Festive Productions Ltd v Jones
[2012] WASC 226
•17 MAY 2012
FESTIVE PRODUCTIONS LTD -v- JONES [2012] WASC 226
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 226 | |
| Case No: | CIV:1863/2012 | 17 MAY 2012 | |
| Coram: | EDELMAN J | 17/05/12 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Freezing order made | ||
| B | |||
| PDF Version |
| Parties: | FESTIVE PRODUCTIONS LTD ROBIN ANDREW JONES |
Catchwords: | Practice and procedure Freezing order Rules of the Supreme Court 1971 (WA) O 52A Principles applicable to granting of freezing order Practice and procedure Freezing order Freezing order in support of prospective judgment in English High Court of Justice Whether prospective judgment registrable under the Foreign Judgments Act 1991 (Cth) Whether leave required to serve outside jurisdiction Leave granted to serve outside jurisdiction |
Legislation: | Foreign Judgments Act 1991 (Cth), s 5, s 6 Foreign Judgments Regulations 1992 (Cth) Limitation Act 1980 (UK) Rules of the Supreme Court 1971 (WA), O 10 r 1A, r 7, O 52A r 2, r 5, r 7 Senior Courts Act 1981 (UK), s 19(1) |
Case References: | BCBC Singapore Pte Ltd v PT Bayan Resources TBK and Kangaroo Resources Ltd [2012] WASC 170 Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271 Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188 Society of Lloyd's v Marich [2004] FCA 1502 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ROBIN ANDREW JONES
Defendant
Catchwords:
Practice and procedure - Freezing order - Rules of the Supreme Court 1971 (WA) O 52A - Principles applicable to granting of freezing order
Practice and procedure - Freezing order - Freezing order in support of prospective judgment in English High Court of Justice - Whether prospective judgment registrable under the Foreign Judgments Act 1991 (Cth) - Whether leave required to serve outside jurisdiction - Leave granted to serve outside jurisdiction
Legislation:
Foreign Judgments Act 1991 (Cth), s 5, s 6
Foreign Judgments Regulations 1992 (Cth)
Limitation Act 1980 (UK)
Rules of the Supreme Court 1971 (WA), O 10 r 1A, r 7, O 52A r 2, r 5, r 7
Senior Courts Act 1981 (UK), s 19(1)
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Result:
Freezing order made
Category: B
Representation:
Counsel:
Plaintiff : Mr J C Vaughan
Defendant : No appearance
Solicitors:
Plaintiff : Chew & Matthews
Defendant : No appearance
Case(s) referred to in judgment(s):
BCBC Singapore Pte Ltd v PT Bayan Resources TBK and Kangaroo Resources Ltd [2012] WASC 170
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271
Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133
Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188
Society of Lloyd's v Marich [2004] FCA 1502
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- EDELMAN J:
(This judgment was delivered orally at the conclusion of the hearing on 17 May 2012 and has been edited from the transcript.)
Introduction
1 This is an application for (i) a freezing order and (ii) service of the order out of the jurisdiction together with other associated orders. The application is brought by a notice of originating motion, dated 17 May 2012. It is brought without notice to the defendant, Mr Robin Jones, because there is a fear that Mr Jones might dissipate assets or dispose of the subject matter of the orders prior to the orders being made.
2 It has not traditionally been the practice for substantial, or any, reasons to be given on applications such as this. However, a developing practice which I consider to be appropriate is that reasons should, wherever possible, be given in an application for orders with these consequences.
3 My reasons this evening can be abbreviated because the return date for the freezing order will be in a very short period, namely on 1 June 2012. At that time Mr Jones will be given a full opportunity to be heard in relation to any matters he wishes to raise. In addition the urgency of this matter means that my reasons for decision should be given as soon as possible after the hearing.
4 I divide these reasons into the following sections.
(1) Background facts including freezing orders that have already been made related to this case in other jurisdictions.
(2) The legal principles to be applied in relation to the grant of a freezing order.
