Dixon & Webster v Liddy No. DCCIV-01-835, DCCIV-01-433

DIXON & WEBSTER v LIDDY
[2002] SADC 143
Judge Muecke
Civil

By application dated 5 September 2002 in the matter of Adam Dixon v Peter Michael Liddy (Action No. 835 of 2001) the defendant sought the following orders:
1.That the Court discharge the order in the nature of a Mareva injunction granted at first instance by Judge Smith on 19 June 2001 and subsequently varied on 19 October 2001 and 19 November 2001.
2.In the alternative, that the Court vary the order in the nature of a Mareva Injunction granted by His Honour Judge Smith, at first instance on 19 June 2001, and subsequently varied on 19 October 2001 and 19 November 2001 by deleting paragraphs 1.2, 1.3, 1.4, 1.5, 2, 3, 4, 5, and 6 contained in the order of 19 November 2001, and inserting the following paragraphs:
2.     That any funds in the Westpac bank account Number 735‑047 66‑2455 (hereinafter referred to as “the bank account”) in the name of the defendant be maintained with Eugene McGee as a signatory but that the defendant PETER MICHAEL LIDDY be restrained from accessing in any way the funds in the said bank account.
3.     That McGee Solicitors on behalf of the defendant, be at liberty to pay by cheque out of the bank account, such accounts and disbursements in connection with criminal proceedings involving the defendant particularised herein, as are approved by a Judge or Master of this Court privately in chambers as being appropriate having regard to the principles enunciated in DPP v Saviour James Vella (1993) 61 SASR 379 at 382 per King C.J., such criminal proceedings being:
3.1Preparation for and conduct of the defendant’s applications for leave to appeal against the jury’s decision in his Supreme Court trial, and the sentence imposed by that Court.
3.2Preparation for and conduct of the appeals to the Court of Criminal Appeal against conviction and sentence.
3.3Preparation for and conduct of the defendant’s application for special leave to Appeal to the High Court of Australia.
4.     That McGee Solicitors on behalf of the defendant, be at liberty to pay by cheque out of the bank account, such accounts and disbursements, in connection with all past and future legal expenses and necessary disbursements incurred by the defendant in the conduct of all legal proceedings with respect to the following matters, as are authorised by a Judge or Master of this Court privately in chambers as being appropriate. Such legal proceedings being:
4.1All civil proceedings currently on foot before this court such proceedings being as follows:
Civil Actions
Martin v Liddy  Action No. 172/00
Minnear v Liddy  Action No. 360/00
Mills v Liddy  Action No. 320/00
McGrath v Liddy  Action No. 998/01
Coventry v Liddy  Action No. 1085/01
Dixon v Liddy  Action No. 835/01
Young v Liddy  Action No. 834/01
Webster v Liddy  Action No. 433/01
Adelaide Central Mission v Liddy     Action No. 0996 of 2002
Criminal Injuries Compensation:
Young, Paul Victor  Action No. 660/01
Martin, Andrew Joseph  Action No. 620/02
Mills, Byron Heath  Action No. 619/00
Minnear, Martin  Action No. 618/00
Webster, Andrew  Action No. 589/02
5.      That McGee Solicitors on behalf of the defendant, be at liberty to pay by cheque out of the bank account, such accounts and disbursements, as have been incurred with maintaining the property referred to in paragraph 1.1 of this order, being the items set out in schedule A of this order.
6.     That McGee Solicitors on behalf of the defendant, be at liberty to pay by cheque out of the bank account, future accounts and disbursements in connection with maintaining the property referred to in paragraph 1.1 of this order up to a total of $2000.00 per quarter, (such period to commence forthwith) and such additional expenses beyond $2000 per quarter as are first approved in writing by a Judge or Master of this court.
7.     That McGee Solicitors on behalf of the defendant, be at liberty, forthwith, to pay by cheque out of the bank account, the amount of $14,700.00 to Coralie Liddy.
8.     That an amount of $2,000.00 per annum be set aside for the period of 18 years, or such term of non-parole as is determined by the Court of Criminal Appeal, for the personal use of the defendant, with such amount to be placed in a bank account to be accessed by the defendant or his nominated person.
Paragraph 4 of the proposed alternative variation of the injunction identifies certain civil proceedings which have been commenced in this Court. Nine “Civil Actions” and five “Criminal Injuries Compensation” actions are referred to. One is the action in which this application was brought. Another is an action in which Andrew Gary Webster is plaintiff and Peter Michael Liddy is defendant (Action No. 433 of 2001). Injunctions in both those actions currently exist and have for some time. Those injunctions “protect” the defendant’s assets “on behalf of” all plaintiffs who have brought proceedings against the defendant (with the possible exception of Adelaide Central Mission).
