Friendly Home Group Pty Ltd v Sanmarco Construction Pty Ltd
[2022] VCC 468
•13 April 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-00931
| FRIENDLY HOME GROUP PTY LTD (ACN 612 585 314) | First Plaintiff |
| and | |
| SAMER SOLIMAN | Second Plaintiff |
| v | |
| SANMARCO CONSTRUCTION PTY LTD (ACN 628 003 654) | Defendant |
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JUDGE: | HER HONOUR JUDGE TRAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 April 2022 | |
DATE OF JUDGMENT: | 13 April 2022 | |
CASE MAY BE CITED AS: | Friendly Home Group Pty Ltd v Sanmarco Construction Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 468 | |
REASONS FOR DECISION
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Subject:CIVIL PROCEDURE
Catchwords: Freezing order – where affidavit asserts existence of contract and its alleged terms– whether arguable case – balance of convenience
Legislation Cited: County Court Civil Procedure Rules 2018
Cases Cited:Zhen v Mo [2008] VSC 300
Judgment: Application granted
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M O’Connor | MSE Legal |
| For the Defendant | Mr M Campbell | Frenkel Partners |
HER HONOUR:
1The plaintiffs, Friendly Home Group Pty Ltd (“Friendly”) and Mr Samer Soliman, have applied for a freezing order over $1,081,287 of the assets of the defendant (“Sanmarco”). The principal asset of Sanmarco is a property development in Bulban Road, Werribee (“the Werribee development”), which comprises six units with a total value of approximately $3-$3.5 million. The freezing order sought, if granted, would freeze nearly one third of the assets of Sanmarco.
2The parties agree that the principles applicable to an application for a freezing order are as set out by J Forrest J in Zhen v Mo:[1]
[1] [2008] VSC 300
“First, that a freezing order, by its very nature, is a drastic remedy and a court must exercise a high degree of caution before taking a step which will interfere with a party’s capacity to deal with his or her assets.
Second, the order is not designed to provide security for the applicant’s claim. It is solely directed to preserving assets from being dissipated, thereby frustrating the court process.
Third, the applicant bears the onus both in satisfying the Court that the order should be continued and in satisfying the Court as to the amount which is to be the subject of the order.
Fourth, that an order can only be made on the basis of admissible evidence which supports the contentions made by the party seeking the order. Speculation and guesswork is no substitute for either the facts or inferences properly drawn from proved facts.
Fifth, that before such an order can be made it is necessary that the applicant establish –
(a) an arguable case against the defendant; and
(b)that there is a danger that the prospective judgment will be wholly or partly unsatisfied as a result of the defendant’s actions in either removing the assets or disposing or dealing with them so as to diminish their value.
Sixth, the balance of convenience must favour the granting of the freezing order.
Seventh, that there is no set process determining the exact nature of an order. The order will be framed according to the circumstances of the case.
Eighth, the applicant must establish with some precision the value of prospective judgment. The order should not unnecessarily tie up a party’s assets and property.
Finally, there may be discretionary considerations which militate against the granting of a freezing order, such as delay in bringing the application on before the court or a lack of candour in the materials placed before the court.”
(Footnotes removed and my emphasis.)
Friendly’s claim for debt or damages
3Friendly commenced this proceeding by generally indorsed Writ filed 17 March 2022.
4Friendly claims that in about July 2019, it entered into an agreement with Sanmarco to manage and carry out construction works at building projects nominated by Sanmarco. This agreement is alleged to be partly oral and partly in writing. Friendly alleges that, under the terms of this agreement:
(a) Friendly was required to initially bear the costs of all building materials and labour and would subsequently provide an invoice to Sanmarco for reimbursement;
(b) Friendly would seek approval for all invoices prior to issuing them to Sanmarco;
(c) Sanmarco was to pay the invoices immediately, being the same day that they were received or shortly thereafter; and
(d) Friendly’s fee for managing the projects would be $200,000 per year, payable in twelve monthly instalments of $16,666.67.
5Friendly claims that this agreement was varied by agreement on or about 24 February 2021, and that after this date:
(a) Friendly was to cease the issuing of invoices to Sanmarco for reimbursement of building material and labour costs;
(b) to seek reimbursement of costs, Friendly was to book an appointment with Sanmarco and provide Sanmarco with evidence of all payments made towards building material and labour costs; and
(c) Sanmarco was to reimburse Friendly for costs immediately or shortly thereafter.
