Antoun v Hanna (No 2)

In these reasons, I will explain why, on an application for the making of a freezing order, I have made that order ex parte without requiring the applicant to offer the usual undertaking as to damages component of the undertakings required in accordance with Practice Note SC Gen 14 (the Practice Note), as set out in Schedule A to the example form of freezing order contained in the Practice Note.

The applicant for the freezing order is Joseph Hanna, who is the third defendant in these proceedings. The respondent is Mary Antoun (also known as Mary Syriane), who is the fourth defendant.

The Court conducted an ex parte hearing in the Duty List on 11 July 2023. I gave Mr Hanna leave to file the affidavit of Isabella Diener, who is a graduate solicitor employed by Mr Hanna, who himself is a solicitor.

There has been some delay in the Court being able to make the freezing order sought by Mr Hanna. Initially, the draft order did not conform with the example form of freezing order in the Practice Note. I considered that there were difficulties with the wording of the draft order, and email correspondence ensued between my Associate and Mr Hanna’s office. Delay occurred, which has recently been explained on the basis that Mr Hanna’s counsel was overseas with limited internet connectivity. The application was re-enlivened upon the receipt by my Associate of an email from Mr Hanna’s office on 22 August 2023, attached to which was a draft amended notice of motion and an annexed draft Penal Notice.

The proceedings to which Mr Hanna and Ms Antoun are parties has been subject to a decision of the Court that I published on 22 June 2023, following a hearing on 27 February 2023: see Antoun v Antoun (No 3); Antoun v Hanna [2023] NSWSC 684 (“J”). I will explain the circumstances relevant to the present application, but will need to assume that the reader is aware of the content of the earlier decision.

In essence, the proceedings that I described at J [3] as the “principal proceedings” are an application by the plaintiffs in those proceedings, Tarnya Antoun and Tamara Antoun, for further provision under s 59 of the Succession Act 2006 (NSW) out of the estate of their father, Antoine (Tony) Antoun (the deceased). The plaintiffs were daughters of the deceased by his first marriage. Mary Antoun was the second wife of the deceased until shortly before his death.

As the persons nominated by the deceased in his will declined to apply for a grant of probate, this Court made an order that Mr Hanna be appointed to represent the deceased’s estate for the purposes of the proceedings: see J [8]. As there explained, Mr Hanna initially agreed to accept the appointment pro bono, as it was expected that his involvement would primarily involve the ascertainment of the nature and value of the deceased’s estate. As it has happened, Mr Hanna has been drawn more heavily into these proceedings, to the extent that he will be entitled to recover his costs out of the estate or notional estate of the deceased, should it be established that there are assets available to meet his costs. Crucially for the purposes of the present application, Mr Hanna is an independent solicitor who has accepted an onerous obligation from the Court in circumstances where there is a significant risk that he will be substantially out-of-pocket. Mr Hanna cannot be expected to place his own assets at risk by providing the usual undertaking as to damages to support the grant of the freezing order against Ms Antoun that he seeks by the present application.

As explained at J [27], in the course of the preparation of these proceedings for hearing, the plaintiffs discovered that, on 4 December 2017, the Federal Circuit Court of Australia (as it was then called) had made orders that adjusted the entitlement of the deceased and Ms Antoun to the property that they owned (the family law orders). The circumstances in which the family law orders were made are set out in J [27], and the terms of the family law orders are specifically set out at J [27(8)]. Crucially, for present purposes, order 1 required Ms Antoun, no later than 31 March 2018, to discharge the mortgage over what I called the “Rosebery property” in the judgment, to transfer the whole of her right title and interest in the unencumbered Rosebery property to the deceased, and to give vacant possession of the Rosebery property to the deceased.

Ms Antoun has refused to comply with order 1 of the family law orders and, at the hearing, it became clear that she would not do so unless compelled by an appropriate court.

A valuation report tendered by Mr Hanna valued the Rosebery property at $495,000 as of 10 February 2023: see J [34(2)].