(3) Whether conditions for a freezing order are satisfied in this case and whether my discretion should be exercised to grant the order, including the appropriate terms of the order.
(4) Whether leave should be given to serve the order out of the jurisdiction.
5 In summary, the conclusion I have reached is that the freezing order should be made. It should be made in the terms sought by the plaintiff.
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- Leave should be given to serve the order out of the jurisdiction although there may be a nice question whether leave is required.
(1) Background facts
6 I commence with the background facts. I preface the whole of this discussion by saying that these facts are based only upon the affidavit evidence received on behalf of the plaintiff. That affidavit evidence is an affidavit of Mr Philip Jones, sworn on 16 May 2012; an affidavit of Mr John Saunders, sworn on 16 May 2012 with numerous annexures including affidavits sworn in other jurisdictions; and an affidavit of Idris Matthews, sworn on 17 May 2012.
7 Mr Saunders' 16 May 2012 affidavit runs to 541 pages with annexures. Consideration of that affidavit necessitated the brief delay between the hearing and the delivery of these reasons.
8 The plaintiff's affidavit evidence upon which I rely is obviously only one perspective of the case. That evidence only needs to meet the test which is set out in O 52A of the Rules of the Supreme Court 1971 (WA), including the requirement of a good arguable case on an accrued or prospective cause of action that is justiciable in another court. In other words, nothing in these reasons amounts to any final and conclusive finding of fact.
9 The background is that the plaintiff company, Festive Productions Ltd (Festive), is a UK company which carries on a business marketing, manufacturing, importing and selling goods in the United Kingdom. It has an annual turnover of approximately £15 million of which some £13 million comes from goods which are imported from Hong Kong and the People's Republic of China.
10 The defendant, Mr Robin Jones, who is referred to in the materials as Robbie Jones, is one of the persons who has been involved with the plaintiff company. He, his brother Mark, and his father Ray were employees and later directors of the company.
11 Mr Robbie Jones was an employee of Festive from 1984 and became a director in 1997. He ceased to be a director in December 2010 and ceased to be an employee in February 2011.
12 The facts which gave rise to this application began with the appointment of Mr John Saunders as non-executive chairman of Festive. By September 2010 Mr Saunders had assumed operational control of
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- Festive. During 2010, Mr Saunders and another person began to suspect that Mr Ray Jones had been receiving secret commissions from Chinese suppliers to Festive.
13 In late 2010, Festive obtained details of a bank account at HSBC in Hong Kong into which it is alleged that those commissions had been paid. On 2 December 2011, Festive sought and was granted a Norwich Pharmacal order in the High Court of Hong Kong (an order named after the decision in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133).
14 The documents that were produced as a result of that order gave rise to an investigation which indicated that amounts of approximately £1.25 million had been deposited into accounts at HSBC in Hong Kong in the names of (i) Ray Jones and Mark Jones, (ii) Robbie Jones and (iii) a company called Fine View International Trading Ltd (Fine View).
15 One issue, to which I will refer later in relation to the question of whether there is a good arguable case, is whether or not there was any delay in seeking these orders following investigations that were taken after the Norwich Pharmacal order was obtained. I do not consider that any delay in the period between (i) obtaining the Norwich Pharmacal order and any investigations that then needed to be undertaken, and (ii) today's date, would be sufficient to prevent the order being made, at least on the interim basis that it is being made today.
16 The effect of the investigations following the Norwich Pharmacal order was that by some time in 2012 it was discovered that of the approximately £1.25 million that had been deposited into the three accounts in Hong Kong approximately £504,000 - £505,000, represented money which had been deposited by suppliers of Festive.
17 Of those funds a large proportion that was in the joint account of Mr Ray Jones and Mark Jones was transferred into the Fine View account. It appears that the sole function of the Fine View account was as a conduit of funds to various of the Jones parties which I have mentioned, namely the father Mr Ray Jones, his son Mr Robbie Jones and his other son Mr Mark Jones.