6Friendly claims that:
(a) it has made payments of building material and labour costs with respect to the Werribee development and another development in Baldin Street, Laverton (“the Laverton development”);
(b) those payments total $1,013,123.69. Of these payments, it alleges that it has only received reimbursement of $570,614.66, leaving a balance owing of $442,509.03;
(c) in addition, it is entitled to fees for its management of the Werribee development and the Laverton development totalling $383,333.33. Of this amount, it alleges it has only received $83,333.333, leaving a balance owing of $300,000; and
(d) this gives rise to a total amount alleged by Friendly to be owed to it by Sanmarco of $742,509.03 (not including interest and costs).
Plaintiffs’ claim for rectification of Deed of Charge
7In this proceeding, the plaintiffs also seek rectification of a Deed of Charge dated 30 January 2020. That Deed is expressed to be made between Sanmarco (as “Chargor”) and Mr Soliman (as “Chargee”). The terms of the Deed record that the Chargee has agreed to advance $600,000 to the Chargor for the purpose of the Werribee development. It records that the Chargor will pay the Chargee the amount of $600,000 within 30 days of a Certificate of Occupancy being received. It records that the Chargor charges the Werribee development in favour of the Chargee with the payment, and authorises the Chargee to lodge a caveat over the Werribee development.
8The plaintiffs allege that the Chargee named in the Deed was intended to be Friendly, rather than Mr Soliman. The plaintiffs say that this follows from the fact that it was Friendly, not Mr Soliman, who undertook the construction works at the Werribee development. The plaintiffs claim that there has been a mutual mistake in the Deed and that the Deed should be rectified, so as to name Friendly as Chargee. It says that if this claim for rectification is successful, Friendly will have a caveatable interest in the Werribee development up to the amount of $600,000.
The application for a freezing order
9By Summons filed 24 March 2022, the plaintiffs seek a freezing order over $1,081,287 of Sanmarco’s assets. This amount is said to represent the total alleged debt of $742,509.03, plus past interest and likely future interest and costs.[2] The order is expressed to be over all the assets of Sanmarco, including the Werribee development. The proposed freezing order would cease to have effect if the sum of $1,081,287 is paid into Court or into a joint bank account in the name of the plaintiffs’ solicitor and Sanmarco’s solicitor; or if security in the amount of $1,081,287 is provided by a method agreed in writing with the plaintiffs.
[2] First affidavit of Mr Samer Soliman, affirmed 23 March 2022, paragraph [34]
10The plaintiffs submit that Friendly has a good arguable case in relation to its claim for debt for unpaid construction expenses and management fees. They also submit that the plaintiffs have a good arguable case for rectification of the Deed of Charge. They submit that there is an established risk of dissipation by Sanmarco. In particular, they rely upon the following circumstances:
(a) Sanmarco is a sole purpose company and its sole asset is the Werribee development;
(b) Sanamarco has advertised all six units in the Werribee development for sale;
(c) Sanmarco has not provided any evidence of its financial position;
(d) Sanmarco has admitted that it wishes to refinance or dispose of the units in the Werribee development;
(e) Sanmarco has refused to pay the alleged debt despite demand; and
(f) despite demand for payment being made in September 2021, Sanmarco failed to provide any explanation for its refusal to pay until these proceedings were commenced against it.
11In the course of his submissions, counsel for the plaintiffs accepted that the Deed of Charge was ancillary to the underlying alleged debt, and that if the claim for the underlying debt failed, the Deed would not take the case further. However, he relied upon the existence of the Deed as a relevant factor to the exercise of the discretion to grant a freezing order. He submitted that if the Werribee development was sold, it would render the plaintiffs’ claim for rectification of the Deed of Charge nugatory.
Should a freezing order be granted?
12As said by J Forrest J in Zhen v Mo,[3] a freezing order is a drastic remedy. The Court must exercise a high degree of caution before interfering with a party’s capacity to deal with its assets. In the present case, the value of the assets sought to be frozen is large – over $1 million – and amounts to nearly one third of the assets of the Sanmarco. A freezing order is not designed to provide security for an applicant’s claim, it is solely directed to preserving assets from being dissipated. The onus is squarely upon the applicant to satisfy the Court that the order should be made on the basis of admissible evidence. Speculation and guesswork does not suffice.
