New South Wales Supreme Court CITATION : ASSAF v SKALKOS [2002] NSWSC 1255 FILE NUMBER(S) : SC 18374 OF 1993 HEARING DATE(S) : 17 December 2002 JUDGMENT DATE : 17 December 2002 JOSEPH ASSAF (First Plaintiff) ETHNIC COMMUNICATIONS PTY LTD (ACN 001 445 889) (Second Plaintiff) PARTIES : v THEODORE SKALKOS (First Defendant) FOREIGN LANGUAGE PUBLICATIONS PTY LTD (Second Defendant) JUDGMENT OF : Levine J K Rees (Plaintiffs) COUNSEL : T Molomby SC (Defendants) Mallesons Stephen Jacques (Plaintiffs) SOLICITORS : T Lazaropoulos (Defendants) CATCHWORDS : Mareva orders - concluded litigation Bax Global (Australia) Proprietary Limited v Evans (1999) 47 NSWLR 538 CASES CITED : Cardile v LED Builders Proprietary Limited (1999) 198 CLR 380, 73 ALJR 657 Frigo v Culhaci, (NSW Court of Appeal, unreported, 17 July 1998) DECISION : See paragraph 16 Ex tempore - revised IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST JUSTICE DAVID LEVINE TUESDAY 17 DECEMBER 2002 18374 OF 1993 JOSEPH ASSAF (First Plaintiff) ETHNIC COMMUNICATIONS PTY LTD (ACN 001 445 889) (Second Plaintiff) v THEODORE SKALKOS (First Defendant) FOREIGN LANGUAGE PUBLICATIONS PTY LTD (Second Defendant) JUDGMENT (Mareva orders - concluded litigation) 1 By an amended notice of motion, the plaintiffs seek Mareva type orders. 2 The evidence in support of the motion was made up of the following affidavits read without objection: Three affidavits of Justine Melissa Munsie sworn 12 November, 18 November and 17 December 2002, to the first of which is exhibited the folder JMN1. The other affidavit was that of Edward John Santow sworn 17 December 2002. The exhibits before Sperling J on 18 November 2002 A to D regarding, in short form, the sale of the Marrickville and Glebe Point Road properties also became exhibits before me. 3 The history of this action is set out in a chronology handed up by Ms Rees, MFI 1. Save for one matter relating to the entry for 18 November 2002, it is in general terms non-contentious. 4 There is no issue as to the relevant legal principles to be applied in an application of this kind. (See Cardile v LED Builders Proprietary Limited (1999) 198 CLR 380, 73 ALJR 657; Bax Global (Australia) Proprietary Limited v Evans (1999) 47 NSWLR 538 and Frigo v Culhaci, (NSW Court of Appeal, unreported, 17 July 1998). 5 This action for defamation has been characterised by defeat for the defendants all the way. Most recently, in the High Court on Friday, 13 December 2002, leave to appeal was refused with an order for costs being made against the applicants/defendants. On 13 February 2002 the Court of Appeal dismissed the appeal and on 23 July 2002 the Court of Appeal ordered the defendants to pay costs of that appeal on an indemnity basis. I accept for the purposes of this application that presently the total costs involved, including an allowance of a rough figure of $40,000 for the appeal to the High Court, is in the vicinity of $1.16 million. The judgment awarded to the plaintiffs at trial by Carruthers AJ has been paid. The orders sought are by way of protection to the plaintiffs for those costs, one component of which will be the subject of an appeal judgment by Master Malpass this Friday. 6 The case for the plaintiffs in the light of the historical matters deposed to and taking into account the judgment finality from 13 December is clear in terms of where power exists over assets, in whom it lies, disposition of assets hitherto and the likely disposition by or on behalf of the defendants. 7 A critical document in these proceedings is an undertaking signed on 9 July 2001. It is in the following terms: "1 I, Theodore Skalkos in my personal capacity and as director of Foreign Language Publications Pty Limited of 5 – 13 Garners Road, Marrickville, New South Wales: undertake to the Court that, pending the determination of this matter on appeal , the defendants will not sell, give or otherwise dispose of any asset in which they have a legal or beneficial interest, except: (a) in the ordinary course of their day to day business; or (b) in the ordinary course of my day to day living expenses, including those living expenses of my dependents or spouse; or (c) for the purpose of discharging or servicing their debts, liabilities, including liabilities under guarantees, present or contingent; or (d) for the purpose of any legal expenses: (i) incidental to this action; or (ii) in relation to an appeal of this action including, but not limited to, any cross appeal or ground of contention. 2 The defendants reserve a right to seek a variation of this undertaking by agreement between the parties, such agreement not to be unreasonably withheld, or failing agreement by application to the court." (emphasis added) 8 The critical phase according to the position taken by the defendants on this motion is "pending the determination of this matter on appeal". 9 The undertaking was entered into as a condition, as I understand it, for the stay of execution in relation to costs thitherto ordered pursuant to consent orders made on 24 June 2001 and following earlier orders made on 23 March 2001. The defendants do not dispute that the undertaking gives protection to the plaintiffs. They assert that that undertaking was exhausted by the judgment of the Court of Appeal, despite that adverse outcome for the defendants. Thus, say the defendants, there has been since the judgment of the Court of Appeal and the exhaustion of the value of the undertaking, no obligation on them, nor any right in the plaintiffs to seek information and documents in relation to public disposition of assets after that time as is referred to in the correspondence at the end of JMM1. 10 In relation to that correspondence which is concerned with the disposition of the assets, attached to it was the undertaking and in it, further undertakings are sought, conformably one would think with paragraph 2 of the principal undertaking. No complaint is made, say the defendants, of any breach by them of the July 2001 undertaking. In terms no such complaint is made. Nor, I must say, did the defendants at any time, at the very least as a matter of intra-professional courtesy, inform the plaintiffs of the position first asserted on 18 November this year that the undertaking was not worth the paper on which it was written after the unsuccessful appeal by the defendants in the Court of Appeal. 