Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Lets Go Adventures Pty Limited v Barrett [2018] NSWCA 2 Hearing dates: 16 January 2018 Date of orders: 16 January 2018 Decision date: 16 January 2018 Before: White JA Decision: Refer to judgment at [31] Catchwords: Practice and Procedure – Freezing order – No question of principle Cases Cited: Lets Go Adventures Pty Ltd v Barrett [2017] NSWCA 243 Category: Procedural and other rulings Parties: Lets Go Adventures Pty Ltd (Applicant) Dean Barrett (Respondent) Representation: Counsel: C J M Palmer (Applicant) Self-represented (Respondent) Solicitors: Colin Biggers & Paisley File Number(s): 2016/365672 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. HIS HONOUR: This is an application for the extension of a freezing order made on 10 January 2018 on the ex parte application of the applicant. 2. The applicant was the appellant in an appeal heard on 31 August and 1 September 2017 from orders of the District Court (Gibson DCJ). The respondent to the appeal, Mr Dean Barrett, was the plaintiff in the proceedings in the District Court. On 22 September 2017 the judgment given in his favour in the District Court was set aside on appeal and this Court ordered that there be judgment for the defendant, the present applicant, Lets Go Adventures Pty Limited. This Court ordered that Mr Barrett pay the costs of Let's Go Adventures of the trial and of the appeal (Lets Go Adventures Pty Ltd v Barrett [2017] NSWCA 243). 3. On 13 October 2017, the solicitors for Lets Go Adventures wrote to the solicitors then acting for Mr Barrett advising that costs and disbursements had been incurred of approximately $483,694. They invited Mr Barrett's solicitors to make an offer to settle the amount of costs and disbursements that will be payable pursuant to the costs orders. 4. No application for special leave to appeal to the High Court has been filed. Mr Barrett says that he is investigating the making of such an application and, as I understand his submissions, is minded to bring such an application. 5. There has been no substantive response to the applicant's solicitors' request for an offer to be made to seek to agree the amount of costs payable pursuant to the orders of this Court. Instructions have been given by the applicant to a firm of cost consultants to prepare a bill of costs. 6. Following the applicant's solicitors' advice of the amount of costs the applicant will be claiming, a property in Heshbon Street, Gateshead, of which Mr Barrett is the registered proprietor, was advertised for sale through real estate agents known as Global Property International. The advertised range of likely sale price was between $495,000 to $530,000. 7. Mr Barrett's solicitors advised the applicant's solicitors that they were not further acting for Mr Barrett. On 15 December 2017 the applicant's solicitors wrote to Mr Barrett asking him to respond on the question of costs. They also advised Mr Barrett that it had come to their attention that the Gateshead property had been listed for sale. They said that their client apprehended there was a real risk that the Gateshead property was being sold so as to frustrate its ability to recover its costs, the subject of the costs orders. Various information and undertakings were sought from Mr Barrett. 8. On 5 January 2018 Mr Barrett emailed the applicant's solicitors to advise that he intended to pursue the matter further in the High Court. He requested information from the applicant or its solicitors in relation to what he described as outstanding issues including as to whether or not Ms Challen, an officer of the applicant, had communicated with a company called PADI Asia Pacific and also related matters. This would appear to have been an attempt to reopen matters which I am told were in issue in the hearing in the District Court. Mr Barrett also sought information as to who the solicitors' client was and referred to Lets Go Adventures and its insurer and PADI Asia Pacific and PADI International. The relevance of those inquiries to a foreshadowed application in the High Court is not apparent. 9. On 8 January 2018 the applicant's solicitors caused an on-line search to be undertaken to ascertain whether the Gateshead property was still advertised for sale. The search results obtained stated that the property had been sold on 18 December 2017 for $500,000. Mr Barrett made no reference to that in his correspondence of 5 January 2018. 10. On or about 21 December 2017, caveats were lodged with respect to the Gateshead property, by Keanu Barrett and Riley Barrett in which those individuals claimed an interest in the Gateshead property pursuant to unregistered mortgages. The caveat lodged by Keanu Barrett refers to an unregistered mortgage dated 25 August 2011, which date has been crossed out on the copy of the caveat in the exhibit to read 25 August 2017. The same amendment appears on the caveat lodged by or on behalf of Riley Barrett. Keanu and Riley Barrett are Mr Barrett's sons. There is evidence that Riley is 12 years of age. I am told that Keanu is 20. 11. There was evidence before me on 10 January 2018 that Mr Barrett had formerly worked overseas. I was satisfied that there was a sufficient risk that Mr Barrett might be attempting to sell the Gateshead property in order to obtain funds that might be put out of the reach of the applicant, so as to be not to be available to satisfy the costs orders which the applicant has received, to warrant the grant of a freezing order for a limited period until the matter could come back to court and Mr Barrett be heard. I granted liberty to Mr Barrett to apply on reasonable notice to the applicant's solicitors for the variation or discharge of the freezing order. No such application was made. Instead, on the return of the order today, Mr Barrett has opposed the extension of the orders. 12. The applicant also has sought an affidavit of discovery of assets. Initially it sought an order that the proceedings be transferred to the District Court. 