Jiri Vychytil v Ivan Vladimir Dachkov [2014] NSWSC 529

Supreme Court New South Wales

Medium Neutral Citation: Jiri Vychytil v Ivan Vladimir Dachkov [2014] NSWSC 529 Hearing dates: Thursday, 1 May 2014 Decision date: 01 May 2014 Jurisdiction: Equity Division Before: Brereton J Decision: Judgment for the plaintiffs Catchwords: FRAUD - recovery of moneys paid pursuant to fraudulent misrepresentations Category: Principal judgment Parties: Gabrielle Vychytilova (first plaintiff) Jiri Vychytil (second plaintiff) Ivan Vladimir Dachkov (first defendant) Susanne Anna Urban (second defendant) Kerry William Lovegrove (third defendant) Representation: Counsel: F G Kalyk (plaintiffs) Solicitors: Rockliffs Solicitors and IP Lawyers (plaintiffs) File Number(s): 2014/63619

Judgment (ex tempore) 1By summons filed on 28 February 2014 the plaintiffs Jiri Vychytil and Gabriela Vychytilova claim judgment against the first defendant Ivan Vladimir Dachkov and the second defendant Susanna Anna Urban for an amount totalling approximately $430,000 plus interest, of which they have been allegedly defrauded by the defendants during the period November 2009 to November 2013. 2The proceedings were commenced by ex parte application made before the Chief Judge on 28 February 2014, when her Honour granted a limited form of freezing order and also made an order for substituted service of the proceedings on the defendants by e-mail to two nominated e-mail addresses, from which according to the plaintiffs' evidence they had in the past received e-mail communications from the defendants. Her Honour also ordered that the relevant documents be delivered to two addresses in Victoria with which the defendants appeared to have a connection, one of them being an address at which the defendants had at least formerly been known to reside. 3The evidence establishes that the proceedings were served by e-mail in compliance with that order on 28 February, and that the documents were subsequently delivered to those addresses. A further e-mail was sent to the first defendant at the specified e-mail address on 3 March 2014, and the first defendant responded to the plaintiffs' solicitor on 3 March 2014 at 5.54pm, indicating that he accessed and used the specified e-mail address after the electronic service of the proceedings. 4Since then, however, nothing has been heard from the defendants, who have filed no appearance in the proceedings nor responded to the freezing orders. A more extensive freezing order was granted by Darke J on 4 March and continued by me on 20 March 2014. 5Further documentation in the proceedings has been served electronically to the two e-mail addresses in question. The defendants, as I have said, have not at any stage since 3 March responded nor appeared in the proceedings. 6The plaintiffs are a married couple of Czech origin and the defendants are domestic partners of, it would seem, Russian and Czech origin. The parties met socially in about late 2006, when they lived in reasonably close proximity in Victoria; it seems that their common Czech language provided a connection, and they became friends and well acquainted. 7The male plaintiff and the male defendant discussed investments, and at the first defendant's suggestion the plaintiffs transferred funds to two bank accounts. One was Westpac bank account XX-XXXX which as it ultimately transpires is in the name of SG Alliance Limited trading as Halls Group, with the customer being identified as SG Alliance Limited. The other was Macquarie Bank cash management account number XXX XXX XXX, which as it ultimately transpired was in the name of the first and second defendants. 8The funds transferred to the Westpac account were supposedly for the acquisition of units in a unit trust supposedly called the Southall Partners Investment Trust as to $150,000 (paid as to $100,000, on 24 November 2009 and, as to $50,000, on 30 March 2010), and as to $66,000 for investment in the so called Agro Module International, supposedly a New Zealand foreign trust. A further payment was transferred to that account as late as November 2013 of $7,956 in response to requests for payment of insurance premium in respect of the investment. The funds transferred in accordance with bank account details provided by the first defendant to the Macquarie Bank account were supposedly for investment in a "metals portfolio trading account" with Macquarie Bank. 9The defendants together with one Mr Kerry Loveridge, were directors of SG Alliance, which was a public company limited by guarantee and registered in Victoria and apparently had the trading name Coles Group. That trading name was not renewed when it fell due for renewal in March 2010. SG Alliance has since been deregistered. 10The only evidence of the existence of the Southall Partners Investments Trust is a trust deed provided electronically by the first defendant in October 2013 in response to a request by the plaintiffs. On examination it appears to be a document prepared in 2007 in Melbourne, Florida, and contains no evidence of execution by any party, nor for that matter even an execution page. Of the $150,000 transferred for investment in it, it seems from the bank statements now produced by Westpac that $72,000 may have been paid to Bell Potter Capital, but there is no indication of it being paid to anything called the Southall Partners Investment Trust. 11The plaintiffs were provided with what is purportedly a unit certificate for 15 ordinary units in the Southall Partners Investment Trust signed by Kerry Loveridge as director of a SG Alliance Limited, and also by a secretary of that company. 12There are receipts into the Westpac account from Bell Potter Capital on a periodic basis which have the appearance of interest payments. These predate as well as postdate the plaintiffs' deposits, and it may be that SG Alliance had some sort of investment through Bell Potter. However, the moneys transferred to the Westpac SG Alliance account otherwise seem to have been expended on what looks like personal expenditure of the defendants on credit cards and outgoings and utilities in connection with a residential property. 