Austin Engineering Ltd v Podulova (No 4)

Case [2025] FCA 523

FEDERAL COURT OF AUSTRALIA

Austin Engineering Ltd v Podulova (No 4) [2025] FCA 523 

File number: WAD 83 of 2023
Judgment of: FEUTRILL J
Date of judgment: 19 May 2025
Date of publication of reasons: 20 May 2025
Catchwords:

PRACTICE AND PROCEDURE – urgent ex-parte application for freezing order – absence of good arguable claim for pecuniary relief – freezing order to prevent frustration of prospective costs judgment – sufficiency of evidence of departure from Australia – sufficiency of evidence of removal of assets from Australia – sufficiency of evidence of danger prospective judgment will go unsatisfied – appropriateness of urgent application without notice

PRACTICE AND PROCEDURE – application to close court – application for suppression and non-publication order

Legislation:

Copyright Act 1968 (Cth) s 115

Federal Court of Australia Act 1976 (Cth) ss 17, 37AE, 37AG, 37M, 37N; Pt VAA

Federal Court Rules 2011 (Cth) rr 7.32, 7.33, 7.35

Cases cited:

Austin Engineering Pty Ltd v Podulova [2023] FCA 419; 416 ALR 511

Australian Broadcasting Commission v Parish [1980] FCA 33; 43 FLR 129

Commonwealth Bank of Australia v Oswal (in his own capacity and atf The Burrup Trust) [2011] WASC 84; 82 ACSR 626

Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194

Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429

Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASCA 174; 53 WAR 201

Facton Ltd v Rifai Fashions Pty Ltd [2012] FCAFC 9; 199 FCR 569

Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49

Hogan v Australian Crime Commission [2010] HCA 21; 240 CLR 651

Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133

R v Davis (1995) 57 FCR 512

Q v Seymour (1993) 69 A Crim R 514

UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396

Zirk-Sadowski v University of New South Wales [2025] FCAFC 64

Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 39
Date of hearing: 19 May 2025
Counsel for the Applicant: Mr S Hallahan
Solicitor for the Applicant: HWL Ebsworth Lawyers
Counsel for the First Respondent: The First Respondent did not appear
Counsel for the Second to Seventh Respondents: The Second to Seventh Respondents did not appear

ORDERS

WAD 83 of 2023
BETWEEN:

AUSTIN ENGINEERING LTD (ACN 078 480 136)

Applicant
AND:

ANASTASIA PODULOVA

First Respondent

SCHLAM ENGINEERING PTY LTD (ACN 145 218 944)

Second Respondent

SCHLAM GROUP PTY LTD (ACN 616 770 122) (and others named in the Schedule)

Third Respondent

ORDER MADE BY:

FEUTRILL J

DATE OF ORDER:

19 MAY 2025

THE COURT ORDERS THAT:

1.Until 4.00 pm AWST on 5 May 2028 or further order and pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground set out in s 37AG(1)(a), the…

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Austin Engineering Ltd v Podulova (No 4) [2025] FCA 523
Case
[2025] FCA 523
Decision Date

CaseChat Overview and Summary

In Austin Engineering Ltd v Podulova (No 4), the court was called upon to determine the validity and appropriateness of an ex-parte application for a freezing order against Ms Podulova by Austin Engineering Ltd. The primary issue was whether sufficient evidence existed to support the granting of a freezing order under r 7.35 of the Federal Court Rules 2011, given the absence of a clear demonstration of the danger that a prospective judgment would remain unsatisfied. The court had to consider whether the evidence provided by Austin Engineering sufficiently demonstrated that Ms Podulova had either absconded, removed assets from Australia, or otherwise acted in a manner that indicated a substantial risk of default on a judgment.

The court thoroughly examined the principles governing the grant of freezing orders, highlighting that such orders are a drastic remedy requiring a demonstration of a real or substantial risk on the balance of probabilities. The court assessed the evidence presented, which included Ms Podulova’s past conduct regarding the Austin Documents and her participation in the proceeding. However, the court found that while there was evidence of breaches of contractual, equitable, and statutory obligations, it did not amount to evidence of dishonesty or a clear intention to frustrate the court’s process. The court concluded that Austin Engineering had not demonstrated a good arguable claim for pecuniary relief, and therefore, the risk of harm if the freezing order were refused was not significant. Additionally, the court noted that there was no evidence suggesting that Ms Podulova intended to remove assets from Australia in response to the application. The discretionary considerations, including the potential for oppression and the lack of evidence regarding Ms Podulova’s financial circumstances, further weighed against granting the freezing order. The court found that the application was not appropriately brought ex-parte or urgently, as Ms Podulova had been transparent about her travel intentions and had not indicated any intention to evade a pecuniary judgment.

The court ultimately decided against granting the freezing order and instead issued an order prohibiting the publication of certain documents and adjourned the application. Costs were reserved pending further orders.

Orders

Orders of the court

1. Until 4.00 pm AWST on 5 May 2028 or further order and pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground set out in s 37AG(1)(a), the publication or other disclosure of Exhibit 2 and Exhibit 3 on the interlocutory application dated 15 May 2025 be prohibited.

