FEDERAL COURT OF AUSTRALIA
Hillier v Martin (No 11) [2022] FCA 407
File number: SAD 113 of 2020 Judgment of: CHARLESWORTH J Date of judgment: 6 April 2022 Date of publication of reasons: 19 April 2022 Catchwords: PRACTICE AND PROCEDURE – order in the nature of injunction – assets of a business as a going concern held on trust – parties in dispute as to their equitable interests in the trust assets and as to the terms of the trust – applicant seeking to restrain the respondents from applying the income and assets of the trust for any purpose other than the payment of the expenses of the business – financial reports showing entities holding the assets have outstanding and aged payables owing to the Australian Taxation Office and a supplier – financial reports showing profits in decline – financial reports showing those in control of the entities have caused the entities to advance loans to themselves or their associates – inference that grant of loans not for a business purpose – inference that loans have affected the relevant entities’ cash flows – whether order appropriate to protect the assets forming the subject of the underlying dispute from diminution in circumstances where demonstrated past transactions and future like transactions would be in breach of the trust asserted by the applicant – where respondents demonstrate no prejudice arising from restraint – where respondents’ lawful interests protected by grant of liberty to apply to vary restraint – order with injunction granted Legislation: Federal Court Rules 2011 (Cth) Cases cited: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Breen v Williams (1996) 186 CLR 71
Chan v Zacharia (1984) 154 CLR 178
Hillier v Martin (No 5) [2021] FCA 949
Hillier v Martin (No 7) [2021] FCA 1221
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Lucisano v Westpac Banking Corporation [2015] FCA 243
Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238
Division: General Division Registry: South Australia National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 49 Date of hearing: 6 April 2022 Counsel for the Applicant: Mr D Whitington QC with Ms H Doyle Solicitor for the Applicant: Sykes Bidstrup Counsel for the First and Second Respondents: Mr S Ower QC Solicitor for the First and Second Respondents: Norman Waterhouse Counsel for the Third Respondent: The Third Respondent did not appear ORDERS
SAD 113 of 2020 BETWEEN: JAMES HILLIER
Applicant
AND: VICTORIA MARTIN
First Respondent
NORDBURGER OPERATIONS PTY LTD
Second Respondent
ERIK VARI PTY LTD
Third Respondent
ORDER MADE BY:
CHARLESWORTH J
DATE OF ORDER:
6 APRIL 2022
THE COURT NOTES THAT:
1.The applicant through his Counsel has given the usual undertaking as to damages in respect of the restraint referred to in paragraph 1 of these Orders.
THE COURT ORDERS THAT:
1.The order in paragraph 4 of the orders made on 29…
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- Case
- [2022] FCA 407
- Decision Date
CaseChat Overview and Summary
The court considered the financial reports and the past transactions of the respondents, which showed that they had caused the entities to advance loans to themselves or their associates. The court inferred that these loans were not for a business purpose and had affected the relevant entities' cash flows. The court found that the restraint was necessary to protect the assets from diminution and that the respondents had not demonstrated any prejudice arising from the restraint. The court also noted that the respondents' lawful interests were protected by the grant of liberty to apply to vary the restraint. The court granted the order with injunction and set out the terms of the order, including the duration of the restraint and the respondents' liberty to apply to vary the orders. The court also set out the case management directions for the interlocutory application for an order in terms of paragraph 7 of the interlocutory application dated 4 April 2022.
Orders
Orders of the court
1. The order in paragraph 4 of the orders made on 29 March 2022 is to remain in force until 5:00pm (ACST) on 28 April 2022.
2. The respondents have liberty to apply, on two business days’ notice, for an order varying or revoking the order referred to in paragraph 1. Such liberty may be exercised by filing an affidavit deposing to the facts upon which the respondents rely. Any rule of the Court requiring the filing of an interlocutory application in respect of any such relief is dispensed with.
3. On or before 11 April 2022 the applicant is to advise the respondents and the Court as to whether an application for orders in terms of paragraphs 1 to 6 of the interlocutory application dated 4 April 2022 is pressed. To the extent that the application for any one of those orders is pressed, the application is, by this order, set down for case management at 9:30am (ACST) on 28 April 2022.
4. On or before 20 April 2022 the respondents, if so advised, are to file and serve any affidavit material upon which they rely in opposition to the order in paragraph 7 of the interlocutory application dated 4 April 2022.
5. On or before 26 April 2022 the applicant is to file and serve any affidavit material strictly in response.
6. The application for an order in terms of paragraph 7 of the interlocutory application dated 4 April 2022 is set down for hearing at 9:30am (ACST) on 28 April 2022.
7. Liberty to apply.
8. Costs of today reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
At present, the legal owner of the assets constituting the Nordburger business is the second respondent, Nordburger Operations Pty Ltd. The respondents assert that Operations hold and is entitled to hold the assets on trust on terms summarised below. Mr Hillier disputes that entitlement. On 29 March 2022 I made orders relevantly in the following terms:3.There be a further case management hearing at not before 4.30pm (ACDT) on 6 April 2022.4.Pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth), the first respondent and second respondent be restrained and an injunction is granted restraining them, whether by themselves, their servants or agents or otherwise, including Mr Thomas Martin, from making any payments out of the revenue, funds or assets, or otherwise dealing with the funds or assets, or the entities, trusts or businesses, which trade under the Nordburger name (Nordburger businesses) or brand except in payment of the expenses of the Nordburger businesses in the ordinary course of business.5. The order in paragraph 4 is to remain in force:(a)until 5.00 pm on 4 April 2022; or(b)if an interlocutory application is filed in accordance with the order in paragraph 2, until such time as the interlocutory application is determined.6.The respondents have liberty to apply at short notice to vary the orders in paragraphs 4 and 5. I will refer to the order in paragraph 4 as the “original restraint”. It is in terms similar to an interlocutory order sought on the face of the originating application filed on 11 August 2020 against the first respondent (Mrs Victoria Martin) as the only respondent at that time. With the consensus of senior counsel for the applicant (Mr Hiller) and Mrs Martin, I have previously ordered that Mr Hillier’s application for interlocutory orders as sought on the originating application (or as varied) be deferred until discovery was complete. I have taken the view that the recent (belated) discharge by Mrs Martin of her discovery obligations makes it now permissible for Mr Hillier to agitate for the relief he sought at the outset of the proceeding, notwithstanding the proximity of this matter to trial. I am satisfied that he has acted promptly after gaining access to the information upon which he relies. As can be seen, the original restraint was expressed to apply for a few days, anticipating the filing of an interlocutory application by Mr Hillier. At the time that it was made, Mr Hillier had provided a minute of order seeking for the restraint to apply until further order. In addition, he sought a series of orders providing for the appointment of a receiver to Operations or the Nordburger Holdings Trust (NH Trust) on the basis of actual or suspected insolvency. He sought to have the application (raised by way of the minute) programmed to an urgent hearing. The respondents submitted that the application was one that ought to have been made by way of an interlocutory application filed in accordance with the Federal Court Rules 2011 (Cth). I accepted that contention insofar as it concerned the application for an appointment of a receiver, but otherwise expressed the view that the application for an order in terms of the original restraint had already been made on the face of the originating application, such that a separate interlocutory application was not necessary in order for it to be pursued on 29 March 2022.