Belmont Tyre & Auto Service Centre Pty Ltd v Ampak Holdings Pty Ltd - [2023] WASC 230

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   BELMONT TYRE & AUTO SERVICE CENTRE PTY LTD -v- AMPAK HOLDINGS PTY LTD [2023] WASC 230
CORAM:   SEAWARD J
HEARD:   21 JUNE 2023
DELIVERED          :   26 JUNE 2023
FILE NO/S:   CIV 1570 of 2019
BETWEEN:   BELMONT TYRE & AUTO SERVICE CENTRE PTY LTD
Plaintiff
AND
AMPAK HOLDINGS PTY LTD
First Defendant
DARRELL CROUCH & ASSOCIATES PTY LTD
Second Defendant

Catchwords:

Practice and procedure - Freezing orders - Application for freezing order against one defendant only - Whether plaintiff has good arguable case - Whether the assets might be disposed of, dealt with or diminished in value - Whether there is a danger of a prospective judgment being wholly or partly unsatisfied - Whether discretion should be exercised to grant the injunction

Legislation:

Australian Consumer Law
Rules of the Supreme Court 1971 O 52A

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	TO Coyle
First Defendant	:	GM Abbott
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Murfett Legal
First Defendant	:	Carmel Galati
Second Defendant	:	Lander & Rogers - Vic

Case(s) referred to in decision(s):

BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq) [2018] WASCA 174
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188
Watson v Foxman (1995) 49 NSWLR 315

SEAWARD J:

By chamber summons filed on 10 May 2023, the plaintiff applied for a freezing order against the first defendant pursuant to O 52A of the Rules of the Supreme Court 1971 (SCR).
The plaintiff's chamber summons was supported by a certificate of urgency, a memorandum of conferral and an undertaking as to damages in the usual form. However, following further conferral between the solicitors for the plaintiff and the first defendant, the parties reached an agreement whereby the chamber summons was not required to be heard until June 2023. The chamber summons was then heard inter partes on 19 June 2023.
For the reasons set out below, I decline to grant the freezing orders sought in the chamber summons.

