Supreme Court New South Wales Medium Neutral Citation: Stanizzo v Badarne & Anor [2018] NSWSC 475 Hearing dates: 17 April 2018 Date of orders: 18 April 2018 Decision date: 18 April 2018 Jurisdiction: Common Law Before: Bellew J Decision: See [33] Catchwords: PRACTICE AND PROCEDURE – Civil proceedings – Application for freezing order – Insufficient evidence of good arguable case – Where evidence did not address requirements of rules governing applications for freezing orders against third parties – Unexplained delay in bringing the application – Order refused Legislation Cited: Conveyancing Act 1919 (NSW) Family Law Act 1975 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: B v U [2012] NSWSC 1416 Bhushan Steel Ltd v Severstal Export GmbH [2012] NSWSC 583 Chan v Acres [2013] NSWSC 1597 Finn v Carelli [2007] NSWSC 261 Frigo v Culhaci (Court of Appeal (NSW), 17 July 1998, unrep) Ninemia Maritime Corporation v Trave GmbH & Co KG (The Niedersachsen) [1984] 1 All ER 398 Perpetual Nominees Ltd v Taouk [2009] NSWSC 605 Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Category: Procedural and other rulings Parties: Vincent Francis Stanizzo – Plaintiff Muhammad Badarne – Defendant Representation: Counsel: C Waterstreet and M Rollinson – Plaintiff J R Young – Defendant Solicitors: Justice Lawyers – Plaintiff Badarne Lawyers – Defendant File Number(s): 2014/92425 Publication restriction: Nil Judgment – ex tempore (revised) 1. Before the Court is a notice of motion filed on 10 April 2018 by the plaintiff which has been referred to me by the Registrar in my capacity as Duty Judge. The notice of motion seeks a number of orders, but for present purposes the focus is upon prayer 1 which is in the following terms: "That a freezing order under UCPR 25.11 and 25.14 (4) and (5) be made restraining the Defendant and the First Respondent to the motion, Muhammad Badarne, and the Second Respondent to the motion, Rowan Badarne, by themselves their servants or agents from disposing of or otherwise dealing with or encumbering in any way the property at 86 Hopewood Crescent, Fairy Meadow, New South Wales being Folio Identifier No. 177/29439 until further order of the Court." 1. When the matter first came before me, counsel for the respondents to the motion (the first of whom is the defendant in these proceedings) sought an adjournment of the hearing of the motion on the basis that the second respondent (who is not a party to the proceedings and who is the wife of the first respondent) had been served only a few days ago, in circumstances where she is presently the legal owner of the property in question. Counsel informed me that he did not formally have instructions to appear for the second respondent, although he did not perceive that there would be any conflict in doing so. Counsel for the plaintiff did not object to an adjournment of the motion but made it clear that his instructions were to seek an interim order in terms of prayer 1 of the motion. 2. The motion is supported by an affidavit of the plaintiff of 10 April 2018 which was read without objection. The plaintiff also relied on paragraphs (27) to (38) of the defendant's affidavit filed in the proceedings on 8 March 2018. It must be said that the affidavit filed in support of the motion is, to a significant extent, in an inappropriate form. It contains a number of wide-ranging allegations many of which, in my view, are unsubstantiated by the evidence which is before me. 3. The background to the motion may be conveniently summarised as follows. The plaintiff has brought proceedings against the first respondent for malicious prosecution. It is not necessary for me to detail the history of the proceedings, other than to say that it is long and torturous. The proceedings are listed for hearing in this Court in the early part of 2019. They arise, in part, from the fact that both parties are solicitors, the first respondent being a former employee of the plaintiff. 4. In about February 2015 the first respondent transferred his interest in a property at 86 Hopewood Crescent, Fairy Meadow ("the property") to the second respondent. The transfer is annexure A to the affidavit sworn by the plaintiff in support of the motion. The transfer is said to be "pursuant to orders of the Local Court of New South Wales dated 10 February 2015". There is no evidence before me as to the nature of any such orders. Indeed, the plaintiff has stated in his affidavit (at paragraph (11)) that he has no information regarding any proceedings in the Local Court, or any orders made in any such proceedings, which might be relevant to the transfer. 5. Counsel for the first respondent asserted from the Bar table that the second respondent holds the property on trust for her children, and that orders to that effect had been made in the Local Court pursuant to the Family Law Act 1975 (Cth) in February 2015. I emphasise that this was said from the Bar table. There is no evidence before me to establish that that is the case. What is clear is that no stamp duty was payable upon the registration of the transfer, which may be consistent with associated Family Court proceedings. 6. Commencing at paragraph (14) of the affidavit in support of the motion, the plaintiff sets out a number of matters upon which he relies to establish that the first respondent has "connections with Israel". In paragraph (17) the plaintiff states: "It appears from this background that Badarne and his wife are Israeli citizens and could return to live in Israel, where Badarne could resume the practice of law, if circumstances required it, for example, if a judgment were given against him in these proceedings." 1. The plaintiff goes on to state in paragraph (18): "Further, there is a provision in a Deed of Assignment dated 31 July 2007, Badarne being the assignee, whereby Badarne is to pay Ahmad Abu Ria the sum of $230,000 within 3 years from the date on which Badarne returns to live in Israel permanently." 