Rowley v Dell'Osa[2016] QDC 319

DISTRICT COURT OF QUEENSLAND

1. [1]
   The claim is for $407,716.29 said to be misappropriated by the first and second defendants plus interest of about $75,000 and costs.

2. [2]
   The defendants applied for several orders, the only one of which I am asked to make is for a stay pending criminal proceedings. The first defendant has been committed for trial in the District Court at Southport. The trial is expected to be heard in the first half of 2017. The pleadings in the civil action are not yet complete. There is a close relationship between the question to be decided in the criminal and civil proceedings. In these circumstances, primacy should be given to the conduct of the public, criminal proceeding. The stay should be extended pending the criminal trial.

3. [3]
   The plaintiffs seek a freezing order under R 260A of the Uniform Civil Procedure Rules. The purposes of such an order have been expressed as –

‘To restrain defendants from dealing with assets so as to … render any future judgment fruitless and barren’, ‘and thus impair the jurisdiction of the court and render it impotent properly and effectively to administer justice’.^[1]

4. [4]
   The rule itself provides its purpose:

260A

3. (1)
   The court may make an order (a freezing 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 partly unsatisfied.

3. (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.

5. [5]
   Relevant considerations include whether the plaintiff has a good arguable case; the idea that unless and until judgment is gained a defendant should be free to deal with her property; what needs – her own or others’ – the defendant has established; where the balance of convenience is to be struck; and the likelihood that the defendant will disperse the assets if not restrained. That is, has the applicant shown there is a danger that a judgment of the court will be wholly or partly unsatisfied? The discretion should be used with caution. If an order is necessary, what amount is “… at least reasonable in all of the circumstances?”^[2]

6. [6]
   The further amended statement of claim particularises numerous unauthorised transactions allegedly carried out by the first defendant, who was employed as a book-keeper. After deducting amounts repaid by the first defendant following a meeting between the first plaintiff and the first defendant’s husband, the plaintiffs claim to be owed the amounts set out above. This pleading has not yet been answered. The original defence contains denials of several specific allegations and liability generally. That is, it is not possible to discern the likelihood that the plaintiffs might achieve judgment for some but not all of the amounts claimed.

7. [7]
   Until recently, the defendant had an interest in three properties. She sold one in September 2016, even while the plaintiff’s lawyers were seeking an undertaking not to deal with the three properties. The net proceeds were $86,000, some of which is spent, the plaintiff having a reserve of $49,000 to fund her criminal trial. The first defendant and her husband live at one property, a home at 3 Coach Way, Upper Coomera and she rents out the other, 2/6 Barracuda Court, Palm Beach.

8. [8]
   The danger is said to be that the first defendant will deal with the properties she has an interest in to the detriment of the plaintiffs should they succeed at trial. The defendants’ material suggests the first defendant will need to sell the Coach Way home ‘because of her parlous financial situation’.^[3]  Keeping the Palm Beach rented apartment, she and her husband would have to stay with friends.

9. [9]
   Further detailed analysis of the matters to be established by the plaintiffs is unnecessary because the defendants do not contest the making of a freezing order but submits it need only affect one property. The issue reduces to whether the order should affect the first defendant’s liberty to deal with both remaining properties or just one. That is, what, in this case, would be reasonable in all of the circumstances?

10. [10]
    The first defendant does not submit the making of an order would interfere with the ordinary course of any business she conducts.

11. [11]
    The first defendant has instructed her solicitors that she has many physical ailments. These are detailed in the affidavit of a paralegal employee, to which is attached a letter from the first defendant’s doctor saying she has undergone ‘multiple admissions to hospital’ over the past three years.

12. [12]
    The first defendant relies on two ‘market appraisals’ for the Palm Beach apartment which suggest a value of between $1.15 million and $1.3 million. After deducting the amount owing on that property (about $663,000), there would be a nett amount between about $486,000 and $636,000. This, the first defendant submits, would secure the purposes of a freezing order.

13. [13]
    The plaintiffs’ material includes range estimates of the Palm Beach property from $920,000 to $1,050,000. One report reveals that 1/6 Barracuda Court, the ‘attached partner duplex’ sold in June 2016 for $942,500.

14. [14]
    The defendants criticise the estimates presented by the plaintiffs but neither party has presented a formal valuation. They are all ‘working’ estimates of real estate agents, some pitched more than others as invitations to list the property with the agent. For the purposes of the exercise I have to undertake, it is necessary to note that the estimates of value of the Palm Beach property vary from $920,000 to $1.3 million. Given the amount owed on the Palm Beach property and considering the costs of sale, there is a real danger that, in the event the plaintiffs succeed at trial, the defendants would not be able to meet the likely judgment debt from the proceeds of the liquidation of the Palm Beach property alone. Mindful that, in granting interlocutory relief, a court should generally grant the minimum relief necessary to do justice between the parties,^[4]I am satisfied justice requires the defendants to preserve more than only one of the first defendant’s properties.

15. [15]
    Late in the hearing of the application, Mr Boulton, who appeared for the respondents, submitted that, should I reach this position, an appropriate order might be that the first defendant should be ordered to preserve an amount, up to $75,000, of proceeds from any sale of the Upper Coomera home. According to the first defendant’s material, the value of the Coach Way house is between $590,000 and $605,000. It is secured by a mortgage of about $237,000. Broadly speaking therefore, the first defendant has about $370,000 equity in the property. A reasonable alternative to freezing the Coach Way house would be to order the preservation of $150,000 of proceeds of any sale.

16. [16]
    Upon publishing these reasons, I heard further submissions from the parties on the particulars of orders arising from these reasons. The orders of the court are as follows:

17. [17]
    The parties’ costs of these applications are to be reserved.