CR Operations Pty Ltd v Clark [2022] NSWSC 1555

Supreme Court New South Wales

Medium Neutral Citation: CR Operations Pty Ltd v Clark [2022] NSWSC 1555 Hearing dates: 11 November 2022 Date of orders: 11 November 2022 Decision date: 11 November 2022 Jurisdiction: Equity - Expedition List Before: Parker J Decision: See [14] Catchwords: CIVIL PROCEDURE – money held in bank account of defendant – plaintiff claims proprietary interest in money – application for interlocutory injunction to freeze bank account pending final hearing – prima facie claim to proprietary interest – balance of convenience – injunction granted Category: Procedural rulings Parties: CR Operations Pty Limited (Plaintiff) Timothy Clark (Defendant) Representation: Counsel: A Martin (Plaintiff)

Solicitors: CharterLaw Legal (Plaintiff)

In person: T Clark (Defendant) File Number(s): 2022/253132 Publication restriction: Nil

Judgment – EX TEMPORE

Revised from transcript; issued 14 November 2022 1. This is an application for an interlocutory injunction which concerns a sum of approximately $33,000 in a bank account held with the Commonwealth Bank in the name of Timothy Michael Clark, the defendant. 2. The evidence before the Court appears to show that the monies in the bank account represent the proceeds of short‑term rental payments made by customers for the use of a property at Kangaroo Valley. That property is owned by Jacks Corner Pty Limited ("JCPL"). 3. JCPL formerly held the property as trustee for a unit trust known as the Jacks Corner Property Trust ("the Trust"). In June this year, JCPL was removed, or purportedly removed, as trustee of the Trust and replaced by CR Operations Pty Limited ("CRO"), the plaintiff. 4. Shortly prior to the removal, Mr Clark, who then controlled JCPL, caused it to enter into a management agreement with himself, pursuant to which he was to manage the property. When this came to the attention of those in control of the affairs of CRO, they caused CRO to issue a notice terminating, or purporting to terminate, any rights under the management agreement over the property. 5. That happened on 8 July. The evidence before the Court appears to show that the total amount credited to the bank account since 9 July is more than $42,000. It would follow that the current proceeds in the account are attributable to receipts after 9 July, that is, after Mr Clark's management rights had been terminated. 6. In these circumstances, the plaintiff applies today for an injunction effectively freezing the bank account until its claim against Mr Clark is heard. 7. At an earlier stage of the proceedings, CRO obtained an asset preservation order against Mr Clark, which contained the usual exclusion for legal fees and living expenses. But the current application is an interlocutory injunction to preserve an asset in which the plaintiff claims a proprietary interest and, accordingly, the principles applicable to the grant of asset preservation orders and the exceptions normally made for such orders do not apply. The questions for determination in the present case are whether CRO has demonstrated a prima facie claim to a proprietary interest in the property and, if so, whether the balance of convenience favours the grant of an injunction. 8. On what I have already said, it is clear that CRO has established a prima facie case to a proprietary interest in what are, on the face of it, proceeds of the short‑term rental business currently in the bank account. Counsel for the plaintiff submitted, and I agree, that it is a strong prima facie case. 9. Counsel for the plaintiff also submitted that the balance of convenience strongly favoured the grant of an injunction. The amount in the bank account is a liquid asset and the evidence shows, as Mr Clark himself asserted today in the course of the hearing, that he is in a parlous financial position. 10. Mr Clark has resisted the application. He says that the Court should not freeze the money but instead, allow him to use it to obtain legal advice so as to defend himself. Apparently, there are related and much more extensive proceedings involving the affairs of JCPL or the Trust or both in the Corporations List. 11. While I appreciate the difficulties in which Mr Clark may find himself, the fact is that the plaintiff has mounted a clear case that the moneys are trust moneys. It is far from clear that the defence of these proceedings by Mr Clark would be a valid expense of the Trust, especially if Mr Clark is eventually unsuccessful. 12. In these circumstances, I see no justification for allowing Mr Clark to expend what are arguably trust moneys on defending his own personal position. In any event, for the Court to accede to an argument of this sort on the balance of convenience, there would need to be clear evidence that Mr Clark has no other source of income available to him to pay legal fees. While Mr Clark has asserted a lack of funds, he has filed no evidence on this application. 13. In my view, the balance of convenience, as determined by reference to the evidence on the application, favours the plaintiff. Accordingly, I will grant an injunction in the terms which are asked. 14. The orders of the Court are: 1. Upon the plaintiff by its counsel giving the usual undertaking as to damages, order that the defendant, by himself, his servants or agents be restrained until further order from withdrawing, or authorising the withdrawal (including the continuation of any prior authorisation of the withdrawal) of any funds from the bank account in the defendant's name with the Commonwealth Bank of Australia BSB [XX] Account number [XX]. 2. Costs of the application be the plaintiff's costs in the cause. 3. These orders are to be taken out forthwith.