Benlist Pty Ltd v Olivetti Australia Pty Ltd

[1989] FCA 838

JUDGMENT No. ..3.3..%~ .... ' :

LIMITED DISTRIBUTION

CATCHWORDS

MAREVA INJUNCTION - Whether facts disclose appropriate basis for relief - whether granting of relief would circumvent

insolvency laws.

BENLIST PTY LIMITED V

G842 of 1989

LOCKHART J.

20 DECEMBER 1989

SYDNEY

LIMITED DISTRIBUTION

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

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 applicant by itself its servants and agents be restrained until further Order from paying any amount

connected with a refund of any and all stamp duty paid received on account of or in relation to or in any way

or payable by the applicant in connection with the agreement the subject of these proceedings to the Bank of New Zealand or Calrobe Pty Limited or any creditor of the applicant other than the respondent.

2.      The applicant forthwith upon the receipt by itself its servants or agents of any such refund of stamp duty pay the amount so received into an interest bearing account with such financial institution as the parties may agree in the joint names of Frederick Swaab and Ian Stuart Wylie or, in the event of a failure to agree, into an interest bearing account with the Bank of New Zealand in such joint names.

3.      The costs of motion dated 15 December 1989 be the respondent's costs in the proceedings.

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

36 of the Federal Court Rules.

LIMITED DISTRIBUTION

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

BETWEEN: BENLIST PTY. LIMITED

Applicant

AND :	OLIVETTI (AUSTRILLIAI PTY. LTD
Respondent

20 December 1989

REASONS FOR JUDGMENT

LOCKHART J.:

This is a motion by Olivetti Australia Pty Limited, ("Olivetti"), for a Mareva injunction to prevent Benl~st Pty Limited, ("Benlist") from disposing of its assets, thereby putting them beyond Olivetti's reach in the event of its obtaining judgment against Benlist in the current

proceedings.

The relevant facts are not in dispute and may be briefly

stated. On 7 December 1988, Olivetti agreed to sell to

Benlist a multi storey	building in ~illiam	Street, S
known as Olivetti House,	for $18,000,000.

12 JAN 1990

FEDERAL COURT OF

aINUPAL

REOSTRY

Benlist alleges that in order to induce it to enter into the agreement Olivetti caused to be published by its agent a brochure which contained a representation to the effect that Olivetti House was capable of being the subject of a strata plan of subdivision; that the representation was misleading and deceptive; that Benlist in reliance upon the representation entered into the agreement to purchase Olivetti House and paid the deposit of $500,000 provided for in the agreement.

Benlist alleges that the representation was false, misleading and deceptive; that it is unable to obtain registration of a strata plan and that in the circumstances Olivetti House is worth considerably less than the purchase price of $18,000,000 and that Benlist has suffered consequential loss and damage.

Olivetti denies the making of the representation and

asserts that Benlist wrongly repudiated its contractual

obligations.

Benlist commenced proceedings in this Court on 6 December
1989 seeking amongst other relief an order for rescission of
the agreement for purchase, the return of the deposit and
damages pursuant to S. 82 of the Trade Practices Act 1974 and

under the general law.

Olivetti has not yet filed its defence to the proceeding but its counsel told the Court yesterday that this would be done and that a cross claim would also be filed by Olivetti asserting a claim for damages against Benlist in the sum of approximately $4,000,000 arising from Benlist's alleged refusal to complete the agreement for purchase of Olivetti House.

As the agreement has been determined, Benlist seeks a refund from the Commissioner of Stamp Duties of New South Wales of the amount of stamp duty paid by it in respect of the agreement to purchase Olivetti House, a sum of $975,000. It is this sum which is the subject of the present controversy and motion.

Olivetti contends that Benlist is a $2 company with no assets except what it asserts to be is claim against Olivetti for damages resulting from the alleged misrepresentation or breach of contract and its claim for refund of the $975,000 stamp duty. Olivetti fears that unless the $975,000 is impounded by the Court, it will, upon its being received by Benlist from the Commissioner of Stamp Duties, be paid either to the Bank of New Zealand ("BNZ") or a company with whom it is said Benlist is closely connected, Calrobe Pty Limited, in such circumstances that unsecured creditors of Benlist including Olivetti, will be forever prevented from obtaining any right to recover it, either alone or as creditors by right of proof in any subsequent administration in insolvency of Benlist.

Benlist claims that the grounds advanced by Olivetti for a Mareva injunction are the very grounds that the decided cases have held to be an inappropriate basis for the grant of such relief, namely, that Olivetti is seeking to prevent Benlist from being free to use its assets to pay its debts and is seeking some advantage over other creditors of Benlist which it would not be entitled to in the event of any subsequent insolvency of Benlist, the fact of insolvency, in any event, not being admitted.

