the Gympie property is the defendant's family home, and they own no other real property;
[35]
(b) on the evidence, the reason they wish to sell the property is in order to fund their legal fees in relation to what are very serious criminal charges, as well as this proceeding;
[36]
(c) the proportion of the plaintiffs' claim ($20,000) to the value of the property ($440,000) is small; and
[37]
(d) the first defendant was willing to give an undertaking to pay that amount into her solicitor's trust account.[22]
[38]
[46] For those reasons, I am satisfied it is appropriate to exercise the discretion to order that the caveat be removed.
[39]
[47] Turning then to the plaintiffs' application for a freezing order. Although the plaintiffs' application for a freezing order was said to be pressed regardless of the outcome of the application to remove the caveat, counsel for the plaintiffs confirmed that it is no coincidence that the freezing order which the plaintiffs seek is limited to restraining property or assets to the value of $400,000, roughly the value of the defendant's Gympie property.
[48] In terms of the elements to be established, I gratefully adopt Bond J's (as his Honour then was) summary of the relevant principles in Parbery v QNI Metals Pty Ltd[2018] QSC 107; (2018) 358 ALR 88 at [15]- [75], as qualified in Bluepoint Property Pty Ltd v Zuri Properties Pty Ltd[2020] QSC 219 at [10].
[49] For the purposes of this application, I accept the plaintiffs have a good arguable case in respect of their underlying cause of action [as distinct from their claim to an interest in the Gympie property]. Neither defendant argued otherwise, focussing their opposition to the order sought on other bases.
[50] The next element is whether there is a real risk, judged objectively, of an unjustifiable disposal of assets which would have the effect of frustrating the prospective court processes of execution and enforcement in respect of any judgment in the plaintiffs' favour.
[51] The plaintiffs seek to demonstrate that by reference to three things: the proposed sale of the Gympie property; evidence of substantial withdrawals of cash said to be contained in Mr Ponsonby's report; and the nature of their claim against the defendants, involving allegations of substantial dishonesty.
[20] Paragraph 41 of the second further amended statement of claim.
[61]
[21] Affidavit of Mr Byrne (CFI 49) at [37], in which Mr Byrne deposes to Mr Hutchins telling him that a review of bank statements for the account ending in 740 show the first defendant making payments of $10,000 on two dates for the purposes of making improvements to the property. An affidavit of Mr Hutchins was read by the plaintiffs on the hearing of the applications, but it was not said to deal with this. The relevant bank statements were apparently not in evidence.
[62]
[22] See generally Ross Cook and Brett Cook Pty Ltd v Bli Bli #1 Pty Ltd[2009] QSC 300 at [21].
[31] Another example is Wickham Developments Ltd v Parker & Anor[1994] QSC 255. This case has some factual similarities to the present proceedings. Parker had been employed by the plaintiff as a salesperson in connection with its real estate developments. She became the owner of three real properties, at Ashgrove, Loganholme and Norman Park. The plaintiff claimed it had caveatable interests in each of the properties in the form of equitable estates in fee simple as beneficiary of a constructive trust because there had been misuse and misappropriation of funds by Parker to acquire and improve, or alternatively, just improve the three properties, using moneys, credit facilities, accounts, contractors and facilities of the company at the company's cost.
[32] There was no suggestion in this case that because of the remedial nature of a constructive trust, no caveatable interest could arise. On an application by Parker to remove the caveats lodged by the plaintiff, Mackenzie J at first instance considered whether there was, in the case of each property, a serious question to be tried as to the existence of the interest alleged and whether the balance of convenience favoured leaving the caveats in place. As to the Ashgrove property, it was common ground it was acquired without the assistance of any moneys attributable to the company in the first instance; and Mackenzie J found the evidence of the allegation that the company's moneys had been expended in making improvements was not convincing. No serious question to be tried was found in respect of the Loganholme property said to have been purchased at a reduced price. As to the Norman Park, the position was different, and it was found there was a serious question to be tried that money obtained in breach of trust was used to improve the property.
[33] Mackenzie J's decision was upheld on appeal,[18] albeit on slightly different bases in some respects. In respect of the Norman Park property, McPherson and Pincus JJA said that there was "at least an arguable case that money or its equivalent belonging to [the plaintiff] has been misappropriated or misapplied in making improvements to the Norman Park property in circumstances giving rise to a claim on the part of [the plaintiff] to trace or follow it and assert an equitable charge over or in respect of that land to the extent of the expenditure involved". The caveats in respect of the Ashgrove and Loganholme properties were removed; but the caveat in respect of the Norman Park property was not.
