Yates & Anor v Ali [2007] NSWSC 1475

New South Wales Supreme Court

CITATION : Yates & Anor v Ali [2007] NSWSC 1475

HEARING DATE(S) : 12 December 2007

JUDGMENT DATE : 18 December 2007

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Plaintiffs to pay Defendant's costs of proceedings.

CATCHWORDS : INJUNCTIONS – EX PARTE APPLICATION – COSTS – Failure to make full and frank disclosure in ex parte application results in costs orders against Plaintiffs.

Brenton Adrian Yates (First Plaintiff) PARTIES : Farshad Amirbeaggi (Second Plaintiff) Osman Ali (Defendant)

FILE NUMBER(S) : SC 3765/07

COUNSEL : J.T. Johnson (Plaintiffs) In person (Defendant)

SOLICITORS : Yates Beaggi Lawyers (Plaintiffs) In person (Defendant)

3765/07 Yates & Anor v Ali

JUDGMENT 18 December, 2007

1 On 24 July 2007 the Plaintiffs, a firm of solicitors, obtained leave to serve on short notice a Summons seeking asset freezing orders against the Defendant. 2 On 26 July 2007, the Plaintiffs applied in the Duty Judge List for the orders sought in the Summons. An affidavit deposed that attempts had been made unsuccessfully to serve the Defendant, whose whereabouts were then said to be unknown. 3 The Plaintiffs alleged that the Defendant owed them a substantial amount of money on account of legal fees. A costs assessment was in progress but the Plaintiffs said that it would result in a debt of approximately $105,000 and approximately $30,000 in further costs and interest. 4 An affidavit of Mr Amirbeaggi of 24 July 2007 showed how the claim against the Defendant was made up. The evidence as to the likelihood of the Defendant removing his assets from the jurisdiction to defeat the Plaintiffs' claim was extremely scant. Mr Amirbeaggi said that by chance he had seen an advertisement for the sale of certain parcels of real estate, had made an enquiry, and had been told that the vendor of the land was the Defendant. He had made a telephone call to an architect formerly engaged by the Defendant who had told him that the Defendant was about to depart for Egypt. When asked whether the Defendant would be returning, the architect said: "You just don't know with Osman". 5 The affidavit stated that most of the properties registered in the Defendant's name were mortgaged. 6 An affidavit of Mr Amirgeaggi of 26 July 2007 attached correspondence between the Plaintiffs and the former solicitors of the Defendant, who advised that they had ceased to act for him and did not know whether he was still in Sydney. 7 I had misgivings whether the evidence was sufficient to warrant an asset freezing order. However, taking into account the statement by the process server that the Defendant's house appeared to be unoccupied, I was persuaded that it was proper to make the order. 8 On 24 October 2007, the matter was re-listed before me at the request of the Defendant, who appeared in person. The Defendant said that he would pay the Plaintiffs' debt in full and wished to apply for a costs order against the Plaintiffs on the ground that there had been no basis for the Plaintiffs' application for an asset freezing order and that the Plaintiffs had been aware of that fact. Directions were made for the filing of affidavits and the matter eventually was re-listed on 12 December 2007 before me. 9 On that day it was agreed that the Defendant had paid the Plaintiffs' debt and that the asset freezing orders should be discharged. I made such an order by consent. The parties then debated the appropriate costs order. 10 The Plaintiffs submitted that they had obtained a freezing order, after proper disclosure, and as the result had been that the Defendant had paid their debt, the costs should follow the event and the Defendant should be ordered to pay the costs of the proceedings. 11 The Defendant submitted that the Plaintiffs had failed to make full disclosure to the Court of circumstances known to them at the time of the ex parte application and that those circumstances, if they had been disclosed, would not have warranted the making of the asset freezing order. 12 The Defendant in particular submitted that the Plaintiffs had been holding the Certificate of Title to one of his properties as security for the debt and had failed to disclose that fact. He deposed that after he had disputed the Plaintiffs' bill of costs in July 2005, the Plaintiffs claimed a lien over his files. The Plaintiffs requested the deposit of a Certificate of Title to one of the Defendant's property as security for the debt. The Defendant delivered to the Plaintiffs the Certificate of Title to an unencumbered property owned by him in Agnes Waters, Queensland. The Defendant said that the property was worth $120,000. The Plaintiffs had the property valued at $90,000 and said that the security was insufficient. The Defendant disagreed with the valuation and refused to provide additional security. The Plaintiffs retained the Certificate of Title to the property and also maintained their lien over the Defendant's files. 13 That was the position at the time of the Plaintiffs' ex parte application to the Court for a freezing order. Those facts were not revealed to the Court by the Plaintiffs. 14 I regard the failure of the Plaintiffs to disclose to the Court that they retained in their possession a Certificate of Title to an unencumbered property of the Defendant as a material non-disclosure. It does not matter that the value of the property was in dispute and that it may or may not have been sufficient to discharge the Defendant's debt in full. The fact that the Defendant had been prepared to provide security of some value and that the Plaintiffs were still in possession of the Certificate of Title would have caused me to make further enquiries of the Plaintiffs as to the background facts of the case. It may well have been the case that I would have refused outright to grant the injunction. 15 The plaintiff, in an ex parte application for an injunction has an obligation to the Court to make full and frank disclosure of all material circumstances. In this case, the Plaintiffs failed to comply with that obligation. The orders of the Court have now been discharged by consent. However, in my view, the Plaintiffs should not have the costs of the proceedings. On the contrary, their lack of candour should be visited with a costs order against them. 16 I order that the Plaintiffs pay the Defendant's costs of the proceedings. – oOo –