NJS v NSW Department of Education & Anor (No 2) [2018] NSWSC 2009

Supreme Court New South Wales

Medium Neutral Citation: NJS v NSW Department of Education & Anor (No 2) [2018] NSWSC 2009 Hearing dates: 6 December 2018 Date of orders: 06 December 2018 Decision date: 06 December 2018 Jurisdiction: Common Law Before: Bellew J Decision: (1) The plaintiff's notice of motion filed on 26 October 2018 is dismissed.

(2) The plaintiff is to pay the second defendant's costs of the motion as agreed or assessed. Catchwords: CIVIL PROCEDURE – Application for freezing order – Consideration of principles to be applied – Insufficient evidence of risk of dissipation of assets – Application dismissed Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Frigo v Culhaci [1998] NSWCA 88 Goumas v McIntosh [2002] NSWSC 713 NJS v NSW Department of Education and Anor (No. 1) [2018] NSWSC 2010 Patterson v BTR Engineering (Aust) Limited (1989) 18 NSWLR 319 Category: Procedural and other rulings Parties: NJS - Plaintiff NSW Department of Education – First Defendant John Kendrew Bradbury – Second Defendant Representation: Counsel: A Mathias - Plaintiff J Hewitt – Second Defendant

Solicitors: Porters Lawyers - Plaintiff Pryor Tzannes and Wallis – Second Defendant File Number(s): 2017/279342 Publication restriction: Nil