Plaintiff's case

The plaintiff originally filed a writ of summons with a general indorsement on 29 March 2019. The statement of claim was filed on 29 May 2019 and has since been amended on many occasions. The latest version of the statement of claim is the second further amended second substituted statement of claim filed on 22 May 2023[1] which I will refer to in these reasons as the statement of claim.
[1] Pursuant to orders made by Registrar Hosking on 5 May 2023.
I have summarised below the key elements of the plaintiff's case as contained in the statement of claim. In broad terms, the plaintiff claims damages pursuant to s 236 of the Australian Consumer Law (ACL) against the first defendant for misleading or deceptive conduct in breach of s 18 of the ACL or, alternatively, for unconscionable conduct in breach of s 21 of the ACL. The plaintiff brings a similar claim for misleading or deceptive conduct against the second defendant, but does not bring any claim for unconscionable conduct against the second defendant.
The plaintiff pleads that in 2012 the plaintiff purchased a business and took an assignment of a lease of Unit 8 in a group of commercial tenancies situated at a commercial complex in Rivervale (the Commercial Centre). The first defendant was at all material times the owner of the Commercial Centre.[2] The business that the plaintiff pleads it purchased was a tyre and general automotive servicing business.[3]
[2] Statement of claim [2].
[3] Statement of claim [17] - [18].
The plaintiff pleads that it purchased a business that had been conducted at Unit 8 for many previous years by Austcorp Pty Ltd (Austcorp) and by a previous owner.[4] The purchase price was $270,000 including stock.[5] The lease between Austcorp and the first defendant prohibited Austcorp from using Unit 8 for any purpose other than the permitted use as defined in the lease, being:
The sale of tyres, associated equipment and accessories, and an associated Mechanical Workshop.
[4] Statement of claim [8] - [16].
[5] Statement of claim [17].
The plaintiff pleads that since 1995, Ultra Tune Australia Pty Ltd (Ultra Tune) leased Unit 3 in the Commercial Centre for the permitted use of:[6]
Servicing, repairing of automobiles. Sales of automotive parts and accessories.
[6] Statement of claim [4] - [5].
The plaintiff pleads that in the lease between the first defendant and Ultra Tune there was a covenant by the first defendant that during the term of the lease (including any renewed term) it would not permit or suffer any other party at the Commercial Centre to carry on a business that was the same or substantially similar to the business conducted by Ultra Tune.[7]
[7] Statement of claim [5(c)].
There are two different limbs to the alleged misleading and deceptive conduct, but both concern the circumstances of the purchase and assignment of the lease in 2012.
First, the plaintiff pleads that when it was considering purchasing the business, the directors of the plaintiff (Alan and Sue Whitehurst) had a meeting with a Mr Lee Taylor, an employee of the second defendant (who was the first defendant's leasing agent at the time). The plaintiff pleads that in that meeting Mr Taylor told them that the first defendant needed to know what business they wanted to conduct at Unit 8 before the first defendant would consider whether to grant consent to an assignment of lease between the first defendant and Austcorp. The plaintiff pleads that the Whitehursts told Mr Taylor that they intended to continue to operate the same business that Austcorp had been conducting at Unit 8. The plaintiff pleads that Mr Taylor said he would need to ask the first defendant, however he could not see a problem with the assignment as there would be no changes to the business being operated. The plaintiff pleads that Mr Taylor then had a conversation with a Ms Carol Bahemia, a director of the first defendant, and advised her that the plaintiff intended to operate the same business that Austcorp had been operating and Ms Bahemia told Mr Taylor that in those circumstances the first defendant would consent to the assignment of the Austcorp lease. The consent was then confirmed in writing.[8]
[8] Statement of claim [19] - [20].
The plaintiff pleads that by informing the Whitehursts that the first defendant would consent to the assignment of the lease, Mr Taylor made the following representations on behalf of the second defendant and as agent for the first defendant:[9]
[9] Statement of claim [21].
(a)Mr Taylor had reasonable grounds for believing that if the first defendant granted formal consent to an assignment of the lease and the plaintiff conducted a business at Unit 8 that was substantially the same as the Austcorp business, the first defendant would not at any time during the balance of the term of the assigned lease and any renewed term:
(i) assert that such conduct was in breach of the permitted use term of the lease; or
(ii) rely on any such conduct as a reason for withholding consent to an assignment of the lease by the plaintiff, (defined as the Agent Reasonable Basis Representation).
(b)the first defendant had not entered into any leases of other units in the Commercial Centre that contained terms:
(i) by which the first defendant covenanted not to permit or suffer the carrying on of any business that was the same or substantially similar to a business specified in such a lease as the permitted use of those other premises; and
(ii) in which the specified permitted use was the same or substantially similar to the permitted use in the Austcorp lease or Austcorp Business (defined as the Agent No Pre-existing Covenants Representation).
The plaintiff pleads that the deed of assignment was signed in late April or early May 2012, and contained an acknowledgment by the first defendant that Austcorp had not been in breach of the lease and there had not been any event or any past or subsisting breach of any of the terms of the lease by Austcorp.[10]
[10] Statement of claim [22] - [23].
The plaintiff pleads that upon the first defendant consenting to the assignment of the Austcorp lease to the plaintiff in circumstances where the two agent representations had been made; the first defendant was aware from the conversation between Mr Taylor and Ms Bahemia that the plaintiff intended to conduct the same business that Austcorp had been conducting; and in light of the acknowledgments in the deed of assignment, the first defendant made the following three representations to the plaintiff:[11]
[11] Statement of claim [24].
(a)Austcorp's conduct of its business had at all times complied with the permitted use term in the lease (defined as the No Breach Representation);
(b) if the plaintiff conducted a business that was substantially the same as Austcorp, the first defendant would not at any time during the balance of the term of the lease and any renewed term:
(i) assert that such conduct was in breach of the permitted use term of the lease; or
(ii) rely on any such conduct as a reason for withholding consent to any assignment of the lease by the plaintiff, (defined as the No Action Representation);
(c)the first defendant had not entered into any leases of other units in the Commercial Centre that contained terms:
(i) by which the first defendant covenanted not to permit or suffer the carrying on of any business that was the same or substantially similar to a business specified in such a lease as the permitted use of those other premises; and
(ii) in which the permitted use was the same or substantially similar to the permitted use in the Austcorp lease or the Austcorp business (defined as the No Pre‑existing Covenants Representation).
The plaintiff pleads that the various representations were false and that therefore the defendants engaged in misleading and deceptive conduct.
Secondly, the plaintiff pleads that in all the circumstances, the plaintiff had a reasonable expectation that prior to execution of the deed of assignment the defendants would inform the plaintiff of matters material to the plaintiff's decision to execute the deed of assignment (defined as the Material Matters).[12]
[12] Statement of claim [25].
The plaintiff pleads that the defendants did not advise the plaintiff of (amongst other matters) the covenant in the Ultra Tune lease.
The plaintiff then goes on to plead that it signed the deed of assignment and settled on the purchase of the business from Austcorp in reliance on the various pleaded representations made by the first and second defendants and on the basis that there were no Material Matters that the defendants had not informed the plaintiff of, and that it would not have signed the deed of assignment and purchased the business if it had been so informed.[13]
[13] Statement of claim [26], [46].
Matters came to a head between the plaintiff and the first defendant when, in August 2018, the plaintiff agreed to sell its business to Super Quick Oil Change Pty Ltd (Super Quick) for the price of $232,000 plus stock at a valuation of $25,000.[14] That sale was subject to (amongst other matters) the first defendant granting consent to the assignment of the lease to Super Quick and the first defendant granting an extension of the lease for not less than nine years.[15]
[14] Statement of claim [32].
[15] Statement of claim [33].
However, the plaintiff pleads that by letter dated 10 September 2018, the first defendant (via their new property agent) advised Super Quick that the first defendant did not consent to the assignment because Super Quick intended to provide servicing of automobiles at Unit 8 which was not a permitted use under lease, and that consent in these circumstances would be contrary to the terms of the Ultra Tune lease.[16] The plaintiff pleads that this refusal was unreasonable.[17]
[16] Statement of claim [36].
[17] Statement of claim [36A].
The plaintiff pleads that following this refusal, Super Quick did not proceed to purchase the business.[18] The plaintiff then remained in possession of the business until the end of the lease on 20 December 2019.[19]
[18] Statement of claim [37].
[19] Statement of claim [37B].
The plaintiff claims damages for misleading and deceptive conduct in the amount of $818,031.35, comprised as follows:
(a)the $270,000 paid to Austcorp to purchase the business on 30 April 2012;
(b)trading losses of $305,646.35 incurred during the time the plaintiff operated the business;[20]
(c)interest on the $270,000 - which from 1 May 2012 to 30 April 2023 is $178,200; and
(d)interest on the trading losses of $305,645 for the 3.5 years from 1 January 2020 - which to 30 June 2023 is $64,185.
[20] Statement of claim [47].
The plaintiff also brings an unconscionable conduct claim in the alternative against the first defendant only, on the basis that it engaged in unconscionable conduct within the meaning of s 21 of the ACL by its refusal, in all the circumstances, to consent to the assignment of the lease to Super Quick.[21] The plaintiff claims damages in the amount of $257,000 being the price it would have received from the sale of the business to Super Quick.[22]
[21] Statement of claim [48] - [49].
[22] Statement of claim [50].
Aside from admitting some of the lease documents, the defendants largely deny the plaintiff's pleadings.

