Harlap v Rosepoint Nominees Pty Ltd

[2009] WASC 241

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HARLAP -v- ROSEPOINT NOMINEES PTY LTD [2009] WASC 241

CORAM:   BEECH J

HEARD:   26 AUGUST 2009

DELIVERED          :   26 AUGUST 2009

PUBLISHED           :  1 SEPTEMBER 2009

FILE NO/S:   CIV 2499 of 2009

BETWEEN:   NAHUM HARLAP

First Plaintiff

OSNAT HARLAP
Second Plaintiff

AND

ROSEPOINT NOMINEES PTY LTD
Defendant

Catchwords:

Practice and procedure - Mareva injunction - Asset preservation order - O 52A freezing order - Whether Supreme Court can grant asset preservation order to preserve the processes of another court

Legislation:

Rules of the Supreme Court 1971 (WA), O 52A

Result:

Application dismissed

Category:    B

Representation:

Counsel:

First Plaintiff                  :     Mr A M Prime

Second Plaintiff             :     Mr A M Prime

Defendant:     Mr J A Thomson

Solicitors:

First Plaintiff                  :     McCallum Donovan Sweeney

Second Plaintiff             :     McCallum Donovan Sweeney

Defendant:     Tottle Partners

Case(s) referred to in judgment(s):

Cardile v LED Builders Pty Ltd [1997] HCA 18; (1999) 198 CLR 380

Celtic Resources Holdings Plc v Arduina Holding BV [2006] WASC 68; (2006) 32 WAR 276

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1

BEECH J: 

(These reasons are an edited version of the reasons delivered extemporaneously on 26 August 2009)

Introduction

1. The plaintiffs own a house at 132 Forrest Street in Peppermint Grove.  The defendant owns a house next door at 134 and 134A Forrest Street.  On 11 August 2009 the plaintiffs brought proceedings against the defendant in the Magistrates Court to recover a sum of $47,871 relating to the fence between the two properties.

2. The defendant has contracted to sell the property at 134 Forrest Street.  By this application the plaintiffs seek a freezing order or asset preservation order restraining the defendant from removing from the jurisdiction of the court, or otherwise disposing of or dealing with, the sum of $60,000 realised from the sale of the property at 134 Forrest Street.

3. For the reasons that follow, I would refuse the plaintiffs' application.

4. The plaintiffs' application is said to be based on the provisions of O 52A of the Rules of the Supreme Court 1971 (WA), or alternatively on the court's general jurisdiction and powers. In my opinion, neither of those bases provides a foundation for the making of an order to protect the integrity of the processes of the Magistrates Court. It is the protection of the efficacy of this court's processes that founds the jurisdiction for making a freezing order or an asset preservation order.

The foundation of an asset preservation order or freezing order

1. I begin with O 52A of the Rules of the Supreme Court. The purpose for which the court is empowered to make a freezing order is that stated in O 52A r 2. The purpose is for 'preventing the frustration or inhibition of the Court's process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied'. A reference to 'the Court' is, of course, a reference to this court.

2. While further support for the conclusion that O 52A does not empower the making of an order for the purpose of the prevention of the frustration or inhibition of another's courts processes might be derived from a consideration of O 52A r 5, it does not seem to be necessary to go beyond O 52A r 2 to support this conclusion.

3. The court's general jurisdiction to make freezing orders or asset preservation orders is not affected by O 52A.

4. In my opinion, the object of the making of an asset preservation order under the court's general jurisdiction is to protect the integrity of the processes of the court making that order, not to protect the integrity of the processes of some other court.  All of the authorities of which I am aware seem to me to support that view.  Neither counsel was aware of any authority to the contrary.

5. The following cases illustrate the object of an asset preservation order.  The basis of the making of what were once called Mareva orders and are now termed asset preservation orders or freezing orders was explained by the High Court in Cardile v LED Builders Pty Ltd [1997] HCA 18; (1999) 198 CLR 380 [25], [26], [40]. This case makes it clear that it is the protection of the processes of the court making the asset preservation order that is the object of such an order.

6. Further, in Cardile [41], [42] their Honours cited with approval (subject to an immaterial qualification) the statement in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 that 'the general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked'. See also Celtic Resources Holdings Plc v Arduina Holding BV [2006] WASC 68; (2006) 32 WAR 276 [39] – [51].

7. Accordingly, in my opinion, the Supreme Court cannot grant an asset preservation order or freezing order in order to protect the efficacy of another court's processes.

8. In this case there is no action in the Supreme Court, nor is there any evidence that such an action is contemplated.  Accordingly, the application fails on that ground.

9. In any case, leaving aside that fatal obstacle, I am not persuaded that on the evidence it would be appropriate to grant any asset preservation order.  Notwithstanding that it is not necessary to express final views on this point, I state my views at the invitation of both counsel.

The defendant's assets are not being dissipated or removed from the jurisdiction

1. It was ultimately accepted in the course of argument by counsel for the plaintiffs that the circumstances as they now appear on the whole of the evidence before the court do not warrant the making of an asset preservation order.  That concession seems to me to have been rightly made.

2. The effect of the evidence can be summarised in this way:

   (a)a claim for $47,871 was made by the plaintiffs against the defendant;

   (b)the defendant is selling its property in Forrest Street, Peppermint Grove;

   (c)as part of that transaction Mr Waller, a director of the defendant, is purchasing a property in Cottesloe, Western Australia, for a price of $5 million;

   (d)there is nothing to suggest that this transaction is other than an ordinary arm's length property transaction;

   (e)Mr Waller is also acquiring an additional property in Cottesloe for a price of $2.75 million;

   (f)it can be seen that both of the properties being acquired are being acquired by Mr Waller in his own name; and

   (g)the defendant is lending the proceeds of sale of 134 Forrest Street of $7.75 million to Mr Waller and that will be, in effect, used by Mr Waller to finance the purchase of these two properties.

3. As counsel for the plaintiffs points out, there is no evidence before me of the terms of the loan between Mr Waller and the defendant, nor is there any evidence as to the terms or the state of any loan account.  Nonetheless, the significance of that has to be viewed in the context of this application having been brought on urgently by the plaintiffs.

4. The effect of the evidence is that I would not be satisfied that the assets of the defendant are about to be removed from Australia, nor am I satisfied that the assets of the defendant are being dissipated or diminished in value.

5. I also note the evidence that the defendant owns an additional piece of property in Western Australia.  There is no evidence of any imminent disposition or alteration to that asset.

6. In summary, therefore, the circumstances as they now pertain would not seem to me to justify an asset preservation order, even had the fundamental obstacle that I have earlier identified been somehow overcome.

Conclusion

1. For these reasons I would dismiss the plaintiffs' application.