Commonwealth of Australia v Zador, I

[1991] FCA 395

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	No. NG557 of 1990

)

GENERAL DIVISION )

BETWEEN:  COMMONWEALTH OF AUSTRALIA

Applicant

IMRE ZADOR

Respondent

28 JUNE 1991

REASONS FOR JUDGMENT

LOCKHART J.

This is a motion by the applicant, the Commonwealth of Australia, for a Mareva injunction against two respondents, Imre Zador (to whom I shall refer as Dr Zador), the first respondent, and Rainbow Pastoral CO Pty Limited (to which I shall refer as Rainbow), the second respondent. Rainbow is joined solely as a party to the motion, it is not a party otherwise to the principal proceeding.

health insurance scheme under the I f e a l t h Insurance Act 1973 (Cth) .	Commonwealth pursuant to its administration of the Medicare
The amount of the overpayment claimed in the proceeding is
$408,991.70, together with interest and costs. The overpayments
are alleged to have been made during the period 1 February 1984 to 4 July 1989.
There is another proceeding on foot in this Court which is of some relevance to the recovery proceeding. Dr Zador commenced proceedings pursuant to the A d n l i n i s t r a t i v e D e c i s i o n s ( J u d i c i a l
R e v i e w ) A c t 1977 ("the ADJR A c t " ) against the Federal Minister
for Community Services and Health in this Court on 30 October
1990, being proceeding G619 of 1990. That proceeding is in the
nature of an application for an order of review and was heard by another Judge of this Court in April, May and June of this year, and on 4 June his Honour reserved his decision subject to the receipt of written submissions of counsel for Dr Zador. Judgment has not yet been delivered. The result of the ADJR A c t proceeding will have a bearing on the future course of the recovery proceeding, but it is unnecessary for present purposes
to examine that question.
It is well established that this Court has jurisdiction to grant what is generally known as a Mareva injunction. The remedy is discretionary. As a general rule an applicant must show first

The proceeding in which the injunction is sought, to which

I shall for convenience refer as "the recovery proceeding", was

commenced in the High Court of Australia on 22 June 1990 and subsequently remitted to this Court by order of the Chief Justice of the High Court on 15 August 1990. That proceeding involves a clalm for repayment by Dr Zador to the Commonwealth of overpayments said to have been made to Dr Zador by the

a prima facie cause of action against the respondent, and secondly, a danger that by reason of the respondent absconding or of assets being removed from the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the applicant, if he succeeds, will be deprived of the fruits of his judgment; see Jackson v S t e r l i n g I n d u s t r i e s L i m i t e d (1987)

162 CLR 612; R i l e y McKay P t y L i m i t e d v McKay [l9821 1 NSWLR 264;

S t e r l i n g I n d u s t r i e s v NIM S e r v i c e s P t y L i m i t e d ( 1986 ) 12 PCR 164

and P a t t e r s o n v BTR E n g i n e e r i n g ( A u s t ) L t d (1989) 18 NSWLR 319.

The claim of the Commonwealth in the recovery proceeding may be summarised as follows. Dr Zador, it is said, was at all material times a practitioner within the meaning of the H e a l t h

I n s u r a n c e Act 1973 (Cth) ("the Act"). The Commonwealth paid to

Dr Zador money purportedly by way of benefit or payment under the Act on various dates and in various amounts between 1 February 1984 and 4 July 1989. Those payments were said to have been made as a result of the making of certain statements by or on behalf oi Dr Zador which are said to be false or misleading. The particulars of the alleged false or misleading statements are said to be contained in claims made by Dr Zador on various dates for benefits or payments under the Act in respect of medical services provided by him. It is said that those statements were

made by reference to medical services set out in the relevant	table to the Act, but that the medical services were not in fact
provlded by Dr Zador. It was also said that the statements did not claim the requisite benefit or payment by reference to the medical services set out in the table. Other complaints are made in relation to the statements said to have been Furnished by Dr Zador, which ground the Commonwealth's claim to the moneys to which reference has already been made. The Commonwealth asserts that in the result the amounts paid by it to Dr Zador exceed the amounts which should have been paid by a sum in excess of $400,000. The Commonwealth puts it case against Dr Zador on various alternative bases including moneys paid under mistake of fact.
There have been various directions hearings in the recovery proceedings in this Court; and affidavits have, pursuantto those directions, been filed by the Commonwealth in support of its case. I have perused those affidavits over the luncheon adjournment and the pleadings and am satisfied that the Commonwealth has established a prima facie case in the sense in whlch that expression is used in the decided cases with reference to the grant of interlocutory injunctions including Mareva injunctions. Whether the Commonwealth will ultimately succeed in its case is a matter on which I have no view, especially as the evidence filed appears to be confined to that filed by the Commonwealth.
The evidence as to the second requirement for a Mareva on 27 June 1991, cross-examination of two of those deponents and injunction is derived from affidavits filed by the Commonwealth
some exhibits. Dr Zador is a man of 75 years of age, with uncertain health. He was in practice as a medical practitioner in Sydney. In fairly recent times he ceased to carry on that
practice. The premises in which he carried on his practice are
In Woollahra and were owned by a company, Inkeri Investments Pty
Llmited. Inkeri is a trustee of a family trust for Dr Zador and his family so far as I can glean from the evidence. Dr Zador holds 100 of the 1200 issued shares in its capital, the remaining 1100 being held by his wife. In 1989 Inkeri sold the Woollahra
property. Inkeri owned a second piece of real estate, namely a
house known as number 12 Pine Hill Avenue, Double Bay, which was the home of Dr Zador and his wife. That property was sold in October last year for about $1.1 million. The use to which the proceeds of sale was put is not clear, but approximately one half of those net proceeds appears to have been lent by Inkeri to Dr Zador and a loan account raised accordingly in the company's books. On 4 April 1991 Inkeri was wound up as a members voluntary winding up by resolution of Dr Zador and his wife.
Another company, Kongoola Pty Limited, an investment company, has 1000 issued shares of which one is held by Dr Zador, another by his wife and the remaining 998 by a company, Hermoni Pty Limited, about which the evidence reveals nothing relevant. Dr Zador and his wife are the two directors of Kongoola. On 20 October 1989, Kongoola was wound up as a members voluntary winding up by its shareholders and Dr Zador himself appointed as
Whether it still owns the land is not clear from the evidence. liquidator. It owned a small parcel of land at Morriset.
There is a third company involved in the matter, namely the second respondent, Rainbow. There are 10 issued shares in the capital oi Rainbow, three are held by Dr Zador and seven by his wife. Dr Zador is also a director of Rainbow and his wife is the other director. Rainbow owns two pieces of real estate, one in the Gosford region which appears to have a value of not less than
$1 million, but the evidence of value is so scant that little
reliance can be placed upon it in this proceeding.	There is some

