Coolstar Holdings Pty Ltd v Cleary
[2006] FMCA 1442
•7 September 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COOLSTAR HOLDINGS PTY LTD v CLEARY & ORS | [2006] FMCA 1442 |
| PRACTICE & PROCEDURE – Mareva injunction – power to make – principles – arguable case – demonstrated evidence of real risk of asset dissipation – threat of travel – transfer of moneys – other court proceedings and orders. TRADE PRACTICES – Misleading and deceptive conduct – untrue representations – erroneous assumption – circumstances of alleged silence. |
| Federal Magistrates Act 1999 (Cth), s.15 Trade Practices Act 1974 (Cth), ss.51AC, 52 |
| Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 Clout v Anscore Pty Ltd [2000] FCA 727 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Donnelly v Porteous [2001] FCA 345 Fraser v NRMA Holdings (1995) 55 FCR 452 Frigo v Culhaci (unreported, NSWCA, CA 4014/98, 17 July 1998) Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 Johnson Tiles Pty Ltd v Esso Australia Limited (2000) 104 FCR 564 Matther v Luttrel Limited and Others [2003] FMCA 62 Official Trustee in Bankruptcy v Dunwoody [2004] FMCA 143 Patterson v BTR Engineering Australia Limited (1989) NSWLR 319 Pierce v Waterhouse [1986] VR 603 Taco Company of Australia Pty Ltd v Taco Bell Pty Ltd (1982) 42 ALR 177 Wily v O'Brien [2006] FMCA 941 |
| Applicant: | COOLSTAR HOLDINGS PTY LTD |
| First Respondents: | PAUL CLEARY & DAWN CLEARY |
| Second Respondent: | A PERFECT TASTE PTY LTD |
| File Number: | PEG219 of 2006 |
| Judgment of: | Lucev FM |
| Hearing dates: | 6 & 7 September 2006 |
| Date of Last Submission: | 7 September 2006 |
| Delivered at: | Perth |
| Delivered on: | 7 September 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Hammond |
| Solicitors for the Applicant: | Hammond Worthington |
| Counsel for the Respondents: | Mr A Hershowitz |
| Solicitors for the Respondents: | Jackson McDonald |
ORDERS
That the application for interim orders be dismissed.
That the applicant pay the respondents’ costs of the interim order application fixed in the sum of $2,375.00 with 42 days to pay.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG219 of 2006
| COOLSTAR HOLDINGS PTY LTD |
Applicant
And
| PAUL CLEARY & DAWN CLEARY |
First Respondents
| A PERFECT TASTE PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
(Revised from the transcript)
The application
The applicant in this matter, by application filed on the afternoon of
5 September 2006, seeks final orders pursuant to sections 51AC and 52 of the Trade Practices Act 1974 (Cth). The applicant also seeks interim orders that:(1)the first respondents be restrained from withdrawing or transferring any funds from accounts held in their names by BankWest and/or Westpac;
(2)the first respondents do file and serve an affidavit setting out where the funds paid by the applicant for the business “A Perfect Taste” have been placed, providing details of the relevant bank account type and bank account number;
(3)the second respondent be restrained from withdrawing or transferring any funds from any accounts held in its name by BankWest and/or Westpac;
(4)notwithstanding orders (1) and (2), the respondents may withdraw $2000 per week in total for ordinary living expenses,
and certain other interim orders which it is unnecessary to set out.
The interim orders sought can be characterised as being in the nature of Mareva type orders. The application for interim orders was heard on morning of 6 September 2006, at which time I reversed my decision.
Power to make Mareva type orders
The power to make Mareva orders in this Court was not disputed. Nor should it have been. Section 15 of the Federal Magistrates Act 1999 (Cth) provides for the Court to make orders, including interlocutory orders of such kinds as the Court thinks fit. Those powers include the making of Mareva type orders: Matther v Luttrel Limited and Others [2003] FMCA 62 at par 26 per McInnis FM (“Matther”), Official Trustee in Bankruptcy v Dunwoody [2004] FMCA 143 at par [19] per Rimmer FM (“Dunwoody”).
