Bloom, M. v Kuji P/L

[1993] FCA 441

441 1993

-, - A E N T No. .......,........ .. I ........ ....

IN THE FEDERAL COURT OF AUSTRAtIA )	NO. QG 135 of 199
OUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	1

BETWEEN: MELWN BLOOM and MARGARET rVONNE BLOOM

First Applicants

AND :  YVONNE BLOOM

Second Applicant

AND :  BETTY BLOOM

Third Applicant

AND :  KUJI PTY. LTD.

Respondent

:.J

JUDGE MAKING ORDER:  Drummond J _I .

-C-

DATE OF ORDER:	21 June, 1993
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

1.        The respondent's notice of motion filed 1 June, 1993 is dismissed.

is dismissed.

The costs of today, insofar as they relate to the applicants' application for further discovery, are reserved to Tuesday, 10 August, 1993.

1. The respondent pay the costs of the third applicant, who is the respondent to the notice of motion, including any reserved costs of the notice of motion, of and incidental to the motion filed on 1 June, 1993 to be taxed on a party and party basis.

   The third applicant has leave to tax forthwith the costs awarded in order 2.

   The applicants' notice of motion filed 17 June, 1993, insofar as it relates to leave to interrogate,

THE COURT DIRECTS THAT:

1. The applicants' notice of motion filed 17 June,

   1993, insofar as it relates to discovery, is

   adjourned to 9.15 a.m. on Tuesday, 10 August, 1993.

2.        The matter is adjourned for further directions to

9.15 a.m. on Tuesday, 10 August, 1993.

3.        All parties have liberty to apply on short notice with respect to discovery.

1. The applicants inform the respondent of the terms of any proposed amendment to the statement of claim, fully particularised, in a letter to be delivered to the solicitor for the respondent by no later than Sunday, 31 July, 1993.

NOTE:  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )	No. QG 135 of 1991
QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

BETWEEN: MELWN BLOOM and MARGARET YVONNE BLOOM

First Applicants

AND :  WONNE BLOOM

Second Applicant

AND :  BETTY BLOOM

Third Applicant

AND :  KUJI PTY. LTD.

