Stanizzo v Badarne (No 2)

1. [1]

   HER HONOUR: By Notice of Motion filed 10 April 2018 the plaintiff, Vincent Stanizzo, seeks an order under Uniform Civil Procedure Rules rr 25.11, 25.14(4) and 25.15(5) restraining the defendant (the first respondent to the motion), Muhammad Badarne, and his wife (the second respondent to the motion), Rowan Badarne, from disposing of or otherwise dealing with or encumbering the property at XX Hopewood Cresent, Fairy Meadow NSW 2519 (contained in folio identifier 177/29439) until further order.

2. [2]

   The relevant provisions of the Uniform Civil Procedure Rules 2005 (NSW) are as follows:

3. [3]

   The Notice of Motion was first returned before Bellew J as duty judge on referral from the Common Law Registrar on 17 April 2018 when the plaintiff applied for the grant of a freezing order on an interim basis pending the hearing of the Motion for final orders. After reserving his decision overnight, his Honour refused the application, reserving the question of costs. His Honour also gave directions for the filing and service of any further affidavit evidence upon which the parties proposed to rely at the hearing of the motion, and relisted the matter for further directions before the Registrar. Since that date additional affidavit evidence has been filed and served, together with written submissions.

4. [4]

   In the proceedings before Bellew J, his Honour noted that counsel for the plaintiff (the same counsel who appeared in the hearing before me) took issue with the submission advanced by the respondents that the making of the freezing order should be regarded as “an extraordinary remedy”. That proposition finds significant support in the case law and is also supported by Supreme Court Practice Note No. SC Gen 14 which refers to an order under r 25.11 of the UCPR as an “extraordinary interim remedy”.

5. [5]

   In Re C & L Cameron Pty Ltd - GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Ward J (as her Honour then was) said that following (at [196]-[198]):

6. [6]

   Whilst in the hearing before me the plaintiff did not address what I am satisfied is the need for the plaintiff to identify unconscionable conduct on the part of the respondents of a kind to which Barrett J referred in TZ Ltd v ZMS Investments Pty Ltd (extracted above), the defendants emphasised, and I accept, that the exceptional nature of the relief sought is a matter to be considered in determining whether the relief should be granted in the exercise of the discretion.

The evidence

1. [7]

   The application is supported by the plaintiff’s affidavit of 10 April 2018 which was read, subject to objections which attracted a ruling in the course of the hearing. He also read the affidavit of Rowan Badarne filed by the second respondent (as to which see later). The plaintiff also tendered his evidentiary statement of 8 March 2018 (a document extending over 52 pages) filed in the substantive proceedings originally commenced by Statement of Claim on 27 March 2014 and to be prosecuted by an Amended Statement of Claim filed on 28 August 2014 in which he seeks an award of damages against Mr Badarne for malicious prosecution. Those proceedings, which were commenced in the District Court, were transferred to this Court on the application of the Crown Solicitor consequent upon the plaintiff also commencing separate proceedings for malicious prosecution against Ms Karina Fregnan (nee Valvano) and the State of New South Wales (for which the Crown Solicitor acts). The three sets of what are described as “related proceedings” are listed for hearing in this Court on 4 February 2019.

2. [8]

   The context in which the plaintiff seeks a freezing order needs to be set out in summary detail in order that an informed assessment might be made as to whether the plaintiff’s evidence is capable of satisfying the test that the case as pleaded in the Amended Statement of Claim of 28 August 2014 may properly be characterised as a “good arguable case” as required by r 25.14(1)(b) of the UCPR.

3. [9]

   The plaintiff advanced the submission, which is plainly correct, that the assessment as to whether the case for substantive relief is a “good arguable case” is different from the test to be applied when an interlocutory injunction is sought, namely whether it can be shown that there is a serious question to be tried. In the plaintiff’s submission (a submission with which the defendant does not take issue), the test of a “good arguable case” is a case which is reasonably arguable, or one that has sufficient (or reasonable) prospects of success.

4. [10]

   The substantive proceedings in which Mr Badarne is the sole defendant must not be confused with the proceedings in which the plaintiff seeks damages for malicious prosecution against the State of New South Wales and Ms Fregnan, despite the fact that the allegations of criminal conduct which grounded the laying of criminal charges against the plaintiff arose in the context of a professional relationship between the plaintiff and Mr Badarne as solicitors, and Mrs Fregnan as a client of the firm in which they both practised.