Mareva type orders – principles
The principles applicable in determining whether a Mareva type order ought issue are:
(1)that the applicant show an arguable case that judgment against the other party or parties will be obtained: Clout v Anscore Pty Ltd [2000] FCA 727 at par [6] per Drummond J (“Clout”), Donnelly v Porteous [2001] FCA 345 at par [9] per Stone J (“Donnelly”), Wily v O'Brien [2006] FMCA 941 at par [9] per Barnes FM (“Wily”);
(2)that the applicant demonstrate by real evidence, and not mere assertion, that a refusal to make the order involves a real risk that judgment in the applicant’s favour would remain unsatisfied because of concealment or dissipation of assets: Donnelly at par [9] per Stone J, Frigo v Culhaci (unreported, NSWCA, CA 4014/98, 17 July 1998) at pp 11 and 16 per Mason P, Sheller JA and Sheppard AJA (“Frigo”), Wily at par [9] per Barnes FM, Matther at par 30 per McInnis FM; and
(3)that the balance of convenience requires the making of an order: Pearce v Waterhouse [1986] VR 603 at p 605 per Vincent J, Wily at par [9] per Barnes FM.
In relation to the principles applicable to Mareva type orders I further note that the orders are:
(a)discretionary: Patterson v BTR Engineering Australia Limited (1989) NSWLR 319 at p 321 per Gleeson CJ, Dunwoody at par [20] per Rimmer FM;
(b)a drastic remedy not to be granted lightly and therefore requiring close scrutiny of the available evidence: Dunwoody at par [21] per Rimmer FM, Wily at par [9] per Barnes FM, Frigo at pp 10-11 per Mason P, Sheller JA and Sheppard AJA. See also R. Meagher, D Heydon and M Leeing, Meagher, Gummow & Lehane’s Equity, Doctrines and Remedies (4th Edn) (Sydney: Butterworths Lexis Nexis, 202) pp 800-801, par [21-445]; and
(c)if granted, only granted to the minimum extent necessary: Frigo at p 12 per Mason P, Sheller JA and Sheppard AJA, Clout at par [6] per Drummond J, Wily at par [9] per Barnes FM.
Arguable case
Is there an arguable case that judgment may be obtained by the applicant against one or more of the respondents? The applicant seeks final orders, relevantly, as follows:
(1)declaring the whole of the contract in writing dated 26 May 2006, between the applicant on the one part and the second respondent on the other part, void ab initio;
(2)that each of first and second respondents or any one or more of them do refund the applicant the sum of $182,500;
(3)further and/or in the alternative to (1) and (2) above, damages against each of the first and second respondents or any one or more of them.
The grounds for seeking those final orders are contained primarily in the affidavit of Robert Jack Thurston sworn on 5 September 2006 (“Thurston's first affidavit”). Mr Thurston is a director of the applicant: Thurston’s first affidavit, par 1. Mr Thurston asserts that at a meeting with the second-named first respondent, that is Ms Cleary, in May 2006 concerning the sale of On Site Spit Roast Caterers (“the Business”), Ms Cleary advised him as follows:
(1)the Business was formerly part of a franchise but that was no longer the case;
(2)when the second respondent acquired the Business it acquired the telephone number 1300 762 780 (“ the 1300 number”); and
(3)A Perfect Taste (the second respondent) owned the business name “Coast To Coast The Golden Roast” and that they had acquired the business name by mistake (“the Representations”).
(Thurston’s first affidavit par 10).
Mr Thurston then says that he has “since discovered” (he does not say precisely when, but I infer it must have been after settlement of the purchase of the Business on or about 12 July 2006) that:
(1)the Business was part of a franchise owned by CCGRA Pty Ltd;
(2)A Perfect Taste had no lawful entitlement to sell the Business;
(3)A Perfect Taste did not in fact own the 1300 number; and
(4)the Clearys and a Perfect Taste were in dispute with CCGRA in relation to the business and that litigation had either commenced or been foreshadowed by CCGRA against a Perfect Taste.