18 One of the relevant transfers was £201,505 to two accounts at the ANZ bank in Rockingham, Western Australia, in the name of Robbie Jones and also a transfer of £225,271 to an account of Mr Robbie Jones in Cyprus.
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19 Although the money which was transferred to Mr Robbie Jones' account is substantially less than the total amount of the freezing order which is sought against him in this jurisdiction, the total amount of the claims against all of the parties in the English proceedings is approximately £2 million. The basis upon which the freezing order is sought in that amount against Mr Robbie Jones is essentially as a participant in the alleged fraudulent or dishonest breach of fiduciary duty.
20 The further inquiries that were made as a result of the Norwich Pharmacal order by Festive disclose that Fine View was a company which was incorporated in Hong Kong and owned and controlled by the Joneses. Those investigations also disclosed that Mr Robbie Jones was the half owner of a property which was situated at 70 Fisher Street, Rockingham in Western Australia. His half ownership was as a tenant in common in equal shares with a Mr Gary Marney who is said to be his father-in-law. The Rockingham property is unencumbered. Mr Robbie Jones also owns other property in South Wales and Mr Ray Jones and Mr Mark Jones also own other property.
21 On 14 May 2012 various claim forms were filed in the High Court of Justice, Chancery Division, in England. One of those claim forms was a claim filed against Mr Robin Jones who, as I have mentioned, is referred to in the materials and has been referred to by me as Robbie Jones. The brief details of the claim include declarations sought that each of the defendants holds moneys that were received by either Mr Ray Jones or Mr Mark Jones by way of secret commission on trust for Festive.
22 Orders are also sought that each of the defendants, including Mr Robbie Jones, deliver up to Festive moneys that any of them received by way of secret commission. An account of the sums received by any of them as a result of secret commissions is also sought as well as orders that they pay to Festive any sums found due on that account.
23 The claim form also seeks any further or other belief. In relation to these facts, counsel for Festive submitted that the facts disclose also a claim for dishonest participation in a breach of fiduciary duty, or a prospective claim for dishonest participation in a breach of fiduciary duty, which claims would be described in Australia as claims for knowing participation in a breach of fiduciary duty.
24 The types of claim which are sought can be broadly divided into what might be described as personal and proprietary claims. The proprietary claims may raise difficult issues including (i) the proper law
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- for a claim based upon a breach of a fiduciary duty or a dishonest participation in a breach of fiduciary duty; (ii) if a proprietary claim exists, whether the proper law is Hong Kong law rather than English law; (iii) whether if a personal claim for an account or disgorgement of profits is sought, what would be the proper scope for that personal claim.
25 It is not necessary to consider any of these difficult issues because I accept, as counsel for Festive has outlined, that the essence of this application can be considered in the context of the prospective personal claims (i) for a money award, including costs, of around £2 million based upon participation or, alternatively, (ii) for equitable compensation which, against the defendant, Mr Robbie Jones, would give rise to a similar money award.
26 I mentioned that freezing orders have already been made. In the proceedings I have described in England freezing orders were made on 14 May 2012, that is Monday of this week, against each of Mr Ray Jones, Mr Robbie Jones, Fine View and Mr Mark Jones. The English freezing orders were 'world-wide freezing orders', as they are described in England.
27 Freezing orders have also been made in Hong Kong against each of Ray Jones, Robbie Jones, Fine View and Mark Jones, although the Hong Kong freezing orders relate only to assets within that jurisdiction. I am told that freezing orders are also sought today or very shortly in Cyprus and that a freezing order in the Isle of Man has been obtained against Mr Ray Jones.
28 The English freezing orders have a return date of Monday, 28 May, at 2.00 pm. The appropriate return date for these freezing orders in Western Australia should be shortly after the return date in England in circumstances in which the English proceedings are essentially the primary proceedings upon which these orders are based.