13. A further affidavit read on the application today includes information received from the solicitors acting for Mr Barrett on the sale of the Gateshead property that settlement of the sale is due to take place on Monday 22 January 2018. The solicitors advise that from the proceeds of sale agents' fees and commission of $7,700 would be payable, that the registered mortgagee of the property, the ANZ Bank, had provided an indicative payout figure as at 27 December 2017 of approximately $235,350 and that the solicitors' costs for acting on the sale would be approximately $1,865. The solicitors also advised that $166,600 would be payable to Keanu Barrett from the proceeds of the sale and $83,300 would be payable to Riley Barrett. They stated that debts owed to Keanu and Riley Barrett arose from their entitlements pursuant to a will of the late Patricia Jean Barrett, who I am told was Mr Barrett's mother and Keanu and Riley's grandmother. The solicitor said that their entitlements under that will were secured against the property by way of unregistered mortgage and caveat pursuant to loan agreements dated in 2011. The solicitors provided the applicant's solicitors with a copy of the front page of the contract for the sale of the Gateshead property. It identified the purchaser as a company called Seamus Walsh Pty Limited for whom another firm of solicitors in the Newcastle area were acting. 14. There is no evidence on this application that the sale of the Gateshead property is anything other than an arm's length sale for a proper price. The existing freezing order, which if not extended will expire today, provides as an exception to the restraint on Mr Barrett's dealing with his assets that he not be prohibited from transferring ownership of the Gateshead property provided that: 1. The applicant consents in writing to transfer of owner ship; and, 2. Upon transfer of the proceeds of sale less any reasonable agent's fees and commission, any reasonable conveyancers' or solicitors' fees for the sale and any amount properly payable in respect of a loan secured by registered mortgage over the property be paid into court pending satisfaction of the cost orders made on 22 September 2017. 1. The purpose of there being an exception to the prohibition on dealing with assets if the applicant consents in writing to transfer of ownership and the proceeds are dealt with as set out above is evidently to enable the applicant to consider whether or not it should consent to the completion of the sale, which it should do if the sale is an arms' length transaction at a proper price. However, it seems to me that the applicant has had sufficient opportunity to make inquiries of those matters. It has known of the price at which the property was sold, namely $500,000, since 8 January and it has known the identity of the purchaser since 12 January 2018. As I have said, nothing in the material before me indicates that the sale is otherwise than for a proper price in an arm's length transaction and I do not think that it would be proper to extend the freezing order in a way that would inhibit the completion of the sale, nor the payment of reasonable agents' fees and commission and solicitors' costs, nor the payment of moneys required to discharge the registered mortgage to the ANZ Bank. 2. However, I accept the applicant's submission that it should be entitled to a reasonable opportunity to investigate the claimed interests of Mr Barrett's sons as unregistered mortgagees in the amounts indicated above. 3. Mr Barrett's solicitors' acting on the sale provided to the applicant's solicitors a copy of the will of Mrs Patricia Barrett, probate of which was granted on 31 December 2010, and a copy of what appear to be two agreements between Mr Barrett and his sons dated 21 December 2011, not 2017, that provide in substance that Mr Barrett acknowledged a debt equal to the "Principal Sum" as being due and owing to his sons. I should add that Mr Barrett was one of the executors of his mother's will. 4. In the case of both agreements it is in substance provided that the "Principal Sum" will be the greater of one-sixth of the market value of the Gateshead property or $50,000. It appears from clause 2(a) that the intention was that Mr Barrett would pay to his sons the "Principal Sum" on the repayment date, being, at least in the case of Keanu, a date not earlier than five years after the date of the agreement. Clause 2(a) provides that the Principal Sum as at the Repayment Date should be determined by a qualified valuer. 5. Under the will of the late Mrs Barrett her estate was to be the divided into 12 parts with Keanu to receive two such parts and Riley one such part. The inventory of property identified the Gateshead property as being the principal asset of the estate. 6. I think there is sufficient doubt in relation to the preparation and effect of those documents to warrant investigation and that the freezing order should be modified to require the net proceeds of sale after payment of fees, commission and the amount required to discharge the ANZ Bank's mortgage into Court. 7. If the matter is to proceed, that is to say, if any issue is raised as to Keanu's or Riley's entitlement to the sums indicated in the solicitor's email of 12 January 2018 then it will no doubt be necessary for them to be joined as respondents to the application and it may be that some more substantive initiating process will be required. But it is appropriate nonetheless to require moneys to be held in court, at least for the time being, whilst those investigations are carried out by the applicant. 8. In light of issues that might further arise I think it appropriate that the proceeding be transferred not to the District Court, but to the Equity Division. 