11 Another point made by the defendants in opposition to this motion is this. In so far as leave was granted to the plaintiffs to serve certain subpoenas and a notice to produce on short notice on 12 November this year, and I refer to Ms Munsie's affidavit of 18 November, the plaintiffs' complaint that the defendants have neither shown, nor told anything about the post Court of Appeal activities in relation to their property, is the more understandable when the leave to serve short notice was granted in terms that that notice be given by fax and, for all it is known, the order and the accompanying documents might never have been received. 12 That extraordinary proposition is made the more untenable by my acceptance of the position stated by Ms Rees that Mr Lazaropoulos, the solicitor for the defendants, on 18 November complained about not being in attendance at the grant of short notice, notwithstanding that he had been informed as a matter of professional courtesy that it was being sought. Yet he did not on that occasion make any complaint about non-receipt or non-service of the documents. 13 The undertaking on 9 July 2001 constituted a protection to the plaintiffs. It is on my construction capable of referring clearly to the disposition on appeal of a matter instituted in the Common Law Division of this Court notwithstanding the temporal context of its being entered into in terms of there then being pending an appeal in the Court of Appeal. 14 The position taken in relation to the undertaking by the defendants, given that that position, and it is my phrase that I use but one that was adopted by Mr Molomby, provided the defendant with "open slather" from the time of the judgment of the Court of Appeal to do what it liked; given the position taken by the defendants in relation to the subpoenas and the notice to produce, a description comes to mind the more favourable quality of which is that those positions were ingenuous. 15 Each position was calculated, in the sense of likely to have the effect of, to frustrate the processes of the Court in the face of a clear entitlement in the plaintiffs. The balance of convenience in terms of the making of the orders unarguably favours the making of them to maintain the protective status quo countenanced by the undertaking of 9 July 2001 and I propose to make the orders sought. (Discussion ensued re the form of the orders and costs. See transcript pages 25 to 26.) 16 I make the following orders as per the amended notice of motion: 1. Until further order, the defendants and each of them be restrained, whether by themselves, their servants or agents, or by any company which the first defendant controls or of which he is a director or shareholder or otherwise howsoever, from removing from Australia, selling, encumbering, charging, mortgaging or otherwise dealing with or disposing of, or causing, procuring or permitting to be sold, encumbered, charged, mortgaged or otherwise dealt with or disposed of, all or any of their money, property and other assets within Australia, whether owned jointly or solely, whether in the names of the defendants or not and whether owned legally or beneficially, up to value of $A1,100,000, including without limitation: (a) the properties comprised and described in New South Wales Certificate of Title Folio Identifiers: (i) 1/DP87764; (ii) 9/DP62937; and (iii) 1/DP964122. (b) the first defendant's shares in the following companies: (i) Foreign Media Pty Limited; (ii) Brinda Pty Limited; (iii) Bridgemoon Pty Limited; (iv) Media Press Pty Limited; (v) Multilingual Advertising Pty Limited; (vi) Bocele Pty Limited; (vii) Video Fast Pty Limited; (viii) Cathwood Corporation Pty Limited; (ix) Asia Publications Pty Limited; (x) Alfa Travel Agency Pty Limited; (xi) Ethnic Media Pty Limited; (xii) All Colour Media Printing Pty Limited; (xiii) Foceba Pty Limited. Except: (a) For full value and on terms that require and authorise the purchaser, encumbrancee, chargee, mortgagee or disponee or other party to the transaction to pay any consideration, after discharging any encumbrance, charge or mortgage, up to an amount of $A1,100,000, to the trust account of Mallesons Stephen Jaques at the National Australia Bank in Sydney, Australia, to be held by them on trust for the seller, incumbrancer, chargor, mortgagor or disponer until further order; (b) to enable the defendants to pay and continue to pay the reasonable legal expenses of defending these proceedings or any other proceedings brought against them, up to a total amount of $A50,000; (c) to meet their Australian taxation liabilities; (d) to pay ordinary and proper business expenses bona fide incurred by them up to a total amount of $A50,000; (e) to pay the first defendant's ordinary living expenses up to an amount of $A1,000 per week; or (f) otherwise with the consent in writing of the plaintiffs or their solicitors. 2. An order that the first defendant, by 5 pm Friday, 18 January 2003, file and serve an affidavit setting out: (a) the name and address of any bank, building society or other financial institution at which there is an account in his name, the name of the second defendant or any other name used by him or the second defendant or in which he or the second defendant has an interest or which is under the control of him or the second defendant, together with the name and number of such account and the balance therein; and (b) the name and address of any person or persons indebted to him or the second defendant and the amount of debt or debts owed by such person or persons; and (c) an itemised inventory of all property owned by him or the second defendant or in which he or the second defendant has an interest or which is under the control of him or the second defendant (excluding items with a value of less than $1,000); and (d) whether any of the property referred to above has been given as security for any debt and, if so, the nature of that security and the debt so secured. 3. Leave be granted to the plaintiffs to give to any bank, building society or other financial institution with which the first or second defendants or any of them conduct or conducts any account or accounts notice of these orders by delivering to, or leaving with, some person apparently in the employ of such bank, building society or other financial institution, at the address of such bank, building society or other financial institution where the defendants or any of them conduct or conducts any account or accounts, an office copy of a minute of these orders. 4. That these orders be entered by the Registrar forthwith. (Ms Rees sought an order for costs of the motion.) 5. The defendants are to pay the plaintiffs' costs of the motion. ********** Last Modified: 01/17/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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