Benlist Pty Ltd v Olivetti Australia Pty Ltd

[1989] FCA 837

JUDGMENT NO. .$37 /.KT-

LIMITED DISTRIBUTION

CATCHWORDS

PRACTICE AND PROCEDURE - Mareva Injunction - application for leave to appeal from interlocutory judgment - whether

principle that relief may not be granted to circumvent the

insolvency laws correctly applied.

BENLIST PTY LIMITED v OLIVETTI AUSTRALIA PTY. LIMITED

G842 of 1989

20 DECEMBER 1989

LOCKHART J .

SYDNEY

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG842 of 1989
)
GENERAL DIVISION	1

BETWEEN: BENLIST PTY. LIMITED

Applicant

AND :	OLIVETTI (AUSTRALIA) PTY. LTD
Respondent

JUDGE MAKING ORDER:	LOCKHART J.
DATE ORDER MADE:	20 DECEMBER 1989
WHERE ORDER MADE:	SYDNEY

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. The application for leave to appeal be dismissed.

2.      There be no order for costs of the motion for leave to

appeal.

NOTE:  Settlement and entry of orders is dealt with in Order

36 of the Federal Court Rules.

LIMITED T3TFTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG842 of 1989
)
GENERAL DIVISION	1

BETWEEN: BENLIST PTY. LIMITED

Applicant

AND :	OLIVETTI (AUSTRALIA) PTY. LTD
Respondent

20 December 1989

REASONS FOR JUDGMENT

LOCKHART J.:

Earlier today, the Court granted an injunction of the kind commonly known as a Mareva injunction in favour of the respondent, Olivetti Pty Limited ("Olivetti"), upon it by its counsel glving certain undertakings to the Court.

Following the giving of judgment counsel for the pursuant to Order 52 rule 10 subrule (1) for leave to appeal	applicant, Benlist Pty Limited ("Benlist") moves the Court
from the Court's judgment. It is common ground that the judgment is an interlocutory judgment of the Court and that an application for leave may be made orally to the judge who pronounced the judgment, if the application is made
time of the pronouncement, all of which has been afternoon.

REGISTRY

Counsel for Benlist says that there is an important question of law involved in the matter and that it is reasonably arguable. He states the important question of law as being that a Mareva injunction cannot, in the light of the authorities, be granted for the purpose of preventing a payment to a creditor which may be preferential in an insolvency administration of the debtor, or for the purpose of preventing a debtor from paying its creditor or creditors.

The principle upon which reliance is placed is that expressed in a number of cases but in particular by Robert Goff J. in Iraai Ministrv of Defence v ArceDev ShiDDina Co.

a, [l9811 1 QB 65 at page 72, a passage which I referred to

in my earlier reasons for judgment together with other references to authority, including Jackson v Sterlinq Industries Limited (1987) 162 CLR 612 and in particular in the joint reasons for judgment of Wilson and Dawson JJs at page 618.

It is, I think, important that I state the relevant passages from those judgments though I did so in part earlier in my reasons for judgment that are the subject of the leave to appeal.

At page 618 of Jackson v Sterling Industries, their

Honours	Justice Wilson and Justice Dawson said, and I
quote:

"... the Mareva injunction represents a

limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. The remedy is not to be used to circumvent the insolvency laws."

Robert Goff J. in the Iraai Ministrv of Defence case said at page 72, amongst other things, that a Mareva injunction is:

"... not a form of pre-trial attachment but

a relief in a personam which prohibits certain acts in relation to the assets in question."

And later in the page: 

"In the light of the Cretanor case M r . Hobhouse was at pains to disclaim a proprietary interest in the assets or the position of a secured creditor by virtue of the Mareva injunction; but from the very nature of his submission he was claiming for the plaintiffs a ranking among the creditors of the defendants in the event of their insolvency which otherwise the plaintiffs would not be entitled to. I find it difficult to see why if a plaintiff has not yet proceeded to judgment against a defendant but is simply a claimant for an unliquiidated sum, the defendant should not be free to use his assets to pay his debts. Of course, if the plaintiff should obtain a judgment against a defendant company, and the defendant company should be wound up, its previous payments may thereafter be attacked on the ground of fraudulent preference, but this is an entirely different matter which should be dealt with at the stage of the winding up. It is not to be forgotten that the plaintiff's claim may fail, or the damages which he claims may prove to be inflated. Is he in the meanwhile, merely by establishing a prima facie case, to preclude the bona fide payment of the defendant's debts? When taxed with this point Mr. Hobhouse suggested that in such circumstances the appropriate course for a defendant's creditors was to proceed to judgment because the enforcement of the judgments by execution would not constitute breaches of the Mareva injunction against the defendant. This I consider to be an unsatisfactory answer. It does not make commercial sense that a party claiming unliquidated damages should, without himself proceeding to judgment prevent the defendant from using his assets to satisfy his debts as they fall due and so put him in the position of having to allow his creditors to proceed to judgment with consequent loss of credit and of commercial standing. On Mr. Hobhouse's approach a jurisdiction which found its origin in the prevention of an abuse has been transmuted into a rewriting

of our established law of insolvency.

Those seem to me to be a convenient statement of the
relevant principles though they are expressed in different
ways in other cases, certain of which I mentioned earlier
I do not regard the statement of principle as enunciated
by counsel for Benlist as an accurate reflection of the
principles to be gleaned from those cases; but I am content to
assume that it is the principles which those cases have
expressed that is the basis of the application for special
leave. It is said that the Court's judgment earlier erred by
not applying those principles. In my view, those principles
were the very principles which were applied by me earlier
today to the facts of this case. I do not regard the facts as

stated by me as falling in any way foul of those principles.

I see nothing on the facts of this case which could be said to constitute a circumvention of insolvency laws or intended to give a form of preferential treatment, priority or any form of advantage to Olivetti over other creditors of Benlist if it should henceforth become insolvent and be subject to an administration in insolvency.

The question of law embodied in the cases which I have referred to is of course an important question of law but in my view it is the very question which was mentioned this morning and applied on the facts of this case. If there be any error, it could only be I think one of fact, but, I am afraid that I cannot see how it could be reasonably argued that that has occurred. Accordingly, I decline to grant the leave sought.

Olivetti seeks no order for costs of this motion. Hence there shall be no order for costs of the motion for leave to appeal.

I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment of the Honourable

Mr. Just'ce LO-ckhbrt

#& & .

Associate

Dated: 20 December 1989

Counsel for Applicant:	Mr. D.M. Bennett Q.C.
(Benlist Pty. Ltd.)	Mr. Simpkins
Solicitors for Applicant:	Swaab and Associates
Counsel for Respondent:	Mr. F.M. Douglas Q.C.
(Olivetti (Aust) Pty. Ltd.):	Mr. P.W. Gray
Solicitors for Respondent:	Sly and Weigall

Date of Hearing:	20 December 1989
Date of Judgment:	20 December 1989