(2) The legal principles to be applied in relation to the grant of a freezing order
29 I turn then to the question of the legal principles to be applied. There is not much difficulty about questions of the legal principles to be applied under O 52A r 2, r 5, which are the rules upon which the plaintiff relies.
30 Essentially, there are the four requirements that must be satisfied by the combination of O 52A r 2 and O 52A r 5. Those four requirements can be summarised as follows. First, that Festive plaintiff has a good
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- arguable case on an accrued or prospective cause of action that is justiciable in the English Court.
31 Secondly, that there is a sufficient prospect of success that the English Court will give judgment in favour of Festive in the English proceedings. Thirdly, that there is a sufficient prospect that such judgment will be registered in or enforced by this Court. Fourthly, that having regard to all the circumstances, there is a danger that the prospective judgment will be wholly or partially unsatisfied because the assets of Mr Robbie Jones are disposed of, dealt with or diminished in value.
32 The first and second elements that I have described, namely questions of good arguable case and sufficient prospect that the English Court will give judgment in favour of Festive, are very closely related. They were recently described by Pritchard J in BCBC Singapore Pte Ltd v PT Bayan Resources TBK and Kangaroo Resources Ltd [2012] WASC 170 as amounting to effectively the same content.
33 Her Honour said that the requirements of 'sufficient prospect' in r 5(3) do not add anything to the overall requirement of 'a good arguable case'. She proceeded on that basis. It may be that there could be circumstances in which there is a sufficient prospect that another court would give judgment in favour of the applicant although a good arguable case might not exist or vice versa, however none of those possible contingencies is evident on the facts and material before me.
34 For those reasons, I will consider the first and second elements together. The question of what amounts to a good arguable case was set out by Beech J in Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Company Pty Ltd [2011] WASC 188. On appeal, there was no doubt cast upon the legal principles set out in those reasons to which I refer below.
35 His Honour at [143] - [144] set out the nature and history of the phrase 'a good arguable case'. He explained that Mustill J, as his Lordship was then, had first enunciated the test and that the test is to be understood in the sense of a case which is more than barely capable of serious argument and yet not necessarily one which the judge believes to have a better than 50% chance of success.
36 Further, his Honour explained that the requirement of good arguable case is equivalent to the general law requirement stated in the High Court decision in Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198
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- CLR 380 that the plaintiff must establish that it has a reasonably arguable case on legal and factual matters.
37 It is also noteworthy that it is not sufficient that a claim is simply asserted in a pleading to establish a good arguable case. In National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; (1990) 169 CLR 271, Mason CJ, Brennan and Deane JJ explained that a freezing order could be obtained even where it was not shown to be a positive intention by the party against whom the order was sought to frustrate any judgment. However, as the joint judgment of the plurality in the Cardile case explained, it is important to fashion any freezing order in a manner which the court considers appropriate to ensure that the order is not abused.
(3) Whether conditions for a freezing order are satisfied in this case and whether my discretion should be exercised to grant the order
38 For the reasons I have set out in my recitation of facts, I consider that the first two elements that I have described are satisfied. Those two elements can be broadly summarised as (i) a good arguable case and (ii) sufficient prospect that the English Court will give judgment in favour of the applicant.
39 Based on the evidence in the affidavits which I have described, there is certainly a good arguable case and sufficient prospects that judgment will be obtained, or could be obtained, against Mr Robbie Jones in amounts up to the £2 million of the freezing order which is sought: O 52A.
40 The amount of £2 million sought to be frozen is considerably more than the amount of money which was received by Mr Robbie Jones. However, a claim for equitable compensation against Mr Robbie Jones based upon dishonest participation in a breach of fiduciary duty (the more accurate Australian description is knowing participation in a breach of fiduciary duty) would potentially lead to a judgment in the amount represented by the total amount of the secret commissions. So far approximately £1.25 million has been identified and is said to have been received in terms of secret commissions.