On 5 June 2001 the defendant was found guilty by a jury of a number of sexual offences he committed against certain of the plaintiffs who have brought proceedings against him in the civil and criminal injuries compensation jurisdictions of this Court. The defendant was convicted of those offences. His conviction was upheld by the South Australian Court of Criminal Appeal and by the High Court of Australia. He was sentenced by the Trial Judge to a head sentence of 25 years imprisonment for all the offences for which he was convicted. A non-parole period of 18 years imprisonment was fixed. An appeal against that sentence has been heard by the South Australian Court of Criminal Appeal. That Court has reserved its decision on that appeal.
The offences for which the defendant was convicted and sentenced were in respect of offences committed against only some of the abovenamed plaintiffs and in respect of only some of the allegations made by those plaintiffs in the civil and criminal injuries compensation proceedings. In all of the civil actions the plaintiffs require and have sought extensions of time within which to bring their proceedings, pursuant to section 48 of the Limitation of Actions Act, 1936. Some of the actions were commenced before the defendant’s convictions and some were commenced after.
By an ex parte application brought on 14 June 2001 Adam Dixon sought an interlocutory injunction from this court to restrain the defendant from removing from the jurisdiction, disposing of, securing in any way or otherwise dealing with in any manner his assets. The affidavit relied on for such an injunction referred to a then recent advertisement in which a property at Kapunda, which was allegedly owned by the defendant, was on the market for sale. The affidavit also referred to reports that the defendant was alleged to have purchased a property in Wallaroo under the alias of Peter Dix. Further, the affidavit referred to a public report that the defendant was alleged to be receiving significant superannuation payments. Finally, the affidavit referred to instructions of Adam Dixon and those of the abovenamed plaintiffs for whom Tindall Gask Bentley, Solicitors were acting, that they were concerned that the defendant intended, and had been taking steps, to liquidate assets and dispose of all or some of those assets, or to transfer them and hold them in a fictitious name, or to remove them from the jurisdiction so as to render nugatory any judgment Adam Dixon and others may obtain. A later affidavit annexed a search from the Lands Titles Office of Adelaide which showed that Peter Dix of 47 East Terrace, Gawler was the registered proprietor of a property at Wallaroo which had been purchased on 4 September 2000 for $43,000.00
The ex parte application for a restraining order (Mareva injunction) came on before a judge of this Court on 15 June 2001. The judge directed that the proceedings be served upon the defendant or his legal representative, and adjourned the matter to 18 June 2001.
On 18 June 2001 the parties appeared before that judge by their legal representatives. It was submitted on behalf of the defendant that the defendant’s property at Kapunda had been on the market for the better part of two years. Furthermore, the property at Wallaroo (which was said to be actually in Kadina) was under the name of Peter Dix and that fact had been raised earlier before Nyland J (the Supreme Court justice before whom the defendant had been tried by jury). Nyland J had been advised that the defendant had taken advice from the Lands Titles Office as to whether he could legally acquire that property in an assumed name. It was submitted that that was done because it was anticipated that if an application for separate trials was not granted, the publicity would be such that the defendant could not obtain respite from such publicity if he purchased a property in his own name. It was submitted that the address at Gawler was the defendant’s legitimate address. It was submitted that “(f)ar from being an attempt to shift and conceal assets, it’s about a $35,000 stone settler’s cottage. If you’re going to seriously try and shift assets, that’s not the sort of property you would acquire.” It was submitted that at a certain point in the police investigation it was not tenable for the defendant to stay at Kapunda any longer. It was also no longer possible for the defendant to go to church at Kapunda because of what had happened in the investigation. He therefore “sought the opportunity of being able to attend service somewhere, and that’s why he purchased the property at Kadina under the name of Dix so that he could attend Sunday services there”.
It was further submitted on behalf of the defendant that he had no choice about the sale of the Kapunda property because of a debt he owed his solicitors. That asset had to be liquidated to pay legal expenses.
Following submissions, the judge took the view that there was sufficient material before him at least to make an interim order by way of a Mareva injunction. His Honour indicated that he was satisfied that the action instituted by the plaintiff had been brought on reasonable grounds; that the property or assets referred to in the affidavits, and the defendant’s other property unspecified, may be required to satisfy judgment which may be given in the action; and that there was a substantial risk the defendant will dispose of the property before any judgment or enforcement of it. Accordingly, he made certain orders by way of a Mareva injunction over the defendant’s assets. He gave the defendant liberty to apply.
One of the orders made was that the defendant do file and serve an affidavit disclosing with full particularity his assets as at the date of swearing the affidavit and stating certain details about those assets.
Applications by the defendant in both of the matters of Adam Dixon and Andrew Webster came on before another judge of this Court in July and August 2001. The judge was informed of several discussions that had occurred between the legal representatives of the two plaintiffs and the defendant by which they had attempted to reach some agreement so as to ensure that funds of the defendant were available so that he could conduct the appeals in the criminal proceedings and the proper conduct of the civil proceedings commenced against him. Reference was made to terms of a draft order to vary the Mareva injunction and to a Memorandum of Understanding which was to be signed by the solicitors for the two plaintiffs and the defendant.