Plaintiff's evidence

The plaintiff originally relied on the following two affidavits in support of the application:
(a)affidavit of Michael Richard Crommelin, sworn 10 May 2023 (First Crommelin affidavit); and
(b)affidavit of Michael Richard Crommelin, sworn 16 June 2023 (Second Crommelin affidavit).
On the evening before the hearing and on the morning of the hearing, the plaintiff filed the following two additional affidavits:
(a)affidavit of Michael Richard Crommelin, sworn 21 June 2023 (Third Crommelin affidavit); and
(b)affidavit of Alan John Whitehurst, sworn 20 June 2023 (Whitehurst affidavit).
Mr Crommelin is the plaintiff's solicitor and Mr Whitehurst is a director of the plaintiff.
Subject to some objections which I upheld, I granted the plaintiff leave to rely on the affidavits sworn on 20 and 21 June 2023.
In the First Crommelin affidavit, Mr Crommelin attaches correspondence and deposes to communications between the solicitors for the plaintiff and the first defendant as to the freezing orders. Specifically:
(a)in April 2022, the plaintiff became aware of the potential sale of the Commercial Centre;
(b)by letter dated 14 April 2022, the plaintiff's solicitors wrote to the first defendant's solicitors raising the marketing for sale of the Commercial Centre, raising the possibility of applying for freezing orders and seeking a written undertaking from the plaintiff to retain from the proceeds of any sale the sum of $811,197 and not to withdraw any of the funds;
(c)by letter dated 27 April 2022, the solicitors for the first defendant responded, stating that their client did not consider that an undertaking is warranted, but did agree as follows:
However, with a view to avoiding an unnecessary dispute, my client is prepared to provide an undertaking on the strict understanding that the provision of the undertaking does not constitute an admission in any way, particularly as regards the damages as calculated and claimed.
(d)the undertaking was provided by the director for the first defendant, Ms Carol Bahemia on 23 May 2022. The terms of that undertaking were as follows:
1. I will cause Ampak to retain the sum of $811, 197,00 from the proceeds of the sale of property owned by Ampak and situate at 135 Great Eastern Highway Rivervale, in the state of Western Australia;
2. the sum referred to will be held in a deposit account with BankWest or otherwise, as notified, from time to time on 7 days' written notice to the plaintiff's solicitor;
3. Ampak will not reduce the sum referred to, or take any steps to charge or encumber the funds:
a. until the final determination of CIV 1570 of 2019 ; or
b. upon 21 days' written notice to the Plaintiff's solicitor of its intention to deal with the funds.
(e)the Commercial Centre was sold on or about 31 May 2022;
(f)by email dated 15 June 2022, the first defendant's solicitors confirmed the deposit of the sum of $811,197 into the solicitor's trust account;
(g)by letter dated 8 April 2023, the first defendant's solicitors gave 21 days' notice of the first defendant's intention to withdraw the funds from the trust account on 3 May 2023, save for $50,000 which will be retained. The letter went on to provide as follows:
While my client is not obliged to provide your client with a reason for withdrawing of the funds, I am instructed to inform your client of the following:
i) The recent successful strike-out application of portions of the second reamended substituted statement of claim by my client underscored the lack of merit of your client's claim. In the reasons for decision the Registrar indicated that the Retail Shops Act aspects appear to be "weak" and this in our view reflects the overall weakness of the plaintiff's case.
ii) Your client's claim itself, even on the best case, is worth significantly less than the amount that is currently deposited in my trust account.
iii) This matter has been on foot since 2019; it relates to matters that in part occurred in March 2012, and your client continues to run this action at a snail's pace.
iv) The matter has not progressed in the last year.
v) Your client has already made 7 attempts to plead its claim; the action is dispropo1iionately expensive to the supposed worth of the claim.
vi) Your client is at risk whatever the result of the case, in having to pay a substantial proportion of the defendants' costs, not the least of which are those incurred in response to the first iteration of the case that claimed damages for the allegedly unreasonable refusal to consent to the SuperQuick assignment (which was doomed to fail on the authorities from the outset).
vii) The terms of the Undertaking allow my client to withdraw the money (or part of it) after giving the plaintiff 21 days' notice of intention to do so. My client has been held out of use of its funds to which it is entitled.
(h)by letter dated 14 April 2023, the solicitors for the plaintiff responded, advising that they were instructed to apply for a freezing order and requesting information as to whether the first defendant has any other assets aside from the funds and the reason for removing the funds from the trust account. No response to this letter was received;
(i)attaching Landgate certificate of tile for a property located in Adelaide Terrace Perth which is owned by the first defendant; and
(j)deposing that the plaintiff's directors have instructed the plaintiff's solicitors to take steps to have the action entered for trial at the earliest opportunity.
The Second Crommelin affidavit attaches a copy of a letter sent to the solicitors for the first and second defendants dated 23 July 2021 which provides information detailing how the plaintiff calculates its net trading loss in the amount of $305,645.35 and attaching what are described as 're‑stated profit and loss statements for the financial year ending 2012 to 2021' and a document from which the average salary for a bookkeeper has been calculated for the purpose of those statements.