5. [11]

   The criminal proceedings, foundational to the plaintiff’s claim that he was maliciously prosecuted, were initiated by NSW Police when the plaintiff was arrested and charged with a range of criminal offences on 4 November 2010. Those charges were then prosecuted through the Local Court and eventually on indictment to the District Court. Ultimately the plaintiff was prosecuted on two separate indictments in the District Court, each of which was resolved in his favour by the Director of Public Prosecutions entering a nolle prosequi during the course of the trial. Significantly, the plaintiff’s application for freezing orders relates only to the allegation that Mr Badarne prosecuted him maliciously and without reasonable and probable cause, and principally in respect of one of those indictments.

6. [12]

   The first indictment (laid first in time), annexed as annexure “B” to the Amended Statement of Claim, charges that on four occasions between 14 December 2009 and 21 December 2010, the plaintiff intimidated Mr Badarne with the intention of causing him to fear physical or mental harm contrary to s 13(1) of the Crimes (Domestic and Personal Violence) Act 2007 (NSW). The second indictment, annexed as annexure “C” to the Amended Statement of Claim, charges that the plaintiff, on 19 November 2008, had sexual intercourse or attempted to have sexual intercourse with Ms Fregnan without her consent, knowing that she was not consenting, contrary to s 61I of the Crimes Act 1900 (NSW). The plaintiff was further charged that on 19 November 2008 he threatened to cause physical injury and financial detriment to Ms Fregnan with intent to influence her not to disclose the conduct the subject of the preceding count contrary to s 315A(1) of the Crimes Act. Two additional offences, allegedly committed on 25 May 2009, were laid contrary to s 61L of the Crimes Act, together with a further charge of intimidation involving Ms Fregnan as a victim contrary to s 13(1) of the Crimes (Domestic and Personal Violence) Act, and finally, a charge that the plaintiff attempted to have Mr Badarne knowingly make a false statutory declaration with intent to pervert the course of justice. It is only that charge that is implicated in the substantive proceedings against Mr Badarne for malicious prosecution.

7. [13]

   Without descending into the detail of the case the plaintiff brings against Mr Badarne for malicious prosecution, it is fundamental to the plaintiff’s case that he establishes that Mr Badarne is a prosecutor for him to be liable for the tort of malicious prosecution. That in turn obliges him to prove to the requisite standard of proof that Mr Badarne instigated and was actively instrumental in the commencement and continuation of his prosecution on the indictment and that he is liable, as a prosecutor, for the tort of malicious prosecution for that reason (A v State of New South Wales (2007) 230 CLR 500).

8. [14]

   In meeting that legal and evidential challenge, the plaintiff seeks to make the case that Mr Badarne provided deliberately false information to the prosecuting authorities, as a result of which the charges the subject of the first indictment were laid. It is also the plaintiff’s case that Mr Badarne gave deliberately false information to police as a witness in respect of the evidence that he provided in support of one of the counts of sexual assault in which Ms Fregnan was a victim, and false evidence in support of the last count on the second indictment which attracted a charge contrary to s 319 of the Crimes Act.

9. [15]

   The plaintiff acknowledges that in circumstances where each of the offences prosecuted on the indictment were initially the subject of a charge laid by investigating police, his case against Mr Badarne as a prosecutor depends upon his establishing that responsibility for setting the criminal process in train can properly be attributed to him, in the sense that the discretion of the prosecuting authorities was actively misled by the provision by Mr Badarne of deliberately false information, thereby causing them to initiate and maintain the criminal proceedings. Put more directly, it is the plaintiff’s case that I would be satisfied that there is a “good arguable case” that the decision making process of the charging police and the prosecuting authority was materially tainted by the provision of false evidence by Mr Badarne, or by misleading conduct on his part, such as to overwhelm their discretion consistently with Johnston v Australia & New Zealand Banking Group Ltd [2006] NSWCA 218.

10. [16]

    In Johnston v Australia & New Zealand Banking Group Ltd, a bank and two other parties (the creditor and his employee) were sued for malicious prosecution. The bank had issued a notice to the appellant and then sought to have him prosecuted for trespass when he entered the land to obtain the notice; the bank, as secured creditor, having taken possession of the land. Basten JA (Giles and Santow JJA agreeing) stated the principles that apply when a private person is sued as a prosecutor at [41]-[43]:

11. [17]