1. In paragraph (19) the plaintiff effectively makes a submission that I should draw an inference that the transfer of the property was made other than bona fide, and was a transaction in which the first respondent engaged with an intent to defraud his creditors, including the plaintiff. The plaintiff further asserts that in the event that he is successful in obtaining judgment against the defendant, he will be at liberty to rely on the provisions of s 37A of the Conveyancing Act 1919 (NSW) and seek to set aside the transfer. Based on these matters, the plaintiff asserts (at paragraph (20)) that there is an available inference that there is a danger that the property may be disposed of, dealt with, or encumbered in such a way that any judgment given in his favour will not be satisfied. 2. In terms of the plaintiff's case against the first respondent, the evidence is essentially limited to what is contained in paragraph (21) of his affidavit in which the plaintiff refers to his "claim against" the defendant being of a certain kind, along with the fact that his "case" is that the first defendant acted in a particular way. That paragraph amounts to little more than a recitation by the plaintiff of the nature of his case. 3. At this point I should note that at the conclusion of submissions on 17 April 2018 I reserved my decision overnight so that I could have the benefit of reading the transcript of the hearing, in the course of which lengthy submissions were made on behalf of each party. At a very early hour on the morning of 18 April my Associate received an email from junior counsel for the plaintiff, attaching further written submissions in reply. Consent was sought from those acting for the respondents to send that correspondence to my Associate. Counsel for the first respondent maintained that whilst consent was sought, it was not forthcoming, but that the correspondence was sent to my Associate in any event. 4. The submissions under cover of that correspondence were essentially further submissions of the plaintiff in reply. Counsel appearing for the plaintiff was given an opportunity to make submissions in reply before the hearing concluded. He availed himself of that opportunity when it was given. In any event, the submissions in reply deal with matters raised by counsel for the first respondent which were not the subject of any evidence before me, and which I have not taken into account. It goes without saying that the present issue has been determined upon the evidence before me, and nothing else. To the extent that the submissions in reply addressed two previous judgments of this Court in these proceedings, I need only say that those decisions were handed down some time ago, and events have overtaken them. 5. Counsel for the plaintiff made a number of submissions in support of the making of an interim order. Firstly, he submitted that although the transfer had come to the attention of the plaintiff on about 8 March (i.e. about a month ago) as a consequence of reading the first respondent's affidavit which had been filed in the proceedings, it had been necessary for the plaintiff to "digest" the contents of that affidavit. He submitted that although there had been some delay in bringing the present application, that delay was adequately explained. 6. Secondly, counsel stressed that the transfer in question was obviously without monetary consideration and had been executed a short time after a decision in related proceedings in the District Court had been reserved. Counsel asked me, in effect, to draw an inference from the absence of consideration, as well as from other circumstances, that the transfer was other than bona fide. 7. Thirdly, counsel made lengthy submissions as to the provisions of s 37A of the Conveyancing Act 1919 (NSW). He submitted that in the circumstances, and consistent with the affidavit of the plaintiff, the provisions of that section would be available to the plaintiff to set aside the transfer. In this regard counsel referred me to the decisions of Kunc J in Chan v Acres [2013] NSWSC 1597 and Pembroke J in B v U [2012] NSWSC 1416. 8. Fourthly, counsel submitted that in the first respondent's affidavit filed in the proceedings there was no suggestion that there had been any disharmony in his marriage to the second respondent at the material time. He submitted that I should infer that there was no basis for orders to be made permitting a transfer pursuant to any provision of the Family Law Act in respect of the property. 9. Fifthly, counsel submitted that there was evidence contained in the plaintiff's affidavit that the first respondent had, as he put it, "moved" between countries before, and could easily leave Australia so as to frustrate any judgment which might be entered against him. 10. Counsel for the first respondent firstly submitted that there had been a delay of approximately one month from the time at which the plaintiff became aware of the fact of the transfer until the time of the filing of the notice of motion. He submitted that this delay was largely, if not wholly, unexplained, and that this was a factor which was relevant to the exercise of my discretion. 11. Secondly, he submitted that the affidavit of the plaintiff in support of the motion was "scandalous" in its form. 12. Thirdly, he submitted that the affidavit of the plaintiff failed to establish that he had a good and arguable case. 13. Fourthly, he submitted that the evidence as a whole tended against any suggestion that there was a risk of assets being dissipated. In this respect he pointed, in particular, to the fact that the transfer was executed more than three years ago. 14. Fifthly, he submitted that the evidence fell short of establishing even a suggestion that either respondent was about to travel anywhere, much less leave Australia. 