The Third Crommelin affidavit addresses the assets of the directors for the plaintiff and is relied upon to support the undertaking provided by the plaintiff's directors on 20 June 2023. This affidavit attaches:
(a)a copy of the Certificate of Title for the property owned by the directors;
(b)a Commonwealth Bank account statement in respect of the mortgage held by the Commonwealth bank in relation to that property (which Mr Crommelin deposes he is advised by Mr Whitehurst is an up to date and accurate statement);
(c)a copy of a CoreLogic Property Report for that property dated 20 June 2023, which identifies the mid-range estimate of the value of that property as being $1,380,000;
(d)a statement of account from Capricorn Society Ltd in respect to the caveat registered against the property by that company (which Mr Crommelin deposes he is advised by Mr Whitehurst is an up to date and accurate statement);
(e)a copy of Murfett Legal's statement of account with the respect to the plaintiff in relation to a charge registered against the property; and
(f)a copy of an undertaking in the usual formed signed personally by the directors of the plaintiff.
I have not detailed the balances of the various accounts in my reasons, but as result of those documents, Mr Crommelin deposes that he believes there is at least $554,073 equity in the property to support the undertaking given by the directors.
Finally, the plaintiff relies on the Whitehurst affidavit. In that affidavit, Mr Whitehurst attaches a copy of his witness outline filed in these proceedings on 5 April 2022 and states that the outline sets out the substance of the evidence that he will provide at trial and confirms that the contents of the outline are true and correct. Mr Whitehurst goes on to attach the following documents which are referred to in the witness outline:
(a)the Austcorp Lease, dated 2009;
(b)the Austcorp Sale Agreement, dated 23 March 2012;
(c)the Deed of Assignment of the Austcorp Lease, dated 1 May 2012;
(d)the Deed of Variation and Extension Deed of Assignment, dated 2 January 2014;
(e)the Super Quick Sale Agreement, dated 20 August 2018;
(f)extracts from the lease between the first defendant and Ultra Tune; and
(g)a number of other pieces of correspondence (to the extent any are relevant to my decision they are detailed later in these reasons).
Mr Whitehurst also:
(a)refers to the trading losses documents attached to the First Crommelin affidavit and states that the information is correct and accurately sets of the trading performance of the plaintiff's business during the relevant periods;
(b)states that he believes that the plaintiff has a good arguable case; and
(c)states that since late 2022 his instructions to the plaintiff's solicitors have been for them to complete pre‑trial steps and take the matter to trial as soon as practicable.

