Sivonen v Smith [2019] NSWSC 1794

Supreme Court New South Wales

Medium Neutral Citation: Sivonen v Smith [2019] NSWSC 1794 Hearing dates: 5 December 2019 Date of orders: 05 December 2019 Decision date: 05 December 2019 Jurisdiction: Common Law Before: Cavanagh J Decision: (1) The summons is dismissed. (2) The plaintiff pay the defendant's costs. Catchwords: CIVIL PROCEDURE — interim preservation — freezing orders — requirements to be met before order made — no evidence of likely attempt by defendant to dispose of assets in order to defeat any potential judgment — summons dismissed Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 25.11 Cases Cited: Frigo v Culhaci (Court of Appeal (NSW), 17 July 2019 unrep) Lake v Crawford (No 2) [2010] NSWSC 419 Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Category: Procedural and other rulings Parties: Kari Mikael Sivonen (Plaintiff) Peter Samuel Smith (Defendant) Representation: Counsel: JA Hillier (Plaintiff) T Buterin (Defendant)

Solicitors: Russell McLelland Brown Lawyers (Plaintiff) Moray & Agnew (Defendant) File Number(s): 2019/374998 Publication restriction: None

REVISED EX TEMPORE Judgment 1. By way of a summons originally filed in court on 28 November 2019, but filed with the Registry on 3 December 2019, the plaintiff seeks a freezing order pursuant to rule 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") in the form proposed, which is annexed to the summons. 2. The order sought by the plaintiff is essentially that the defendant not remove from Australia, or any way dispose of, deal with or diminish the value of his assets up to the unencumbered value of $1 million. 3. For the purposes of the order, the plaintiff includes three properties, the details of which are noted in the proposed orders. There was some reference to a fourth property being a property owned by a Peter Samuel Smith at Moree Plains as referred to in the National Property Ownership Report annexed to the affidavit of James Leslie Watt, the plaintiff's solicitor, dated 3 December 2019. 4. Bearing in mind the possibility that there may be more than one Peter Samuel Smith in Australia, Ms Hillier appropriately did not press the proposition that I should find that the defendant had not disclosed all of his assets for the purposes of this application. 5. Mr Buterin, who appears for the defendant, provided some information about the defendant's knowledge of that property from the bar table but, as I said to both counsel, I would not be drawing any inference from the National Property Ownership Report either way. 6. The plaintiff sustained injuries in an accident on 2 March 2019 at a property at Hancocks Creek Road, Wandandian, which he says was owned by the defendant. He says that he had attended at the property for the purposes of collecting logs and at the time the defendant was in the process of clearing trees. Whilst he was on the defendant's property measuring logs, the defendant arrived driving his excavator. The defendant began to use a claw instrument on the excavator to pick up one of the logs. 7. The plaintiff asserts in his affidavit of 27 November 2019 that he signalled to the defendant not to move the log and the defendant acknowledged his signal. However, the plaintiff says that the defendant moved his excavator forward, thereby resulting in the excavator hitting a tree stump causing it to swing violently and come in contact with the plaintiff's leg. As a result of the accident, the plaintiff sustained severe injuries. 8. As part of the evidence on the application, the plaintiff, by way of an affidavit from his solicitor James Leslie Watt, estimates that the potential damages that he might recover may be in the order of $1 million. I should emphasise that proceedings against the defendant for damages arising out of his alleged negligence have not yet been commenced. However, based on the material available on this application, I am prepared to accept that the plaintiff may have an arguable case for damages against the defendant, and that the damages he might recover could exceed $500,000 and could be $1 million. In using the word "could", I mean to emphasise that I simply do not know but there is a potential for the plaintiff to recover a significant sum from the defendant. 9. I make no further comment on the strength of the plaintiff's case against the defendant or the damages that he might receive, and nothing I say in this judgment should be taken as any indication by me that the plaintiff will recover any damages from the defendant. It is just that I am satisfied for the purposes of this application that the plaintiff has an arguable case and might receive a significant sum from the defendant. 10. The issue which arises on the summons is whether I should grant a freezing order in favour of the plaintiff. Although this might be viewed as a standard type of personal injury action, and although experience tends to suggest that freezing orders are not generally sought in personal injury actions, there is no principle which prevents the plaintiff seeking and obtaining such an order provided that an order is appropriate. 