Fairfield Pastoral Holdings Pty Ltd v Ridge Estate Pty Ltd
[2019] FCA 536
•2 April 2019
FEDERAL COURT OF AUSTRALIA
Fairfield Pastoral Holdings Pty Ltd v Ridge Estate Pty Ltd [2019] FCA 536
File number: SAD 312 of 2018 Judge: WHITE J Date of judgment: 2 April 2019 Catchwords: PRATICE AND PROCEDURE – interim freezing orders made previously – application for a further freezing order to be made – importance of the adequacy of the undertaking as to damages – evidence before the Court does not indicate that the undertakings as to damages are of substance or worth – application dismissed. Cases cited: Heartwood Architectural Timber & Joinery Pty Ltd v Redchip Lawyers [2009] QSC 195 Date of hearing: 2 April 2019 Registry: South Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 14 Counsel for the Applicants and Cross‑Respondents: Mr S Ower SC Solicitor for the Applicants and Cross Respondents: 1878 Elix Lawyers Pty Ltd Counsel for the Respondents and Cross‑Claimants: Mr T Cox SC with Mr S Hagivassilis Solicitor for the Respondents and Cross‑Claimants: Charlton Rowley ORDERS
SAD 312 of 2018 BETWEEN: FAIRFIELD PASTORAL HOLDINGS PTY LTD ACN 603 973 584
First Applicant
FAIRFIELD PASTORAL HOLDINGS NO 1 PTY LTD ACN 600 365 544
Second Applicant
AND: RIDGE ESTATE PTY LTD ACN 165 731 706
First Respondent
STEVEN PHILIP VAN NIEKERK
Second Respondent
PHILIP FREDERIK VAN NIEKERK (and another named in the Schedule)
Third Respondent
AND BETWEEN: RIDGE ESTATE PTY LTD ACN 165 731 706 (and another named in the Schedule)
First Cross-Claimant
AND: FAIRFIELD PASTORAL HOLDINGS PTY LTD ACN 603 973 584 (and another named in the Schedule)
First Cross-Respondent
JUDGE:
WHITE J
DATE OF ORDER:
2 APRIL 2019
THE COURT NOTES THAT: The Applicants and Cross-Respondent undertake to the Court and to the Respondents and Cross-Claimants that the settlement of the contract dated 26 February 2019 for the sale of Lot 2, 252 Piney Ridge Road, Brukunga, South Australia (Lot 2) to Jonathan Michael Bayes will not take place, and that they will otherwise preserve, retain and not dispose of the property located at Lot 2, other than on seven days written notice.
THE COURT ORDERS THAT:
Freezing Order
1.The application in paragraph 2 in the claim for interlocutory relief contained in the Originating Application filed on 18 December 2018 and amended on 21 December 2018 by which the Applicants sought a freezing order against the First Respondent be dismissed.
2.The Freezing Order made on 19 March 2019 be discharged with immediate effect.
3.The Applicants pay the First Respondent’s costs of and incidental to paragraph 2 in the application for interlocutory relief contained in the Originating Application of 18 December 2018 as amended on 21 December 2018.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
EX TEMPORE REASONS FOR JUDGMENT
WHITE J:
By series of orders made at a number of hearings, commencing with the ex parte hearing on 18 December 2018 and continuing to 19 March 2019, the Court has ordered the freezing of the assets of the first respondent, Ridge Estate Pty Ltd (Ridge Estate). These have all been in the nature of interim orders. Today the Court heard substantive submissions from both sides with respect to the application. The current interim order, which was made on 19 March 2019, expires at 10 am tomorrow and hence the desirability of the Court giving a decision now, rather than reserving judgment on the application.
The parties were agreed as to the principles to be applied by the Court on such an application. They are, in any event, settled in a number of the authorities. I proceed on the basis that the applicants have the onus of establishing that they have a good arguable case against Ridge Estate and, further, that there is a real danger of its assets being removed, disposed of, dealt with or diminished in value in a way which would frustrate the execution of process in the event that they are successful in obtaining a monetary judgment against it.
The parties’ evidence and submissions have canvassed a number of matters bearing upon each of those two issues. In the view which I take, it is not necessary for the Court to refer to that evidence or to those submissions for the purpose of dealing with the applicants’ current application.