15. Finally, he submitted that in the light of the fact that the second respondent was not a party to the litigation, r 25.14(5) of the Uniform Civil Procedure Rules 2005 ("the Rules") was applicable and that the plaintiff's evidence did not address, in any way, the requirements of that rule. 16. The present order is sought pursuant to the provisions of r 25.11 and r 25.14(4) and (5) of the Rules which are in the following terms: 25.11 Freezing order (1) The court may make an order (a "freezing order" ), upon or without notice to a respondent, for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied. (2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets. 25.14 Order against judgment debtor or prospective judgment debtor or third party … (4) The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur: (a) the judgment debtor, prospective judgment debtor or another person absconds, (b) the assets of the judgment debtor, prospective judgment debtor or another person are: (i) removed from Australia or from a place inside or outside Australia, or (ii) disposed of, dealt with or diminished in value. (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. … 1. Counsel for the plaintiff appeared to take issue with the proposition that the order which is sought is an extraordinary one. However that proposition is amply supported by authority. In Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Ward J (as her Honour then was) reviewed a number of authorities in relation to the nature of the remedy which is sought. Commencing at [196] her Honour said the following: [196] In Cardile v LED Builders Pty Limited [1999] 1 HCA 18, the plurality said at [51] that the function of a Mareva injunction is not to "provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency". [197] In TZ Ltd v ZMS Investments Pty Ltd [2010] NSWSC 196, Barrett J (as his Honour then was) said at [26]: A general law freezing order is warranted only if, in the words of Bryson J in Acquasun Pty Ltd v Coverdale Ram Pty Ltd [20001 NSWSC 1146, there has been "conduct on the part of the defendants which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments or of being intended to do so or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the company have been or will be dealt with in an irregular way". [198] Similar statements are to be found in Perpetual Nominees Ltd v Taouk & Anor [2009] NSWSC 605 per Hoeben J, as his Honour then was, citing Frigo v Culhaci (Unreported, NSWCA, 17 July 1998) and Finn v Carelli [2007] NSWSC 261 at [5]). 1. Her Honour also noted (at [198]) that the relevant Practice Note which governs applications of this nature (Practice Note SC Gen 14 at paragraphs 5 and 6) recognises that a freezing order is an extraordinary interim remedy. 2. I have come to the view that for a number of reasons, the evidence does not support the making of the interim order which is sought. 3. Firstly, the plaintiff's affidavit falls substantially short of establishing, to the requisite standard, that he has a good and arguable case against the defendant. The relevant authorities support the view that a good and arguable case is one which is more than barely capable of serious argument: see Ninemia Maritime Corporation v Trave [1984] 1 All ER 398 at 404; Bhushan Steel Ltd v Severstal Export [2012] NSWSC 583 at 144. The evidence of the plaintiff in relation to this issue is essentially limited to the recitation of his case in paragraph (21) of his affidavit. Whilst there is a broad reference in that paragraph to reliance on evidentiary statements which have been filed in the proceedings, the affidavit does nothing more than recite the basic nature of the plaintiff's claim. 4. Secondly, I am not satisfied that the evidence establishes that either respondent is likely to abscond. The mere fact that the first respondent may have "connections with Israel" does not support a conclusion that he is likely to flee. The fact that this is a bare possibility is self-evident from the plaintiff's use of the word "could" in paragraph (17) of his affidavit. 5. Thirdly, the evidence fails to satisfy me that there is any risk that if an order is not made, the property, or indeed any other asset, be disposed of by the respondents, or will be dealt with in a way which will see its value diminish. There is considerable merit in the submission of counsel for the first respondent that the fact that the relevant transfer took place three years ago tends wholly against a suggestion that there is likely to be any dissipation of assets. 6. Fourthly, and bearing in mind that the second respondent is not a party to the proceedings, the evidence relied upon by the plaintiff fails to properly address r 25.14(5) which applies specifically to circumstances in which orders of this nature are sought against a non-party. There is no evidence which properly addresses any of the considerations to which that rule is directed. 7. Finally, and whilst it is not determinative, the evidence establishes that the transfer came to the plaintiff's knowledge shortly after 8 March 2018 when the first respondent's affidavit was filed in the proceedings. Accordingly, there has been a delay of more than one month in bringing this application. That delay is, as counsel for the first respondent pointed out, largely (if not wholly) unexplained. Whilst this is not a determinative factor, it is one which tends completely against exercising my discretion in favour of making of the order sought. 8. For those reasons I do not propose to grant the interim order sought on behalf of the plaintiff and I make the following orders: 1. The first and second respondents are to file and serve any affidavit evidence upon which they propose to rely by 5pm on 27 April 2018. 2. The plaintiff is to file any affidavit evidence in reply by 5pm on 4 May 2018. 3. The notice of motion is listed before the Registrar for directions on 7 May 2018. 4. I reserve the question of costs of the proceedings to date pending the final outcome of the notice of motion. ********** Amendments 01 May 2018 - Correction to legal representatives on coversheet 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: 01 May 2018