Judgment – Ex TEMPORE (REVISED) 1. Before the Court is a notice of motion filed by the plaintiff on 26 October 2018 seeking a freezing order against the second defendant pursuant to r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW). The notice of motion is supported by two affidavits of Simone Jayde Doherty of 27 November 2018. The order sought is opposed by the second defendant who relies upon an affidavit of Fotini Constantopedos of 6 December 2018. All of the affidavit material was read without objection. 2. The background to the application is as follows. 3. The plaintiff commenced proceedings in this court against the first defendant, the NSW Department of Education. In July of this year the second defendant was joined by the plaintiff to the proceedings. The plaintiff seeks damages against the second defendant for what are alleged to have been sexual assaults committed upon him some years ago. Those allegations are currently the subject of criminal proceedings before the Local Court. 4. There was a mediation earlier this year which led to the settlement of the proceedings as between the plaintiff and the first defendant. Following that, an issue arose as to whether the second defendant had the capacity to instruct his lawyers. Ultimately that issue was resolved. On 29 October 2018, and in the absence of filing a defence, the second defendant filed a notice of motion seeking a temporary stay of the proceedings pending the finalisation of the criminal proceedings which have been brought against him. I have determined that notice of motion in his favour: NJS v NSW Department of Education and Anor (No. 1) [2018] NSWSC 2010. 5. In support of the present motion, counsel for the plaintiff relied principally upon what was said to have been a delay, and an associated lack of diligence, on the part of the second defendant in advancing his case in the proceedings. In addition, counsel relied upon the fact that the evidence disclosed that the second defendant recently sold a property. On the evidence, the proceeds of that sale are to be used, in large measure, to fund the defence of the second defendant in the criminal proceedings. Based upon all of these factors, counsel for the plaintiff submitted that there was a risk that the assets of the second defendant would be dissipated if the order sought was not made. 6. In advancing these submissions, counsel for the plaintiff took me to the decision of the Court of Appeal in Patterson v BTR Engineering (Aust) Limited (1989) 18 NSWLR 319, and in particular to the judgment of Gleeson CJ where his Honour observed (at 325-326) that he considered it reasonable to infer, in the circumstances of that case, that in the absence of restraint the appellant was unlikely to preserve his assets so as to ensure that they were available to a judgment creditor. Counsel for the plaintiff sought to draw an parallel between those circumstances and those of the present case. 7. Counsel for the second defendant submitted, quite simply, that there was no evidence upon which I could reasonably conclude that there was any risk of the second defendant's assets being dissipated. Counsel took me to a number of authorities and submitted, in particular, that the second defendant's recent sale of the property was to be viewed as a legitimate transaction which was carried out in order to equip him with sufficient funds to allow him to defend the criminal charges which have been brought against him. 8. The decision of the Court of Appeal in Frigo v Culhaci [1998] NSWCA 88, and that of Barrett J (as his Honour then was) in Goumas v McIntosh [2002] NSWSC 713, set out a number of general principles which govern applications of this nature. Those principles include the following. 9. Firstly, a freezing order is an exceptional interlocutory remedy. Its function is to minimise the possibility of an unscrupulous party seeking to render himself or herself "judgment-proof", by taking steps to ensure that no assets within the jurisdiction can be found on the day of judgment. Such an order imposes a severe restriction upon a defendant's right to deal with his or her assets. 10. Secondly, a party seeking such an order must establish by evidence, and not by mere assertion, that there is a real risk that by reason of a defendant absconding or removing assets out of the jurisdiction, or disposing of assets within the jurisdiction, he or she will not be able to have the judgment satisfied if successful in the proceedings. Whilst there has been some debate as to the degree of risk which must be established, the one thing that is clear is that a mere assertion that a defendant is likely to put his assets beyond a plaintiff's reach will not be sufficient. 11. Thirdly, provision should be made for the defendant to have access to his or her own assets for living expenses, payment of debts and payment of legal expenses. This has particular significance in the present case for the reasons to which I have already referred. 12. Fourthly, relief of this kind is not intended to operate as some form of de facto security for the claim(s) of the party seeking the restraint. The sole concern is to ensure that the processes of the Court are not frustrated by removal, dissipation or misapplication of assets. 13. Finally, it is not the aim of a freezing order to stop litigants spending their money. Rather, the aim is to stop them spending it in ways which are not legitimate. 14. With those principles in mind, and having regard to the evidence, I am not satisfied that the order sought by the plaintiff should be made. 15. Fundamentally, the evidence fails to establish that there is a risk that the second defendant's assets will be dissipated. The mere fact that he has recently sold a property does not, as the plaintiff would have it, sustain an inference that there is a risk of dissipation of assets. The reasons for selling that property are both obvious and legitimate. 16. Moreover, and in circumstances where the plaintiff relied upon a lack of diligence and/or delay on the part of the second defendant, four matters should be emphasised. Firstly, the second defendant was only joined in the proceedings a relatively short time ago. Secondly, it is not as if he has done nothing since that time to assert his position. As I previously noted, he filed an application for a stay of proceedings within a reasonable time of being joined. Thirdly, it is reasonable to infer that he has taken the deliberate step of not filing a defence on the advice of his lawyers, in circumstances where he faces serious criminal charges, the allegations in which mirror those in these proceedings. Fourthly, the only other issue raised by the second defendant in the proceedings thus far related to his capacity. There is no suggestion that such issue was raised in a way which was other than bona fide. In all of these circumstances, the plaintiff's assertion that there has been undue delay, or a lack of diligence, on the part of the second defendant, is somewhat overstated. In any event, even if I came to the view that there was unexplained delay, that fact would not establish a risk of dissipation of assets. 17. Finally, the judgment of Gleeson CJ in Patterson does not, in my view, support the plaintiff's position. In that case, the appellant (against whom the freezing order had been made) had fraudulently misappropriated funds. The Chief Justice concluded that in those circumstances, there was a risk that unless the appellant was restrained, he would deal with his assets in a way which would make them unavailable to a judgment creditor. Those circumstances are far removed from those of the present case. Moreover, I do not understand that part of the judgment of the Chief Justice to which I was taken to incorporate a statement of principle. Rather, his Honour was expressing a conclusion, based on the facts of that case. 18. The second defendant has sought an order in his favour for the costs of the motion. That order has been opposed by counsel for the plaintiff on the basis that the affidavit relied upon by the second defendant was only served this morning. If late service of the affidavit somehow prejudiced the plaintiff's position, it would have been open to counsel to seek an adjournment of the hearing of the motion. No such application was made. In those circumstances, I can only conclude that counsel did not consider that the plaintiff's position was prejudiced in any way. Having proceeded to a hearing, the plaintiff's motion failed. There is no reason in those circumstances why costs should not follow the event. 19. Accordingly, I make the following orders: 1. The plaintiff's notice of motion filed on 26 October 2018 is dismissed. 2. The plaintiff is to pay the second defendant's costs of the motion as agreed or assessed.