[3] [2008] VSC 300 at paragraphs [21]-[30]
Strength of Sanmarco’s claim
13A critical question to the determination of this application is the strength of Sanmarco’s claim for debt. A good arguable case must be shown to exist. If a good arguable case is shown to exist, the strength of that case is relevant to the exercise of the discretion.
14In the present case, the strength of Friendly’s claim for debt turns upon the existence of a legally enforceable contract; whether the terms of that contract incorporated a management fee with respect to the Werribee development; and the amount of any expenses borne by Friendly with respect to the two developments.
15A good arguable claim is not established by the filing of a generally indorsed Writ, or even a Statement of Claim. Probative admissible evidence is required.
16In his first affidavit, Mr Soliman states in relation to the alleged “agreement”:[4]
[4] First affidavit of Mr Soliman, affirmed 23 March 2022, paragraphs [5]-[8]
“In July 2019, Sanmarco entered into an agreement with FHG whereby FHG would manage and carry out construction works of 6 units at the premises, and 13 units at 64 Baldin Street, Laverton, both of which has been completed (agreement).
The agreement is constituted by:
(a) text messages between the director and secretary of Sanmarco, Rakesh Palta, and me;
(b) invoices sent to, and paid by, Sanmarco for FHG’s construction works at the premises; and
(c) conversations between me and Mr Palta as follows:
(i) In or about July 2019, Mr Palta and I agreed to enter into the Agreement, and scheduled a meeting in Doncaster at his office to discuss the further terms of the Agreement.
(ii) The next day, I met with Mr Palta at his office and we discussed the terms of the Agreement as detailed in the Plaintiff’s statement of claim filed on 16 March 2022.
A true copy of the text messages is produced on page 26 of this combined Affidavit and bundle exhibit document.
A true copy of the invoices is produced on page 34 of this combined Affidavit and bundle exhibit document.
Under the agreement, FHG would bear the costs of all building materials and labour, and Sanmarco would subsequently reimburse it upon invoice – the requirement for a provision of an invoice for reimbursement was later varied between the FHG and the Sanmarco as follows:
(a)FHG was to cease the issuing of invoices to Sanmarco for reimbursement of building material and labour costs.
(b)To seek reimbursement of costs, FHG was to book an appointment with Sanmarco and provide Sanmcarco with evidence of all payments made towards building material and labour costs.
(c)Sanmarco was to reimburse FHG for costs immediately or shortly thereafter.
8.Sanmarco would also pay FHG a management fee of $200,000 per annum, payable in monthly instalments.”
17Eight pages of text messages were exhibited to Mr Soliman’s first affidavit. There is no direct evidence in these text messages of the specific terms alleged to form part of the agreement. Invoices and handwritten reconciliations are also exhibited to his affidavit. The existence of these invoices, and their payment, may support the existence of an agreement to pay amounts with respect to one or both of the developments, but they do not provide probative evidence of the specific terms alleged to form part of the agreement.
18The most direct evidence provided of the agreement in Mr Soliman’s affidavit is that, in about July 2019, there was an agreement to enter into “the Agreement” and a meeting to “discuss the further terms of the Agreement”[5] was scheduled. The next day it is said that there was a further meeting and “we discussed the terms of the Agreement as detailed in the Plaintiff’s statement of claim filed on 16 March 2022”.[6]
[5]First affidavit of Mr Soliman, affirmed 23 March 2022, paragraph 6(c)(i)
[6] First affidavit of Mr Soliman, affirmed 23 March 2022, paragraph 6(c)(ii))
19An allegation that the “terms of the Agreement” were “discussed” does not amount to satisfactory evidence that there was a binding oral contract incorporating each of the specific terms alleged in the indorsement of claim. Mr Soliman provides no other evidence as to the actual conversations, or the substance of the conversations which are said to have given rise to these terms.
20A critical term of the alleged agreement is that Sanmarco agreed to pay a management fee of $200,000 per year in instalments of $16,666.66. Sanmarco denies that there was any such agreement. In response to this denial, Mr Soliman states:
“I refer to paragraph 20 of Mr. Palta’s Affidavit and deny the veracity of the allegations contained therein, and say further that:
(a) The consideration of the Agreement was agreed as $200,000.00 per annum to be paid in monthly instalments of $16,666.66 (“The Management Fee”).