(Thurston’s first affidavit par 11).
Mr Thurston says that in reliance on the Representations the applicant agreed to purchase the Business from A Perfect Taste, who are the second respondents: Thurston’s first affidavit par 12. The applicant purchased the Business under a written contract of sale, the relevant parts of which for present purposes are annexure RJT3 to Thurston's first affidavit and annexure DC3 to Ms Cleary's affidavit sworn on
6 September 2006 (“Cleary’s affidavit”). The applicant paid $182,500 for the Business with settlement on 12 July 2006: Thurston’s first affidavit, pars 13 and 15. Subsequent to the purchase of the Business the applicant has outlaid significant moneys for the lease of premises from which to operate the Business and for advertising and other business expenses: Thurston's first affidavit par 16(i), (iii), (iv) and (v).In the Federal Magistrates Court in Canberra on 18 July 2006, in separate and unrelated proceedings (numbered (P)CAG 21 of 2006) (“the Canberra Court Proceedings), albeit with some seemingly common issues and possibly some common facts, Mowbray FM made the following final orders relevant to this application:
“(2)the first respondents be restrained from withdrawing or transferring any funds from any accounts held in their names by BankWest;
(3)the second respondent be restrained from withdrawing or transferring any funds from any accounts held in its name by BankWest;
(4)notwithstanding orders (1) and (2), the respondents may withdraw $2000 per week in total for ordinary living expenses;
(5)the respondents have liberty to seek to have orders (2) to (4) discharged subject to an application and an accompanying affidavit being filed and served by close of business on 26 July 2006.”
(“the Canberra Court Orders”: being annexure RJT2 to the Further Affidavit of Robert Jack Thurston sworn on 6 September 2006 (“Thurston’s further affidavit”)).
I note that the first and second respondents in the Canberra Court Orders are the first and second-named first respondents in these proceedings.
CCGRA Pty Ltd is seemingly a company owning or asserting ownership of the franchise rights to a business run under the name of “Coast To Coast The Golden Roast”. Having somehow, and it is not apparent how from Mr Thurston's first or further affidavits, being made aware of the Canberra Court Orders, it appears that Mr Thurston, on behalf the applicant, caused further inquiries to be made of CCGRA's solicitors in Canberra. As a consequence Mr Thurston was informed by his solicitor Mr Hammond that Mr Hammond had been advised by CCGRA's solicitors that:
(i)A Perfect Taste’s Business was always the subject of franchise agreement between CCGRA and A Perfect Taste. A Perfect Taste did not own the Business;
(ii)A Perfect Taste did not own and has never owned the 1300 number;
(iii)the Business is in the process of being sold to a South Australian entity; and
(iv)the Clearys had decided unilaterally that the Business was their Business.
(Thurston’s first affidavit, par 18).
Thurston says that had he known that A Perfect Taste:
(i)did not own the business and the business was the subject of a franchise arrangement;
(ii) was in dispute with the franchisee of CCGRA;
(iii) did not own the 1300 number;
(iv)did not own the business name “Coast To Coast The Golden Roast”,
Coolstar, would never have purchased the business.
(Thurston’s first affidavit, par 24).
The applicant, through its solicitors Hammond Worthington, wrote a letter to the first and second respondent's solicitors Jackson McDonald on 8 August 2006. That letter rescinded the applicant's agreement to purchase the business from the second respondent: page 4 of annexure RJT5 to Thurston's first affidavit. The final paragraph of the 8 August 2006 letter reads as follows:
In the event that your clients do not agree to refund the purchase price paid together with making good all losses, my client will commence proceedings in the Federal Court claiming inter alia misleading and deceptive conduct contrary to section 52 of the Trade Practices Act.
(page 4 of annexure RJT5 to Thurston’s first affidavit).
Counsel for the respondents, Mr Hershowitz, argued the matter, quite properly in my view, on the basis that there was an arguable case for the applicant, at least for the purposes of an interim order hearing. Naturally the respondents made no concession in respect to the ultimate disposition of the issue. The respondents also, prudently in my view, filed an affidavit from Ms Cleary disputing the essential terms of the substance of the applicant’s case, but concentrating more particularly on the substance of the interim orders sought, namely, whether or not there was a real risk of dissipation of assets.