On 19 October 2001 the matters came on before the judge who originally made the Mareva injunction on 18 June 2001. The judge was informed that between the three sets of solicitors there had been exchanged a document called a Memorandum of Understanding, which was supported by an exchange of letters between the solicitors, “setting out the spirit in which the assets of Mr Liddy are going to be valued, disposed of and the proceeds utilised”. The Memorandum of Understanding and the letters were said to be private to the parties. The judge was asked to make and did make variations to the original Mareva injunction by consent. One variation required the defendant to file and serve an affidavit disclosing with full particularity information as to superannuation policies previously held by him and the transfer of monies to his bank account as a result of the redemption of such policies and the use of such monies after the transfer. The order was also varied to include an order that:
The disposal of the defendant’s assets or the use of the defendant’s money with the consent of the plaintiffs’ solicitors (which consent shall not be unreasonably withheld) shall not constitute a breach of this order.
Also on 19 October 2001 the judge made orders by consent by way of a Mareva injunction in the matter of Andrew Webster v Peter Liddy (Action No. 433 of 2001). This injunction was in identical terms to the Mareva injunction, as varied on 19 October 2001, in the matter of Adam Dixon v Peter Liddy (Action No. 835 of 2001) (with the exception of an undertaking as to damages). After 19 October 2001 the proceedings relating to the Mareva injunctions were heard in both actions together, although the application to discharge, or alternatively to vary, the Mareva injunction that was heard by me was filed only in the matter of Adam Dixon. It was understood, however, that any decision on the application in the matter of Adam Dixon would apply to the matter of Andrew Webster (and indeed the other plaintiffs).
On 19 November 2001 the solicitors for Adam Dixon, Andrew Webster and the defendant again attended before the same judge. By consent, the judge again varied the Mareva injunction, this time to allow the defendant to sell his Kapunda property and the contents of it. The Mareva injunction was not otherwise varied except to allow the defendant further time to file and serve the affidavit regarding superannuation.
On 24 December 2001 the defendant’s solicitor swore and filed an affidavit. She referred to the Court’s order of 18 June 2001 by which she said the defendant was to file and serve an affidavit disclosing with full particularity information as to superannuation policies previously held by him and the transfer of monies to his bank account as a result of the redemption of such policies and the use of such monies after the transfer. They were not in fact the terms of the order made on 18 June 2001. The original order made on that date required an affidavit disclosing all the defendant’s assets. In her affidavit she referred to it being agreed between the solicitors for the parties on 19 October 2001 that she file the superannuation information referred to above, for and on behalf of the defendant, in the form of an affidavit. Any such agreement must have been reached after the Court made the order varying the Mareva injunction on 19 October 2001 because such order included an order that the defendant file and serve his affidavit containing the above information. The solicitor’s affidavit then deposed to the fact that, on the defendant’s instructions, she had conducted full investigations of all superannuation policies that he had ever held and investigations into the transfer of monies into the defendant’s bank account and the use of such monies after the transfer.
The affidavit discloses that the defendant commuted 100% of his pension to a lump sum on 11 February 2000. A payment of about $785,900 was made to a particular superannuation fund on that date. There was the sum of approximately $737,300 remaining in two superannuation policies held by the defendant after plan fees and tax were paid.
The affidavit refers to expenditure disclosed by the relevant bank statements of the defendant for the period 31 December 1999 to 29 June 2001. Without including weekly drawings of $500 per week made by the defendant between 11 February 2000 and 18 June 2001, and disregarding individual withdrawals of less than $3,300 (which she was instructed would have related to the defendant’s normal living expenses) the solicitor calculated that a total debit of about $679,700 occurred on the account between 11 February 2000 and the making of the Mareva injunction on 18 June 2001. Those expenditures included the following:
·24 February 2000 - cash donation to Kadina Catholic Church in respect of their overdraft - $30,000
·24 February 2000 - sum paid to clear outstanding debts of defendant on credit cards - $24,700
·24 February 2000 - sum to discharge mortgage on Kapunda property - approximately $99,800
·31 August 2000 - sum to purchase Moonta property - approximately $42,600
·A sum which cannot be specifically identified due to the defendant’s incarceration and failing health - approximately $15,600.
These sums total $212,700. Finally, the affidavit discloses that the balance of the account as at 18 June 2001 was approximately $2,100. The defendant’s solicitor deposes to the fact that the balance of the sum of about $679,700 (namely $464,900) “were utilised by the defendant in preparing and conducting his defence of the criminal charges in the Supreme Court of South Australia and all associated costs thereto”. The defendant had paid other such costs direct to certain creditors.