(b) The Defendant did indeed make payment of this management fee to the Plaintiff whilst it was carrying out works and managing the Baldin Street Property for 5 months. However, the Defendant has not made any payments towards the first Plaintiff’s fees for carrying out works and managing the construction works at 64-66 Bulban Road Werribee (“Werribee Property”).”[7]
[7]Second affidavit of Mr Soliman, affirmed 5 April 2022, paragraph [11])
21Again, this amounts to little more than an assertion of an agreement. Despite Sanmarco making it clear that the existence of any agreement to pay a management fee with respect to the Werribee development was disputed, no probative evidence of the actual conversations which are said to have led to the payment of a management fee becoming a binding contractual obligation is provided. It may be that an inference supportive of the plaintiffs’ case may be drawn from the evidence that a monthly fee has been paid in the past. However, this is not particularly strong evidence of an agreement to pay a fee in other months and for a different development.
22The Court is left to assess the question of whether there is a good arguable case that a legally-binding contract was formed, which included the specific terms alleged by the plaintiffs, on the basis of Mr Soliman’s bare assertions as to the existence of the agreement and its terms.
23In relation to the quantum of the alleged debt, the plaintiffs rely upon paragraph 9 of the first affidavit of Mr Soliman:
“On 16 March 2022, FHG commenced this proceeding seeking damages from Sanmarco for breach of the Agreement in failing to make full payment of reimbursement costs and management fees, as detailed below:
Reimbursements
Total paid by FHG
$1,013.123.69
Total reimbursed by Sanmarco
$570,614.66
Total owing in reimbursements
$442,509.03
Management fees
Months
Amount
Total Required to be paid
November 2019-September 2021
$383,333.33
Total Paid by Sanmarco
August 2020-December 2020
$83,333.33
Total owing by Sanmarco
November 2019-July 2020
+
January 2021-September 2021
$300,000.00
24There is also an invoice exhibited to this affidavit dated 14 September 2021[8] which includes:
(a) a sum of $438,190.03 for:
“Services
remaining money after construction is completed : carpentry , plumbing , roof plumbing , electrical , nbn , security camera , antenna , intercom , tiling , waterproofing , stairs , balustrade , plaster , rendering , concreting , skylight , kitchen , bathroom , wardrobe , caulking , shower screen , mirror , landscaping , fencing , hating (sic) and cooling ,”
[8]Page 57 of Exhibit SS-1 to the affidavit of Samer Soliman affirmed 23 March 2022
(b) a sum of $149,994 for “Services supervision of construction work per month”; and
(c) a sum of $58,818.40 for GST.
25This invoice was referred to in a Letter of Demand sent by the plaintiffs’ then solicitors, Zora Law, dated 22 September 2021.
26Various other invoices (for much smaller amounts) are exhibited, but these have largely been paid. Counsel for the plaintiffs did not rely upon these invoices as evidencing the actual debt claimed in this proceeding.
27Friendly claims to have paid a total of $1,013.123.69 in expenses for which it is entitled to reimbursement – a very specific sum. However, it provides no documentary evidence of these expenses. It provides no reconciliation listing each of the expenses relied upon. It provides no business records – other than the single unparticularised invoice referred to above, which was sent shortly before a legal letter of demand – evidencing these expenses.
28This lack of evidence of the expenses claimed was raised in the affidavit of Mr Palta,[9] which was filed on behalf of Sanmarco. In his affidavit in reply, Mr Soliman states “evidence of all payments made in accordance with the Agreement for the Werribee property and the [Laverton] property are available for inspection at the office of my solicitors by prior appointment”.[10] The burden is upon the plaintiffs to prove by admissible evidence that it has a good arguable case. A statement that evidence is available (but not put before the Court) does not discharge that burden.
[9] Affidavit of Mr Rakesh Palta, affirmed 1 April 2022, paragraph [53]
[10]Second affidavit of Mr Soliman affirmed 5 April 2022, paragraph [25]
29Similar criticisms can be made of the evidence filed by Sanmarco.[11] Both parties seemed to have approached their affidavits as a vehicle for making submissions or a substitute for pleadings, rather than an opportunity to provide probative, admissible and appropriately detailed evidence of the facts relied upon in support of their respective positions. As stated in Rule 43.03 of the County Court Civil Procedure Rules 2018, an affidavit should be confined to facts which the deponent is able to state of the deponent’s own knowledge or, in the case of an interlocutory application, a statement of fact based on information and belief, if the grounds are set out. Submissions, arguments, conclusions and opinions have no place in the affidavit of a lay witness.
