Coolstar Holdings Pty Ltd v Cleary - [2006] FMCA 1442

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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] FMCA 1442
Decision Date: 7 September 2006

CaseChat Overview and Summary

In the case of Coolstar Holdings Pty Ltd v Cleary, the applicant sought interim orders including a Mareva injunction to prevent the respondent from dissipating assets in the context of ongoing proceedings related to alleged misleading and deceptive conduct. The Federal Circuit and Family Court of Australia was tasked with deciding whether the applicant had demonstrated a sufficient case to warrant such an order. The central legal issue before the court was whether the applicant had established a prima facie case of asset dissipation sufficient to justify the grant of a Mareva injunction, alongside the broader question of whether there was a real risk of the respondent removing assets from the jurisdiction. The court also needed to consider the principles governing the granting of such injunctions, including the requirement for a demonstrated likelihood of success at trial.

The court found that while there were allegations of misleading and deceptive conduct and instances of money transfers, the applicant had not established a sufficiently arguable case to meet the threshold for a Mareva injunction. The court emphasised the necessity for a demonstrated risk of asset dissipation, supported by clear and compelling evidence. The applicant's evidence was deemed insufficient to establish such a risk, particularly in light of the respondent's lack of direct access to the assets in question. The court also noted the absence of any demonstrated threat of travel by the respondent, a critical factor in the grant of a Mareva injunction. Consequently, the application for interim orders was dismissed, and the applicant was ordered to pay the respondents' costs of the application.

In dismissing the application for interim orders, the court made it clear that the applicant had not met the necessary burden of proof. The applicant's evidence was considered insufficient to demonstrate a real risk of asset dissipation or the respondent's intention to remove assets from the jurisdiction. Furthermore, the court underscored the importance of a strong evidentiary foundation when seeking a Mareva injunction. The applicant was ordered to pay the respondents' costs of the interim order application, which were fixed at $2,375.00, with 42 days to effect payment.

Orders

Orders of the court

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.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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