By an ex parte application dated 21 August 2002 the defendant sought an order that the Court approve payment of legal expenses and necessary disbursements incurred by the defendant in the conduct of legal proceedings with respect to his application for leave to appeal against the jury’s decision in the Supreme Court trial, and the sentence of the Court; the appeals to the Court of Criminal Appeal against conviction and sentence; and his “right to exhaust all rights of appeal against a criminal conviction or sentence of a Court, including his Application for Special Leave to the High Court of Australia”. In the affidavit in support of the application the defendant’s solicitor referred to the confidential Memorandum of Understanding signed by the legal representatives of the defendant and of various parties in civil actions in this Court. The affidavit stated that the Memorandum of Understanding was not exhibited to the affidavit, nor were the accounts that were required to be approved, in order to maintain confidentiality of the agreement. The application came before a judge of this Court ex parte on 22 August 2002. The judge adjourned consideration of the application to 3 September 2002. On that day, the plaintiffs Adam Dixon and Andrew Webster were represented by solicitors. The application was again adjourned.
The application that is now before me was filed on 5 September 2002, in the matter of Adam Dixon, Action No. 835 of 2001. It first came on before me on 10 September 2002. I was told by a solicitor from Tindall Gask Bentley that that firm was ceasing to act for the various plaintiffs for whom they acted in their actions against the defendant. Mr Andrew Martin appeared and I received from him a letter written by him to the defendant’s solicitor dated 10 September 2002. That letter raised a number of matters and by it, and in his submissions to me, Mr Martin asked for an adjournment of the defendant’s application relating to the Mareva injunction in order to allow him and his fellow plaintiffs, previously represented by Tindall Gask Bentley, to appoint new legal representatives. Mr Darren McGrath also appeared before me. He told me he was not sure if he was still represented by Tindall Gask Bentley. Following further submissions I adjourned consideration of a number of matters raised during submissions for mention on 17 September 2002.
On 17 September 2002 submissions were again made as to legal representation of the plaintiffs. Mr Andrew Webster was represented by a solicitor who had always represented him. One issue that was raised was the fact that arrangements had been made for three of the plaintiffs who resided interstate to return to Adelaide within the ensuing two weeks to be examined by a psychiatrist for the purpose of their civil and other actions against the defendant. I adjourned further consideration of the matters raised.

By an application filed on 19 September 2002 Tindall Gask Bentley sought orders declaring that that firm ceased to be the solicitors acting for a number of plaintiffs. On Monday 23 September 2002 I listed those applications to be heard at 2.15 pm on Thursday 26 September 2002. I also indicated that I would, at that same time and date, make any orders by consent to vary the Mareva injunction to enable the psychiatric examinations of three plaintiffs by Professor Goldney to proceed by releasing funds for the payment of Professor Goldney’s fees.
On 26 September 2002 I made an order by consent to vary the Mareva injunction to allow “the defendant’s money to be used to pay the costs of the independent medical examination at the request of the defendant pursuant to Rule 61.02 of (eight) plaintiffs … by Professor Goldney …”. Also on that day I granted the applications made by Tindall Gask Bentley, Solicitors and declared that that firm had ceased to be the solicitor for each of the parties in each of the actions in which they had previously been instructed. I adjourned the defendant’s application to discharge, or alternatively to vary, the Mareva injunction for hearing on 11 October 2002.
On 11 October 2002 the solicitor who had appeared before me on behalf of the plaintiffs previously represented by Tindall Gask Bentley on the application of that firm of solicitors to cease to act told me that he did not have instructions to act for those plaintiffs on the defendant’s application to discharge or vary the injunction. He told me, however, that they all had indicated to him that they opposed the application by the defendant to discharge the injunction, and in the absence of representation they would adopt and rely on the submissions to be put by counsel for Andrew Webster. They asked that the injunction be extended at least until they had been able to arrange representation.
I then heard submissions from counsel for the defendant and for Mr Webster on the application itself.
An affidavit of the defendant’s solicitor dated 5 September 2002 had been filed to support the application. That affidavit indicated that as at 19 June 2001 the defendant had a balance of about $2,100 remaining in his bank account and that the solicitor was aware of no other cash that belonged to him. She stated that the “orderly sale of (the defendant’s) house and contents (at Kapunda) was not only a source of money for him to pay his lawyers in the criminal and civil proceedings but it was also the principal source of monies to pay compensation to such of his alleged victims as might be successful in the civil proceedings that they had instituted”. She said that it “was recognised by those involved advising the defendant that there was an understandable wish on the part of each of the plaintiffs to ensure that such funds that might become available were not expended without appropriate checks and balances”.
She referred to raising with solicitors for the plaintiffs in August 2001 that within the defendant’s house at Kapunda there were contents belonging to his mother. She had been instructed that their value was $14,700. She had communicated that value to both solicitors. She told them that the valuation of the contents and the house included items belonging to the defendant’s mother which, upon the sale of the defendant’s house and contents, she would require the payment of $14,700. That amount has never been paid to the defendant’s mother for the sale of her items contained within the defendant’s house.
She stated that in accordance with a clause in the Memorandum of Understanding dealing with expenses incurred in relation to the civil proceedings, she had, from time to time, presented various accounts to both of the solicitors for the plaintiffs. Those presented to the plaintiffs’ solicitors have been verified by them, and payment has been made out of the bank account into which the proceeds of the sale of the house and its contents had been paid.
