Goldtrap P/L v Emzay P/L & Murphy

[1997] QSC 256

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  Writ No.7544 of 1996

Before the Hon. Mr Justice Mackenzie

[Goldtrap P/L v. Emzay P/L & Murphy]

BETWEEN:

GOLDTRAP PTY LTD ACN 010 989 250
  Plaintiff

AND:

EMZAY PTY LTD ACN 010 659 097
  First Defendant

AND:

PHILLIP REGINALD MURPHY
  Second Defendant

JUDGMENT - MACKENZIE J.

Judgment Delivered 7 March, 1997

CATCHWORDS:           MAREVA INJUNCTION - Proceeds from contracts for sale of land between companies - director's fiduciary duty - application of Anshun principle - whether arguable case, balance of convenience satisfied and, danger of defendants absconding or removal of assets out of the jurisdiction, so plaintiff unable to have judgment satisfied - whether terms of undertaking and/or character of first respondent's assets sufficient - whether delay in seeking the relief was a disqualifying feature.

Counsel:I.D.F. Callinan Q.C. and Mr Martin for the applicant.

W. Sofronoff Q.C. & G.C. Newton for the respondents.

Solicitors:  Baker Johnson for the applicant.
  Russell and Company for the respondents.

Hearing date:          24 February, 1997
IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  Writ No.7544 of 1996

Before the Hon. Mr Justice Mackenzie

[Goldtrap P/L v. Emzay P/L & Murphy]

BETWEEN:

GOLDTRAP PTY LTD ACN 010 989 250
  Plaintiff

AND:

EMZAY PTY LTD ACN 010 659 097
  First Defendant

AND:

PHILLIP REGINALD MURPHY
  Second Defendant

JUDGMENT - MACKENZIE J.