The final orders sought rely upon a claim based on ss.51AC and 52 of the Trade Practices Act 1974 (Cth). I need only consider s.52 of the Trade Practices Act to determine if there is an arguable case for the purposes of the interim order proceedings.
Section 52(1) of the Trade Practices Act provides that:
A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(This is a model of elegant simplicity in legislative drafting. In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 at p 555 per Lockhart J it was said that the “section is expressed briefly, indeed tersely, in plain and simple words”.)
Arguably, and at this stage it is no more than that that I can or do decide, the alleged Representations might have given rise to an erroneous assumption the part of the applicant, or be such as to induce or be capable of inducing the applicant into error, in relation to the true nature or state of the Business at the time of negotiation and purchase: Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at pp 85-87 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ (“Campomar”), Johnson Tiles Pty Ltd v Esso Australia Limited (2000) 104 FCR 564, Taco Company of Australia Pty Ltd v Taco Bell Pty Ltd (1982) 42 ALR 177 at p 200 per Deane and Fitzgerald JJ (“Taco Bell”). Alternatively, they might arguably be simply untrue: Campomar at p 84 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ, Taco Bell at 202 per Deane and Fitzgerald JJ.
An arguable case might also arise by reason of the circumstances of the alleged silence of the respondents in relation to the litigation initiated by CCGRA: Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at p 88 per Samuels JA, Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at p 32 per Black CJ. This alleged silence might arguably be said to relate to information relevant and material to a proper consideration by the applicant of the nature of the business which was being purchased: Fraser v NRMA Holdings (1995) 55 FCR 452 at p 453 per Black CJ, von Doussa and Cooper JJ.
In all the circumstances, and considering only s.52 of the Trade Practices Act, it is my view that the applicant has made out an arguable case that judgment may ultimately be obtained against one or both of the respondents.
Demonstrated evidence of a real risk of asset dissipation
The evidence relied upon by the applicant to demonstrate a real risk of asset dissipation was as follows:
(a)that Mr Thurston had discovered since acquiring the business that “the Clearys threatened to leave for Dubai” allegedly prompting CCGRA to take action and obtain the Canberra Court Orders: Thurston's first affidavit, paragraph 19(iii);
(b)that during negotiations to purchase the business, Ms Cleary told Mr Thurston that “once the transaction had settled she and her husband Paul Cleary would be travelling to Dubai”: Thurston's further affidavit, paragraph 15; and
(c)that at or about the time the Canberra Court Orders were made, Thurston says he was informed by a “Phil Hoskins of Coast To Coast the Golden Roast” that “the Clearys intended leaving Australia and sought to transfer moneys from their Australian accounts to a trust account in England.” Thurston’s further affidavit, paragraph 16.
The applicant further argues that:
(a)the alleged conduct of the respondent in making the alleged Representations is itself some evidence that there is a real risk of asset dissipation;
(b)if not expressly, then impliedly, the Canberra Court Orders evidence a real risk of asset dissipation; and
(c)the respondents’ conduct in failing to have its solicitors respond to the applicant's solicitor's letter of 8 August 2006, is also some evidence of a real risk of asset dissipation.
The respondents argue that the applicant has, on the applicant's evidence, failed to demonstrate a real risk of asset dissipation. Alternatively, as I have already said, and prudently, the respondents have tendered Cleary’s affidavit. The evidence in Cleary's affidavit relied upon to show that there is not demonstrable evidence of a real risk of asset dissipation is as follows:
(a)a letter dated 5 September 2006 from the respondents’ solicitors to the applicant’s solicitors written in response to the application for interim orders stating that the first and second-named respondents “did not and do not intend to leave the country”; and
(b)an attachment to the letter of 5 September 2006, being an extract from an affidavit sworn, it seems, on 28 August 2006 by Ms Cleary in support of an application to discharge various of the Canberra Court Orders, the material parts of which for practical purposes are identical to subparagraphs (a) to (d) of paragraph 10 of Cleary's affidavit, which are as follows:
(a)No evidence has been nor could it be provided to the court to support the applicant's allegation that my husband and I intend or intended to leave Australia.