She further stated that, in accordance with another clause in the Memorandum of Understanding relating to expenses incurred in the defendant’s criminal proceedings, she had submitted accounts to a judge of this Court on two occasions in December 2001 “for his approval in accordance with the principles enunciated by King CJ in DPP v Saviour James Vella, a judgment of the South Australian Court of Criminal Appeal”. I infer those accounts were approved.
She referred to the impracticability for her to get accounts in relation to expenses associated with the various civil proceedings approved in accordance with the Memorandum of Understanding as a result of Tindall Gask Bentley ceasing to act for their former clients. She referred to difficulties she had encountered in arranging for the attendance of certain plaintiffs on a psychiatrist nominated by the defendant for examination and report.
She referred to a final bill of account with respect to the criminal proceedings being currently before another judge of this Court as a result of the ex parte application filed on 21 August 2002.
She referred to difficulties she had encountered in respect of legal representation for the defendant by counsel, and of embarrassment regarding outstanding legal accounts and disbursements. She referred to the cost and time that would be involved in taxing legal costs. She indicated that it would cost several thousand dollars to tax the costs which were the subject of the ex parte application for this Court’s approval of the final costs in the defendant’s criminal proceedings.
During submissions before me the defendant’s counsel gave me an unsigned affidavit of the defendant which is said to be dated 17 April 2001. I was given an assurance that the affidavit accords with the defendant’s instructions to his solicitor. The affidavit was said to be consistent with the material that was put before this Court on 18 June 2001 as to the reasons the defendant purchased a house at Kadina in October 2000 in a fictitious name. It was also submitted that it was important because the date the affidavit bears precedes the application for the Mareva injunction, which application was made on 14 June 2001. The other document I was handed was a copy of the defendant’s bail agreement dated 12 July 1999. The defendant’s address on that document appears as 47 East Terrace, Gawler. That is the same address of Peter Dix who is shown in public documents to be the purchaser of the Kadina house.
On behalf of the plaintiff, Andrew Webster, I had two affidavits before me. One was sworn by the plaintiff Andrew Webster and the other, a confidential affidavit, was sworn by Mr Webster’s solicitor. That was said to be confidential on the basis that it referred to what the parties had at one time agreed to be a confidential Memorandum of Understanding. That Memorandum was not part of the material that was put before me for the purpose of deciding this application. I have not seen or read it.
Mr Webster’s affidavit contains information regarding the charges upon which the defendant was convicted and what occurred at his trial. The solicitor’s affidavit sets out the background upon which instructions were given by Mr Webster which led to his proceedings against the defendant. It is asserted that the “factual substratum of (the) convictions (against the defendant) would entitle (Mr Webster) to apply to enter, at the very least, a partial judgment against the defendant in the civil case under Rules 25.02 and 25.03”. It is asserted that Mr Webster has a strong case for being granted an extension of time in which to bring the proceedings. The affidavit refers to the background against which he executed the Memorandum of Understanding, and the giving of his consent to the order made by a judge of this Court on 19 October 2001.
The solicitor also refers to an alleged agreement between the defendant’s solicitor and the solicitor for Adam Dixon and himself that the defendant’s solicitor would file an affidavit relating to superannuation issues. The solicitor did not agree with the recollection of the defendant’s solicitor in that respect. He had expected that, whilst the defendant’s solicitor would make all relevant enquiries, the defendant would ultimately swear the affidavit. He asserts that he has, since the time of the affidavit in December last year, sought clarification with respect to the disposition of the defendant’s superannuation. He asserts that it appears from the affidavit that approximately $460,000 was paid by the defendant for legal costs prior to the granting of the Mareva injunction in June 2001.
As to the time subsequent to the Mareva injunction of that date, he refers to the sale of the defendant’s house and contents at Kapunda for $500,000, the net proceeds from which, in mid-December 2001, were $497,479. He had been advised by the defendant’s solicitor that approximately $157,000 of the net proceeds of sale has been used by the defendant for his defence of the criminal and civil proceedings. As at August 2002 the sum remaining in the pool was approximately $317,000. He had been advised that the defendant’s solicitors had outstanding fees owing in the sum of $37,461. He referred to sums alleged to be owed to the defendant’s mother. He had indicated he would not consent to that sum being paid without further information.
He referred to a hearing before another judge of this Court to which I have already referred. That related to the ex parte application for the release of further funds from the pool of assets of the defendant. The costs which were the subject of that application have not been provided to him.
The affidavit summarises the grounds upon which the application to discharge or vary the Mareva injunction is opposed by the plaintiff Mr Andrew Webster.
I now refer to the provisions of the District Court Act and to certain authorities relating to Mareva injunctions.
Section 31 of the District Court Act provides for restraining orders. It provides as follows:
(1)A Court may make an order (a “restraining order”) preventing or restricting dealing with property of a defendant to an action if –
(a)the action appears to have been brought on reasonable grounds; and
(b)the property may be required to satisfy a judgment that has been, or may be, given in the action; and
(c)there is a substantial risk that the defendant will dispose of the property before judgment is given, or before it can be enforced.
