Supreme Court New South Wales Medium Neutral Citation: Seven Network (Operations) Limited v Fitzgerald [2016] NSWSC 420 Hearing dates: 11 April 2016 Date of orders: 11 April 2016 Decision date: 11 April 2016 Jurisdiction: Equity - Duty List Before: Kunc J Decision: Ex parte asset preservation order granted Catchwords: INJUNCTIONS – Asset preservation order sought ex parte – Strong evidence of fraud – No issue of principle Category: Procedural and other rulings Parties: Seven Network (Operations) Limited ACN 052 845 262 (Plaintiff) John Michael Fitzgerald (First Defendant) FPC Pty Limited ACN 117 041 719 (Second Defendant) Kanfit Pty Limited ACN 103 116 865 (Third Defendant) Michell Louise Fitzgerald (Fourth Defendant) Representation: Counsel: D. Sulan (Plaintiff) Solicitors: Addisons (Plaintiff) File Number(s): 2016/10128 Publication restriction: No EX TEMPORE Judgment 1. This is an application by the plaintiff, Seven Network (Operations) Limited ("Seven"), for ex parte asset preservation orders against the defendants. 2. The first defendant, Mr Fitzgerald, is Seven's Commercial Manager, Programming. His duties include accounting, financial reporting, the budgetary responsibility for television productions, sport, news and public affairs, overseas bureaux and programming. His role includes raising and approving purchase orders relevant to those areas. He has approval authority for payments of up to $55,000. 3. The second and third defendants are companies of which Mr Fitzgerald is the sole director and shareholder. 4. The fourth defendant is Mr Fitzgerald's wife. She is joined in the proceedings, at the moment, on the basis that two of the unencumbered properties which will be involved in these proceedings are held by Mr and Mrs Fitzgerald jointly. 5. On or about 4 April 2016 Seven became aware of a number of suspicious purchase requisitions unrelated to these proceedings. This resulted in an investigation being initiated. That investigation then brought to light payments going back over a number of years on invoices apparently issued by the second and third defendants. The evidence is that none of those invoices related to work that had in fact been ordered by Seven. 6. In the course of assisting with the investigation of the unrelated invoices which had originally raised Seven's suspicions, Mr Fitzgerald has now admitted to falsifying invoices and arranging and approving their payment. He has further confirmed that those false invoices were issued by, and payments were made to, the second and third defendants. Significantly, for present purposes, Mr Fitzgerald has also apparently admitted that his assets include $1 million in a superannuation fund and $2.5 million in cash and shares. The ultimate relief that will be sought by the plaintiff against the defendants includes injunctions based on a tracing exercise, damages, equitable compensation and an order for account of profits. 7. Even without the benefit of Mr Fitzgerald's admission, the Court would have been satisfied that there was a serious question to be tried. It is clear from the material before the Court that a serious and ongoing fraud appears to have been committed by Mr Fitzgerald against his employer. 8. Although Mr Fitzgerald is in discussions with Seven in relation to the matters the subject of these proceedings, he does not know that these proceedings have been commenced. The authorities make it clear that where fraud is made out, the Court can more readily draw the inference required for the asset preservation jurisdiction to be enlivened that there is a risk of dissipation of assets with a view to frustrating the Court's ultimate judgment. Mr Sulan, who appears today for Seven, has drawn to the Court's attention that, at least in relation to those assets which Mr Fitzgerald has made admissions, they are in cash and shares and are easily moveable. The properties in which it appears he has an interest could also be relatively quickly encumbered. 9. I am satisfied that a proper case has been made out for an ex parte asset preservation order against Mr Fitzgerald and his two companies. While, at this stage, there is no allegation against Mrs Fitzgerald of actual knowledge or participation in Mr Fitzgerald's fraud, I am also satisfied that it is appropriate that the order extend to her as a joint owner of at least some of the properties which will be involved in Seven's asset recovery exercise. 10. I propose to grant the order and make it returnable in fairly short compass at 10am next Thursday before the duty judge. However, I will add to those orders proposed by Seven an order that the proceedings can be relisted by any party on 12 hours' notice. That should afford the defendants an adequate opportunity to approach the Court urgently should some particular prejudice be occasioned to them by reason of the orders which I will shortly pronounce. ********** Amendments 25 May 2016 - "presentation" replaced with "preservation" in Decision area of cover sheet 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: 25 May 2016