Supreme Court New South Wales Medium Neutral Citation: Malvina Park Pty Ltd t/as Firths the Superannuation Lawyers v Pollard [2015] NSWSC 578 Hearing dates: 15 May 2015 Date of orders: 18 May 2015 Decision date: 18 May 2015 Jurisdiction: Common Law Before: Schmidt J Decision: Orders sought refused. Catchwords: INJUNCTIONS – ex parte application – freezing order sought for legal costs payable by client – personal injury claim – no arguable case – orders sought refused – costs Legislation Cited: Legal Profession Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 Finn v Carelli [2007] NSWSC 261 Frigo v Culhaci [1998] NSWCA 88 Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249; (2008) 163 LGERA 83 Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG; "The Niedersachsen" [1983] 1 WLR 1412; [1984] 1 All ER 398 Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279 Tomasetti v Brailey [2012] NSWCA 6 Category: Procedural and other rulings Parties: Malvina Park Pty Ltd t/as Firths The Superannuation Lawyers (ACN 056 553 407) (Plaintiff) Vance James Pollard (Defendant) Representation: Counsel: Mr R Goodridge (Plaintiff) Solicitors: Firths – The Compensation Lawyers File Number(s): 2015/145733 Publication restriction: None Judgment 1. On 15 May 2015 the plaintiff, a law firm, approached the Court ex parte, seeking a freezing order under Rule 25.2 of the Uniform Civil Procedure Rules 2005 (NSW), in terms consistent with the Court's Practice Note SC Gen 14. The order was sought in respect of legal costs of some $30,830.39 claimed to be payable by a client, Mr Pollard, for whom the firm had acted on a personal injury claim, which had been settled in his favour. 2. I refused to make the order sought, despite what was disclosed in the affidavit sworn by Mr Mickels, the plaintiff's solicitor. These are the reasons for that conclusion. 3. Mr Mickels' affidavit disclosed that Mr Pollard had suffered injuries in a 2012 motor vehicle accident. The reports of a psychiatrist and neuropsychologist were annexed. They disclosed the nature of his injuries. 4. Also annexed to the affidavit was a conditional costs agreement in which total costs and disbursements were estimated by the firm to be some $31,800. Advice was there given as to Mr Pollard's rights to request an itemised bill and to apply for an assessment of costs within 12 months, if he was unhappy with the costs charged. Also annexed was a direction for Mr Pollard's benefit cheque to be deposited into his bank account, after payment of the firm's costs. 5. Also annexed was the firm's letter of 12 May to the insurer, confirming advice that it had paid Mr Pollard's benefits direct to him and a letter of 13 May to Mr Pollard, seeking confirmation that the firm's bill of some $30,830.30 was to be paid. A file note of a telephone conversation that day with Mr Pollard, recorded that he had said he had not yet received the firm's account and had hung up, after being asked if he would pay it. He did confirm that he had received payment from the insurer, saying "Yes, I was tired of Firths lying to me." 6. Exhibit 1 was a letter of 12 May 2015 sent to Mr Pollard advising him that the plaintiff had been following up the insurer since 15 April; of the insurer's advice that day that payment had been made direct to him and enclosing a memorandum of fees and disbursements for $30,830.90. He was there advised of his rights under the Legal Profession Act 2004 (NSW) to have the costs assessed and the costs agreement set aside. 7. A high duty of candor is imposed on a party who pursues a freezing order. I heard the application on an ex parte basis, being satisfied that this duty had been met. 8. I approached the application in light of binding authority that: * the Court's power to grant a freezing order is based on its power to prevent the frustration of its process and to ensure that its judgments are not without value (see Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249; (2008) 163 LGERA 83 (at [43]) per Spigelman CJ (Bell JA and Handley AJA agreeing).) * A freezing order is nevertheless " a drastic remedy which should not be granted lightly ... Its purpose is to preserve the status quo, not to change it in favour of the [applicant]" (see Frigo v Culhaci [1998] NSWCA 88 (at p 6) per Mason P, Sheller JA, Sheppard AJA) as approved in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 (at [51]) per Gaudron, McHugh, Gummow and Callinan JJ.) The need to establish a good arguable case? 1. As discussed by McColl JA in Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279, an applicant for a freezing order must demonstrate a good arguable case on a justiciable cause of action (see UCPR 25.14 and Tomasetti v Brailey [2012] NSWCA 6 (at [14] - [15]). 2. That did not require a preliminary appraisal of a plaintiff's case to be conducted, but the plaintiff has to show that its claim is capable of serious argument, even if not necessarily one which the judge believes to have a better than 50% chance of success (see Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG; "The Niedersachsen" [1983] 1 WLR 1412; [1984] 1 All ER 398 (at 404) ("Ninemia Maritime") per Mustill J.) 3. Here the plaintiff's claim to be entitled to payment of the fees the subject of the application appeared to have a basis, subject to Mr Pollard's right to challenge them under the Legal Profession Act, as he had been advised. 4. The plaintiff did not dispute that right, but submitted that it was entitled to ensure that the fruits of any action it successfully pursued against him for payment of its fees, was not dissipated, particularly having in mind the state of Mr Pollard's health. It also claimed to have a lien over the sum in respect of which Mr Pollard had given the direction. 5. It was not necessary to come to a concluded view about this aspect of the plaintiff's case, given the conclusions which I had otherwise reached. Nevertheless, that the plaintiff had the strongly arguable case it claimed, given Mr Pollard's rights under the Legal Profession Act, seemed doubtful. The evidence did not establish the necessary danger of disposal of assets 1. I concluded that the plaintiff had not established that the necessary danger of disposal of assets by the evidence relied on, notwithstanding the nature of the injuries Mr Pollard had suffered. 2. A freezing order is not intended to provide a plaintiff or judgment debtor with security for its judgment, in advance of execution (see Finn v Carelli [2007] NSWSC 261 (at [4]). A claim that there is a risk that the assets will be dissipated, is not enough. 3. An applicant must establish by evidence that there is a danger that by reason of the defendant's assets being disposed of within the jurisdiction, or otherwise dealt with in some fashion, the plaintiff, if it succeeds, will not be able to have the judgment satisfied (see Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 (at 321 - 322) per Gleeson CJ.) 4. The evidence simply did not establish that there is a risk that any judgment given in favour of the plaintiff as to its costs, will be wholly or partly unsatisfied, because of a danger that Mr Pollard will dispose of his assets or diminish their value. 5. In my view the mere fact that Mr Pollard approached the insurer direct, being dissatisfied with the plaintiff's pursuit of the payment of his entitlements, does not provide a basis on which it can be concluded that this danger has been established. The Bank has confirmed that the money is in Mr Pollard's account. The fact that on 13 May he refused to indicate that he would pay a bill he had not received and by 15 May he had not paid a bill which he is entitled to dispute, was not a basis on which a finding of the necessary danger could rest. What does the balance of convenience dictate? 1. In the circumstances, the basis for making a freezing order not having been established, the balance of convenience did not arise to be considered. 2. In the circumstances disclosed on the evidence, I consider that the balance would have favoured the order being granted ex parte, was also not an available conclusion. Costs 1. The usual order as to costs is that they follow the event. The application having failed, the plaintiff must bear the costs it incurred. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 May 2015