As is explained at J [34(10)], Mr Hanna’s inquiries suggest that the value of the actual estate of the deceased is no more than $13.04, subject to the value to the estate of the satisfaction of order 1 of the family law orders, which would be $495,000 if Ms Antoun complied with those orders.

At J [82], I stated my determination that the Court would make the following orders in the principal proceedings:

As I understand matters, the Court has not yet processed order 2 to grant letters of administration with the deceased’s Will annexed to Mr Hanna.

For the reasons that I explained at J [47]-[68], I made the declaration in order 7 in favour of the plaintiffs. That was an unusual course for the Court to take, because the Court could do no more than to make a declaration as to what the plaintiffs were provisionally entitled, subject to then unknown eventualities. Relevantly, the orders were constructed in terms that contemplated Mr Hanna, as the administrator of the deceased’s estate, would take steps in the successor court to the Federal Circuit Court of Australia, the Federal Circuit and Family Court of Australia (Division 2) (the Division 2 Court) to enforce order 1 of the family law orders against Ms Antoun. The subject of those proceedings would be the Rosebery property. Plainly there were many contingencies involved in Mr Hanna’s prospects of success. Accordingly, on the assumption that he would succeed, after payment of all legal costs, there would be property in the deceased’s actual estate to which the formula in order 7 could be applied.

Although this Court contemplated that Mr Hanna would get in the deceased’s estate’s assets by taking proceedings to enforce order 1 of the family law orders, as discussed at J [70]-[71], the Court left alive the possibility that it would, on a future application, make a notional estate order against Ms Antoun’s equity in the Rosebery property under Part 3.3 of the Succession Act.

The reason that Mr Hanna has made the present application is that, as explained in Ms Diener’s affidavit, on 15 May 2023, the Rosebery property was transferred by Mary Antoun to an innocent third party for a price of $425,000. Presumably, as part of that transaction, the mortgage on the Rosebery property was discharged. This sale price was $70,000 less than the value of the Rosebery property supported by the evidence at the hearing.

Mr Hanna only became aware that Ms Antoun had sold the Rosebery property at around 4pm on 7 July 2023.

Ms Antoun was represented at the hearing that took place on 27 February 2023. She was cross-examined by counsel for the plaintiffs. While Ms Antoun was in the witness box, I made observations that made it clear that she had been joined as fourth defendant because of the expectation that certain assets may be subject to notional estate orders: see T 38.33. Ms Antoun was questioned at T 46.13-47.39 about compliance with order 1 of the family law orders, and she admitted that she had not complied with any aspect of that order.

It would have been transparently obvious to Ms Antoun that the object of her involvement as the fourth defendant in the proceedings was for the plaintiffs and Mr Hanna to set the groundwork for the enforcement of order 1 of the family law orders against Mary Antoun.

The Court does not have evidence of the date of the contract entered into by Ms Antoun that led to the transfer of the Rosebery property on 15 May 2023. Neither counsel nor Ms Antoun herself informed the Court at the hearing that the Rosebery property had already been sold. It is apparent that the valuer who valued that property as at 10 February 2023 was unaware that there was any contract for the sale of the property. The Court is entitled to infer on an interlocutory basis that Ms Antoun entered into the contract to sell the Rosebery property after the completion of the hearing, and with the conscious intention to deprive the pending orders of the Court following the publication of its reserved judgment of any effect, if those orders were predicated on the possibility that Ms Antoun would be forced to satisfy order 1 of the family law orders by an appropriate application in the Division 2 Court.

Mr Hanna has advised the Court, by his counsel, that he is not prepared to take the personal risk involved in giving the usual undertaking as to damages as a condition of the Court making the freezing order that he seeks against Mary Antoun. That is an entirely reasonable position for Mr Hanna to take considering that he has initially acted pro bono and has already taken considerable risks as to recovery of his costs, when he has no personal interest in the proceedings, but is acting to facilitate the determination of the principal proceedings.