First defendant's evidence

The first defendant relies on the affidavit of Carol Bahemia sworn 13 June 2023 (the Bahemia affidavit). Ms Bahemia is a director and sole shareholder of the first defendant. In that affidavit, Ms Bahemia deposes:
(a)to some of the changes to the plaintiff's pleaded case over the history of the action;
(b)to some of the aspects of the first defendant's defence to the pleaded claim and the amount of damages claimed;
(c)that by mid‑2021 the first defendant faced substantial costs in defending this action and the first defendant resolved to sell the Commercial Centre to, inter alia, assist in the payment of the legal fees incurred in defending these proceedings;
(d)to the details of the sale of the Commercial Centre and the deposit of the proceeds of $811,197 into the trust of account of the first defendant's solicitors;
(e)to the details of the undertaking provided and referred to in the First Crommelin affidavit;
(f)that the first defendant also owns a unit situated in Adelaide Terrace Perth, which was purchased in about 2003 for approximately $500,000 and is currently unencumbered. Ms Bahemia deposes that she does not have any information as to the current value of the Adelaide Terrace property. Ms Bahemia deposes that there is no present intention to sell the Adelaide Terrace property;
(g)details regarding the costs incurred by the first defendant to date in the proceedings which the plaintiff will be required pay in any event, being the first defendant's costs of $10,000 in relation to various abandoned claims, and the costs of the recently successful strike out application (and conferral) which are due to be taxed but which Ms Bahemia is informed by her solicitor are approximately $51,000; and
(h)details regarding the financial status of the plaintiff and the directors of the plaintiff (which have largely been overtaken by the Third Crommelin affidavit) including a table of the plaintiff's operating profit after income tax for the period ending 30 June 2013 to the period ending 30 June 2020.

Legal principles

The plaintiff's application is made pursuant to O 52A r 5 of the SCR, which relevantly provides as follows:
(1) This rule applies if -
…
(b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in -
(i) the Court; …
…
(4) The Court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because any of the following might occur -
(a)the … prospective judgment debtor … absconds; or
(b) the assets of the … prospective judgment debtor … are -
(i)removed from Australia or from a place inside or outside Australia; or
(ii) disposed of, dealt with or diminished in value.
The legal principles relevant to the grant of freezing orders are usefully set out in the decisions of Cardile v LED Builders Pty Ltd,[23] Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq)[24] and Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd.[25] By way of summary, the key principles from these authorities are:
[23] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [25] ‑ [53].
[24] Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq) [2018] WASCA 174 [39] ‑ [61].
[25] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [129] ‑ [144].
(a)the court has inherent or implied power to make a freezing order to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. The purpose of a freezing order is to preserve the efficacy of the execution which would lie against an actual or prospective judgment debtor. The object is to protect the integrity of the court's processes once they are set in motion;
(b)the object of a freezing order is not to provide security to a plaintiff;
(c)a freezing order is a drastic remedy which should not be granted lightly;
(d)in order that a freezing order be made, a plaintiff must show, relevantly, a good arguable case that it has an accrued or prospective cause of action justiciable in the court. A good arguable case will be, 'a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success'. The test has also been described as being a case which is reasonably arguable on legal and factual matters;
(e)a plaintiff must also show that:
(i) the assets of the prospective judgment debtor might be disposed of, dealt with or diminished in value;
(ii) there is a danger that the prospective judgment will be wholly or partly unsatisfied; and
(iii)that danger arises because the assets of the prospective judgment debtor are disposed of, dealt with or diminished in value;
(f)the risk of danger must be real or substantial, as opposed to a remote, speculative or theoretical possibility. The facts from which the risk or danger is to be inferred must be proved on the balance of probabilities, but it is not necessary to establish that it is more probable than not that judgment will be unsatisfied unless a freezing order is made. Ultimately, it is a question for evaluation by the issuing court as to whether the degree of the danger or risk is sufficient to justify an order in the terms which the court is asked to make;
(g)it is not necessary that the respondent must act for the purpose of avoiding judgment before a freezing order can be granted; and
(h)the strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion.
Accordingly, before the discretion to make a freezing order is enlivened I must be satisfied of the jurisdictional requirements that first, the plaintiff has a good arguable case against the defendant on either an accrued or prospective cause of action that is justiciable in the court, and second, that there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of the defendant might be removed or otherwise disposed of, dealt with or diminished in value. If the jurisdictional requirements are satisfied, I must then consider any relevant discretionary factors.