13The plaintiffs received a number of newsletters in connection with their investment. One, dated 28 June 2013, was apparently signed by Kerry Loveridge notwithstanding that he had died in November 2011. In addition, the receipt for the financial guarantee insurance for which the plaintiffs paid $7,956 in November 2013 is issued over the signature of the by then long deceased Kerry Loveridge. 14As to the money transferred to the Westpac account supposedly for investment in "Agro Module International", the Westpac Bank statements indicate that they were expended on personal expenditure of the defendants of the type I have described, and not placed in any investment. 15As to the amounts transferred to the Macquarie account, the first defendant from time to time provided to the plaintiffs copies of what appeared to be statements issued by Macquarie Bank in respect of what was described as a "metals portfolio" and which appeared to contain a number of superannuation submission-accounts, one for one of the defendants, one for the second plaintiff, and one for another party. 16However, when Macquarie Bank produced on subpoena the bank statements in respect of that account, it was manifest that the documents supplied by the first defendant were total fabrications on a fraudulently created Macquarie Bank letterhead so as to resemble a Macquarie Bank statement but having no authenticity as such whatsoever. 17In respect of the total transferred to the Macquarie Bank account of $205,500, and the $66,000 for the Agro Module International , it is very clear indeed that there were no such investments as the first defendant recommended to the plaintiffs. The exercise was entirely a sham and a fraud on the plaintiffs. 18It is, as I have observed, somewhat remarkable that the payment of $7,956 on 4 November 2013 was made notwithstanding that the plaintiffs had on 15 October 2013 demanded repayment of the investment funds within seven days, and had received legal advice which must have cast grave doubt on the genuineness of the transactions that had occurred to that time. It is also somewhat remarkable that, even now, it does not appear that the plaintiffs reported these matters to police, nor to Macquarie Bank upon whom the fraud has also been practiced, to the extent that its letterhead and correspondence from purported officers of that bank have been misused. 19However, on the material before the Court, it is very clear that the plaintiffs were deceived by the first defendant into parting with their funds in the way in which I have described. The evidence does not implicate the second defendant in the deception in respect of the Westpac account. It is true she was a director of SG Alliance, but she is not shown to be implicated in anyway in the deceptive conduct of the first defendant. The position in respect of the payments into the Macquarie account of which she was one of the two account holders differs for that very reason; she was, together with the first defendant, a recipient of those payments and gave no consideration for them; accordingly, regardless of knowledge on her part, as a voluntary recipient of funds procured by the fraud, she is prima facie liable to disgorge them. 20Accordingly, it seems to me that the plaintiffs are entitled to judgment against the first defendant for the amounts paid to the Westpac account, together with interest from the date on which each amount was so paid, less credit for the "interest" amounting to $58,925 that they received in respect of the purported SG Alliance investment. They are entitled to judgment against the first and second defendants for the amounts paid to the Macquarie account, together with interest from the date of each payment. 21The plaintiffs have sought that the Court make an order that a garnishee order issue to the Macquarie Bank in respect of the small amount standing to the defendants' credit in that bank account. Although the amount is very small, it seems to me that that is not sufficient reason not to order execution against it. 22I will make an order dispensing with compliance with rule 39.34 requiring a notice of motion for a garnishee order, and an order pursuant to rule 39.35 that no affidavit in support of the application for a garnishee order be required, as the affidavit evidence otherwise before the Court sufficiently proves the requisite matters. The draft garnishee order that has been provided to the Court will need to be completed, by inserting the amount of the judgment in paragraph 1 and inserting a description of the relevant bank account in the notice for garnishee on page 2. 23The plaintiffs are entitled to an order for costs. The plaintiffs seek a lump sum order and I am ordinarily disposed to make such an order. However, at present I think there is insufficient detail to make an order as sought pursuant to Mr Michael's affidavit of 1 May. There needs to be at least some explanation of the basis of the estimate that goes beyond that there have been four appearances in Court. One would think, in this day and age, that a law firm has a computerised costing system which would show the number of attendances, by whom, and the time expended and the charge out rates which would enable a more detailed estimate to be obtained without much effort at all. 24I will therefore not at this stage make a lump sum order, but if the evidence can be supplemented I remain prepared to consider doing so when short minutes that reflect these orders are brought in. 25The judgments referred to above should be expressed in terms that the Court gives judgment that the first defendant pay to the plaintiffs the sum of $X (being the amount of the principal judgment plus interest calculated on the basis I have described to date). There is no need separately to specify the judgment and interest. 26I will adjourn the matter to Monday 5 May 2014 at 10am before me, for short minutes.