GFB Fisheries Ltd v. Nino Pty Ltd t/a Barramundi Waters

[2009] QDC 119

DISTRICT COURT OF QUEENSLAND

CITATION:

GFB Fisheries Ltd v Nino Pty Ltd t/a Barramundi Waters [2009] QDC 119

PARTIES:

GFB Fisheries Ltd
(applicant/plaintiff)
V
Nino Pty Ltd t/a Barramundi Waters
(respondent/defendant)

FILE NO/S:

Townsville 169/2009

DIVISION:

Application

PROCEEDING:

Application for a freezing order

ORIGINATING COURT:

District Court at Townsville

DELIVERED ON:

Ex tempore on 30 April 2009

DELIVERED AT:

Brisbane

HEARING DATE:

30 April 2009

JUDGE:

Kingham DCJ

ORDER:

1.   The application is adjourned to 01.05.2009 for further hearing so the applicant may put on evidence as to the value of the plaintiff’s undertaking as to damages and the assessment of the costs of the proceedings.

CATCHWORDS:

APPLICATION - application for freezing order – where there is outstanding judgment against defendant – where defendant has limited assets – where advanced negotiations to sell assets - where court orders defendant to pay money into court upon sale of asset until further order

Uniform Civil Procedure Rules 1999 (Qld), r 260A, r 361.

COUNSEL:

K Fleming QC for the applicant/plaintiff
M Blacklock for the respondent/defendant

SOLICITORS:

Connolly Suthers for the applicant/plaintiff
Macdonnells Law for the respondent/respondent

HER HONOUR: I am satisfied the requirements for making an order under r 260A[1] are made out.  The plaintiff has a judgment of the court.  The appeal period has expired.  No appeal has been lodged.  The statutory demand for payment has been issued. The 21 days to apply to have it set aside has also passed without action. The judgment sum remains outstanding.

[1] Uniform Civil Procedure Rules 1999 (Qld).

The respondent's material establishes the company is on the verge of receivership unless it is able to sell the fish farming business it operates.  Due diligence by a potential purchaser appears to be either at an advanced stage or completed. The evidence led by the respondent is that the sale of the business is almost certain to proceed.

The accountant who swore an affidavit in support of the respondent's resistance to the application was involved in the due diligence process. He has attested to the fragile state of the respondent's finances.  It is common ground that practically, it is in both parties' interests for the sale to proceed. 

Whilst the applicant originally sought orders in very broad terms, alternative orders have been proposed today on a narrower basis. They are intended to allow the negotiations to continue and indeed for the sale to proceed, provided the applicant is informed when the contract is signed and completed.

That set of orders is drafted on the assumption that the defendant, its directors, shareholders, servants and agents would give an undertaking to the court to pay into court $200,000 or to pay that amount into a joint bank account or otherwise secure it.

That undertaking is not offered by the respondent. 

If the money is paid into court until further order it certainly cannot be dispersed.  If the company did go into either liquidation or receivership subsequently, the liquidator or receiver would have the opportunity to be heard by the court before the money was disbursed.

It seems to me that a more limited order than that proposed by the applicant would achieve the end of securing the plaintiff's access to sale proceeds without giving it priority over other creditors of the respondent and without putting at risk the sale.

I am persuaded an order is necessary because the defendant has failed to satisfy the judgment debt; it has taken no action to appeal the judgment or set aside the statutory demand; and it is in has a fragile financial position.

There are two issues that remain of concern to me.  Firstly, the respondent has raised the value of the undertaking offered by the applicant.  That is a sound submission where the applicant is a company and the only evidence of its value is a small amount of paid up capital.  I would be prepared to make an order that reflects these reasons if I was satisfied of the value of the undertaking by the applicant company, or if the directors of the company would give that undertaking personally.  I will give the applicant an opportunity to obtain instructions about that matter.

Secondly, the amount sought to be paid in is $200,000.  That is a little more than double the amount of the judgment debt.  I am told the interest on the judgment is likely to be in the order of $20,000.  That leaves some $80,000 being referable to the costs order of the judgment.

At this stage, the applicant has an order for costs on a standard basis.  Given the terms of
r 361 in formulating the amount that should be paid, I am content to proceed on the assumption that His Honour Judge Pack will, when he hears the application, vary the order so that it is an order for indemnity costs given the evidence led about the settlement offer made prior to judgment being entered.

Nevertheless, the amount of costs, whether on a standard or an indemnity basis, that should be taken into account is not clear.  I may be out of touch but $80,000 seems, I believe, generous even on an indemnity basis where there has been no trial.  Whilst it is a matter of some age it was resolved by a summary judgment application.

I will give the applicant an opportunity to provide an assessment by the solicitor involved in the matter as to the likely costs on an indemnity basis.  That does not, of course, have to be a proper costs assessment.  So at this stage I will adjourn the matter for further hearing.  The application is adjourned to tomorrow morning.  Then the matters that I have raised, the value of the undertaking given by the applicant and whether that should be given by the directors, and an assessment of the quantum of the costs on an indemnity basis can be provided to the court.

I also invite the parties to reconsider the shorter of the draft orders provided by the applicant to reformulate that section dealing with the undertaking so that it is a direction from the court and so that they reflect my intention to make an order that the money is paid into court.