(b)My husband and I did not and do not intend to leave Australia other than for holidays from time to time of which we do not have any presently planned or for short periods related to my previous work as a travel journalist which I intend to resume.
(c)I told Trevor Blaylock that my husband and I were no longer operating a catering business and that I intended to travel to resume my work as a travel journalist.
(d) I deny that I told Trevor Blaylock or any person that
(i) my husband and/or I intended to leave Australia;
(ii) that our money was not in Australia; or
(iii) we had sent money offshore.
The respondents also argue that:
(a)if there was a real risk of asset dissipation the application would have been made ex parte and there would have been no delay, or less delay, in the making of this application; and
(b) the applicant's "evidence" is, by and large, nothing but assertion.
Travel to Dubai
Once a place less travelled to, Dubai today is a major Middle Eastern commercial centre and tourist and transit mecca:en.wikipedia.org/ wiki/Dubai#history, middle-east/united-arab-emirates/dubai. The first respondents’ alleged "threat" to "leave for" Dubai, if true, was made some time ago and certainly prior to 18 July 2006. It has not been acted upon. The first respondents remain resident in Australia. The threat evidence is, in any event, inherently unsatisfactory. Mr Thurston says "he discovered", since acquiring the Business, a threat to leave but names no source, time nor place for the discovery. The evidence is hearsay; not inadmissible on that account in an application for interim orders, but to be treated with some caution nevertheless.
Had the threat not been hearsay, or had the threat been put directly to Mr Thurston by one of the first respondents, Mr Thurston would no doubt have averred to that fact. See, for example, paragraph 9 of Thurston's first affidavit where he says clearly, "Dawn Cleary advised me". The evidence is of a threat only, it is not evidence of an act such as having booked an aeroplane ticket or tickets or hotel rooms in Dubai, or a statement indicating a flight number or a time for departure, which would indicate a positive intention to depart for Dubai. The evidence is of a threat to "leave for" Dubai, it is not evidence of a threat to leave Australia permanently. And, whether or not the first respondents were intending to leave Australia permanently, it is not evidence of an intention to dissipate any asset in Australia held by the respondents.
Similar considerations apply to the evidence that Ms Cleary told Mr Thurston that once the "transaction", which I infer to be the purchase of the business, had settled, she and Mr Cleary "would be travelling to Dubai". Moreover, as Mr Hershowitz counsel for the respondent so aptly pointed out in argument, why would the second-named first respondent tell Mr Thurston where the first respondents were going if it was their intention to permanently depart Australia and take the assets with them, or otherwise dissipate those assets prior to or post departure. That seems inherently incongruous to me.
Again, similar considerations apply to the information that "the Clearys intended leaving Australia". That information was allegedly provided "by Phil Hoskins of Coast To Coast the Golden Roast". No evidence was led as to who Mr Hoskins was or what his position was. It is unclear to me whether he is an officer or employee of CCGRA, which apparently owned the franchise of which the Business was a part on the applicant's case, or simply one of the franchisees operating under the business name Coast To Coast The Golden Roast.
Whether a person is general manager, janitor or independent franchisee might affect the weight to be attributed to the evidence. But again the evidence is inherently unsatisfactory. In this case Hoskins informant is not named and no time nor place is given for the provision of the information to Hoskins or to Hoskins informant. These deficiencies, perhaps understandable in an urgently prepared affidavit to accompany an urgently made application, are less understandable when Thurston’s further affidavit, seemingly filed to shore up the applicant's position, leaves these deficiencies unremedied.
I conclude, on the basis of the applicant's own evidence, that there is no, or no sufficient evidence, that the first respondents intend to permanently depart Australia.