11. The reason that the plaintiff seeks a freezing order is that the plaintiff became aware that the defendant transferred the property where he was living to his nephew at some stage after the defendant became aware of the potential claim against him (or so the plaintiff asserts). 12. In those circumstances, the matter came before Fagan J on an ex parte basis on 28 November 2019. His Honour expressed concern about the alleged conduct of the defendant in apparently transferring the property where he was living to his nephew after receipt of the claim in the sense that such transfer might have given rise to an inference that the defendant was attempting to dispose of his assets so that they would not be available to the plaintiff should the plaintiff recover judgment against the defendant. 13. The matter comes before this Court today not on an ex parte basis but with the defendant being represented. The defendant is represented by Mr Buterin of counsel instructed by Moray & Agnew Solicitors. The defendant relies on an affidavit of Ian Denham sworn 4 December 2019. Mr Denham is a partner at Moray & Agnew and has the conduct of the matter. 14. At the time of the accident, the defendant held a policy of insurance with QBE. I assume that Mr Denham is instructed by QBE on a reservation of rights basis for the purposes of protecting the interests of the defendant at this stage. QBE has not yet made a decision on whether it will indemnify the defendant in respect of the plaintiff's claim. 15. There was some criticism, if I put it that way, by Ms Hillier of the delay in QBE making a decision and, of course, Ms Hillier acknowledged that if QBE had made a decision to indemnify the defendant at this stage then the plaintiff would not be seeking the freezing order. However, it does not seem to me to be too extraordinary that a liability insurer has not yet completed all of its investigations into a claim in circumstances in which the plaintiff has not commenced his own proceedings for damages against the defendant. 16. When the matter came before the Court on 3 December 2019, I urged Mr Buterin to do what he could to have QBE make a decision, but that has not occurred and the application proceeds on the basis that the plaintiff does not know whether QBE will be indemnifying the defendant. No information was put before the Court as to any basis on which QBE would not be indemnifying the defendant and the only finding I can make at this stage is that QBE is investigating the matter presumably with the intent of making a decision as soon as possible. 17. I do not need to further consider the basis or nature of the claim that might be made against the defendant. However, it is relevant to note that the plaintiff has not yet commenced proceedings and there is no compulsion on the plaintiff to commence any proceedings for a number of years. The ordinary limitation period of 3 years would apply. 18. For the purposes of this application, the defendant has disclosed an interest in two properties at Wandandian, as well as another property at South Nowra. He discloses the amount of his interests as being $1.85 million. He also discloses his interest in cars, trucks, equipment, personal effects, cash and savings up to $315,000. There is no evidence that the defendant has not properly disclosed all of his assets. 19. The key aspect to Mr Denham's affidavit is the evidence relating to the transfer and ownership of the property. As Mr Denham says, he has been informed by Mr Smith and believes that the Hancocks Creek Road property has been sold by the defendant to Mr Travis Smith (the nephew) and that the sale was the subject of negotiations which commenced before the incident involving the plaintiff but culminated in September 2019. 20. He further says that the sale was not precipitated or motivated by any potential claim by the plaintiff and that the defendant has resided at the property for a period of 23 years but has been in the process of moving out of the property. 21. With reference to the defendant's other property, Mr Denham says that, based on his instructions from Mr Smith, the defendant has been moving into the property situated at Wandandian and proposes to live at that property and has no intention of relocating or divesting himself of the land. 22. In relation to the property situated at South Nowra, Mr Denham says that Mr Smith's interest in the land is in his capacity as trustee of a Self-Managed Superannuation Fund and that the land is the principal place of the excavation business conducted by the defendant. 23. Mr Denham was not required for cross-examination. There was no objection to any part of his affidavit, not of course that I am suggesting that there should have been. 24. In the circumstances, I would accept what Mr Denham says as to that which he has been informed by Mr Smith. That is, in particular, that the sale was not precipitated or motivated by any potential claim by the plaintiff and, in fact, the negotiations for the sale had commenced prior to notification of any claim. 25. Ms Hillier submits that I should draw a number of inferences based on the absence of further information about that sale. Mr Buterin submits that any inferences I make would be positive to the defendant; that is, that I would not infer any attempt by the defendant to dispose of assets or any motivation or intention to do so. 26. I must have regard to the evidence and there is evidence from Mr Smith through Mr Denham whereby Mr Smith says he does not intend to dispose of his assets. It may be unlikely that he would be disposing of a parcel of land where he is operating his business and has done so for some time. The fact that he is moving from the Falls Creek property into another property which he owns does not give rise to an inference that he is about to sell that property. Rather, the inference is that he wishes to live there and will continue to live there, if any inference is available from the fact that he is moving into the property. 27. The real issue in this matter is whether the plaintiff has established that which is necessary to establish for the purposes of obtaining a freezing order. The plaintiff seeks an order under r 25.11 of the UCPR. As set out in r 25.11, the Court may make an order 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 partially unsatisfied. 28. The purpose of a freezing order is to prevent frustration or an abuse of the process of the Court. It is not to provide security in respect of a judgment or order. As observed by Harrison J in Lake v Crawford (No 2) [2010] NSWSC 419 at [15], such an order should be viewed as an extraordinary interim remedy because it can restrict the right to deal with assets even before judgment. 29. As his Honour said, the jurisdiction to grant such orders is not intended to enable a plaintiff to obtain security in advance of a judgment. It is founded on the jurisdiction of the Court to prevent abuses of its processes by preventing a defendant from embarking on a course of conduct that would have the effect of defeating the Court's jurisdiction. 30. As was noted by Ward J (as her Honour then was) in Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 at [196]–[197], such an order is only warranted when there is conduct on the part of the defendant which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the Court and enforcement of its judgments or of being intended to do so by in any way being evasive indicating dishonesty. 31. Further, as was said in Frigo v Culhaci (Court of Appeal (NSW), 17 July 2019 unrep), the plaintiff must establish by evidence and not assertion that there is a real danger that, by reason of the defendant absconding or removing assets, the plaintiff will not be able to have the judgment satisfied if successful in the proceedings. Mere assertions that the defendant is likely to put assets beyond the plaintiff's reach would not be enough. 32. The plaintiff plainly had some concern when in the process of investigation it appeared to him that the defendant had sold a property on notification of the claim against him. However, on the evidence presented on this hearing, the defendant was already in negotiations to sell that property and there is no evidence that he sold the property in an attempt to dispose of it just in case he was sued by the plaintiff. 33. I am not prepared to draw an inference that anything done by the defendant was done for the purposes of frustrating the processes of the Court or enforcement of any judgment. Further, on the evidence presented by the defendant, there was no basis on which I could find that the defendant is likely to dispose of any assets in order to defeat any potential judgment, or even that there is any real risk that he might do so. 34. A freezing order should not ordinarily be made except if the party seeking the freezing order has put before the Court evidence sufficient to justify the interference with the defendant's ordinary entitlements to deal with his property as he sees fit. The mere assertion that the defendant might attempt to dispose of the property is not sufficient. Otherwise, a freezing order could be granted in every action because it is always possible that people may want to dispose of their property. 35. I am mindful of the fact that the QBE has not yet made a decision on indemnity and, of course, if it had done so the plaintiff would not be here. However, the plaintiff brings the application at this time. In my view, the evidence does not justify the continuation of the freezing order and I decline to make the orders sought in the summons. In the circumstances, the summons is dismissed. 36. The defendant sought costs which the plaintiff opposed. In my view costs should follow the event and I order that the plaintiff pay the defendant's costs.