Judgment Delivered 7 March, 1997

This is a motion for a Mareva injunction. The applicant plaintiff ("Goldtrap") is a property development company. The respondent second defendant ("Phil Murphy"), his brother Tosh Ordy Murphy and Robert James Trask were directors until the second defendant ceased to hold office on 28 November 1990. The writ includes claims for declarations, injunctions and other relief in respect of the transfer of land (the Campbell land) to Kurts Development Pty Ltd and damages for breach of fiduciary duty, fraud and breaches of the Corporations Law.
          The affidavits read on the motion disclose that there are a large number of questions of fact in dispute.  The applicant's case is that Phil Murphy was not only a director but a full-time employee of it.  Phil Murphy says that while he was employed on commission by other companies in his brother's group he was not an employee of the applicant. 
          The applicant's version of the acquisition of the land is that Phil Murphy located the Campbell land for purchase by Goldtrap.  Because of other demands on his time Tosh Murphy assigned the protracted process of acquiring the land to Phil Murphy.  After some time he was told that the negotiations had fallen through and that the Campbell land had been sold to a purchaser whose identity Phil Murphy did not know.  Tosh Murphy deposes that he only later became aware that it had been acquired by the first respondent by contract dated 16 August 1990.  It is alleged that any acquisition of the Campbell land by the first respondent was contrary to Mr Tosh Murphy's instructions and in conflict with Phil Murphy's duties as director and employee of Goldtrap.   Mr Trask has deposed in terms broadly consistent with Mr Tosh Murphy's version but without a great degree of detail.  A solicitor, Mr Ford, deposed that he believed he had seen a contract relating to the Campbell land with a company name on it, without being able to recall the name of the company.  Phil Murphy deposes that at one time a contract had been prepared in the name of Charmcove Pty Ltd and that there had never been a contract in the name of Goldtrap. 
          Phil Murphy's version of events is that the only purpose of the unit trust of which Goldtrap was the trustee was to acquire a parcel of land (the Emanuel land).  With respect to the Campbell land he deposes that Tosh Murphy was taken to see the land and spoke disparagingly of it.  This is corroborated by Mr Campbell.  Phil Murphy deposes that Tosh Murphy was not interested in purchasing the land, so he instructed Mr Ford or Mr Gasteen at Bain Gasteen & Smith accordingly.  Thereafter the firm acted for him in the matter of the transfer of the land from the Campbell interests to the first defendant. 
          The areas of dispute already referred to relate to the most directly relevant matters for the purposes of the application.  There are numerous other disputes as to matters of detail in the affidavits.  The thrust of the application is that Goldtrap complains that it will be deprived of a profit of about $2M because of the alleged failure of Phil Murphy to act in accordance with his duty to Goldtrap.  Tosh Murphy deposes that he has a genuine concern that any funds arising from the Campbell land which are rightfully assets of Goldtrap, will be dissipated in the hands of the respondents.  It is further alleged that they do not have sufficient other assets to compensate Goldtrap in the event that the funds arising from the sale are dissipated. 
          Because there is a submission that the action must fail because of the application of Anshun v. Port of Melbourne Authority (1981) 147 CLR 589, it should be noted that in respect of the Emanuel land and other lands described as the Newton lands there was litigation between Phil Murphy and Emzay Pty Ltd as plaintiffs and defendants Goldtrap, Tosh Murphy, his wife and Mr Trask and companies controlled by them for relief not unlike that claimed in the present case. Those proceedings commenced in December 1992. The action against Trask and his company was settled and in October 1995 Byrne J. gave judgment against Mr Tosh Murphy and his company Remford Pty Ltd, making declarations of constructive trust ordering an account of profits and granting various other forms of relief including injunctive relief. The account of profits is under way but has not yet been finalised. As against Goldtrap, the only order against it was in relation to the Newton lands. There is similar litigation on foot in respect of the Emanuel land involving Tosh Murphy and a company Dundale Pty Ltd.
          The thrust of the complaint in the action decided by Byrne J. was that Goldtrap, in which the second respondent had a 15 per cent interest, had entered into contracts to purchase the Emanuel land but after the second respondent ceased to be a director the remaining directors caused Goldtrap's contracts to acquire the land to be terminated and caused their companies Remford and Mapgate, in which the second respondent had no interest, to acquire the land and develop it.
          To successfully apply the Anshun principle, it is necessary to establish that the matter relied on in the second proceedings was so relevant to the subject matter of the first proceedings that it would have been unreasonable not to rely on it in the first proceedings.  Here, in the earlier proceedings, Phil Murphy and Emzay were complaining about breaches of trust by Goldtrap and others.  In these proceedings, like conduct by Phil Murphy and Emzay in respect of different land is complained of.  Apart from the class of conduct complained of, the cases are separate and distinct.  I am unconvinced that Anshun can be applied. 
          In an application for a Mareva injunction it is not my function to resolve the conflicts of fact.  It must be established by the applicant that it has a good arguable case.  In some circumstances, the perception that while there is a case which may be made out, it is shadowy may affect the outcome when weighed with balance of convenience factors.  I propose only to say in this case that if the tribunal of fact accepts Tosh Murphy's version over that of Phil Murphy this requirement is satisfied.  In the circumstances, I do not feel it necessary to attempt to resolve the differences in the versions given by the parties notwithstanding the intricate detail in which they were explored in submissions.   A further requirement is that the applicant establish 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 other fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.  (Northcorp Limited v. Allman Properties (Australia) Pty Ltd (1994) 2QdR 405). It is not necessary to show that the apprehended or proven purpose of disposal of assets is to prevent recovery of the amount of the judgment. It is sufficient to show a danger that by reason of the assets dealt with, the plaintiff if successful will not be able to have the fruits of his judgment.
          The remedy is also discretionary or, as it was put in Planet International Ltd (in liquidation) v. Garcia (1989) 2 QdR 427, it must be just and convenient to grant the injunction. There is evidence, which is uncontradicted, that the first respondent has net assets of about $3.3M. Of that, $930,000 is the estimated value of moneys recoverable from Remford as a result of the former action. Of the remainder, $1.275M is money due from Kurts Developments Pty Ltd. This is described as non-current and is repayable in sums of $425,000 each 16 August until the year 2000. It was submitted on the basis of these figures that there is no risk of dissipation of assets frustrating a judgment. Reliance was placed by the applicant on the terms of an undertaking offered at an earlier stage of proceedings. It was submitted that the uses to which the money might be put if the undertaking had been accepted indicated an intention to use it in a way which would put it beyond the reach of the applicant in the event of judgment being obtained by him. Some items in the undertaking were of a business cash flow nature. Others had a personal nature and the limitations on such expenditure were not well defined. Mr Callinan also submitted that as the claim was an equitable claim for breach of fiduciary duty the action was not for a monetary sum but was one in respect of the proceeds of the sale of trust property, which could be traced. He submitted that this was a further ground why the respondents should be restrained from making use of the proceeds.
          The respondents submitted that the delay in seeking the relief was a disqualifying feature.  Mr Sofronoff submitted that the principle applied in Carlton and United Breweries (NSW) Pty Ltd v. Brewing New South Wales Limited (1987) 76 ALR 633 was equally applicable to this case. There seems to be uncontradicted evidence that no later than 1993 the applicant knew that the respondent company had taken an interest in the land. No action was taken to restrain dealings with it and it appears that no complaint was made at that time or indeed at any time until the proceedings were commenced on 11 September, 1996. The reason for the delay relied on by Mr Callinan was that until the land was sold the applicant did not have any reason to pursue the matter. I accept that the proceeds of the sale are more easily dissipated than an asset in the form of real property. However it is in my view surprising that there had not been an attempt by the applicant to protect its position when it became aware of what at that time must have appeared to it to be a breach of fiduciary duty.
          In deciding whether an injunction should be granted it is necessary to weigh the several factors together, bearing in mind that the remedy is, in the final analysis, an equitable one, and discretionary.  Notwithstanding Mr Callinan's argument about the nature of the moneys I have come to the conclusion that that is not an overwhelming factor in this case.  In the first place, I consider that the delay is not adequately accounted for by the argument that sale of the land was a factor requiring restraint against breach of trust for the first time.  The delay in seeking the remedy, coupled with the asset position of the respondent company and the second respondent, and the fact that moneys from the sale will be realised only progressively over 4 years satisfies me that this is not a case where there is a real danger there will be a dissipation of assets in the sense that there will be insufficient assets left if judgment is obtained.  The application is therefore refused with costs to be taxed.