Another important consideration in relation to the issue of a freezing order is the Court’s satisfaction that the undertaking for damages, which (other than in exceptional cases) is an essential requirement for the making of the order, be an undertaking of worth. The importance of the adequacy of the undertaking has been emphasised in a number of the authorities, including in Heartwood Architectural Timber & Joinery Pty Ltd v Redchip Lawyers [2009] QSC 195 at [39] and following, to which counsel for the respondents referred.
The two applicants are corporate entities and they have proffered undertakings. The adequacy of their undertakings is a real issue. The Court has information regarding the financial position of the first applicant only. That indicates that, as at 30 June 2018, the first applicant’s assets comprised $2 in cash and a loan of just under $750,000 which it has made to the second applicant. As the Court does not have any evidence as to the financial position of the second applicant, the value of that asset, that is to say, the prospect of it being recovered, cannot be ascertained.
The question of the adequacy of the two undertakings provided by the applicants was raised at the ex parte hearing on 18 December 2018. Counsel then informed the Court that he was not aware of any reason why the Court should be concerned about the value of the undertaking from the two corporate applicants and I accept that that was so at that time. The Court did, however, in the discussion with counsel, commend to him that the Court be provided with a further affidavit establishing the adequacy of the undertakings as to damages. The applicants have not provided an affidavit directed to that topic.
The applicants were put on further notice that the adequacy of the undertakings was a live issue by the outline of submissions which counsel for the respondents handed up during the hearing on 1 March 2019. By [20] of that outline, counsel submitted that, in the event that the Court determined that a freezing order should be made, it should be a condition of the order that the applicants give security for the undertakings.
The applicants were put on further notice of the issue by the filing and service of the affidavit of the respondent’s solicitor on 6 March 2019, which annexed a copy of the financial report of the first applicant as at 30 June 2018. It was that report which disclosed the financial position of the first applicant to which I referred earlier.
At the hearing today, counsel for the applicants said that, in addition to the two undertakings from the applicants, Mr Hamilton, the principal of the applicants, offers a personal undertaking to support the undertaking as to damages. However, on questioning, counsel acknowledged that there was no evidence before the Court on the basis of which it could conclude that that undertaking is one of substance or worth.
In some circumstances, the Court may be willing, having regard to the information before it regarding the identity of the individual, his or her occupation and associated matters, to infer that the undertaking is likely to be one of worth. However, in my view, that inference is not appropriate presently. That is because of the evidence before the Court suggesting that Mr Hamilton is “financially stretched” and so may not have the necessary resources if called upon to honour the undertaking.
It is not necessary for me to refer in any detail to all the evidence bearing on this issue. It includes Mr Hamilton’s own statement in an email of 30 June 2017 sent at 4.15 am that he was now “at my limit”. He stated matters indicating that his circumstances were so troubling that he was then unable to sleep. Considered by itself, it might be said that the Court ought not attach too much significance to that single email, but its tenor is consistent with the context of a whole series of emails between Mr Hamilton, on the one hand, and Mr Steven Van Niekerk on the other. Those emails suggest strongly that Mr Hamilton’s personal financial position is “tight”. Another indication is Mr Hamilton’s apparent inability to provide the funds to settle on the purchase of properties located by Mr Steven Van Niekerk.
It is telling that Mr Hamilton has not deposed to matters indicating that his proffered undertaking can be regarded as one of worth.
In these circumstances, the Court does have the assurance, which it should have on applications of the present kind, that, in the event that the applicants’ claims fail and the undertakings as to damages are called upon, Ridge Estate will be recompensed for any losses which it suffers by reason of the freezing order having been in place.
For those reasons, I decline to issue a further freezing order.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White. Associate:
Dated: 17 April 2019
SCHEDULE OF PARTIES
SAD 312 of 2018 Respondents
Fourth Respondent:
BRENDA LYNN VAN NIEKERK
Cross-Claimants
Second Cross-Claimant:
STEVEN PHILIP VAN NIEKERK
Cross-Respondents
Second Cross-Respondent
ANDREW HAMILTON
Third Cross-Respondent
FAIRFIELD PASTORAL HOLDINGS NO 1 PTY LTD ACN 600 365 544
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