Supreme Court New South Wales Medium Neutral Citation: Cleveland Investments Global Limited v Ficaro Pty Limited & Ors [2016] NSWSC 473 Hearing dates: 15 April 2016 Date of orders: 15 April 2016 Decision date: 15 April 2016 Jurisdiction: Equity - Duty List Before: Kunc J Decision: Ex Parte freezing order granted over assets of estate Catchwords: INJUNCTIONS - Freezing order over assets of third party estate pending construction of will where, depending on construction, judgment debtor may be sole beneficiary – UCPR Part 25 r 25.14 Legislation Cited: Uniform Civil Procedure Rules 2005 NSW Category: Procedural and other rulings Parties: Cleveland Investments Global Limited (Plaintiff) Ficaro Pty Ltd ACN 090 793 472 (First Defendant) Peter Evans (Second Defendant) Representation: Counsel: E Muston & H Mann (Plaintiff & First Defendant) Solicitor: Plaintiff & First Defendant: Swaab Attorneys File Number(s): 2009/288926 Publication restriction: No EX TEMPORE Judgment 1. HIS HONOUR: By judgment entered on 19 December 2013 in these proceedings, Lindsay J ordered Mr Peter Evans to pay $259,000 to Cleveland Investments Global Ltd ("Cleveland") and Ficaro Pty Ltd ("Ficaro") and made a further order that Mr Evans pay Ficaro Pty Ltd $110,067.23. Cleveland and Ficaro are the applicants on the motion which has come before me in the Duty List this afternoon. 2. That motion prays for an asset freezing order under UCPR Part 25 r 25.14 against a third party, Mr Johnny Asfar. The relevant parts of r 25.14 are as follows: 25.14 Order against judgment debtor or prospective judgment debtor or third party (1) This rule applies if: (a) judgment has been given in favour of an applicant by: (i) the court, or (ii) in the case of a judgment to which subrule (2) applies-another court, or (b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in: (i) the court, or (ii) in the case of a cause of action to which subrule (3) applies-another court. … (5) The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a "third party") if the court is satisfied, having regard to all the circumstances, that: (a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because: (i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or (ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor, or (b) a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment. (6) Nothing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so. 1. Sub-rule 25.14(1)(a)(i) is clearly satisfied so that the rule applies. 2. The real question is whether the requirements of sub-rule (5)(a) are satisfied. I shall consider each of those elements in turn. 3. First, Mr Asfar is someone other than the judgment debtor. 4. Next, it is necessary that the Court be satisfied that there is a danger that the judgment will be wholly or partly unsatisfied because Mr Asfar meets either the description in sub-rule 5(a)(i) or (ii). In the present case it is (ii) which is relied upon. 5. How sub-rule (ii) is made out is, on the facts of this case, less than straightforward. The ultimate submission is that the Court should be satisfied that there is a serious question to be tried that Mr Asfar is in possession of the assets of Mr Evans' late mother (including a house at Hardy's Bay) which in equity are assets of Mr Evans. The facts are these. 6. Mr Evans' mother, the late Rosemary Evans, died leaving a will in these terms: LAST WILL THIS IS THE LAST WILL AND TESTAMENT of me, ROSEMARY EVANS of 32 Heath Road, Hardys Bay in the State of New South Wales. I REVOKE all Wills and other documents of testamentary intent previously made by me; this is my last Will and Testament. I APPOINT JONNY ASFAR of 43 North Crescent Wyoming to be Executor or Executrix and Trustee of this my Will HOWEVER in the event he is unwilling or unable to accept that appointment THEN I APPOINT SAMI ASFAR to be my Executor or Executrix and Trustee. I GIVE the whole of my Estate to JOHNNY ASFAR but if he dies before me then I give the whole of my Estate to my Trustee UPON TRUST to sell, call in and convert into money so much of my Estate as shall not consist of money with power to postpone such sale calling in and conversion as my Trustee in his absolute discretion shall think fit and from and after such sale calling in and conversion I DIRECT payment of all my just debts funeral and testamentary expenses AND I DIRECT my Trustee to stand possessed of the net amount then arising UPON TRUST for PETER RONALD EVANS. 1. At the heart of the argument put to me this afternoon is the contention that there is a serious question to be tried as to the proper construction of clause 3 of that will. On one view of the matter clause 3 operates to leave the whole of Mrs Evans' estate to Mr Asfar but with a gift over, in the event of Mr Asfar predeceasing Mrs Evans, to another trustee, Sami Asfar, to hold upon trust for Mr Evans. On that view of clause 3 Mr Asfar has succeeded to Mrs Evans' estate and Mr Evans has no rights in relation to it. This construction requires "I GIVE the whole of my Estate to JOHNNY ASFAR" to be read disjunctively from the balance of the clause. 