Benlist is, in fact, a company with a paid up capital of

$2 and it was incorporated for the very purpose of purchasing

Olivetti House from Olivetti. It appears to have two assets,	first, its claims against Olivetti arising from the alleged
misrepresentation with respect to the potential of Olivetti House for strata subdivision which, in reality, appears to be its claim for the refund of the deposit of $500,000 and perhaps more, by way of damages; and secondly, its claim for the refund of the $975,000 stamp duty. The claim by Benlist for refund of the stamp duty has been made on the Commissioner so that the refund may be made at any time, depending on the exigencies of that State statutory authority.
Benlist's liabilities, like its assets, also arise from the contract to purchase Olivetti House or are referable thereto. It charged its assets, which means for practical purposes its interest in the agreement to purchase Olivetti House, in favour of BNZ to secure moneys advanced by BNZ to Calrobe. Apparently Calrobe borrowed from BNZ certain moneys which it then on-lent to Benlist to enable it to purchase Olivetti House. Benlist is liable, therefore, to repay to Calrobe the money which it borrowed from it.
Benlist not only charged its assets to BNZ to secure the advance by BNZ to Calrobe but it guaranteed repayment to BNZ of Calrobe's primary liability to BNZ. There are other liabilities of Benlist but all related, so far as I can see, in one way or another to the purchase of Olivetti House.
There is some dispute as to the precise relationship between Benllst and Calrobe but it is plain that whatever it is, the
relationship is close in commercial terms.
The jurisdiction to make what are commonly referred to as Mareva injunctions and the circumstances in which they can be made have been considered in many reported cases. It is sufficient for present purposes to refer to the general principle stated by Lord Denning, M.R. in Rahman (Prince Abdul bin Turki a Sudaimy v Abu Taha [l9801 1 WLR 1268, at page 1273:

" . . .a Mareva injunction can be granted

against a man even though he is based in this country if the circumstances are such that there is a danger of his 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 plaintiff, if he gets judgment, will not be able to get it satisfied."

This statement of principle was cited with approval by Deane J. in Jackson v Sterlina Industries Limited (1987) 162 CLR 612 at 623.

It is accepted by the parties in this case that usually an applicant for a Mareva injunction must establish a prima facie cause of action against the respondent before the injunction may be granted. It is agreed by the parties, for present purposes, that Olivetti has an arguable case against

Benlist notwithstanding that it has not yet filed its defence	or cross claim. Counsel for Olivetti has informed Benlist and
the Court, however, that its foreshadowed claim for damages arising from Benlist's alleged wrongful repudiation of its agreement to purchase Olivetti House will be embodied in a cross claim to be filed within such time as the Court directs.
Benlist accepts this assurance as being sufficient to establish that Olivetti has a prima facie case or a reasonably arguable case, as the case may be, on its claim for damages.
I have the firm impression that if Olivetti succeeds in its claim for damages against Benlist and obtains judgment against Benlist in a sum substantially in excess of any damages which Benlist may be held to be entitled to recover from Olivetti, the only asset of Benlist of any real value will be the amount of stamp duty, presumably by then, refunded by the Commissioner of Stamp Duties. It is plain, that once Benlist receives that refund, it will be likely to pay it either to Calrobe or to BNZ in discharge of its liabilities to them. There is a question of whether the BNZ's charge over Benlist's assets extends to the refund of the stamp duty; but counsel have agreed that the Court cannot determine this question now, especially as BNZ is not presently a party and that the Court should assume that this is a reasonably
arguable question. I shall act on that basis.
Once payment is made by Benlist to BNZ or Colrobe of the $975,000 there is a distinct likelihood that Olivetti will find nothing available to it in the coffers of Benlist against whlch it may enforce any judgment it may recover.
I am not persuaded that the relief sought by Olivetti is a form of pre-trial attachment of the kind mentioned by the English Court of Appeal in Cretanor Maritime Com~anv Limited v Irish Marine Management Limited [l9781 1 WLR 966 and therefore an impermissable use of the Mareva injunction. Olivetti's position is not akin to a claim of a proprietary interest in the assets of Benlist or to a claim of a secured creditor by virtue of the Mareva injunction or of the kind mentioned by
Robert Goff J. in Iraai Ministrv of Defence v Arce~ev ShiD~inq
CO, SA [l9811 1 QB 65 at 72.
As Wilson and Dawson JJ. said in their joint reasons for judgment in Jackson v Stirling Industries Limited at 618 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."

See also Hortico (Australia) Ptv. Limited v Enerw Eaui~ment CO (Australia) Ptv Limited (1985) 1 NSWLR 545, per Young J. at 5583; Clark Ecrui~ment Credit of Australia Limited v Como Factors Ptv Limited (1988) 14 NSWLR 552, per Powell J. at 569B; PCW (Underwriting Agencies) Limited v Dixon [l9831 2 All ER 158, per Lloyd J. at 162 and Admiral ShiDDinq v Portlink Ferries Limited [l9841 2 LLoyd's Rep 167, per Sir John Donaldson, M.R. at 168.

I propose to grant the injunction sought by Olivetti. I shall stand the notion down for a short time to enable the parties to agree upon the appropriate form of order. The order should be framed so that the stamp duty when refunded be paid into an appropriate interest bearing account under the control of the Court or the solicitors for the parties so that when this litigation has concluded the moneys in the account, including accumulated interest may be paid out to the person or persons entitled to them.

The orders should subsist until further order so that it may be reviewed later if necessary on the application of any interested party. The vendors should pay the cost of Olivetti of the motion.

I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment of the Honourable Mr. Jusucg Lockhart.

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