Respondent

Corm:  Drummond J

Place: Brisbane

Date:  21 June, 1991

EX TEMPORE REASONS FOR JUDGMENT

The applicant on the notice of motion ("the proceeding. The respondent to the notice of motion ("the	applicant") is the respondent and cross-claimant in the main
respondent") is the third applicant, and third cross- respondent, in those proceedings, which involve the question of whether the three applicants in the main proceeding can avoid contracts to buy three units from the respondent in that proceeding.
The applicant seeks very wide ranging Mareva relief against the respondent. It was not until addresses that senior counsel for the applicant acknowledged that the relief sought by paragraph 1 of the notice of motion should, if granted, be limited so as to allow the respondent access to any frozen assets to meet her ordinary living and business expenses. Further, it was not until then that senior counsel abandoned the claim in paragraph 2 of the notice of motion that the respondent, within two days of any order, disclose on oath full details of all her assets in the jurisdiction.
Mareva relief is granted only where the applicant for that relief satisfies the court that there is a real risk that the respondent is disposing, or may dispose, of her assets so as to defeat any judgment, including a judgment on a cross-claim, which the applicant may recover from the respondent. It is conceded that the applicant, as cross- claimant, has a prima facie case in the main proceeding that will, if established, entitle it to relief against the
respondent as a cross-respondent.
The applicant's claim to relief here is essentially founded on the evidence of Mr. Hickey, the solicitor on the record for that party in the proceedings. In a section of his affidavit headed "Evidence of DiS~o~ition of Assets", Mr. Hickey creates a clear picture of a pattern of conduct by the respondent that involves the disposal by her of the real property in New South Wales and Queensland which she owned
when action was commenced in late 1991. This pattern of conduct culminated, according to what Mr. Hickey says in his affidavit, in the very recent sale by the respondent of the last of that property.
Mr. Hickey deposes to only learning of the sale of the respondent's Sydney property, which was completed back in September 1992, for the first time on 4 May last. He says he got this information from Titles Office searches. He also swears that he was informed by two real estate agents only a few weeks ago, in late May, of the sale of two of the respondent's Queensland units. He says that prior to about 21 May last, he was not aware that these units had been sold. Further, he swears that he ascertained from an Australian Securities Commission search response dated 1 June, 1993 that the respondent is a shareholder in four named companies.
If the picture created by Mr. Hickey in his affidavit remained unmarked, then some form of relief would be
affidavit is really quite misleading. justified. But the picture that Mr. Hickey creates in his
By order of this court made in June 1992, the parties and their accountants attended three mediation conferences held between August and November 1992. At these conferences the respondent, by herself or by her representatives, disclosed to the applicant, or its representatives, details of all her assets to which Mr. Hickey now refers in his affidavit. Her accountant also confirmed, in November last, her shareholdings in the companies referred to in paragraph 21 to Mr. Hickey's af fidavit. Moreover, Mr. Hickey admitted in cross-examination that the respondent also then disclosed her intention to sell her property holdings to which he refers, an intention only recently realised by sale. The applicant on the notice of motion was also told, in the course of the same mediation conferences, of the sale by the second applicant in the proceedings to her mother, the respondent on the notice of motion, of one of the Queensland units which has now been sold by the respondent to the notice of motion.
In short, as long ago as November last, the applicant on the notice of motion was aware of all the assets owned by the respondent to which Mr. Hickey refers in his affidavit, and was also by then aware of her intention to dispose of those assets. Moreover, the applicant learned of this information by disclosures volunteered by the respondent
conduct in this regard is quite inconsistent with any notion in the course of the mediation conferences. The respondent's
that she was, or is, seeking to put her assets beyond the reach of the court which may ultimately give judgment to the applicant.
In cross-examination Mr. Hickey sought to explain the misleading statements he made in his affidavits, to which
I have referred, on the basis that when he swore to learning
of matters only recently, he failed, at that stage, to recall what he had learned, by November 1992, as a result of the mediation conferences. It is unnecessary to make any finding on Mr. Hickey's credit. If it were essential to do so, I would have to hesitate long before accepting his explanations of extended forgetfulness when he came to compose, and then to execute, paragraphs 13 - 22 and paragraph 27 of his affidavit.
Mr. Hickey also suggested at one stage, as I understood his evidence, that even if he had recalled that there had been some discussions in the mediation conferences of the respondent's assets, he would have been at pains not to refer to his notes of those conferences in preparing his affidavit in order to ensure that he avoided referring to "without prejudice" information. But if he had taken that trouble, he could not properly have sworn to only recently learning of various matters for the first time, as he has done in his affidavit.
There is, in my view, no evidence to suggest that the respondent is acting with respect to her assets in such a manner as would entitle the applicant to obtain any form of Mareva relief. Her frankness in the course of the mediation conferences as to her assets and as to her future intentions with respect to those assets dispels entirely, in my view, the picture created by Mr. Hickey's affidavit.
Mr. Hickey also exhibits correspondence passing between himself and the solicitor for the respondent in the period April/May last. In his letter of 21 April last, Mr. Hickey asserts, on the basis of the fact that the respondent "has recently been attempting to sell" the two Queensland units, in one of which she resides, that she may be contemplating a move to Fiji where her son and his wife, who are the first applicants in the main proceedings, live.

Mr. Hickey went on in this letter to seek, inter

alia, the following:

"3. An undertaking not to sell, or otherwise deal with in any way whatsoever, the said units at Atlantis West of which Mrs Bloom is the registered proprietor, without seven days prior notice in writing to us.