    The plaintiff contends that the evidence relied upon to make out his case that Mr Badarne is a prosecutor for present purposes to a “prima facie” standard is contained within his evidentiary statement. I have read and considered that document. I am unpersuaded that it carries the evidentiary force contended for by the plaintiff. His evidentiary statement consists largely of a series of accusations and contentions unsupported by independent evidence and in some respects contradicted by other evidence. That is not to foreclose upon the way in which the plaintiff might ultimately advance his case in the substantive proceedings. For present purposes I am also obliged to take into account, and I do, the submission advanced by the defendant that it is clear on the evidence upon which the defendant relies, inclusive of a statement from the Crown Prosecutor who prosecuted the plaintiff on the indictment (prior to the entering of the nolle prosequi in the course of the trial), that Mr Badarne’s statements to police were not the only evidence available to the them (and it might be inferred upon which they relied) before they charged the plaintiff. Neither was his evidence the only evidence available to the Crown Prosecutor in determining that the proceedings should be prosecuted to trial by the presentation of an indictment in the District Court. Without detailing that evidence, suffice to note that three of the four charges the subject of the first indictment were supported by independent witness statements to the effect that each witness heard the subject threats issued, one of whom was a receptionist at a law firm who heard the threats made on a telephone call when the call was on speakerphone. I also note that the fourth offence was apparently supported by a sound recording. While the plaintiff makes the bare and unsubstantiated allegation in his evidentiary statement that the recording was “cut, pasted, edited and doctored” to create a deliberately false impression sufficient to support an allegation of intimidation, this is unsupported on the evidence before me by independent evidence that the sound recording was constructed or manipulated. The defendant also emphasised that in respect of the count on the second indictment which alleges the sexual offence in which Ms Fregnan is the named complainant (and as to which it is said the defendant was a witness) that incident was recorded pursuant to a listening device warrant issued to the NSW Police.

12. [18]

    The circumstances in which the Director of Public Prosecutions determined that there be no further prosecution of the indictment in which the plaintiff was charged with multiple counts of intimidating Mr Badarne are not entirely clear. What is clear is that the decision was preceded by a decision that there be no further prosecution in the proceedings in which Ms Fregnan was the complainant. Whatever may have been the ultimate basis for the entering of the nolle prosequi, it appears, again on the evidence before me, that the decision not to proceed to seeking verdicts on either indictment was a considered decision made by the Director of Public Prosecutions, taking into consideration a variety of matters bearing on the discretion reposed in him by the Director of Public Prosecutions Act 1986 (NSW).

13. [19]

    Not insignificantly, in the substantive proceedings the defendants also forecast their intention to tender a statement of facts signed by the plaintiff which were at one time intended to accompany his sentence proceedings in respect of some or all of the charges ultimately prosecuted on indictment. The fact that the plaintiff successfully persuaded a judge of the District Court that in the exercise of his discretion, the pleas of guilty accompanied by signed admissions of guilt should be withdrawn allowing for a trial on all issues does not necessarily derogate from the evidentiary weight attaching to the signed admissions on the question whether, assuming Mr Badarne is a prosecutor (a matter as to which I have some grave doubt), it can be established that he prosecuted the plaintiff in the absence of reasonable and probable cause, and maliciously – as separate elements of the tort of malicious prosecution as to which the plaintiff bears the onus of proof. For that additional reason, I am not persuaded that the plaintiff has a “good arguable case” to justify the relief he seeks.

14. [20]

    Were my assessment of the insufficiency of the evidence to establish the foundation for the making of a freezing order in error, it is appropriate that I also consider whether I am satisfied that there is a good arguable case for relief under s 37A of the Conveyancing Act. I do so despite the plaintiff having not initiated proceedings in the Equity Division of this Court for relief of that kind. The plaintiff seeks to invoke reliance on s 37A of the Conveyancing Act 1919 (NSW) in these proceedings, it being contended that the transfer of the property from the plaintiff to his wife, the second respondent, on trust for their children, was a transaction entered into with the intention of frustrating, defeating, hindering, delaying or preventing the plaintiff from recovering damages, in the form of a judgment debt, on the successful resolution of his claim for damages for malicious prosecution.

15. [21]

    It is the plaintiff’s case that a freezing order over the property will preserve the asset to facilitate the making of an application pursuant to s 37A of the Conveyancing Act to set aside orders made in the Local Court under the Family Law Act by claiming standing as a person in the category of a potentially defrauded creditor. That section provides as follows:

16. [22]

    It is not necessary to refer at length to the way in which s 37A operates as a matter of principle. I note, in that connection, Chan v Acres [2015] NSWSC 1885 and B v U [2012] NSWSC 1416 are authorities to which both parties referred in the course of submissions. What the plaintiff is confronted with in the proceedings before me is the uncontested evidence of both Mr and Ms Badarne as respondents to the motion to the effect that the consent orders entered in the Local Court which altered the legal and equitable interests in the matrimonial property were sought by them as applicant and respondent to proceedings pursuant to the Family Law Act. On their evidence, those consent orders reflected their strained marital relations as at February 2015 and the events that preceded the date of the orders, including a course of litigation initiated by the plaintiff in the Equity Division of this Court – litigation that resolved in Mr Badarne’s favour by the plaintiff filing a Notice of Discontinuance with an accompanying order for costs.

