Commonwealth v Ling

[1993] FCA 25

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JUDGMENT No.

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) NO. G 1 8 2 of 1 9 9 2
GENERAL DIVISION

BETWEEN	:	THE COMMONWEALTH OF AUSTRALIA
Applicant

AND NOEL LING tradina as AUSTRALIAN TEFL CENTRE AND AUSTRALIAN TEFL COLLEGE

10 FEE 1993

FEDERAL COURT First respondent

AUSTRALIA

PRINCIPAL

REQISTRV ,-	AUSTRALIAN TEFL COLLEGE PTY LIMITED
Second respondent

C O W :  Beaumont J .

m:  2 February 1 9 9 3

EX TEMPORE REASONS FOR JUDGMENT

Before the Court is a notice of motion filed on 2 November 1 9 9 2 on behalf of the first respondent seeking a variation of certain interlocutory orders made in this matter. These proceedings and other related proceedings between the Commonwealth and parties associated with the first respondent and parties not associated with the first respondent are complex and I will not attempt to state at this stage the several issues tendered on the pleadings as they now stand. It will suffice to say that there have already been a series of directions hearings in all the matters which total something in the order of 13 sets of proceedings and that the principal proceedings have been fixed for hearing in August of

this year before myself as the trial Judge.

For present purposes the relevant history of the matter is as follows. On 7 April 1992 Davies J made certain orders ex parte which included an order made in para. 7 that the first respondent forthwith upon being notified of this order direct the office of the public Trustee in the State of Queensland to hold (subject to any further order of the Supreme Court of Queensland) the sum of $850,000 and to deal with that money only in accordance with either (a) any further order of the Court; or (b) a written direction signed by both the applicant and the first respondent or their respective solicitors.

On the return of the proceedings in the first
instance, on 23 April 1992, the respondents appeared and
, Davies J made further orders on an interlocutory footing, by

consent and without admissions. Those orders included a Mareva injunction in the usual form, which restrained the respondents until the final hearing of the matter from

Australia, any of their assets therein, or selling, charging	removing, or causing or permitting to be removed from
or any way dealing with, or causing or permitting any of those things to be done to any of their assets wherever situated. However, there was a proviso imposed on the operation of this order, again in the usual form, to the effect that the order was not to prevent (a) the first respondent paying ordinary living and business expenses; (b) the second respondent carrying on the ordinary course of its business; and (c) the respondents paying reasonable legal expenses as incurred in these proceedings.
Order 2 made by Davies J on 23 April 1992 was in similar terms to the order made in para.7 of the order dated 7 April 1992 to which reference has already been made.
It should be explained, at this stage, that the sum of $850,000 referred to in order 2 made on 23 April 1992, is an amount which is the subject of an order made by Cooper J on
5 March 1992 when a judge of the Supreme Court of Queensland.
In proceedings brought by the Director of Prosecutions of the State of Queensland under the provisions of the Crimes 1Conf iscation of Profits) Act 1909 /1990 (Qld. ) his Honour ordered by consent, but without admission, inter alia, that a certain fund held by the Public Trustee of Queensland being an amount of $850,000 be held by the Public Trustee until certain unregistered leases over property in Queensland were placed in
was authorised to pay the whole of the fund to the first registrable form and registered whereupon the Public Trustee respondent.
The notice of motion presently before this Court seeks only to vary the order made in para.2 on 23 April 1992. In essence the variations sought is that the amount of
$850,000 be paid to the solicitors for the first respondent
who in turn are to be authorised to pay the sum of $55,000 to the first respondent's former solicitors in respect of the present proceedings and the sum of $53,242.74 to the first respondent's present solicitors, also in respect of these proceedings.
It was further sought to vary the existing order by providing that the balance of the said sum of $850,000 be held by the solicitors for the first respondent and in the absence of objection on behalf of the Commonwealth the balance could be applied in whole or in part in payment of the reasonable accounts of the first respondent's solicitors for acting in the present matter.
I have heard full argument yesterday and at the conclusion of yesterday's proceedings I stood the matter over to this morning because senior counsel for the Commonwealth indicated at the conclusion of yesterday's proceedings that it was proposed on behalf of the Commonwealth to seek an
behalf of the Commonwealth. It was appropriate that the amendment of the application and statement of claim filed on
respondents be given an opportunity to consider the detail of the amendments proposed.
The proposed amendments arise in the following context. It is common ground that the order made in para.1 of the orders dated 23 April 1992 is a Mareva injunction in the usual form. However, it is not clear that the orders made in para.2 were intended to be picked up as part of the Mareva injunction and in particular it is not clear on the face of para.2, if looked at in isolation, that the proviso to para.1, which as I have said is in the usual form in the case of a Mareva injunction, applied to para.2 as well.
The particular point that arises for construction is whether, given the absence in literal terms of such a proviso in para.2, it was nonetheless an implied term of that paragraph that there be a proviso in similar terms. In my opinion, if it be assumed for the moment that para.2 is itself intended to operate as a Mareva injunction, such an implication should be made. As I have said, it is a usual proviso to the operation of a Mareva injunction, for reasons which are obvious and fair, that there be an exclusion from the operation of the restraint imposed by any Mareva injunction of those assets which are necessary for the respondent to live, carry on his, her or its business and to
pay reasonable legal expenses in defending the proceedings at hand. Upon the assumption that para.2 is intended to operate
as a Mareva type of injunction, I would make that implication.
However, the matter does not end here because, during the course of argument, senior counsel for the
Commonwealth indicated that he wished to support an injunction in the terms of para.2, not only on the footing that it was a
Mareva style of injunction, but on a broader footing. The submissj.on was that an order in the terms of para.2 was justified on an interlocutory footing upon the basis that the Commonwealth alleged as a substantive cause of action that it was entitled to trace, as a matter of proprietary right, by way of a claim to the fund of $850,000 itself. I expressed yesterday the view that such a claim did not, on the face of the pleadings as they then stood, appear to have been pleaded.
The significance of such a cause of action and the significance of a claim for interlocutory relief made in aid of such cause of action is that the usual proviso to the operation of a Mareva injunction would not of course be appropriate. If it be the case that the Commonwealth can establish that it has an arguable or prima facie claim that the sum of $850,000 is in equity its own property, then the rationale for the exclusion from the terms of any interlocutory injunction along the lines of sub-paras.(a), (b) and (c) in para.1 of the order made on 23 April 1992
disappears.
This of course would not be the only consideration. It would be necessary to turn to the balance of convenience but, on the face of it, if the Commonwealth were able to establish an arguable claim to trace through a proprietary claim to the sum of $850,000 it may be that it would be appropriate for the court to restrain any dealing with that sum absolutely up to and including the hearing of the
principal proceedings (see the discussion by A.A.S. Zuckerman "Mareva and Interlocutory Injunctions Disentangled" (October 1992) 109 L.Q.R. 559 at 560-1).
In that context, the present application to amend the pleadings has been made. Mr Donald, the solicitor for the respondents, has indicated that he needs time to consider this amendment and it is only appropriate that he be given that time. I therefore propose to stand the matter over in the first instance to 11 February at 9.30 am when this matter and the other related proceedings are fixed for a further directions hearing. On that occasion I will expect that the respondents will indicate their attitude to the application to amend the pleadings that I have mentioned.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumofi-L

Associate

Dated: 2 February 199

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