….
(4)The Court may vary or revoke a restraining order at any time.
The section empowers this Court to make what is commonly known as a “Mareva” injunction. By the application before me the defendant seeks an order revoking, or alternatively varying, the restraining order (Mareva injunction) to which I have already referred, and in the manner to which I have referred.
Although it appears that the Mareva injunction was made in this case without there being full argument, the Judge who made it considered that the circumstances required by section 31(1) were satisfied. In particular, he was satisfied that there was a substantial risk that the defendant would dispose of the property the subject of the Mareva injunction before any judgment or enforcement of it. It was submitted that, in determining whether the Mareva injunction should now be revoked, I should consider and determine whether the circumstances referred to in section 31(1) now exist. It was submitted by the defendant’s counsel that the plaintiffs had not discharged an onus on them to satisfy me that the circumstances required by section 31(1) now exist.
It was not submitted on behalf of the defendant that the actions brought against the defendant were not brought on reasonable grounds (section 31(1)(a)). Neither was it suggested that the property the subject of the Mareva injunction may not be required to satisfy any judgment that may be given in the actions (section 31(1)(b)). The defendant’s counsel concentrated his submissions on whether the persons who had the benefit of the Mareva injunction had established that it was more probable than not that there is now a substantial risk that the defendant will dispose of the property the subject of the injunction before judgment is given, or before it can be enforced.
The purpose of a Mareva injunction and the circumstances in which it might be appropriate to order such an injunction has been the subject of much judicial comment.
It has often been said that it is an exceptional remedy that should not lightly be granted. One circumstance in which a Mareva order may be made is where there is a danger of assets being disposed of so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied. The function of a Mareva injunction is to minimise the possibility of an unscrupulous defendant seeking to render itself judgment-proof or to dispose of assets in a manner prejudicial to the plaintiff’s ability to satisfy any potential judgment debt in the action. The purpose is to prevent the abuse or frustration of the process of the Court in relation to matters coming within its jurisdiction (Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 623).
In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 Gleeson CJ said (at 321-322):
The remedy is discretionary, but it has been held that, in addition to any other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
In Glenwood Management Group Pty Ltd v Mayo (1991) 2 VR 49, 53 Young CJ said that the Court will look to the effect rather than the purpose of the defendant’s conduct in determining whether the Court’s processes have been abused or frustrated.
In Neat Holdings v Karajan Holdings Pty Ltd (1992) 8 WAR 183, at 185, Ipp J said:
In PerthMint v Mickelberg (No 2) [1985] WAR 117 Burt CJ (at 118) approved of the remarks of Kerr LJ in Z Ltd v A – Z [1982] 1 QB 558 at 585, where his Lordship said:
‘[A] Mareva injunction should be granted but granted only, when it appears to the court that there is a combination of two circumstances. First, when it appears likely that the plaintiff will recover judgment against the defendant for a certain or approximate sum. Secondly, when there are also reasons to believe that the defendant has assets within the jurisdiction to meet the judgment, in whole or in part, but may well take steps designed to ensure that these are no longer available or traceable when a judgment is given against him.’
Burt CJ said, further, in Perth Mint v Mickelberg (No. 2) (at 118):
‘The true basis for exercise of the jurisdiction, I think, is to render the administration of the law effective and to prevent abuse and not when expressed in general terms to protect the interests of the plaintiff.’
Mareva injunctions are directed against dispositions which are intended to frustrate or to have the necessary effect of frustrating the plaintiff in his attempts to seek an appropriate remedy through the courts: see State Bank (Vic) v Parry (unreported, Supreme Court, WA, Library No 7408, 22 November 1988).
The plaintiff is, accordingly, required to establish an intention on the part of the defendant to dispose of his assets so as to defeat the claims of creditors and to ensure that any judgment obtained by the plaintiff would be unsatisfied: See Perth Mint v Michelberg (No. 2); State Bank (Vic) v Parry.
In considering the making of a Mareva order the Court must exercise caution to take care to see that no order is made which would be oppressive to the persons restrained either in the carrying on of business or in everyday life (TSB Private Bank International SA v Chabra (1992) 1 WLR 231, 241).
In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, the majority of the High Court referred at page 403 to the reality that the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made. It operates as a species of security over property, to which the contempt sanction is attached.
It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct.
We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard A-JA) in Frigo v Culhaci (Unreported; 17 July 1998, at 10-11. See also the observations as to the need for care by Dixon J, with respect to the writ of ne exeat colonia in Glover v Walters (1950) 80 CLR 172 at 175-176.):
“[A Mareva order] is a drastic remedy which should not be granted lightly …
A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to (110) ‘provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant’s insolvency’ … Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319.”