[34] Relevantly (because a similar argument is made here by the second defendant), Mackenzie J rejected a submission that the Norman Park caveat was too widely expressed, because it claimed an equitable estate in fee simple as beneficiary of a constructive trust. On appeal, McPherson and Pincus JJA accepted that the interest was "overstated" in the caveat, but said that did not warrant its removal in the circumstances. Fitzgerald P agreed the interest specified in the caveat was too widely expressed, and for that reason would have ordered the removal of the caveat, but also would have granted leave to lodge another caveat claiming the correct interest, under s 129 of the Act.
[35] On the basis of these authorities, I reject the submission of the second defendant that, as a matter of principle, the plaintiffs cannot show a caveatable interest, given the discretionary nature of the remedy of constructive trust.
[36] Because of the conclusion I have reached as to whether there is a serious question to be tried as to the existence of an interest in the Gympie property, next discussed, I find it unnecessary to deal with the second defendant's further argument, that the caveat is defective for failing to identify the extent of the plaintiffs' claimed interest.[19] In any event, Wickham Developments v Parker suggests that if it came down to this, and there was found to be a defect in the caveat itself, an appropriate remedy would be to order its removal, but give leave to file another caveat.
[37] The real question on the present application is whether, on the evidence before the court, the plaintiffs have established that their claim to an interest in the Gympie property does raise a serious question to be tried.
[38] As already noted, the property was acquired by the defendants over four years before the first defendant started to work for the first plaintiff. There is, therefore, no question to be tried as to any financial contribution by the plaintiffs, or either of them, to the acquisition of the property in the first instance.
[39] Counsel for the plaintiffs submitted that the plaintiffs' case would be that the companies' moneys, misappropriated by the first defendant, were used to make financial contributions to the ongoing acquisition of the property, subsequently, in the form of contributions to the mortgage payments.
[40] There are (at least ) two problems with this argument. The first is that this is not pleaded by the plaintiffs in their statement of claim (see paragraphs 39 to 43, set out at paragraph [5] above), which only pleads the contribution of $20,000 towards improvements. When this was raised at the hearing of the applications (although I note it was also pleaded in the defences), counsel for the plaintiffs said he would apply for an adjournment so that the pleading could be amended to remedy this. That was unsurprisingly opposed by the defendants. I did not rule on the adjournment application at that time, as I considered it necessary to read the whole of the material before reaching my decision on the applications, including the application for an adjournment. Having now done that, and in light of the matters discussed below, I refuse to adjourn the hearing of the applications to enable a further amendment to be made to the statement of claim.
[41] The second problem is an evidentiary one. According to counsel for the plaintiffs, the plaintiffs would seek to rely upon the drawing of an inference - that because (as they allege) the defendants(s) misappropriated or misapplied funds belonging to the first and/or second plaintiffs, it is to be inferred that they used that money, or at least part of it, to pay their mortgage. However, the defendants' home loan bank statements are in evidence, and it was not submitted that those statements showed any transaction consistent with that inference.
[42] Although counsel for the plaintiffs protested that the stay of the proceedings has prevented disclosure from taking place, and accordingly they are not in a position to yet know what happened to the money they allege was misappropriated, that does not appear to be borne out by the chronology. The proceedings began in January 2020. They were not stayed until August 2021, about 18 months later. Orders were made for disclosure, in respect of an agreed document plan, in July 2020. Notices of non-party disclosure have also been issued and complied with. There appears to have been a substantial amount of investigatory work undertaken, having regard to the affidavits of Mr Hutchins and the report(s) of Mr Ponsonby which have been obtained. In that context, and in circumstances where the home loan bank statements are in evidence, the inability of counsel for the plaintiffs to put this any higher than an inference is insufficient, in my view, to support a conclusion that there is a serious question to be tried, as to the plaintiffs' claim to an interest in the Gympie property on the basis of financial contributions to the ongoing acquisition of it, in the form of mortgage payments.
[43] That leaves the contention as to financial contributions to improvement of the Gympie property. What is pleaded, in paragraph 42 of the further amended statement of claim,[20] is a contribution of $20,000, made in August and October 2017. There is no evidence of that before the court. Mr Byrne's affidavit included a paragraph containing second-hand hearsay evidence as to the contents of a bank statement said to demonstrate this.[21] That was excluded on the basis it was inadmissible, even on an interlocutory application such as this. Counsel for the plaintiff was invited to take the court to the actual bank statement(s), or any other evidence, but could not do so.
[44] It follows that I am also not satisfied there is a serious question to be tried as to the plaintiffs' claim to an interest in the property, on the basis of financial contributions to improvements to the property.