Jurisdictional questions

Good arguable case

Prior to the Whitehurst affidavit being filed, the plaintiff had not filed any affidavit evidence deposing to the accuracy of the matters in the statement of claim, attaching any of the relevant documents or providing any explanation of the plaintiff's case as against the first defendant (aside from some documents in the Second Crommelin affidavit regarding trading losses). This point was taken in the first defendant's written submissions.
However, in the Whitehurst affidavit, Mr Whitehurst has annexed his outline of evidence in which the substance of his evidence is explained, with cross referencing to relevant documents. Mr Whitehurst deposes to the accuracy of that outline and also attaches a number of documents relevant to my assessment of the plaintiff's case, including the relevant lease documents.
Having reviewed the pleadings and the filed material, I am satisfied in all the circumstances that the plaintiff has demonstrated that it has a good arguable case. In this regard, as outlined above in my discussion of the legal principles, the threshold for meeting this test is low.
In so finding I, of course, do not make any final or conclusive finding as to whether the plaintiff will ultimately be successful or not in the proceeding.
However, I am of the view that on the basis of the evidence before me, the plaintiff's case faces a number of hurdles and to that extent can be described as weak. My assessment of the strength of the case is relevant to the exercise of my discretion. Given this is an interlocutory hearing, this conclusion is based only on the material before me and is not a final or conclusive conclusion. However, I consider that at trial the plaintiff will face the following issues.
The plaintiff's case for misleading and deceptive conduct as against the first defendant is not based on a simple and clear alleged misrepresentation. Rather, it is based (in part) on alleged oral representations made by the second defendant's employee in 2012; knowledge of matters by an employee of the second defendant; a conversation between an employee of the second defendant and a director of the first defendant; knowledge by the defendants of the operation of the business by the plaintiff and the previous tenants in apparent contravention of the lease; the allegation that the first defendant must have been aware of the matters alleged to have been known by the second defendant's employee and the alleged representations by the second defendant's employee due to the nature of the relationship between the two defendants. These will be difficult matters to establish. Whilst I accept that the plaintiff's case against the first defendant also based in part on the provisions of the written deed of assignment, to the extent the plaintiff is relying on oral representations from 2012, the limitations and difficulties in this respect identified by the NSW Court of Appeal in Watson v Foxman[26] are relevant.
[26] Watson v Foxman (1995) 49 NSWLR 315, 318 ‑ 319.
The second basis of the plaintiff's claim for misleading and deceptive conduct concerns the alleged failure of either defendant to advise the plaintiff of the details of the covenant in the Ultra Tune lease. When considering the strength of this part of the plaintiff's case, it is also relevant to consider the fact that the plaintiff's lease with the second defendant contains a permitted use term which is to similar effect, in so far as the permitted use does not extend to a general mechanical workshop of the type operated by Ultra Tune.
The unconscionable conduct claim made against the first defendant is pleaded on the basis that in all the circumstances the first defendant's refusal to consent to the assignment was unreasonable. This claim will need to be assessed in light of the permitted use term in the lease; the relevant express clause in the Ultra Tune lease and the business proposed to be operated by Super Quick. The first defendant submits that these three matters (at least) provide a reasonable basis for refusing to assign the lease. The first defendant also submits that when the letter from the first defendant's current property agent to Super Quick dated 10 September 2018[27] is reviewed, it is clear that the reasons the first defendant declined to consent to assign the lease were associated with the business proposed to be operated by Super Quick and the covenants in the Ultra Tune lease, and had nothing to do with the plaintiff and the operation of its business.
[27] Letter dated 10 September 2018, Whitehurst affidavit AJW - 7.
The first defendant also made a number of submissions as to difficulties with the amount of the damages claimed by the plaintiff and the extent to which the damages claimed will be able to be proven. In relation to the misleading and deceptive conduct claim, the first defendant claims the purchase price paid for the business plus the trading losses incurred during the period of time the plaintiff owned the business. In this regard the Second Crommelin affidavit attached profit and loss statements. The first defendant submits that the documentation establishes that these statements have been re-issued and propose an assessment of the trading losses taking into account a different method of payment for Mr and Mrs Whitehurst's services to that which occurred in fact. Further, the first defendant submits that the purchase price for the sale includes an amount for stock and plant and equipment which were presumably used and/or sold.
In relation to the unconscionable conduct claim, the first defendant submits, again, that the purchase price includes an element for stock and further that the purchase price was premised on Super Quick obtaining an extension to the lease (or new lease) for nine years. As at the date of the proposed sale, the existing lease only had one year remaining and there was no obligation on the first defendant to grant a new lease. These factors negatively affected the amount of the alleged damages.
When these matters are taken into account, the first defendant submits that there are real issues with the quantification of the damages claimed by the plaintiff and any award of damages will be less than claimed. Noting that the some of these matters are questions of proof and expert, I nonetheless accept that these are issues which weaken the quantum of the plaintiff's case.
I note that the first defendant made submissions regarding the length of time between the alleged misleading and deceptive conduct (2012) and the issuing of the writ (2019). To the extent those submissions were directed to possible limitation issues, I note that there is no pleading of a limitation defence in either defence. I note that the first defendant also made a number of submissions regarding the various amendments made by the plaintiff to its pleadings. For the purposes of considering this jurisdiction question, I have had regard to the current version of the statement of claim only.
Accordingly, I am satisfied in all the circumstances that the plaintiff has demonstrated that it has a good arguable case, but that it is weak in that the plaintiff faces a number of hurdles in its case.

