Benjamin v KMV Constructions Pty Ltd & Ors [2020] QDC 3

DISTRICT COURT OF QUEENSLAND CITATION: Benjamin v KMV Constructions Pty Ltd & Ors [2020] QDC 3 PARTIES: LOUSE VICTORIA BENJAMIN (Plaintiff/Applicant) v KMV CONSTRUCTIONS PTY LTD (First Defendant/First Respondent) and BRENT GORDON VINCENT (Second Defendant/Second Respondent) and KELLY LEE VINCENT (Third Defendant/Third Respondent) FILE NO/S: 6345 of 2019 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 9 January 2020 (delivered ex-tempore) DELIVERED AT: District Court at Brisbane HEARING DATE: 9 January 2020 JUDGE: Reid DCJ ORDER: 1. The application is dismissed. 2. The plaintiff pay the third defendant’s costs of and incidental to the application, to be assessed on the standard basis. CATCHWORDS: APPLICATION – CIVIL PROCEDURE – FREEZING ORDER – SALE OF PROPERTY - where plaintiff contracted the first defendant to construct a residential dwelling on property owned by the plaintiff – where second and third defendants were at the time directors of the first defendant – where dispute arose concerning completion of building contract – where plaintiff brings an application for a freezing order in relation to third defendant’s property – where that property has been advertised for sale – where claim is based solely on contract with First Defendant – where no claim is properly pleaded against Third Defendant where no good arguable case. -- 1 of 4 -- 2 UCPR r 260A, r 260D(2) and (3) COUNSEL: Plaintiff/Applicant in person R Gallo for the Defendants/Respondents SOLICITORS: Whitehead and Associates for the Defendants/Respondents Judgment [2] The plaintiff and her husband contracted with the first defendant, a building company, for that company to construct a residential dwelling on property owned by the plaintiff and her husband at Manly West. The second and third defendants were at the time directors of the first defendant. I gather the third defendant is no longer a director of the company. The third defendant is, however, the owner of a property at 34 Bailey Street, Wakerley. [3] A dispute arose concerning completion of the building contract. On the 18th of June 2019, the plaintiff commenced, in her own name, but not in the name of her husband, an action for breach of contract against the first defendant but also against the second and third defendants, despite the fact that they are not parties to the contract. [4] The plaintiff is self-represented. While she is a lawyer, she is a lawyer practising in child protection and is not familiar with commercial litigation. In her statement of claim, she appears to draw little distinction between the first defendant, being the building company, with whom she and her husband contracted, and the directors of that company. [5] Indeed, in paragraph 10 of the statement of claim, she pleads: “Between September 2016 to March 2017 the plaintiff… [and her husband]… negotiated with the first and third defendants, trading as ‘David Reid Homes’ ... for a home renovation contract.” [6] The plaintiff also alleges, in paragraph 13 of the statement of claim, that the written contract was signed by the plaintiff and her husband, and the third defendant on behalf of the first and second defendants. [7] I interpose that “David Reid Homes”, being the trading name of the first defendant as named in the claim, bears no relationship to me. I know no person who is a builder known as David Reid. [8] It is clear to me that the plaintiff does not appreciate the legal significance of the fact that the contract was with the first defendant alone, and not with the directors of that company. It is not suggested that they entered into any guarantee of the first defendant’s performance of its obligations under that contract. [9] Accordingly, there seems to me a strong argument that, as presently pleaded, the plaintiff’s claim against the second and third defendants, said in paragraph 87 of the statement of claim to be one for damages for breach of contract, is misconceived. [10] In such circumstances, the plaintiff now brings an application, filed on the 20th of December 2019, for a freezing order under r 260A of the UCPR in relation to the third defendant’s property at Wakerley. In support of the application, she attests to the fact -- 2 of 4 -- 3 that the property has been advertised for sale. That is not disputed. Indeed, in written submissions, counsel for the defendant submits that the third defendant has found a prospective purchaser, who intends to execute a contract for the purchase of the property. [11] Before turning to a consideration of the application, I interpose that even if the plaintiff were able to persuade me that an order ought be made to protect her interests, I would not restrain the sale of the property by the third defendant, but only the disposition of the proceeds of sale after discharging any mortgage and payment of the costs and outlays associated with the sale, including real estate agent’s commission. There is, I interpose, no material before me concerning the value of the subject property or the extent of any mortgage, and so no evidence of the extent of the third defendant’s equity in the subject property. [12] In her submissions, the plaintiff appears to recognise the difficulty that the statement of claim pleads only the alleged claim for