Another reason, unfortunately rarely adverted to in the cases, for care in exercising the power to grant a Mareva order is that there may be difficulties associated with the quantification and recovery of damages pursuant to the undertaking if it should turn out that the order should not have been granted. These matters were the subject of discussion by Aickin J in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1979) 146 CLR 249 at 260 et seq; affd (1981) 146 CLR 306. A further question to which a Mareva order gives rise is the identification of the events to trigger its dissolution or an entitlement to damages. So far as this is possible, some attention to that question should be given at the time that the order is framed in the first instance.
The High Court also referred to discretionary considerations which should carefully be weighed before an order is made (at paras 53ff).
Also in Cardile, Kirby J said, (at 425ff):
… such orders have been developed as much to protect and defend the court’s process from abuse as to protect and defend the interests of the potential judgment creditor. This point was made in Canada in Grenzservice Speditions GesmbH v Jans (1995) 129 DLR (4^th) 733 at 755 where Huddart J observed:
“The Mareva and Anton Piller orders were conceived not so much to protect plaintiffs as to protect the court’s jurisdiction against defendants bent on dissipating or secreting their assets or evidence in order to render inconsequential the judicial process against them.”
Later Kirby J said (at 427ff) that asset preservation orders are –
… interlocutory orders, subservient to the main proceedings but potentially vital to their utility. The grant of such relief is discretionary. They must often be provided (or withheld) in urgent circumstances where a propensity to shift assets, apparently to defeat a judgment, has already been manifested. The plaintiff must establish a real risk of assets being disposed of (Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 at 668-669). No such relief should be contemplated without the provision of an undertaking as to damages (National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277). This is protective both of the defendant and of non-parties made subject to such orders. It acts as a sanction against ill-considered applications or unjustified orders.

Kirby J also said (at 428):
The fact that the orders are interlocutory does not relieve the court asked to make them of the obligation to consider their utility and the ultimate right of the judgment creditor to gain access to the assets and property made the subject of them. However these considerations require that a very large measure of latitude be allowed to judges as to when they consider it ‘appropriate’ to provide such relief, with the aim of protecting the position of an actual or potential judgment creditor and the process of the court itself. Few judges, asked for such orders, have the luxury of the extended reflection availed of by appellate courts. In expressing the applicable principles, we should not overlook the practical exigencies in which orders of this kind are typically made.
Finally, Kirby J said (at 429):
“To the extent that orders for the preservation of property impede the use by a party of its assets beyond that which is essential to the purposes of the preservation, it oppresses the party bound, exposes it needlessly to risk of punishment for contempt, ties up its affairs and finds no justification in either of the reasons which have given birth to this remedy (Iraqi Ministry of Defence v Arcepey Shipping Co SA [1981] QB 65 at 72-73; Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 at 276; Marine Atlantic Inc v Blyth (1993) 113 DLR (4^th) 501 at 504).
These authorities indicate the following about Mareva injunctions:
(1)Being interlocutory in nature, they are subservient to the main proceedings but are potentially vital to their utility.
(2)Whilst discretionary, they are to be exercised with a high degree of caution and not be granted lightly.
(3)They should only be granted where there is a prima facie cause of action against the defendant.
(4)They should only be granted where there is a danger that the defendant’s assets will be dealt with in a way which may result in the plaintiff not being able to have his judgment satisfied if he is successful in his action.
This last matter has been expressed in a variety of ways in the authorities to which I have referred. Reference is variously made to the defendant’s assets being removed from the jurisdiction, being disposed of within the jurisdiction, being dealt with in some fashion, being dissipated, being secreted, being shifted apparently to defeat a judgment, or being put beyond the reach of the court if an order is not made. Reference is also made to assets being disposed of with the intention to frustrate, or having the necessary effect of frustrating, a plaintiff in his attempts to seek an appropriate remedy through the courts; or being disposed of by the defendant so as to defeat the claims of a creditor and to ensure that any judgment obtained by a plaintiff would be unsatisfied.
One issue that I consider arises in this case is whether the authorities establish that this court’s jurisdiction to order a Mareva injunction only arises where a plaintiff can establish, on the balance of probabilities, that there is a substantial risk that the defendant to these proceedings will, if the Mareva injunction is not maintained, dispose of his remaining property, that he has an intention to so dispose of them, and that he has such an intention in order to frustrate the plaintiffs in these actions from recovering against any judgment obtained by them against him.
I do not consider that these propositions can properly be drawn from the authorities. Obviously, Mareva injunctions are designed to be available to plaintiffs who can establish the subjective intentions of a particular defendant. But I do not consider that the availability of the Mareva injunction is confined to circumstances where a plaintiff can establish such subjective intentions.
Section 31(1)(c) of the District Court Act refers to there being a substantial risk that the defendant will dispose of property which may be subject to a Mareva injunction before judgment is given. I do not consider that those words, nor the authorities to which I have referred, confine the availability of restraining orders to circumstances where a court is satisfied that there exists an unscrupulous defendant who consciously and intentionally has or will seek to render himself judgment-proof against a deserving plaintiff. I consider that whilst a defendant’s purpose may be important in certain cases, the effect of a defendant’s conduct in other cases will be sufficient to ground the making of a Mareva injunction regardless of his purpose or motive (see particularly Glenwood Management Group Pty Ltd v Mayo (1991) 2 VR 49 and the cases cited at page 53).