[11] eg: Affidavit of Mr Palta, affirmed 1 April 2022, paragraphs [16]-[17]
30However, the onus of proof in this application lies squarely with the plaintiffs.
31In the circumstances, although I accept that Friendly has an arguable case that it is owed some money for building and management services and reimbursement of expenses, I am unable to find, with any precision, the value of any prospective judgment that might be able to be obtained by it against Sanmarco.
32The most certain claim made by Friendly is for management fees of $300,000. This claim depends principally upon proof of the terms of the Contract, rather than upon proof of payment of expenses. I accept that Friendly has an arguable case for payment of this amount. However, for the reasons already given, the evidence that it was a legally binding term of an agreement that management fees would be paid with respect to the Werribee development, is weak. Friendly has done enough to establish that it has a good arguable case for this amount, but not that it has a strong case.
33Somewhat ironically, the best evidence that Friendly has a claim in debt against Sanmarco comes from the affidavit of Mr Palta filed on behalf of Sanmarco. In that affidavit, Mr Palta states that a “subsequent agreement” was reached at a meeting on 21 February 2021 between Friendly and Sanmarco, to the effect that Friendly would complete the Werribee construction for a fixed fee of $600,000 inclusive of GST. He says that Sanmarco has paid $334,618.31 towards that fixed fee, which would on Sanmarco’s own case leave an amount to be paid of $265,381.69. He goes on to state that Friendly ceased construction on 31 August 2021 “with the Townhouses being left in a terrible state including rubbish being left all over the Property”[12] and that Sanmarco has or will incur rectification and completion costs of $229,000. In my view, this evidence establishes a good arguable claim by Friendly, in debt, for the amount of $265,381.69, albeit one which is susceptible to reduction by set-off and counterclaim if Sanmarco is successful in its allegations that it has incurred rectification and completion costs of $229,000.
[12]Affidavit of Rakesh Palta affirmed 1 April 2022, paragraph [47]
Other relevant factors
34It can be inferred that the imposition of a freezing order of over $1 million carries with it an inherent risk that Sanmarco will suffer significant damage. Any contested trial in this proceeding is unlikely to occur until the first quarter of next year. It is likely that any freezing order would operate for at least 12 months. Loss of use of such a significant amount (both in dollar terms and as a proportion of Sanmarco’s assets) for that period of time carries with it an inherent risk of damage.
35However, San Marco’s evidence of the specific prejudice that will be suffered by it if a freezing order is made is weak. There is a reference to Sanmarco “seeking to obtain finance”. No details are provided of the nature of the finance sought. There is a reference to a “key stakeholder” who is entitled to some of the proceeds of sale. Again, no details are provided of the identity of this stakeholder, nor of how much is owed to him. There is a reference to prejudice in not being able to sell the units, however this evidence does not take into account the facility for sale to be permitted if the proceeds are paid into a controlled account.
36In relation to the risk of dissipation of assets, there is no direct evidence of any fraud, forgery, sharp practice or attempt to transfer assets out of the country or overseas. In particular, I do not accept that the failure of Sanmarco to provide a substantive response to the invoice of 19 September 2022, or Friendly’s letter of demand of 22 September 2022 until 1 April 2022, is evidence of sharp practice or demonstrates that Sanmarco’s defence is weak. Friendly expressly reserved its position in relation to Friendly’s claim for payment in a letter dated 9 November 2021. It is plain from subsequent correspondence that at the time Sanmarco was focussing on the removal of a caveat over the Werribee property which had been lodged by Mr Soliman. Sanmarco also lacked details of the manner in which Friendly’s claim for payment was put.
37I also do not accept that Sanmarco’s refusal to provide an undertaking not to dissipate its assets is grounds for an inference that it intends to dissipate the assets. Unless restrained by this Court, Sanmarco is entitled to utilise its assets as it sees fit within the bounds of the law (including the director’s duties and insolvency provisions in the Corporations Act). It would be circular to reason from a refusal to provide an undertaking not to dissipate assets; that an obligation not to dissipate assets should be imposed.
38Having said that, the Werribee development is Sanmarco’s only significant asset and the units which comprise the Werribee development have been advertised for sale. Sanmarco has also stated that it intends to refinance the loan over the Werribee development, yet has not provided any details of the existing finance over the Werribee development; the purpose of this refinancing; or the use to which any funds which are obtained as a result will be put. There is evidence that one director of Sanmarco has returned, or intends to return, to his home country of Kuwait.[13] There is evidence that Sanmarco intends to pay some unspecified proportion of the proceeds of sale to an unnamed “key stakeholder”. Despite it clearly being relevant to the question of the specific prejudice which will be suffered by Sanmarco if the freezing order is granted, the affidavit of Mr Palta provides no further details as to how the proceeds of sale of the units of the Werribee development will be disbursed or utilised.