9. I am satisfied that it is otherwise appropriate to extend the freezing orders until further order and to require Mr Barrett to make an affidavit of discovery of assets as is sought by the applicant. There is another property registered in the name of Dean Barrett, being a property in Mahogany Crescent, Gateshead. Mr Barrett says from the bar table that he is not the registered proprietor of that property. He says that a former client of his with the same name is the registered proprietor, but there is no evidence about that and the affidavits of discovery will need to address that matter. No submissions were made that would indicate any particular prejudice if Mr Barrett is required to make an affidavit of his assets. 10. For the same reasons as I considered the freezing order should be made on 10 January, I consider that it should be extended until further order. 11. Mr Barrett says that he is impecunious, that he has no income apart from workers' compensation payments and no other assets, but there is no evidence about that. 12. I think that there is sufficient reason to apprehend that if the freezing order is not extended, moneys which should otherwise be available for payment of Mr Barrett's creditors, including the applicant as a prospective creditor, may be improperly dissipated. 13. Mr Barrett says that the moneys from the proceeds of sale of the Gateshead property should be released so as to be available for the purposes of a one-third share of the sale price, namely $166,600, being available to Keanu to provide moneys which Keanu could put towards the purchase of a house and otherwise to be available to Mr Barrett for the pursuit of his foreshadowed application to the High Court and otherwise to pay general living expenses. 14. The figures contained in the email of his solicitor of 12 January 2018 do not indicate that there would be any substantial sum available to Mr Barrett, as distinct from his sons, from the net proceeds of sale in any event. 15. I have regard to the position of his sons. Mr Barrett has accepted on their behalf service of notice of this application. I will extend the freezing orders only for a period of some weeks and the matter can be returned in the Equity Division with a view to a judge of the Equity Division considering whether the order should be further extended. 16. For these reasons I will make the following orders, subject to any amendment that either party might propose to deal with matters of appropriate form. 17. What I propose then is as follows: 1. Subject to order 2, order that the freezing orders made in these proceedings, a copy of which will be annexed to these orders, be extended up to and including 13 February 2018. 2. The freezing orders do not prohibit the respondent from completing the contract for sale of the property at 9 Heshbon Street, Gateshead made between the respondent and Seamus Walsh Pty Ltd and dated 15 December 2017. 3. Order that upon completion of the sale of the said property the net proceeds of sale (less reasonable agent's fees or commission, reasonable solicitors' costs for acting for the respondent on the sale and the amount payable in respect of the loan secured by registered mortgage over the property in favour of ANZ Banking Group Ltd) be paid into court to be held pending further order. 4. Subject to order 5, Mr Dean Barrett: 1. within 7 working days after being served with this order, swear and serve on Lets Go Adventures Pty Ltd an affidavit setting out all of his assets worldwide and, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of his interest in the assets, including, in respect of any mortgages over the property known as Lot 1 in Deposited Plan 26227 at 9 Heshbon Street, Gateshead, in the state of New South Wales (Property), or the property known as Lot 151 in Deposited Plan 224692 at 58 Mahogany Crescent, Gateshead, in the state of New South Wales, the amounts owing to any mortgagee, when the loan amount or amounts were advanced, how they were advanced and by whom. 2. within 3 working days after being served with this order provide Lets Go Adventures Pty Ltd with copies of the following documents: 1. The agency agreement between Mr Barrett and Global Property International for the sale of the Property. 2. Any invoice issued to Mr Barrett by Global Property International in respect of the sale of the Property. 3. Any correspondence from ANZ bank setting out the indicative payout figure for ANZ's mortgage over the Property. 4. The contract for the sale of the Property entered into between Mr Barrett and Seamus Walsh Pty Ltd. 5. Any unregistered mortgage between Mr Barrett and Keanu Barrett dated 25 August 2017. 6. Any unregistered mortgage between Mr Barrett and Reilly Barrett dated 25 August 2011. 7. Any unregistered mortgage between Mr Barrett and Reilly Barrett dated 25 August 2017. 1. (a) This order 5 applies if Mr Barrett wishes to object to complying with order 4(a) on the grounds that some or all of the information required to be disclosed may tend to prove that he: 1. (i) has committed an offence against or arising under an Australian law or a law of a foreign country; or 2. (ii) is liable to a civil penalty. 1. Mr Barrett must: 1. (i) disclose so much of the information required to be disclosed to which no objection is taken; and 2. (ii) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and 3. (iii) file and serve on Lets Go Adventures a separate affidavit setting out the basis of the objection. 1. Order that the proceedings be transferred to the Equity Division. 2. Order that the matter be listed before the Registrar in Equity on 13 February 2018. 3. Note that all the above orders are made on the applicant by its counsel continuing the undertakings given to the court on 10 January 2018. 4. Vary order 18 made on 10 January 2018 by deleting the second sentence of that order and substituting that any such application should be made to the Duty Judge in the Equity Division. 5. These orders are to be entered forthwith. 6. Order that the costs of today's hearing be the applicant's costs on the notice of motion. [Orders made.] ********** 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: 31 January 2018