The plaintiffs' counsel has advised the Court that the plaintiffs consent to the making of the freezing order on the terms sought by Mr Hanna. The plaintiffs have not offered to give the usual undertaking as to damages to the Court. The Court knows that the financial circumstances of the plaintiffs would not support that undertaking in any event.

I acknowledge that the authorities establish, at the very least, that the Court should not make freezing orders ex parte when they are not supported by the usual undertaking as to damages, unless in exceptional circumstances. In Frigo v Culhaci [1998] NSWCA 88, the Court of Appeal (Mason P, Sheller JA and Sheppard AJA) discharged a freezing order obtained ex parte where no undertaking as to damages had been given. They said at 12-14: "We cannot conceive of circumstances where an ex parte mareva injunction should be granted otherwise than subject to an undertaking as to damages…". Their Honours described the undertaking as to damages as "this invariable incident of an interlocutory injunction" when it is sought ex parte.

In De Boer v Williams [2004] NSWSC 351, Einstein J canvassed the authorities on this issue at [20]-[25], and concluded at [26]:

However, the review by his Honour of the authorities suggests that the practice to require the giving of the usual undertaking as to damages before an ex parte freezing order is made is not absolute.

At [20], Einstein J discussed the commentary at [21-410] of Meagher, Gummow and Lehane’s, Equity: Doctrines and Remedies (4th ed, 2002, LexisNexis Butterworths) , where the authors said: "…There are very few exceptions to the requirement that an undertaking be given…normally it is the price a plaintiff has to pay for the grant of an interlocutory injunction": see now [21-410] of the fifth edition to the same effect. Einstein J observed that the authors suggested that possible exceptions include "when the plaintiff makes out an unarguable case of fraud (which, at an interlocutory stage, must be rare), and where a plaintiff's poverty prevents him from tendering a meaningful undertaking".

Einstein J observed, at [23], that Austin J had pointed out in New Cap Reinsurance v Chase Manhattan (No 2) [1999] NSWSC 808 that one example of when the usual undertaking as to damages might not be required is where the plaintiff is impecunious and supported by legal aid. Another example suggested by Austin J was where interlocutory injunctions have been granted at the suit of a liquidator without any requirement that the liquidator give a personal undertaking as to damages.

His Honour noted that, in Southern Tableland Insurance Brokers Pty Ltd (in liq) v Schomberg (1986) 11 ACLR 337, Young J (as his Honour then was) made an observation at 342: "that the circumstances where it is not just and reasonable that an undertaking should be given are extremely rare." Einstein J recorded at [25] that Young J added, at 342, that “it is likely to be even rarer for there to be a case where it is proper to grant a Mareva injunction without an undertaking as to damages."

In Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961, Kunc J said at [85]:

In P Biscoe’s Freezing & Search Orders: Mareva & Anton Piller Orders (2nd ed, 2008, LexisNexis Butterworths), the author said:

Finally, the observations by Gibbs J in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249; [1981] HCA 75 at 311-312 are material. His Honour said:

If the Court has a discretion not to enforce an undertaking as to damages that has been given if the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking, that would suggest that there may be cases where the conduct of the defendant would make it inequitable for the Court to insist upon the giving of the usual undertaking as to damages in the first place as the price for the making of a freezing order.