41 To that £1.25 million, Festive adds £110,000 plus taxes that have been incurred in seeking the order in Hong Kong and in preparation of these proceedings. There is evidence that it is also anticipated that the costs of all of the proceedings will be in the order of £200,000 - £300,000 plus VAT if the matter goes to a contested trial in England.
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42 In addition, there is evidence that the collateral or supporting orders in several jurisdictions will incur approximately £10,000 plus current taxes. And on top of all of those matters, there would be interest sought on any judgment award and by way of illustration, it is said that five years of the simple interest on £1.5 million at a rate of 6% is approximately £450,000.
43 The choice of five years of simple interest is referable back to the date, 14 October 2004, when the amounts are said to have been derived from secret commissions.
44 I was properly taken to the possibility of any defences that may be raised to any of the accrued or prospective claims. This includes the accrued claims that are referred to in the claim form and any prospective claim that would be included in a future claim form although that prospective claim would fall within the notion of an accrued claim under O 52A, having already accrued although perhaps not yet pleaded.
45 The possible defence of delay in seeking the freezing order has already been referred to earlier in these reasons. The other possible defence to which I was taken was the possibility of a limitation defence. The limitation defence may arise because some of the moneys that were received were received prior to the six-year period backdated from the date when the claim form was filed in England.
46 I am satisfied that there is a good arguable case that those limitation periods would not defeat the claim for the reason set out in the affidavits. That reason is that the provisions of the Limitation Act 1980 (UK) in England would provide for an extended limitation period in circumstances in which a fraud was alleged.
47 It is not necessary to consider any other possible responses to a limitation defence nor is it necessary to consider whether any additional amounts might be time barred by any limitation period for this reason concerning the extended limitation period.
48 I turn then to the third requirement, which is that there is sufficient prospect that the English judgment will be registered in or enforced by this court. Festive says that the primary consideration in considering this requirement must be whether the judgment of the home jurisdiction, in other words the judgment of the English court, is registrable in the Supreme Court of Western Australia under the Foreign Judgments Act 1991 (Cth).
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49 The relevant provisions of that Act are s 5(1) - (5) and s 6(1) - (3). Although those provisions, read together with the Foreign Judgments Regulations 1992 (Cth), identify the United Kingdom as a relevant country, the High Court of England and Wales is not a court which is provided in the schedule of the superior courts. Nevertheless, s 5(2) of the Foreign Judgments Act 1991 provides that that is not a situation which is to be taken to imply that the court, ie the High Court of England and Wales, is not a superior court for the purposes of the Act.
50 In fact, s 19(1) of what is now the Senior Courts Act 1981 (UK) provides that the High Court shall be a superior court of record and Mr Philip Jones in his affidavit has confirmed that to be the case. Mr Philip Jones is admitted as a solicitor of the senior courts of England and Wales and has over 20 years' experience in commercial litigation in England and Wales.
51 If there were any doubt concerning whether a judgment of the High Court of Justice in England and Wales were able to be registered in Western Australia, that doubt should be dispelled by the fact that this situation has occurred in other cases after consideration of the legislation which I have described. For instance, in the Society of Lloyd's v Marich [2004] FCA 1502, a judgment against Marich in the High Court of Justice of England and Wales was registered in the Supreme Court of New South Wales under this Act. Allsop J, as he was then, said at [15] that there is no doubt that the English judgment was capable of registration under the Foreign Judgments Act 1991.
52 The final requirement is that there is a danger that the prospective judgment will be wholly or partly unsatisfied. This matter has been dealt with in comprehensive submissions by the plaintiff, Festive. The essence of those submissions relies upon the facts which I have described, as well as the fraud which is alleged. The allegation and a good arguable case concerning a situation of fraud and dishonesty is a matter from which this court might infer a risk of dissipation of assets, and I consider that in all of the circumstances, the facts do give rise to the inference that can be drawn to the requisite degree that a prospective judgment could be wholly or partially unsatisfied unless the freezing order is granted.