Assets might be disposed of, dealt with or diminished in value

The plaintiff submits that to meet this jurisdictional requirement, O 52A r 5(4) only requires the plaintiff to demonstrate that the first defendant's assets might be disposed of, dealt with or diminished in value and not that they have to be disposed of, dealt with or diminished in value. This is consistent with the language of O 52A r 5(4).
The plaintiff's case on this jurisdictional question is put on the basis that the sale of the Commercial Centre, combined with the proposal to remove the proceeds of the sale from the solicitor's trust account, means that the assets of the first defendant might be disposed of, dealt with or diminished in value. The plaintiff's submission was put on the basis that the asset has been sold, and now it is proposed to withdraw and spend the proceeds from that sale.
The defendant submits that the mere conversion of the Commercial Centre as property to cash is not sufficient to demonstrate that an asset has been disposed of or diminished in value. The first defendant also submits that the fact that the first defendant wishes to use that cash for the purposes of paying legal fees associated with this case is not sufficient to meet the jurisdictional requirements as O 52A is not concerned with preventing that sort of use of a defendant's assets. In relation to this submissions, the Court of Appeal held in Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq)[28] that the particular use to which the defendant proposes to put the asset in question (or its purpose in otherwise disposing of or dealing with the asset) is a matter which is relevant to the exercise of the discretion and not the jurisdiction question.
[28] Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq) [2018] WASCA 174 [57] ‑ [61].
I therefore accept that the proposal to withdraw the proceeds of the sale from the trust fund leads to an inference that those proceeds will be spent. The correspondence between the solicitors contemplates that this will occur, although there is no evidence as to how much. Therefore, I am satisfied that in relation to the proceeds of the sale of the Commercial Centre there is evidence that this asset might be disposed of, dealt with or diminished in value.
In relation to the Adelaide Terrace property, counsel for the plaintiff made the submission that the fact that the Commercial Centre has been sold, and the first defendant now wishes to access and spend the proceeds of that sale, supports an inference that the Adelaide Terrace property may also be sold going forward. The plaintiff submits that there is no evidence or explanation by the first defendant of what other business the first defendant operates, and it appears to be an entity that only holds property.
Ms Bahemia deposes that there is no current intention on the part of the first defendant to sell this property. Ms Bahemia was not subject to cross examination and the plaintiff lead no other evidence as to the potential sale of the Adelaide Terrace property. Given the evidence of Ms Bahemia and the lack of any other evidence to the contrary, I do not accept the plaintiff's submission. Accordingly, I am not satisfied that there is evidence that the Adelaide Terrace property might be disposed of, dealt with or diminished in value.

Accordingly, the evidence before the court is that an asset of the first defendant has been sold and the proceeds are now proposed to be accessed by the first defendant and spent. In these circumstances, I accept that the plaintiff has demonstrated that some of the assets of the first defendant might be disposed of, dealt with or diminished in value.

Danger that the prospective judgment will be wholly or partially unsatisfied

However, on the evidence before me I am not satisfied that the plaintiff has demonstrated there is a danger that a prospective judgment of this court will be wholly or partially unsatisfied because assets of the first defendant might be disposed of, dealt with or diminished in value.
In this regard, I note that there is no evidence that all of the cash will be used by the first defendant. The mere fact that the proceeds of the sale will no longer be kept in a trust account is not sufficient, absent more, to demonstrate that all of the cash will be spent or otherwise dealt with, or a sufficient amount such as to demonstrate a danger that a prospective judgment will be wholly or partially unsatisfied. There is no evidence before me that the first defendant proposes to move the cash out of the jurisdiction and into a jurisdiction where there are no reciprocal enforcement proceedings.
I also note that the first defendant owns the Adelaide Terrace property. Whilst I have not been provided with any up to date valuation information for this property, Ms Bahemia deposes that it was purchased in 2003 for approximately $500,000 and that it is unencumbered. Further, Ms Bahemia deposes that there is no current intention on the part of the first defendant to sell this property. The Adelaide Terrace property is therefore a significant additional asset of the first defendant which, presently, will be available to assist to meet any future judgment against the first defendant.
Further, and importantly, the plaintiff's action is against two defendants. The plaintiff claims damages for misleading and deceptive conduct against both the first and second defendants, and it is only the alternative unconscionable conduct claim which is pleaded against the first defendant. In order to form a view as to whether there is a danger that any dissipation of assets might result in a future judgment of this court being unsatisfied, it is important to have an understanding of the pool of assets of both defendants that might be available to meet any future judgment. There is no evidence to suggest that the second defendant has no assets. The plaintiff is therefore seeking to make the case that there is a risk of dissipation of assets and a corresponding danger that any future judgment may be unsatisfied based only on part of the pool of assets. I note that the second defendant is a firm of real estate agents. In light of the identified assets of the first defendant, and given the lack of any evidence as to the assets of the second defendant, I am not satisfied that the plaintiff has established that the use of the cash from the sale of the Commercial Centre on its own is sufficient to demonstrate a danger that any future judgment will not be satisfied and therefore there is a risk of an abuse or frustration of the court process.
Accordingly, I do not consider that the plaintiff has discharged its onus of proof in relation to this second jurisdictional question.