breach of contract against the third defendant. She says, for example, in paragraph 4 of those submissions, that: “The plaintiff has possession of evidence that the Defendants requested sub-contractors to do work under the Contract for the renovation of the Plaintiff’s property and directed that the invoices be in the name of the now insolvent company Brentkel Constructions Pty Ltd ... of which the Second Defendant was also a Director, instead of to [the first defendant].” [13] She also alleges, in paragraph 3 of her submissions, that the second and third defendants have breached their fiduciary duty as directors of the first defendant by engaging in taxation evasion, illegal phoenix activity and unlawful movement of company funds to personal assets. [14] Unfortunately, these are not matters that are pleaded in the statement of claim. If such a claim is to be made against the second and third defendants, it must clearly be pleaded and go well beyond a claim for damages for breach of contract. [15] In his written submissions, counsel for the defendant submits, correctly in my view, that the application for a freezing order should be refused, on the basis that the plaintiff’s claim is a claim in contract against the first defendant, and the pleadings disclose no cause of action against the second and third defendant, so it could not be said there is a good arguable case against those defendants. [16] He also submitted, there was no evidence of risk that the third defendant’s sale of her property would lead to the resultant funds being dissipated, and submitted that the balance of convenience weighs against the granting of the freezing order because the proceeding is not ready for trial, and the third defendant has found a prospective purchaser of the property. [17] Whilst there is significant merit in those latter two observations, it is clear, I think, that the effect of any sale of the property is that any equity of the third defendant would then be in a very liquid form, and so much more easily secreted than when it is tied up in real property. Nevertheless, in circumstances where there is no good arguable case demonstrated and no clearly demonstrated risk that the third defendant intends to dissipate the assets so that they are beyond the capacity of the plaintiff to recover, there is no proper basis for the making of a freezing order. -- 3 of 4 -- 4 [18] As counsel submitted, in order to obtain a freezing order, the plaintiff must satisfy the Court, consistently with UCPR r 260D(2) and (3), that she has i. a good arguable case; ii. there is a danger the prospective judgment will be wholly or partially unsatisfied because assets might be disposed of, dealt with or diminished in value. [19] He also submitted that the plaintiff has failed to demonstrate that the effect of any dealing with the property by the third defendant would create “more than the usual likelihood” that a prospective judgment will be unsatisfied. [20] The plaintiff has failed to persuade me of those matters, largely because of the deficiencies I have identified in the statement of claim. It does not appear to me that the plaintiff could be said to have a good arguable case for breach of contract against the third defendant. The plaintiff does not identify any basis pursuant to which the third defendant could be held to be personally liable under the contract. Furthermore, there is, on the current state of the evidence, no identified basis for concluding that the third defendant intends to dissipate her equity in the property. Consequently, despite the much more liquid nature of a party possessing the equity of the party in a property upon its sale, it does not seem to me appropriate, on the current state of the material, to grant a freezing order. Accordingly, the application is dismissed. [21] I also note that before me the plaintiff sought to tender an invoice and two screenshots in relation to work said to have been undertaken by a subcontractor on the plaintiff’s property. It may well be that such material is ultimately of relevance, but in circumstances where the material was not included in any affidavit, and there is simply no explanation as to why the invoice for work performed on the plaintiff’s property may have been directed not to the first defendant, but to another company previously operated by the second defendant, which has now been placed in liquidation, it appears to me that the material ought be excluded. There may be other explanations why, for example, the name of the company in liquidation might have been included rather than the first defendant. For example, the subcontractor may have been familiar with working for that company, as a result of previous work it had performed at the behest of the second and/or third defendant through their company structures. In any case, that evidence at the current moment does not impact upon the determination I have made that the application ought be dismissed. [22] I will dismiss that application. In circumstances where the defendant’s counsel concedes there were no extra costs associated with serving the application and supporting material on all defendants, I will order that the plaintiff pay the third defendant’s costs of and incidental to the application, to be assessed on the standard basis. -- 4 of 4 --