[45] Had I reached a different view as to that question, in relation to the improvements, I would in any event have found that the balance of convenience favours removal of the caveat given that:
[52] In so far as the plaintiffs rely on the proposed sale of the Gympie property to demonstrate this, I do not regard that as evidence of an unjustifiable disposal of that asset - the evidence is that the defendants wish to sell their home, which is the only real property they own, to fund their legal fees in respect of this proceeding and the serious criminal charges against them.[23]
[53] As to the second matter, the plaintiffs rely on parts of a report of Mr Ponsonby, who is described as a director of Forensic Accounting Pty Ltd. The report in evidence is dated 27 May 2021,[24] and is described as a "supplementary report". It makes reference to an "original report", which is defined as a report prepared by Mr Ponsonby dated 8 July 2020. That "original report" is not in evidence, and it appeared the plaintiffs' counsel had not seen it. On the other hand, the first defendant's counsel had only seen the "original report", and had not been provided with the supplementary report, prior to Mr Brown's affidavit being filed by leave in court (a matter which did not become apparent until the dates of the respective reports were noted). That leaves the evidence in an unsatisfactory state, to say the least - apart from other matters, as far as I can see, there is no reference to Mr Ponsonby's qualifications in the report which is before the court (perhaps because it is intended to be read with the "original report", and they are set out there, although that is mere speculation).
[54] The evidence of unjustifiable disposal of assets said to be found in Mr Ponsonby's report is contained in paragraph 3.47, which reads: "Based on my review of the documentation provided to me, together with my interview of the Director, it appears evident that upon the Suspect and the Suspects Husband [the first and second defendants] becoming aware of legal action being commenced for the civil recovery of the alleged misappropriation, that a total of $295,000 [$171,000 + $96,000 + 28,000] was removed from multiple ATM's, refer to Section 14.0".
[55] Section 14 of the report includes a paragraph 14.9 which reads: "A review of the bank statements [identified in para 14.2] identifies a total of $171,000 was withdrawn from numerous ATM's held with NAB, CBA and Westpac during the financial period from 28 January 2020 to 26 June 2020, refer to Schedule 3A, page 1 for a summary of the transactions".
[56] Schedule 3A lists ATM withdrawals from a bank account ending in #7983, almost daily, or every second day, from 28 January 2020 (shortly after the proceedings were commenced) to 22 June 2020, of $2,000 each time, totalling $171,000.
[57] As counsel for the plaintiffs acknowledged, he could not work out where the sum of $295,000, referred to in paragraph 3.47, came from. He submitted, however, that withdrawals of $171,000 were established.
[58] Separately, in paragraph 12.43 to 12.45 of Mr Ponsonby's supplementary report, he refers to the home loan account having a balance of $6,750.38 as at 16 March 2020; and then from 20 March 2020 to 11 December 2020, a total of $224,664.05 being re-drawn and paid into the offset account for this home loan, leaving a (loan) account balance of $224,312.76. The details are said to be contained in appendix 28A, which is not in evidence (the plaintiffs' solicitor explaining that the full report is some 1433 pages long, and for the sake of brevity, only the body of the report and three of the schedules have been put into evidence).
[59] I accept that, on its face, and even putting to one side the evidentiary issues arising from the fact that the original report is not in evidence, what appears in schedule 3A and also in paragraphs 12.43 to 12.45 is suspicious. However, that was conduct from January to June 2020, and March to December 2020. This application was not made until October 2021. The plaintiffs' delay in bringing the present application is unexplained. If, as appears to be the case, the basis of their application is really the prospective sale of the Gympie property, for reasons I have already given, I do not accept that as providing a basis for making the order sought.
[60] However, I am concerned, given the nature of the plaintiffs' claim and the defendants' apparent conduct, at least as it appears during 2020, that there may be a risk that the prospective court processes of execution and enforcement of any judgment could be frustrated. In that regard, I accept that the evidence which establishes the underlying strength of the plaintiffs' case also has a bearing on this, especially as the case is one of serious dishonesty involving diversion of money from its proper channels.[25]
[61] But as I say, the plaintiffs have, inexplicably, left it a very long time to take any interlocutory action in relation to the funds that may, on their case, be in bank accounts held by the defendants. And even now, the application that has been made only obliquely addresses that - the focus really being to prevent the sale of the Gympie property. There is no application, for example, to "freeze" any of the many bank accounts which have been identified.
[62] The question is, how to deal with this in the circumstances. It seems to me there are two options. The first is to simply dismiss the plaintiffs' application. The second is to adjourn the application to a date to be fixed, giving leave to the plaintiffs to amend it, so that the question of whether any such order is appropriate can be determined, on a proper evidentiary basis, at a later stage. Whether there is any utility in doing that - given the unexplained delay, and the outcome of the present applications in so far as the Gympie property is concerned - and/or whether there is any utility in seeking that undertakings be given by the defendants in the meantime, are matters that I will need to hear further submissions about. I will therefore not make any orders in relation to the plaintiffs' application until hearing further submissions, following the delivery of these reasons.
[63] I will also hear from the parties as to the costs of both applications.