Discretionary considerations

Even if I am wrong as to my conclusions in relation to the jurisdictional questions, I would not exercise my discretion to grant the freezing orders. The following factors are relevant to my decision in this regard.
The plaintiff's case is weak for the reasons set out above.
There is no evidence before me that the reason the first defendant wishes to use the cash from the sale of the Commercial Centre is so as to avoid any future judgment. Whilst it is not necessary for the plaintiff to establish such an intention in order to be successful, the lack of any such intention is relevant to the exercise of my discretion.[29]
[29] Duro Felguera Australia Pty Ltd v Trans Global Projects Pty Ltd (In liq) [2018] WASCA 174 [50] ‑ [61].
The evidence from Ms Bahemia is that the cash is being used by the first defendant (at least in part) to pay for the legal expenses of the present case. That is also the reason the Commercial Centre was sold in the first place. This is not an irregular, inappropriate or unjustifiable disposal, dealing with or diminution of the value of the first defendant's assets. In this regard, I note that the Consolidated Practice Directions expressly provides that any freezing order granted should ordinarily exclude dealings by the respondent with its assets for legitimate purposes, including the payment of reasonable legal expenses.[30]
[30] Consolidated Practice Directions 9.6.1 [12].
The first defendant owns other property, in the form of the Adelaide Terrace property. The evidence from the director of the first defendant is that this property was purchased in 2003 for approximately $500,000 and it is unencumbered. The director also gives evidence that there is no current intention to sell that property. Not only does this indicate there are other assets available to meet any future judgment, but it militates against any suggestion of dissipation of assets to avoid any future judgment. The Commercial Centre itself was also owned by the first defendant since at least 1995 before being sold in 2022.[31] The evidence before me is therefore of a plaintiff that has, to date, owned property for lengthy periods of time.
[31] Statement of claim [4].
The plaintiff's action claims misleading and deceptive conduct against both the first and second defendants. It is only the unconscionable conduct claim which is pleaded against the first defendant only. However, the plaintiff has not provided any evidence of funds or assets of the second defendant which may also be available to meet any future judgment, any dissipation of these assets or any evidence to suggest that when the second defendant's position is also taken into account there is any danger of a future judgment being unsatisfied. There is no evidence to suggest that the second defendant has no assets.
In considering the various discretionary factors, I have also had regard to the legal principles set out earlier in these reasons, including that the object of a freezing order is not to provide security to a plaintiff and that a freezing order is a drastic remedy which should not be granted lightly.
In considering the various discretionary factors, I have not overlooked the undertaking provided by both the plaintiff and the directors of the plaintiff. The first defendant raised legitimate concerns regarding the strength of the plaintiff's undertaking, given the limited financial resources of the plaintiff. However, I am satisfied that the undertaking provided by the directors is sufficient for the present purposes. I also accept that there has not been any undue delay on the part of the plaintiff in bringing this application (given the date of sale of the Commercial Centre, the steps taken immediately thereafter and the undertaking provided). I note however that these proceedings have been on-going since 2019, and whilst Mr Whitehurst deposes that he gave the plaintiff's solicitors instructions in late 2022 to complete pre-trial steps and take the matter to trial as soon as practicable, the matter has not yet been entered for trial.
I have also not overlooked the fact that the balance of convenience will usually favour a plaintiff (assuming the jurisdictional matters are made out and subject to any other discretionary matters) because the potential damage to the plaintiff of being unable to satisfy the judgment will outweigh the inconvenience to the defendant of being subjected to a properly drawn freezing order.[32]
[32] BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 [22].
However, I am of the view that in the present case, the discretionary factors in favour of granting the freezing orders are outweighed by those factors I have identified above which weigh against granting the freezing orders.

Conclusion

For the reasons outlined above, I decline to grant the freezing orders sought and I dismiss the plaintiff's chamber summons dated 19 May 2023. I will hear further from the parties in relation to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SO
Associate to the Judge
26 JUNE 2023