In this case the affidavit evidence establishes that in the 16 months prior to the Mareva injunction being ordered on 18 June 2001 all but $2,100 was expended of a sum of approximately $737,300, being the net proceeds received by the defendant in February 2000 from superannuation policies. Of that expenditure, nearly $100,000 was spent to pay off the defendant’s mortgage on his Kapunda house, approximately $42,600 was paid to purchase the Moonta property, and approximately $465,000 was spent in preparing and conducting his defence of the criminal charges in the Supreme Court and associated costs. It appears that the balance of the expenditure comprised about $55,500 which were weekly drawings of $500 by the defendant and other expenditure of less than $3,300; about $24,700 which was used by the defendant to pay outstanding debts on his credit cards; about $15,600 which was spent by the defendant on unidentified expenditure; and $30,000 which was paid by the defendant as a cash donation to the Kadina Catholic Church in respect of their overdraft. These four sums, which were spent by the defendant in a 16 month period, total $125,800.
Whilst the affidavit evidence that was put before me on behalf of the plaintiffs does not suggest directly that any part of that sum of $125,800 was expended in a conscious attempt by the defendant to render himself judgment-proof against deserving plaintiffs in the civil proceedings instituted against him, the payments do indicate the level of the defendant’s expenditure for private purposes. They also indicate that in the past the defendant has been prepared to expend large sums of money for other purposes. I particularly instance the cash donation of $30,000 to the church on 24 February 2000, in the same month that the defendant commuted 100% of his pension to a lump sum.
The affidavit evidence also establishes that the net proceeds of the sale of the defendant’s Kapunda house was approximately $497,500. Those proceeds included, of course, the nearly $100,000 that the defendant had paid on 24 February 2000 to discharge the mortgage on that property. Of the sum of approximately $497,500 there was remaining as at August 2002 a sum of approximately $317,000. It appears that the majority of the difference in these two sums of $180,500 is accounted for by the payment of legal costs incurred in the defendant’s criminal and civil proceedings. Further legal costs of about $37,500 have been incurred which have not been paid. I infer that those costs have been incurred in the civil and criminal injuries compensation proceedings to which I have referred earlier in these reasons. There is another sum of $14,700 which is said to be owing by the defendant to his mother. Furthermore, there is a sum or sums which are said to represent the defendant’s final bill of account in respect of his criminal proceedings which is currently before another judge of this Court. The defendant is seeking approval to pay this sum or these sums pursuant to the Memorandum of Understanding and letters by which it is said that the parties have previously agreed a basis for approval by a judge of this Court. I do not know the extent of the costs which are being sought to be approved in that way.
It appears clear, however, that from the remaining pool of cash funds of about $300,000, there is potentially a significant sum which has already been incurred by way of legal fees, and another significant sum is said to be owing by the defendant to his mother.
Because of the expenditures to which I have referred, there is little doubt in my mind that if the injunctions are discharged, whatever debts are said by the defendant to be outstanding to his solicitors and counsel, to his mother, and to other alleged creditors, will be immediately paid thus significantly diminishing the few remaining cash funds and other asset that may be available to pay any judgments given for the plaintiffs in these two actions and in the other actions. Furthermore, I consider that there is a substantial risk that the defendant would expend his remaining resources in other ways, perhaps similar to the large donation he made in February 2000. There is, in addition, a significant risk of the defendant’s house at Moonta being sold and the proceeds spent before any such judgment. The result would be that these and the other plaintiffs would not be able to have their judgments satisfied should they be successful in their actions against the defendant.
I am therefore satisfied, on the evidence that has been put before me, that all the pre-conditions of section 31 currently exist.
I am also satisfied that matters relevant to the exercise of my discretion favour the plaintiffs. Whilst I acknowledge the submission by the defendant’s counsel that the original Mareva injunction was made without full argument as to the law, the injunctions in both actions have now been in place for about 16 months. They have been varied with the consent of the parties, and on the part of those involved in advising the defendant in recognition “that there was an understandable wish on the part of each of the plaintiffs to ensure that such funds that might become available were not expended without appropriate checks and balances”.
I consider that it is important to discretionary considerations that the parties have thus far conducted themselves, and their proceedings before this Court relating to the Mareva injunctions, in a largely co-operative way, and in ways that recognise some of the practicalities involved, and the justice of their respective positions.
For those reasons, I am satisfied that the pre-conditions of section 31 of the District Court have been established by the plaintiffs, and that the discretionary matters relevant to whether or not I should discharge the Mareva injunction favour the plaintiffs. Accordingly, I refuse the defendant’s application to discharge the Mareva injunction.
I will hear the parties as to the defendant’s application to vary the injunction.

[2002] SADC 143

12 November 2002