Federal Court of Australia El-Rihani v Hotait (No 4) [2023] FCA 1615 File number: NSD 807 of 2018 Judgment of: STEWART J Date of judgment: 14 December 2023 Catchwords: PRACTICE AND PROCEDURE – ancillary orders to prospective freezing orders Legislation: Federal Court Rules 2011 rr 7.32, 7.33 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 12 Date of hearing: 14 December 2023 Counsel for the Plaintiff: T Lynch SC and M Harker Solicitor for the Plaintiff: HWL Ebsworth Lawyers Counsel for the Defendant: The Defendant did not appear. ORDERS NSD 807 of 2018 BETWEEN: HUSSEIN EL-RIHANI Plaintiff AND: BILLAL HOTAIT Defendant order made by: STEWART J DATE OF ORDER: 14 DECEMBER 2023 THE COURT ORDERS THAT: 1. By noon on Friday 22 December 2023, the defendant serve on the plaintiff an affidavit: (a) disclosing all the defendant's assets world-wide; (b) giving the value, location and details of those assets (including any mortgages, charges or other encumbrances to which they are subject); and (c) disclosing the extent of the defendant's interest in those assets. 2. The interlocutory application be otherwise stood over for case management before me on 16 January 2024 at 9.30 am. 3. These orders be served on the defendant at his address for service in the proceeding not later than noon on 15 December 2023. 4. The listing before a Registrar on 21 December 2023 be vacated. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (delivered ex tempore) STEWART J: 1 On 6 June 2023, Farrell J made orders which include that the defendant make payment of a series of sums into a trust account on specified dates in June, July, August and September of this year. Each of those payments was conditional on the plaintiff first paying equivalent sums into that trust account. It is provided in those orders that in the event that the defendant failed to make any one of the payments at the time that he was ordered to make it, then the corresponding and prior conditional payment of the plaintiff would be paid back to the plaintiff on his demand. 2 There was also an order that the defendant pay the plaintiff's costs of the proceeding as agreed or taxed. There is evidence before me now that those costs are conservatively assessed to be about $400,000, the actual costs of the plaintiff being approximately double that amount. The costs have not yet been agreed or taxed. 3 The evidence is that the plaintiff paid each of the amounts that he was supposed to have paid into the trust account so as to enliven the defendant's corresponding obligation, but on each occasion the defendant failed to make his payment. The plaintiff was in turn repaid what he had paid. There is also evidence, in the form of an email addressed to the solicitor controlling the trust account the day after the orders of 6 June 2023, that the defendant does not accept the terms of the orders. That is the implication of his instruction to the solicitor to make payments from the trust account which is at odds with the orders. 4 Also, despite invitation to the defendant to agree the costs that he must pay, no response has been received from him. 5 By interlocutory application dated 7 December 2023, the plaintiff applies for freezing orders against the defendant which are said to meet the danger that the judgment of 6 June 2023 will be wholly or partly unsatisfied. Orders 6 and 7 of the proposed freezing orders, which are in the usual terms, are orders of the nature contemplated by r 7.33 of the Federal Court Rules 2011, being "ancillary orders". They require the defendant to disclose on affidavit information with regard to his assets. 6 The defendant has had notice of the application today but has not appeared. 7 Mr Lynch SC, who appears with Mr Harker for the plaintiff, has not sought freezing orders at this stage. Rather, the plaintiff seeks, today, only the ancillary orders in the terms contemplated by prayers 6 and 7 of the interlocutory application. 8 Although I am doubtful that order 2 of the orders of 6 June 2023, being the order requiring the defendant to make the series of payments to the trust account conditional on the plaintiff making his payments, is of such a nature as to justify a freezing order, there can be little doubt that the cost order is of such a nature. My doubt is as to whether order 2 is a "judgment" as referred to in r 7.32. 9 As mentioned, there is evidence before me that an effort has been made on behalf of the plaintiff to agree the quantification of the costs order with the defendant, but no response has been received. In view of that, the evidence of a contract for the sale of real property in the defendant's name to his wife, and the defendant's disregard of the orders, I am satisfied that there is a danger that the cost order, which is yet to be ultimately quantified, may not be met in due course. 10 I am therefore satisfied that the requirements for a freezing order, limited at this stage as being in relation to the unpaid costs, are met. I am thus satisfied that the power in r 7.33 to make an ancillary order, which can be made in relation to a "prospective freezing order", is enlivened. 11 As to such an order being "appropriate", as required by the rule, I consider that it is. Such an order is readily made once the requirements for a freezing order are met, in particular because there is a danger that assets will be dissipated such that the judgment will not be met. It is necessary to identify what assets there are so as to more readily prevent their dissipation and to facilitate execution on the judgment once the costs have been quantified. 12 So for those reasons, I will make the following orders: (1) By noon on Friday, 22 December 2023, the defendant serve on the plaintiff an affidavit: (a) disclosing all the defendant's assets worldwide; (b) giving the value, location and the details of assets (including any mortgages, charges or other encumbrances to which they are subject); and (c) disclosing the extent of the defendant's interest in those assets. (2) The interlocutory application be otherwise stood over for case management before me as duty judge on 16 January 2024 at 9.30 am. (3) These orders be served on the defendant at his address for service in the proceedings not later than noon on 15 December 2023. (4) The listing before a Registrar on 21 December 2023 be vacated. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate: Dated: 15 December 2023