This conclusion is supported by the evidence in Cleary’s affidavit. Ms Cleary denies that the first respondents, she and her husband, intend to leave Australia other than for holidays, or in her case, for work as a travel journalist. Further she denies that she told any person that she or her husband intended to leave Australia. Ms Cleary's evidence is not inconsistent with the applicant's own evidence that the first respondents would be "leaving Australia" and "leaving for" or "travelling to" Dubai. Ms Cleary directly deposes to the intentions of the first respondents, and her evidence, which I accept for present purposes, establishes that the first respondents do not intend to permanently depart Australia.
Counsel for the applicant Mr Hammond, conceded that the Blaylock "evidence", contained in a seemingly unsworn and undated affidavit annexed to Cleary's affidavit, was "speculative". I have therefore not had regard for or placed any weight on the "evidence" of Blaylock.
The evidence in relation to travel to Dubai does not constitute demonstrable evidence of a real risk of asset dissipation by the respondents.
Transfer of moneys from Australian accounts
The evidence concerning the respondents’ alleged intention to dissipate assets by the transfer of money out of Australia is limited to the information provided by Hoskins that the first respondents “intended leaving Australia and that they sought to transfer moneys from their Australian accounts to a trust account in England”: Thurston’s further affidavit, par 16.
I have already made observations as to the inherently unsatisfactory nature of that evidence in relation to the travel question. The evidence about the alleged “Australian accounts” is no more satisfactory. I note that the interim orders sought refer to accounts held in the names of the respondents by "BankWest and/or Westpac".
Apart from the Canberra Court Orders which provided that the present respondents:
Be restrained from withdrawing or transferring any funds from any accounts held in their name by BankWest,
which is itself not evidence of either the existence of such funds or such accounts, there is no evidence from the applicant of the present existence of respondents funds and specifically the money paid to the second respondent for the Business. Nor is there evidence of the existence of any accounts, save for a sentence in an email dated 19 July 2006 from CCGRA’s Canberra solicitors to a solicitor at the applicant's solicitors indicating as follows:
Yesterday, we obtained a freezing order for bank accounts held by the defendants in BankWest. I understand, indirectly, that your client has ascertained that his cheque has been paid into Westpac Bank.
(Annexure RJT4 of Thurston's first affidavit, an email from Janine Porto to Greg Milner).
It is not explained either in the 19 July 2006 email, nor in any of the applicant's evidence, how the applicant has ascertained that “his cheque”, whatever the phrase “his cheque” means, has been paid into Westpac Bank, let alone to whom it was paid, to what account, and at what branch, if any, of that bank. At the very least that information, so far as it is known to the applicant, or the indirect basis for that knowledge of the applicant, ought to have been put before the court. Further, apart from the fact that $182,500 was paid for the business, I assume from the foregoing by cheque, no further details of that transaction are provided by the applicant.
I acknowledge that the applicant appears to have been waiting further developments in the Canberra Court Proceedings. For reasons set out below, I do not consider that that was a prudent course to adopt. If there was in the applicant's view a real risk of asset dissipation, other more urgent and practical steps and preparation might have been taken between mid July and early September 2006.
I have concluded that the applicant has not established that the evidence concerning money transfers is demonstrated evidence of a real risk of asset dissipation.
That conclusion is bolstered by the evidence of Ms Cleary. She denies ever telling any person that the first respondents’ money was not in Australia or had been sent offshore: Cleary’s affidavit, par 10(d).
Respondents’ alleged conduct
The applicant argued before me that I ought consider the nature of the respondents’ alleged conduct and that that conduct was of itself evidence of a real risk of asset dissipation.
The respondent filed Cleary's affidavit which is principally directed, as I indicated earlier, to answering the question of asset dissipation issues and issues associated with departure from Australia and money transfer as a consequence thereof.
There is sufficient in Cleary’s affidavit to indicate that the substance of the issues in dispute in respect of the final order sought will be hotly contested at hearing: Cleary's affidavit pars 11-16 and 18. In those circumstances, I am not prepared to conclude on the presently available evidence that the respondents’ conduct gives rise to an inference that there is a real risk of asset dissipation.
Canberra Court Orders
The Canberra Court Orders are annexure RJT2 to Thurston’s further affidavit.