2. The application be adjourned to a date to be fixed.

3. Costs be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Here, Austin Engineering also brings its application under r 7.35. That rule applies, relevantly, if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court: r 7.35(1)(b)(i). Subrule 7.35(4), then provides:7.35Order against judgment debtor or prospective judgment debtor or third party…(4)The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur:(a)the judgment debtor, prospective judgment debtor or another person absconds;(b)the assets of the judgment debtor, prospective judgment debtor or another person are:(i)removed from Australia or from a place inside or outside Australia; or (ii)disposed of, dealt with or diminished in value. While as a practical matter, in most cases the danger required by r 7.32 will be provided because one or more of the circumstances set out in r 7.35(4) is (are) present, r 7.35(4) does not ‘cover the field’ of events that might give rise to a danger of the kind necessary to enliven the power in r 7.32: Deputy Commissioner of Taxation v Huang [2021] HCA 43; 273 CLR 429 at [21]-[22] (Gageler, Keane, Gordon and Gleeson JJ). Otherwise, the principles applicable to the circumstances in which a freezing order will be made are well established. I summarised these principles in UFC Enterprise Morley Pty Ltd v UFC Enterprise Northbridge Pty Ltd [2024] FCA 1396 at [13] in a manner that was cited with approval by a Full Court (Snaden J, Wheelahan and McElwaine JJ, agreeing) in Zirk-Sadowski v University of New South Wales [2025] FCAFC 64 at [46].(1)The language of r 7.32 of the Rules reflects what has been considered to be a general power of the Court to grant a Mareva injunction under s 23 of the Federal Court of Australia Act 1976 (Cth): Jackson v Sterling Industries Ltd [1987] HCA 23; 162 CLR 612 at 622-623 (Deane J).(2)As a general proposition, a freezing order may be granted if the applicant demonstrates a prima facie or good arguable case for final relief and the circumstances are such that there is a danger of the respondent absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with so that there is a danger that the applicant, if it gets judgment, will not be able to get it satisfied: Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at [8] (Kenny J) and the authorities there cited.(3)The reference in r 7.32 to a ‘danger’ that a judgment or prospective judgment will go wholly or partly unsatisfied is a reference to a risk of that outcome. The risk must be real or substantial as opposed to a remote or speculative or theoretical possibility. The applicant must prove facts from which the Court can infer the existence of a real or substantial risk on the balance of probabilities: Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (in liq) [2018] WASCA 174; 53 WAR 201 at [42]-[43] (Buss P, Murphy and Mitchell JJA) and the authorities there cited.(4)It is not necessary to establish that judgment will be unsatisfied unless a freezing order is made. Nor is it necessary to demonstrate that a respondent has a positive intention to frustrate a judgment. However, there must be facts from which ‘a prudent, sensible commercial’ person can ‘properly infer a danger of default if assets are removed from the jurisdiction’. That may include facts concerning a lack of available information about a respondent: Hua Wang Bank Berhad at [9]-[12] (Kenny J) and the authorities there cited. See, also, Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102; 84 NSWLR 141 at [59]-[60] (Bathurst CJ, Beazley P and Barrett JA agreeing); Trans Global Projects at [45].(5)The mere fact of removal or danger of removal of assets from the jurisdiction will not necessarily give rise to a danger or risk that a judgment will go unsatisfied. In this regard, it is necessary to take into account any reciprocal regimes for the registration and enforcement of judgments and other means by which a judgment may be enforced: Trans Global Projects at [47]-[48]; Severstal Export at [63]-[65].(6)Ultimately, it is a question for evaluation by the Court as to whether the degree of the danger or risk is sufficient to justify an order in the terms made. In making that evaluative assessment, the Court will bear in mind that a freezing order is a drastic remedy which imposes a severe restriction on a respondent’s right to deal with its assets, and that the purpose of the order is not to provide security for a judgment which the applicant hopes to obtain and fears might not be satisfied: Trans Global Projects at [44] and the authorities there cited.

Ratio Decidendi

Legal Principle Established

Accepting that it is not necessary to demonstrate a positive intention to frustrate a judgment, nonetheless there must be ‘solid’ evidence of the existence of the danger. The evidence may take many forms. For example, an inference may be drawn from Ms Podulova’s past conduct that she is not to be relied on to pay a judgment debt. An inference may also be drawn from the manner in which Ms Podulova has structured her financial affairs that she cannot be relied upon to pay. However, Austin Engineering has pointed to no evidence other than an assertion of an inference of removal of assets as to the existence of a ‘danger’ that Ms Podulova will default if assets are removed from Australia. The relevant evidence of her past conduct relates to taking, retaining and accessing Austin Documents. That is evidence of breaches of contractual, equitable and statutory obligations and of commercial immorality, but it falls short of dishonesty. Further, thus far, Ms Podulova has participated in the proceeding and co-operated with the Court and the other parties. There is nothing in her conduct in the proceeding to suggest that she would default in payment of a judgment debt, if she had the financial means to satisfy it, even if she were resident overseas and the majority or all her assets were also overseas.Discretionary and other considerations In my view, on the available evidence, Austin Engineering has not demonstrated that this is a proper case for freezing orders to be made even on an interim ex-parte basis. Despite the frequency with which freezing orders tend to be sought and granted, the authorities make it clear that freezing orders should be granted with caution and sparingly and having regard to the potential for oppression. In the absence of any evidence of Ms Podulova’s financial circumstances the potential to cause oppression is a significant factor that weighs against granting the order sought even on an interim basis. It is not a matter that can be adequately addressed by an undertaking as to damages. It is also significant that Austin Engineering has not demonstrated a good arguable claim for pecuniary relief. Therefore, at present, the risk of ‘harm’ to Austin Engineering should refusal of a freezing order turn out to be the ‘wrong’ decision is not significant. I also record that there is no evidence before the Court to suggest that Ms Podulova is in the process of arranging her financial affairs in a manner that is intended to frustrate or inhibit the Court’s process or that removal of assets from Australia would likely have been accelerated if she had been given notice of this application. While such an intention is not necessary for the grant of a freezing order, it has relevance to the appropriateness of applying ex-parte for such orders and requesting the resources of the Court to be employed to deal with an application on an urgent basis. In my view, the application was not appropriately brought ex-parte or urgently. Ms Podulova has been quite open about her travel intentions and has expressed no intention directly or indirectly to not pay or evade any pecuniary judgment she may be ordered to pay.