53 As I have mentioned, I consider that the freezing order is also formulated sufficiently narrowly to avoid excessive prejudice to the defendant, given the short period before the return date. There are additional matters relevant to the exercise of my discretion that I have considered, including balancing the nature and the effect of a freezing
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- order upon the defendant with the need for the freezing order by Festive to avoid frustrating the effect of any action which it has or any foreign proceeding.
54 I have also considered the risk that freezing orders being sought might have an adverse impact upon Mr Robbie Jones. I have been referred to the fact that Festive, which is a substantial company, has offered an undertaking as to damages. Although Festive has not proffered a payment into court, as to which I note the amount would be difficult to determine in the absence of any contradictor, the financial records and financial statements of Festive do suggest that the undertaking is of real value. And on an interim basis, I consider that the undertaking and the terms in which the undertaking has been given is sufficient.
55 I have also considered the circumstance that Mr Robbie Jones does not reside in Western Australia and that the Rockingham property over which the freezing order is sought is unencumbered. The other matter I have considered is that the freezing order that is sought over Mr Robbie Jones' assets is not a general or unlimited freezing order but is only sought in respect of particular identified assets.
56 In those circumstances, I consider that the freezing orders that are sought are appropriate. I have mentioned that those orders are in some respects narrowly tailored. One respect in which they are narrowly tailored is that the order are confined only to the money standing to the credit in Mr Robbie Jones' bank account at the Rockingham branch of the ANZ Banking Corporation and also as to his one undivided half-share as a tenant in common of the property in Rockingham.
57 Another way in which the order is confined is that if the unencumbered value of Mr Robbie Jones' assets in England and Wales exceeds the amount of £2 million Mr Robbie Jones is entitled to remove any of the Australian assets from Australia or dispose or deal with them or diminish their value as long as the total unencumbered value of his assets in England and Wales still exceeds that amount. Further, if the unencumbered value of Mr Robbie Jones' Australian assets and his assets in England and Wales exceeds £2 million, he is entitled to remove any of his Australian assets from Australia or dispose or deal with them or diminish their value so long as the total unencumbered value of the Australian assets and his assets in England and Wales still exceeds £2 million.
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58 There are other exceptions to the order that are provided, including exceptions that the order will cease to have effect if the English order ceases to have effect and that it does not prohibit Mr Robbie Jones from doing anything which is permitted under exceptions in the English order, including exceptions relating to personal expenditure and so on.
59 For those reasons, I consider that the freezing orders in the terms that are sought are appropriate. I will deal with the appropriate dates to be inserted after these reasons are given but, as I indicated during submissions, I consider that the appropriate return date ought to be 1 June 2012.
(4) Whether leave should be given to serve the order out of the jurisdiction
60 The final matter is the question of service out of the jurisdiction. Festive seeks orders that a notice of originating motion and all the material in support as well as the orders be served out of the jurisdiction. Order 52A r 7 provides an application for a freezing order or an ancillary order made be served on a person who is outside Australia.
61 Whether or not a person is domiciled or resident in Australia, if any of the assets to which the orders relate are within the jurisdiction of the court then that will permit the service of a freezing order application outside the jurisdiction.
62 Order 10 of the Rules of the Supreme Court considers the question of service of a writ outside the jurisdiction. However that order is not confined to writs and extends to processes other than a writ, including a summons, order or any notice in any proceedings duly instituted.
63 Order 10 r 7 permits service outside the jurisdiction of these originating processes other than a writ as well as any order in the proceedings duly instituted. That rule therefore permits, in this case, the service of the notice of originating motion and all the material in support as well as the order outside this jurisdiction.
64 There may be a nice question whether the service of the freezing order applications being separately provided for in O 52A r 7 is also subject to the leave requirement in O 10 r 1A. I consider that there is a strong argument that it is subject to that requirement. But for all of the reasons that I have expressed in relation to why the freezing order itself should be granted, I consider that leave should also be granted to permit the service of these documents out of the jurisdiction.
65 For these reasons, I will make the orders that are sought.
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