The Canberra Court Orders were made on an application by CCGRA against the present respondents. Initially the orders were made ex parte at 12.35 pm on 18 July 2006. Further orders were made following a further hearing at 2 pm that day at which (and I was informed of this from the bar table) the respondents were not legally represented. An application to discharge the orders was seemingly made by the respondents on or about 28 August 2006: Cleary's affidavit par 6 and annexure DC1. It now appears that the Canberra Court Orders have been discharged and that the issues in dispute have been "resolved" between CCGRA and the respondents in the Canberra Court Proceedings who are the respondents in these proceedings.
There is no evidence before me of the evidence Mowbray FM took into account in making the orders, nor of the nature of the cause of action in the Canberra Court Proceedings. And whilst, by reason of the Canberra Court Orders, I must take it that there was a real risk of asset dissipation such as to possibly frustrate an enforcement of judgment demonstrated in that instance, it does not follow that there is a real risk of asset dissipation in this case. Indeed, I have found already that there is no evidence to support such a claim at this stage based on the primary evidence led by the applicant. I respectfully venture to suggest that it is very risky for a potential party to an application to ride in the wake of other proceedings particularly where the potential party, the applicant in the proceedings, is not a party to the other proceedings. The risks inherent in such an approach, adopted by the applicant, are obvious from the events of the last few days.
It is not sufficient for the applicant to say, as its counsel Mr Hammond argued, that the applicant was comforted by the existence of the Canberra Court Orders. In my view, the Canberra Court Orders were "miserable comforters": Bible (King James Version), Job 16:2, for the applicants. The Canberra Court Orders did not apply to any account at the Westpac Bank, which the applicant's own evidence suggests, albeit weakly, was the bank that the applicant's funds for the purchase of the Business were deposited to, and which was one of the two banks in respect of which it sought orders in this application.
I cannot in the circumstances conclude that the Canberra Court Orders provide any evidence of a real risk of asset dissipation in this application.
Respondents’ solicitor's failure to respond to the applicant's solicitor's letter of 8 August 2006
The applicant argues that I might draw an inference of asset dissipation from the respondents’ failure to respond to the applicant's solicitor's letter of 8 August 2006: Thurston's first affidavit: annexure RJT5.
In terms, the letter did not call for a response, more pertinently it did not foreshadow an application for interim orders of a Mareva type. Once this application was served on the afternoon of 5 September 2006, the respondents’ solicitors wrote forthwith challenging the basis for the application: Cleary’s affidavit annexure DC1. In those circumstances, I decline to draw any inference adverse to the respondents from the failure of the respondents’ solicitors to respond to the applicant's solicitor's letter of 8 August 2006. There is no evidence of a risk of asset dissipation on this basis.
Respondents’ further argument
Having regard to the findings that I have already made, it suffices to say that I agree generally with the respondents’ arguments that if there was a real risk of asset dissipation the application would have been brought ex parte and there would have been no delay, or certainly less delay in its making, and that the applicant's evidence is by and large nothing but assertion.
Conclusion on asset dissipation
Overall, there is in my view, no demonstrable evidence of a real risk of asset dissipation in this case.
Balance of convenience
It is not necessary in view of my prior conclusion to address the balance of convenience.
Applicant’s position and listing
The allegations that are made in the application for interim orders, which obviously flow over to the final orders are, in my view, serious. I do have regard for Mr Thurston's financial position which on the evidence in his further affidavit, if not quite perilous, is certainly no mean burden for what appears to be a businessman operating his own small business and carrying a $600,000 mortgage, a significant part of which relates to funds which were used for the purchase of the Business in dispute in these proceedings.
In those circumstances I intend to ensure that this matter is listed with priority, subject of course to the views of the parties.
Orders
The orders that I intend to make are as follows:
(1)that the application for interim orders be dismissed;
(2)that the applicant pay the respondents' costs of the interim order application fixed in the sum of $2,375.00 with 42 days to pay.
I will hear counsel as to the final basis and quantum of the costs order.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate:
Date: 28 September 2006
7
13
2