evldence to suggest that it may be worth substantially more. It appears to have some subdivisional potential. The other block of land is in Lower Portland in the Windsor region.

Dr Zador and his wife are of European extraction and enjoy living in Europe, Mrs Zador prefers to live there. They have a daughter who lives in Geneva. Dr Zador lived in France over the past eight years or so from time to time for extended periods. He has in recent times left Australia for Europe more than once and returned here. On 18 March, Dr and Mrs Zador left Australia; Dr Zador returned here on 11 May but left Australia again on 1 June 1991. Dr Zador appears to work in some capacity for Ansett Transport Industries Limited involving his working both in Australia and Europe, but the precise nature of his work and the terms of his employment are not clear.

I am not satisfied that Dr Zador has absconded or intends to abscond. I am satisfied, however, that the assets of Dr Zador

have been dealt with and may be dealt within the future in some way that if the Commonwealth succeeds in the recovery proceeding it will not be able to have its judgment satisfied. I rely on the following matters to support this conclusion:

(a)	the sale in 1989 of the building in which Dr Zador conducted his practice by a company in which he is a shareholder;
(b)	the sale by the same company of his former home in Double Bay in October last year and the realisation of the sale price of over $1 million;
(c)	the voluntary winding up of that company requiring his consent on 4 April last;
(d)	the voluntary winding up of Kongoola on 26 October 1989 of which he is a shareholder and director and now its liquidator;
(e)	his association and family links with Europe, and his and his wife's having lived there for substantial periods of time in recent years and his most recent departure earlier this month from Australia;
(f)	his no longer being in practice in Australia as a medical practitioner, notwithstanding some engagement by Ansett in
more recent times.

Accordingly, the orders I propose are as follows:

1. That the first respondent be restrained until further order from disposing of or dealing in any manner whatsoever with any

of his assets within the Jurisdiction including removing any such

assets from the jurisdiction and including any shareholding or any other legal or equitable interest in the second respondent.

2. That the first respondent be restrained until further order from exercising any powers vested in him in relation to or in furtherance of the disposal of any assets of the second respondent until further order.

3. That the second respondent by itself, its servants and

agents be restrained until further order:

(a)	from disposing of or dealing in any manner whatsoever with any of its assets whether such assets be within or outside the jurisdiction;
(b)	in the case of any such assets within the jurisdiction from removing such assets from the jurisdiction;

including without limiting the generality of (a) and (b) hereof,

the following:

(i) the freehold property being lot 181 in deposited plan 755251 (folio identifier 181/755251) (New South Wales) being property in the City of Gosford, Parish of Patonga, County or Northumberland, or (if the same has been sold) the net proceeds of sale thereof after discharge of mortgage including any moneys payable to any party hereto in respect of such property; and

(ii) the freehold property being lot 1 in deposited plan 567200 (folio identifier 1/567200) (New South Wales) being property in Lower Portland, Shire of Baulkham Hills, Parish of Cornelia, County of Cumberland, or (if the same has been sold) the net proceeds of sale

thereof including any monies payable to any party
hereto in respect of such property.

4. That as an exception to orders 1, 2 and 3, the first

respondent and the second respondent may dispose of or deal with his or its assets upon terms consented to in writing by the applicant or the applicant's solicitor.

5 . That the first respondent and the second respondent and each of them do disclose the full value of his and its assets within the jurisdiction of this Court, identifying with full particularity the nature of all such assets and their whereabouts and whether the same be held on his or its own names or by nominees or otherwise on his or its behalf and the sums standing in any account such disclosures to be verified by affidavits to

be made by the respondents, and in the case of the second

respondent by its proper officer and served on the applicant's

solicitor within 14 days of service of a sealed copy of these
orders.

6. That liberLy to apply be reserved to all parties generally

on two days notlce including any motion to discharge or vary any
of these orders.

7. That the costs of this motion be the applicant's costs in

the proceeding.

I certify that this and the preceding nine (9) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Dated: 28 June 1991

Counsel for the Applicant	M. Beazley QC
Solicitors for the Applicant :	Australian Government Solicitor
Counsel for the Respondent	Mr Masterman QC and 1.1s Stuckey-Clark
Solicitors for the Respondent:	Esplins
Date of Hearing	28 June 1991

Date of Judgment 28 June 1991