17. [23]

    The plaintiff elected to read in his case the affidavit of Ms Badarne as the second respondent to the Notice of Motion. Unsurprisingly, there was no objection to that course. In her affidavit she states, categorically, that as a consequence of her concern at the potential dissolution of her marriage she sought independent legal advice, with her motivation in doing so being driven by a desire to have the matrimonial property transferred to her on trust for the benefit of her children to ensure her husband did not “feel the need to borrow against the property” in order to meet what she perceived her husband thought was the need to be represented by senior and junior counsel in proceedings then pending in the Equity Division. She makes clear in her affidavit that that decision was made in the context of the plaintiff having brought other unmeritorious proceedings against her husband, and in the context of his compromised physical and mental health as a result of the stress of being embroiled in a persistent course of litigation. Mrs Badarne made clear that it was that set of circumstances and those circumstances only that led, in July 2014, to her and her husband agreeing to live under the same roof with their three children, although separated. She deposed to the following:

18. [24]

    She went on to say that although the relationship reverted to a “much better footing” after the successful resolution of the Equity proceedings, at the time the orders under the Family Law Act 1975 (Cth) were sought and entered she denied, absolutely, that she or her husband had any intention to defraud creditors by the property settlement (including for present purposes a potential for the plaintiff to be a judgment creditor). She further deposed to the following:

19. [25]

    Mrs Badarne’s evidence aligns with the evidence of Mr Badarne in his affidavit of 26 April 2018. Relevantly, he said as follows:

20. [26]

    Finally, Mr Badarne deposed to the fact that he does not consider himself to be at risk in the substantive proceedings. Doubtless on the basis of advice as to the relevant legal principles which will determine the viability of the plaintiff’s claim for malicious prosecution, the defendant said in his affidavit “while I accept that there is often a measure of uncertainty in the prediction of legal proceedings, I do not regard these proceedings as being proceedings where I am at risk”. I note that the plaintiff is represented by Mr Macaulay of counsel in the substantive proceedings. Mr Macaulay appeared as junior to Mr Pritchard SC on the application for freezing orders.

21. [27]

    The further significance that attaches to the judgement of Bellew J is, according to the respondents, that his Honour determined that the evidence before him for interim orders failed to establish the following:

22. [28]

    The defendant submitted that in pursuing his application for a freezing order where no additional evidence of any materiality has been served to address the deficiencies in the evidence on the application before Bellew J or to alter or add weight to the evidence before his Honour, the Notice of Motion should be dismissed with costs ordered to be paid on an indemnity basis. Having regard to the evidence before me, including in particular the additional evidence illuminating the circumstances in which the property was transferred, I am not persuaded that that order should be made. A further order was sought that since Mrs Badarne is not a party to the substantive proceedings, her costs in responding to the Notice of Motion should be ordered to be paid forthwith. I accept that submission.

Consideration

1. [29]

   In applying the relevant legal principles, and after having considered the evidence before me as to the pleaded claim for malicious prosecution and the evidence relied upon in support of the plaintiff’s claim for damages in those proceedings, I am not satisfied that there is an adequate or proper basis upon which the freezing orders sought by the plaintiff should be made.

2. [30]

   In coming to that conclusion, I note that Mr Badarne and his wife have both sworn affidavits in respect of which they each depose to matters which have not been the subject of contest otherwise than by the plaintiff’s counsel seeking to urge a countervailing inference from the position that both respondents have attested to without requiring either for cross-examination. The allegations made against Mr Badarne and his wife, both in the substantive proceedings as regards Mr Badarne and on this application against both Mr Badarne and his wife, are grave, serious and, to a large extent, as I assess it, unsupported by evidence.

3. [31]

   Accordingly, I make the following orders:

   1. (1)

      The notice of motion is dismissed.

   2. (2)

      The plaintiff is to pay the first respondent’s costs.

   3. (3)

      The plaintiff is to pay the second respondent’s costs. Those costs are payable forthwith.