Every case must be decided on its own facts. It may not always follow from the fact that the defendant has deprived the plaintiff of substantially the whole of the plaintiff's assets, so that the usual undertaking as to damages if given by the plaintiff will be worthless, that the Court should make a freezing order without requiring that the undertaking be given. The proper course for the Court to take will depend, among other things, on the reasonableness of the defendant's claim that it was lawfully entitled to deprive the plaintiff of its assets. However, there is more in this case than Ms Antoun having apparently deprived the deceased's estate of all of its assets, bar the amount of $13.04, which is in any case inadequate to satisfy all of the costs orders made in favour of parties to the proceedings. In this case, Ms Antoun’s conduct has deprived the deceased's estate of the value of the Rosebery property because the nature of the estate's asset is the right to enforce order 1 of the family law orders, and Ms Antoun has wilfully refused to comply with that order. Furthermore, Ms Antoun has wilfully sold the Rosebery property for what may, on the evidence, be an undervalue of $70,000. It is at least likely that she made a quick sale that required her to accept a low price. Most significantly, however, there is a strong case, albeit on the basis of the evidence presented ex parte, that Ms Antoun has acted in flagrant disregard for the Court's processes to put the Rosebery property beyond the reach of the Court, while the Court was in the process of determining its reserved judgment. I have no doubt that Ms Antoun appreciated that the entire objective of the proceedings had become to get into the deceased's estate the value of the unencumbered Rosebery property.

I consider that it is fundamental to the proper administration of justice that the Court not permit a defendant to wilfully deprive the Court's possible judgment of effect, after the parties and the Court have participated in a hearing. At least in these circumstances, a defendant cannot boldly say: “I now have in my possession the subject of the Court's judgment. Consequently, the parties entitled to that property are now worthless. The Court should not make a freezing order against me, because the wronged parties do not offer the usual undertaking as to damages, or the undertaking would be worthless because of my conduct in depriving them of their assets.”

I consider that it is material in a case like the present for the Court to consider the likely effect of the freezing order on the defendant and the defendant’s assets. Where a freezing order will impinge upon a defendant’s business in a way that may cause substantial collateral damage, and where the nature and effect of the damage may not be readily quantifiable, the Court may need to hesitate in making the freezing order without an effective undertaking as to damages, even in cases that involve conduct such as that engaged in by Ms Antoun in this case. However, in other cases, of which the evidence suggests the present case is an example, the freezing order is not likely to have any extreme effect on the utilisation of the defendant’s assets or cause substantial collateral damage. Where the defendant owns real property, and in the ordinary course will do no more than to service the mortgage on the property, the making of the freezing order may not have any significant effect, other than to restrain the dissipation of the property. In such a case, the Court may more readily make the freezing order without requiring the undertaking as to damages.

It is also relevant that the Court has the facility to manage on an ongoing basis the risk that the making of the freezing order without the usual undertaking as to damages will cause unwarranted loss to the defendant. The defendant is always given leave to relist proceedings, and if circumstances give rise to a risk of unexpected consequences from the existence of the freezing order, it will be available to the defendant to apply for an appropriate order to mould the effect of the freezing order to the circumstances in a way that does justice between the parties.

The making of the freezing order in this case is supported by Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 25.11(1) insofar as the order will meet a danger that a prospective judgment of this Court made following an application as authorised by order 9 made on 22 June 2023 will be wholly or partly unsatisfied. As this Court will not have power to enforce any order made by the Division 2 Court on the application of Mr Hanna, the freezing order would not be supported by UCPR r 25.14(1)(a)(i) and (ii). However, UCPR r 25.14(6) provides that the rule does not affect the power of the Court to make a freezing order if the Court considers it is in the interests of justice to do so. I consider that it is in the interests of justice in this case for the Court to make the freezing order in support of any orders that the Division 2 Court might make concerning Ms Antoun’s sale of the Rosebery property in circumstances where she was in breach of order 1 of the family law orders. Those orders, if made, will ultimately be in support of the Court’s ability to make family provision orders and orders for costs in the principal proceedings that may be satisfied out of the actual or notional estate of the deceased.

Consequently, I will make a freezing order against Ms Antoun without at this stage of the proceedings requiring Mr Hanna to give the undertakings to the Court set out in Schedule A to the example freezing order in the Practice Note.

I will make the freezing order based upon the example form of freezing order contained in the Practice Note.

Given the exceptional circumstances of the present application, I have expanded the usual terms for the provision of information in order 8 of the example form of freezing order contained in the Practice Note to read as follows:

The orders of the Court are: