- Unreported Judgment
SUPREME COURT OF QUEENSLAND
No BS628 of 2005
GENERAL SECURITY AUSTRALIA INSURANCE BROKERS
(ACN 084 437 196)
CHERIE ANN SUMMERS
HIS HONOUR: The applicant has brought proceedings against the respondents by an originating application filed on 25 January 2005 in which the applicant seeks to recover monies by way of compensation for breach of fiduciary duty or as monies had and received against each of the respondents. The first respondent was until January of this year a company secretary of the applicant, and it is alleged that in that capacity, she owed fiduciary duties to the applicant. The second respondent is her husband. The case against him, broadly speaking, is that he has been a knowing recipient or a knowing assistant in her breach of duty and he, therefore, is liable to the applicant also.
Again, speaking broadly, the applicant's case is that the first respondent misappropriated, by several transactions, in total a large sum of money which is now pleaded to be in excess of $800,000. The applicant has obtained several orders in these proceedings by way of Mareva injunctions. Until today, there has been no opposition by the respondents, although they concede that they were aware, at least on the occasion that the matter was last before the Court, that the Court would then be asked to extend the existing orders against them.
The present position is according to an order made by the Chief Justice on the 8th of April by which the orders made by Helman J on 21 March were enlarged until today or earlier order. The applicant now seeks an extension of the present regime until trial or earlier order. It also seeks a variation in one respect to which I will return.
At today's hearing, it was conceded by the respondents that the applicant has a serious case to be tried. It was argued, however, that the applicant had not demonstrated the requisite risk of dissipation of assets clearly enough. As the respondents rightly submit, it is necessary for an applicant for orders of this kind to establish such a risk by evidence, rather than by assertion. The applicant submits, however, that that risk plainly appears at least from the conduct which is complained of. I am satisfied that that submission should be accepted.
Without, of course, expressing any concluded view on the merits of the applicant's case, it does appear to be a relatively strong one. The first respondent's affidavit advances a case which is to the effect that although she was likely to have been involved, at least, in many of the transactions, the subject of the applicant's complaint, she was involved at the direction of someone else who was a director of the company and was not involved for her own personal gain. It has been argued that there is an issue which will have to be tried as to whether, in these circumstances, she had the authority of the applicant itself, as distinct from this individual director, to undertake these transactions.
It may be that there is an issue to be tried in that respect. But, at present, it does not seem to me that provides a particularly strong basis for defending this claim. In addition, her own affidavit is careful to avoid an assertion that each and every transaction was for someone else's benefit. So, in paragraph 29 of her affidavit, she denies that all of the alleged transactions were for her benefit and she says that many of the transactions were for the benefit of others.
The applicant's evidence strongly indicates, if it does not already establish, that in some of these transactions at least, the money appropriated from the applicant was paid into the respondents' bank account. In the circumstances, there is a risk of dissipation which is sufficiently established. The risk of dissipation can be readily inferred from the evidence of the first respondent's conduct. Even accepting that many of the transactions were for the benefit of others, the first respondent's conduct would appear to have been dishonest unless she could make out her contention that the director who required her to undertake the transactions did so with the authority of the company.
The second respondent, as I mentioned, was not employed by the applicant and he is joined upon a somewhat different basis. The respondents conduct a horse stud business in which it is said that he is a non-active partner. There are no assets, at least of any significant value, which are said to be his alone. Because there is a significant risk of dissipation of assets by the first respondent, that risk exists then in relation to any assets in which the second respondent has an interest and it is obvious to say that risk might become a reality through the potential for assistance to the first respondent's dissipation by the second respondent's cooperation.
The application was also opposed on the basis that there was no need to restrain any activity in relation to the two real properties of the respondents or of the first respondent. It was said that there was no likelihood that the respondents would leave their place of residence where they have a young family.
That may be so, but there are other means in which the value of those assets could be diminished and, in particular, by the assets being further encumbered to raise cash which, in turn, might be dissipated. It was, no doubt, with a risk of that kind in mind, that the Judges who have made earlier orders in these proceedings made them in terms which were wide enough to protect against that particular risk.