4.   Advice as to the proposed fate of the proceeds of sale of the said units.

5.   An undertaking not to leave the Commonwealth of Australia without seven days prior notice in writing to us."

The respondent's solicitor replied on 11 May, 1993. In that letter, he revealed a misunderstanding as to the nature of the application that the applicant on the present notice of motion was then threatening, in that he anticipated that the threatened application was in the nature of one for security for costs. He wrote, however:

"'The information which has come to our attention' [I interpolate that the respondent's solicitor was then quoting a statement made by Mr. Hickey in the letter of 21 April] was provided to you on a 'without prejudice' basis in a Court ordered Mediation. We are still of the view that for your client to use this information to ground an Application for Security for Costs is quite improper.

We advise that there is no suggestion whatsoever that any of our clients are dealing or proposing to deal with their assets in a manner designed to defeat successful execution of any judgment.

Our clients are continuing to vigorously prosecute their case against your client. Furthermore our clients have not defaulted in respect of orders

made. "

This last statement is not challenged.

On 24 May, Mr. Hickey followed this with a letter referring to having learned of the sale of the two Queensland units and in which letter he sought the following:

"1. Confirmation that your client has in fact sold her two units at Atlantis West;

2.    The date for completion of any such contract;

3.    The name/s of Purchaser/s;

4. Particulars as to the deposit paid and where

such deposit is being held;

5.   How your client intends to deal with the proceeds from any such sale."

The fifth point repeated a request made in the first letter by Mr. Hickey of 21 April last.

The reply by the respondent's solicitor on 27 May, 1993 dealt with all of the demands made by Mr. Hickey in his most recent letter, save for the fifth demand as to advice as to what will be done with the proceeds of sale of the respondent's two units in the Atlantis West building. Mr. Bloom, in paragraph 20(b) of his affidavit, now provides a response to that demand. It is a partial response only as it does not reveal what the respondent then intended to do with all the proceeds of sale, nor does it reveal what she now intends to do with those moneys. It is this that the applicant seizes upon in submitting that relief should be granted on the motion. The submission is that, if the respondent has nothing to hide, she should disclose her intentions or suffer an adverse inference to be drawn that she is acting in a way which would justify the exercise of the Mareva jurisdiction against her.

I am not prepared, against the background of frank disclosure by the respondent to which I have referred, to find that her refusal to respond to this particular demand makes a case for relief that, on the evidence before me, the applicant

does not otherwise have. There are no circumstances in any of

the other evidence that colours this refusal in a way which would entitle me to infer, against the respondent, that she is now intent upon ensuring that any judgment the applicant may obtain against her will be an empty one.

Senior counsel for the applicant also relies on Mr. Bloom's failure to mention that there was a mortgage to the National Australia Bank over a property owned by a company in which the respondent was a shareholder, which had priority over a mortgage granted over that same property and to which Mr, Bloom referred in his af fidavit. But Mr. Bloom said in paragraph 21 of his affidavit:

"That company is the registered mortgagee in the sum of $250,000 over a property known as Unit 210, 1-9 Marian Street, Redfern, in the State of New South Wales, which mortgage advance is in my opinion well

secured. "

In view of his explanation in cross-examination, I do not regard his affidavit as misleading, in contrast to that of Mr. Hickey upon which the applicant relies to justify the grant of relief which it seeks. I therefore dismiss the motion.

The respondent seeks an order for taxation on an indemnity basis. There are legitimate reasons which could be advanced as to why that would be the proper order to make in this case. The applicant can be criticised, for reasons which

application on the evidentiary foundation relied upon.	I canvassed in dismissing the application, for bringing this
However, I do take into account the fact that the respondent has not responded to a request for information which may provide some slight justification for saying the applicant was entitled to raise as a matter for discussion. I also take into account the limited evidence that I have heard in relation to Mr. Hickey's approach to matters. I am not prepared, on the evidence before me, to treat this as one of those exceptional cases in which costs should be ordered on an indemnity basis. I will therefore order that the applicant on the notice of motion pay the respondent's costs, including any reserved costs of the notice of motion, to be taxed on a party and party basis, but I will give leave to the respondent to the notice of motion to tax those costs forthwith.
I certify that this and the preceding nine pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Drummond.
Associate:
Date :  21 June, 1993