2. However, the view for which counsel for the applicants has contended this afternoon is that clause 3 in fact operates to give the whole of Mrs Evans' estate to Mr Evans so that the estate is held by Mr Asfar (or, if Mr Asfar had died before Mrs Evans, then by Mr Sami Asfar) upon trust to convert the estate into cash, pay its debts and then stand possessed of whatever was left upon trust for Mr Evans. This construction requires "I GIVE the whole of my Estate to JOHNNY ASFAR but if he dies before me then I give the whole of my Estate to my Trustee" to be read together but disjunctively from the balance of the clause. 3. By way of "testatrix's armchair" circumstances advanced to support the unlikelihood of Mrs Evans having left her estate to Mr Johnny Asfar, the following matters have been referred to. First, Mr Peter Evans was Mrs Evans' only child. Second, there is no obvious reason why Mrs Evans would have left the whole of her estate to Mr Asfar, who appears from the evidence at various times to have been in a potentially hostile litigious relationship with Mr Evans. Third, there is evidence that at various times Mr Evans resided in the Hardy's Bay property. 4. I am satisfied that there is a serious question to be tried on the proper construction of clause 3 of the will. 5. There is evidence that the Hardy's Bay property has been transferred, pursuant to a transmission application, to Mr Asfar as executor of Mrs Evans' will. If clause 3 has the meaning for which the applicants contend, then Mr Evans ought to be entitled as the absolute beneficial owner of the estate, to call for it from Mr Asfar. On this analysis sub-rule 5(a)(ii) is satisfied. 6. However, a further complication - in this case potentially favourable to the applicants - has been interposed by Mr Evans having been made bankrupt. Counsel for the applicants has informed the Court that representations have been made on their behalf to Mr Evans' trustee in bankruptcy, the Official Trustee, to invite the Official Trustee to at least file a caveat over the Hardy's Bay property while the question of the construction of clause 3 and any rights that Mr Evans may have is resolved. The Official Trustee has declined to take that step. 7. The matter which I next have to address is the nexus created by the use of the word "because" in r 25.14(5)(a). That is to say, the Court must be satisfied that the danger of non-satisfaction of the judgment is because, in this case, Mr Asfar, at least arguably, is in possession of or in a position of control or influence concerning assets of Mr Evans. 8. The original case against Mr Evans which gave rise to the judgment was one involving fraudulent conduct by Mr Evans. I am satisfied that there is a relevant danger of non-satisfaction because, if the present situation is allowed to persist in circumstances where Mr Evans is in fact the beneficial owner of the estate's assets including the property, then the judgment may remain unsatisfied because it will remain in the hands of Mr Asfar unless something is done. Mr Evans would have every reason to ensure the assets of his late mother's estate remained with Mr Asfar. 9. For these reasons I am satisfied that the jurisdiction to make the order against Mr Asfar has been engaged. 10. There is one matter about which I should make specific observation. The form of the order which the applicants invite the Court to make is not in the usual form of an asset freezing order insofar as it is not limited to a particular sum. An estimate of the amount actually owing pursuing to the judgment which is in evidence before me is a figure of just over half a million dollars. There is evidence that the value of the Hardy's Bay property is of the order of $800,000 and that it is unencumbered. 11. Counsel for the applicants has properly drawn to my attention that the form of the order is not limited as to value but refers to the assets of the estate. That course, it is submitted, is justifiable in at least the first instance in circumstances where, if the applicants are correct, then the assets of the estate should ultimately, in their entirety, be in the possession of Mr Evans' trustee in bankruptcy as an independent third party entitled to them by operation of the bankruptcy law. 12. At least for the purposes of an ex parte order returnable in a short period of time, I accept that the approach taken in the orders sought today is appropriate. That may not be the case after parties whose interests are affected have, if they wish, appeared before the Court to seek some limitation on the scope of the order. 13. In addition to the orders that are sought in the short minutes of order being provided to me today, I will direct that service be effected on the address for Mr Asfar disclosed in the probate application granting him probate of Mrs Evans' estate, and also for service of these proceedings on the Official Trustee so that an 14. Official Trustee can take such role in the proceedings as it thinks fit. 15. Counsel for the applicant has instructions to give the usual undertaking as to damages. Again, quite properly, he has disclosed that Cleveland is a company incorporated in the British Virgin Islands. That could give pause for thought in other circumstances were it the only applicant before me. However, Ficaro is a company registered in Australia and the undertaking is to be offered on behalf of both Cleveland and Ficaro. In those circumstances the Court is satisfied, in the absence of evidence to the contrary, that an undertaking given on behalf of both Cleveland and Ficaro is adequate. ********** Amendments 25 May 2016 - File number on cover page amended 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