The orders presently in place and which the applicant asked to be enlarged until trial provide important exceptions to alleviate against any hardship. In particular, they permit funds to be used for legal expenses both for civil and criminal proceedings and for assets to be used in the ordinary course of business. They also permit the drawing of reasonable living expenses and, of course, should the operation of these orders result in some particular hardship, it is open to the respondents to come back to the Court to ask for some variation of them.
The applicant seeks a variation of the present orders in so far as the amount in paragraphs 1, 4 and 8 of the order of Mr Justice Helman are concerned.
The applicant wishes to substitute the figure of $822,493.33 for that figure of $569,559.33 having regard to the further information and evidence which has emerged in the last few weeks. No submission was advanced on behalf of the respondents as to why that variation should not be made.
There is also a further question which is whether the defendants should be given an extension of time in which to deliver their defence or defences to the amended statement of claim filed on 31 March. The due date is 28 days from then, that is, today. The defendants seek a further 21 days. It may be that the defendants have known of these proceedings for some months but the present position is that their solicitor and counsel have only been very recently engaged and I am told that more time is needed to prepare a defence which complies with the rules. Given the protection of the Mareva orders, it seems to me that the defendants should have this further time for their pleading.
Apart from the question of costs, the orders therefore will be in terms of the draft handed to me by Mr Ferrett for the applicant. I have deleted paragraph 3 of that application. It is, of course, open to either party to bring the matter back on in the ordinary course. I have also added an order in these terms:
The time for filing and service of the respondents defence or defences be extended to 19 May 2005.
That leaves the matter of costs.
HIS HONOUR: The remaining issue is one of costs. The applicant seeks its costs of today as well as costs reserved by Byrne J on 9 February, Helman J on 21 March and the Chief Justice on 8 April. As to today's costs, the applicant has, of course, succeeded in the application for further injunctive relief and ordinarily costs would follow the event. That seems to me to be an appropriate outcome subject, only, to the fact that there was also some debate as to whether the respondents should have an extension of time in which to file their defence.
However, although the respondents have succeeded on that argument, it was an argument which was necessitated by their seeking the indulgence of an extension of time and in circumstances where it does appear that they had been aware, well prior to the service of the amended statement of claim that these proceedings had been commenced and orders had been or were likely to have been made. Therefore, the fact that the respondents did succeed in getting an extension of time does not affect what is otherwise an appropriate order for costs for today's hearing and the applicant should have them.
The costs reserved on those three occasions can be, I think, considered together although the respondents submit that the costs of the 9th of February are in a different category. There is evidence which does not appear to be presently challenged that the second respondent, and one could then infer the first respondent, were aware of the proceedings and the likelihood of orders even prior to the first order being made on 25 February. It does seem that, for some time, the respondents were not facing up to the fact that proceedings were about to be or had been commenced against them and that they would be subject to injunctions.
The consequence is that the applicant has been put to the expense of having to come to Court on several occasions to seek extensions of orders obtained in the absence of an appearance by the respondents. The applicant experienced difficulties in personally serving the respondents because they were travelling interstate.
As I see the matter, the respondents are responsible for the costs which had to be spent by the applicant on these three occasions. I am unable to see that the occasion of 9 February is different from the others and, in particular, that there is any significance, at least in a way that is helpful for the respondents, from the fact that as at 9 February (until the order of that day was made) the respondents were not subject to an existing order because the original order made on 25 February had been made only until 3 February.
Accordingly, the respondents will be ordered to pay the costs reserved on those days with the consequence that the order for costs will be that the respondents pay the costs of the hearing of today and those costs reserved by orders of Byrne J on 9 February, Helman J on 21 March, and the Chief Justice on 8 April 2005.
As I have said, there will otherwise be in terms of the draft with the addition of that order in relation to the pleading as I have mentioned.
- Published Case Name:
General Security Australia Insurance Brokers v Cherie Ann Summers
- Shortened Case Name:
General Security Australia Insurance Brokers v Summers
 QSC 131
28 Apr 2005
No Litigation History