Award Accounting Pty Ltd v WGC Aust Pty Ltd

[2016] NSWSC 1757

Supreme Court

New South Wales

Medium Neutral Citation:	Award Accounting Pty Ltd v WGC Aust Pty Ltd [2016] NSWSC 1757
Hearing dates:	7 December 2016
Date of orders:	07 December 2016
Decision date:	07 December 2016
Jurisdiction:	Common Law
Before:	Schmidt J
Decision:	Orders made in terms of orders 1, 2, 3, 5, 6, 7, 9 and 10 of the notice of motion filed 7 December 2016.
Catchwords:	INJUNCTIONS – ex parte application – freezing order sought – basis for freezing order established - orders made
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Category:	Procedural and other rulings
Parties:	Award Accounting Pty Ltd ACN 003 803 236 (Plaintiff) WGC Aust Pty Ltd ACN 125 518 676 (First Defendant) Queensland Mining Services Aust Pty Ltd ACN 137 905 616 (Second Defendant) Queensland Coking Coal Pty Ltd ACN 129 600 004 (Third Defendant) Queensland Coal Corporation Pty Ltd ACN 130 691 904 (Fourth Defendant) Paul Douglas Williams (Fifth Defendant)
Representation:	Counsel: Mr A Fernon (Plaintiff)   Solicitors: Yates Beaggi Lawyers (Plaintiff)
File Number(s):	2016/
Publication restriction:	None

EX TEMPORE Judgment

1. HER HONOUR: By a motion filed in court this afternoon, the plaintiff seeks an ex parte freezing order under Part 25 of the Uniform Civil Procedure Rules 2005 (NSW). The plaintiff has given an undertaking as to damages as required by the Rules.

2. It appears from the statement of claim and what has fallen from Ms Amanda Ward in an affidavit sworn on 7 December 2016, to which correspondence between the parties is attached, that in issue in the proceedings will be the plaintiff's entitlement to the sum of $600,000, which, it claims, it is entitled for accounting services provided to the defendants under the various agreements identified in the statement of claim.

3. The plaintiff's case is that there is a danger that if the freezing order is not made that the only assets of the defendants will be dissipated, in circumstances described in considerable detail in Ms Ward's affidavit. Those circumstances concern the sale of various assets there identified, settlement of which is imminent; the recent denial of liability to make the payments claimed; and the refusal to give undertakings sought in correspondence recently exchanged between the parties.

4. As the application is brought ex parte, there is, of course, a high duty of candour imposed on the plaintiff. In the circumstances disclosed in the documents on which the plaintiff relies, I am satisfied that the application should be heard ex parte.

5. There is no question that the Court has power to grant a freezing order, given its power to prevent frustration of its proceedings and to ensure that its judgments are not without value. A freezing order is nevertheless a drastic remedy which should not be granted lightly. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff.

6. Two questions arise. The first is whether the plaintiff has a good arguable case. An applicant for a freezing order must demonstrate a good arguable case on a justiciable cause of action, if a freezing order is to be entertained. That does not require a preliminary appraisal of the plaintiff's case to be conducted on this application. But the plaintiff must show that this claim is capable of serious argument, even if it is not necessarily one which the judge believes to have a fifty per cent chance of success.

7. Here, the plaintiff relies on the circumstances disclosed in the affidavit sworn by Ms Ward on 7 December. She was not only the sole director of the plaintiff but also an officer of certain of the defendants and has considerable knowledge of the corporate defendants, through the work that she has performed for them. She has familiarity not only with their operations and financial circumstances, but also the circumstances in which the impending sales are to be settled.

8. The affidavit also deals with discussions between Ms Ward and Mr Paul Williams on behalf of the defendants, as to the claimed outstanding fees for accounting services provided by the plaintiff under agreements identified in the statement of claim. The affidavit details circumstances in which agreement for payment of outstanding fees on a discounted basis was claimed to have been reached and certain payments made. The plaintiff also relies on Ms Ward's affidavit evidence to establish a repudiation of that agreement, as well as recent denials of the existence of the agreement by Mr Williams.

9. Plainly enough, in the correspondence from the defendants’ solicitors, the existence of the agreement has been denied. Nevertheless, I am satisfied on what is before the Court thus far that the plaintiff has established that it has a good arguable case on a justiciable cause of action, namely, for payment of outstanding invoices for accounting services provided.

10. The second issue which has to be considered is whether or not the plaintiff has established that there is a danger of disposal of assets.

11. A freezing order is not intended to provide a plaintiff or a judgment debtor with security in advance of judgment. A claim that there is a risk that assets will be dissipated is not enough. An applicant must also establish by evidence that there is a danger that by reason of the defendant's assets being disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if it succeeds will not be able to have its judgment satisfied.

12. The plaintiff relies again on the affidavit evidence of Ms Ward and the documents attached to that affidavit, to meet that onus. In particular, what is relied on is the fact that the proceeds of the impending sale will, in practical effect, be the corporate defendants’ only asset. The recent repudiation of the agreement for payment of long outstanding accounting fees at a significantly discounted rate and the denial of its very existence, despite some payment made under the agreement, are relied on to establish the necessary danger.

13. Not without some hesitation, I must say, having considered what is relied on in the affidavit evidence and the submissions advanced for the plaintiff, I am satisfied that the evidence does establish that there is a risk that any judgment given in favour of the plaintiff will be wholly or partly unsatisfied, because there is a danger that the defendants will dispose of their assets or diminish their value, if the order sought is not made.

14. While a basis for the making of a freezing order on an ex parte basis has been established, the balance of convenience must also be considered. That requires that the orders sought be made only until further order, with the matter coming into the list again shortly for the purpose of the defendants being heard as to its continuation.

15. In those circumstances, I propose to make orders in terms of orders 1, 2, 3, 5, 6, 7, 9 and 10 of the notice of motion filed in Court today. The matter will come into the list before the duty judge at 10am on Monday next.

16. The parties are directed to confer in the meantime, including as to the question of how long any hearing will take, if no agreement is reached between them. In the event that the hearing will not conclude in under two hours, it will be necessary for the parties to approach to obtain a special fixture.

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Decision last updated: 08 December 2016