[13] Affidavit of Mr Palta, affirmed 8 March 2022 and filed in proceeding CI-22-00840
39The Court needs only be satisfied that there is a risk that if the freezing order is not granted that the assets of Sanmarco will be dissipated and the Court’s processes frustrated. It is not necessary for the Court to be satisfied that Sanmarco will engage in conduct which amounts to an abuse of process. Sanmarco has given evidence that it intends to liquidate its major asset, and that it will suffer prejudice if it is not able to do so, and that it intends to disburse an unspecified proportion of the proceeds (including through refinance and payment to the “key stakeholder”). However, Sanmarco provides absolutely no evidence of the proportion of the proceeds which will be disbursed, the manner in which they are to be disbursed or the identity of the recipient of those proceeds. It is open to me to infer that this evidence would not have assisted Sanmarco’s case. In the circumstances, I am prepared to infer that there is a risk that, once these units are sold, the proceeds of sale will be dissipated and the Court’s processes frustrated.
40I note that both Friendly and Mr Soliman have proffered an undertaking as to damages, although, strictly, the application is only for the benefit of Friendly. However, there is no evidence that either Friendly or Mr Soliman have the capacity to meet any undertaking as to damages. Indeed, the evidence of Mr Soliman is that:[14]
“I am now 58 years old and have just undergone surgery on my left leg, hence, I am not able to work as I used to. Due to the vast amount of money I paid towards the construction of the 6 units at premises from my own pocket, with an expectation that this money would be reimbursed, and I would be paid my appropriate fee, I am now severely stressed and unable to adequately provide for my family.
My wife has sought to refinance funds so that we may be able to continue to pay for everyday needs until this matter is finalised.”
[14] First affidavit of Mr Soliman, affirmed 23 March 2022, paragraphs [52]-[53]
41It can be inferred from this evidence that the plaintiffs do not have capacity to meet any order as to damages that may be made in reliance upon their undertaking.
42In response, Counsel for the plaintiffs submitted that the Court could make any freezing order conditional upon the provision of security for the undertaking as to damages. However, he did not offer any particular form or amount of security on behalf of the plaintiffs and provided no evidence that any such security would be available.
Conclusion on whether a freezing order should be granted
43I have accepted that Friendly has a good arguable case for either payment of the management fees sought by them ($300,000), or payment of the balance of the $600,000 fixed fee contended for by Sanmarco ($265,381.69), not including interest and costs. These are alternative, not cumulative, claims, as they rely upon very different contractual arrangements being proven at trial. These amounts do not include any allowance for interest or costs.
44The evidence for the claim for management fees is weak. The evidence for payment of the balance of a fixed fee relies upon evidence filed by Sanmarco and is not included in the indorsement to the Writ, although the proceeding has not yet progressed to pleadings.
45Beyond these amounts, I am unable to find, with any precision, the value of any prospective judgment that might be able to be obtained by Friendly against Sanmarco.
46I have accepted that in all the circumstances there is a real risk of dissipation of assets.
47I have accepted that a freezing order of over $1 million would cause significant prejudice to Sanmarco, which may not be capable of being remedied by an undertaking as to damages.
48However, a freezing order over only $300,000 (or less than 10 per cent) of the assets of Sanmarco will be far less prejudicial to Sanmarco. Any such prejudice can be ameliorated by requiring the plaintiffs to provide an undertaking as to damages, secured by either payment into Court or provision of an acceptable bank guarantee in the amount of $30,000. In the absence of any specific evidence that Sanmarco requires the entirety of the proceeds of sale of the Werribee development for any particular purpose, this attains an appropriate balance between protection of Friendly’s interests – and the Court’s processes – and Sanmarco’s entitlement to use its assets as it sees fit. It is an appropriately cautious use of the drastic remedy of a freezing order.
49I will grant a freezing order in the amount of $300,000, conditional upon the plaintiffs providing security for their undertaking as to damages, in a form acceptable to the Registrar of the Court, in the amount of $30,000.
50I will hear from the parties on the question of costs.
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