Hruska v Maxcem Pty Ltd (No 4) - [2023] SADC 95

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)
HRUSKA & ANOR v MAXCEM PTY LTD & ANOR (No 4)
[2023] SADC 95
Judgment of his Honour Judge Slattery
26 July 2023
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS
The applicants and the third parties apply for orders for judgment, for elevated costs orders and for freezing orders in aid of judgment.
Held:
On the application of the applicants and the third parties, the court orders:-
1.The first respondent has breached the terms of the equitable lease over the property previously identified as Certificate of Title Volume 6060 Folio 644 but now identified as Certificate of Title Volume 6273 Folio 685, located at 15 Onkaparinga Road, Verdun SA 5245 (Premises) and its licence over the premises.
2.The first respondent is liable to pay to the applicants outstanding rent and outgoings under the lease in the amount of $531,597.38.

3. The lease and the licence stand terminated.
4. The applicants be entitled to re-enter the premises forthwith.
5.The applicants are entitled to damages on account of any repairs to the premises consequent upon failure to maintain the premises.
6.The caveat dealings 12773502 and 13657972 lodged by the First Respondent over the Premises on 4 August 2017 and 16 November 2021 respectively, and the caveat dealing 13648883 lodged by the first respondent over the land of the first third party previously identified as Certificate of Title Volume 5405 Folio 396 but now identified as Certificate of Title Volume 6273 Folio 683 and Certificate of Title Volume 6273 Folio 684, respectively, be uplifted by the Registrar General upon receipt of these orders.
7.The first and second third parties’ application issued against the applicants on 3 February 2022 [FDN 54] be discontinued with each party to bear own costs.
8.The applicants have their costs of the action against the first respondent on their claim and on the respondents counterclaim against them on a party and party basis.
9.The third parties have their costs of their claim against the first respondent and also on the cross claims of the respondents against them in the action on a party and party basis.

10. Liberty to apply on short notice.
Freezing orders in aid of the applicants’ judgment.
Uniform Civil Rules 2020 (SA), referred to.
Sands v Channel 7 Adelaide Pty Ltd & Anor (No.2) [2009] SASC 365; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Pozzan v Gibbons (No.2) [2006] SASC 163; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; Krix v Citrus Board of (SA) (2003) 87 SASR 229; Pirrotta v Citibank Ltd (1998) 72 SASR 259; Glenmont Investments Pty Ltd v O’Loughlin [1999] SASC 504; Morris v McEwen (2005) 92 SASR 281; Calderbank v Calderbank [1976] FamLaw 93; [1975] 3 All ER 333; [1975] 3 WLR 586., considered.

HRUSKA & ANOR v MAXCEM PTY LTD & ANOR (No 4)
[2023] SADC 95

Application by the applicants and the third parties for orders for judgment, for elevated costs orders and for freezing orders in aid of judgment.
The applicants and the third parties have been successful in their claims and in defending the cross claims brought by both of the respondents against them. Each of them are entitled to an order for costs on those claims and cross claims in their favour. In the case of the applicants, on their claim and on the cross claim of the respondents. In the case of the third parties, on the cross claim of the respondents and their cross claims against the respondents. The applicants and the third parties do not seek any order for costs against the other on any basis and so there will be no order for costs on those claims.
The amount of costs
The trial of this action commenced on 15 March 2022. The date of the commencement of the trial was accelerated by the court at the request of the applicants for a number of reasons, including the effect of the COVID related legislation and the failure or refusal of the respondents to pay a very large amount of rent and outgoings.
On 16 March 2022, the applicants issued a Calderbank letter. It is exhibit LAH7 to the affidavit of the second applicant dated 12 July 2023 (FDN 187). The applicants offered to the respondents to resolve this action and the Magistrates Court Action in a detailed offer. It is not necessary that I repeat the whole of the detail of the offer. In summary, it required the respondents to vacate the leased premises within 28 days and to pay $100,000 on account of unpaid rent, outgoings and legal expenses. I am satisfied that at the date of the letter, there was no prospect of the respondents succeeding in defending the claim of the applicants or upon any of their cross claims. I am satisfied that the potential money claim of the applicants at that time was significantly in excess of $100,000 solely on account of unpaid rent and outgoings. That sum has now been assessed at $531,597.38. I consider that, on any reasonable estimate, the amount of legal expenses of the successful applicants would have been substantial. I am therefore satisfied that the offer made was a genuine offer and that it was also a genuine offer of compromise. It was a much more favourable outcome for the respondents, if accepted, than that which would have been achieved at trial. There was no response to the offer. A significant issue for my consideration is that the offer was received on the second day of trial.
The applicants complain that the respondents did not invite or leave open any further negotiation avenues and continued with the trial. The court has received an email from the second respondent Mr Friebe of 10 July 2023 which is Exhibit LAH8 to the affidavit of the second applicant dated 12 July 2023 (FDN 187). In that email, Mr Friebe says that the offer was rejected on account of legal advice that the respondents’ cross claim had a reasonable chance of success. However, he does not produce the legal advice referred to and so I am unable to assess the merits of that assertion and I will put it to one side. I place no weight upon this unauthenticated assertion of the respondents.
In the same email, an assertion is made that the second respondent is impecunious. In later correspondence, the first respondent also claims to be impecunious. In addressing the issues for my determination here, the impecuniosity of a party is not a basis to refuse to make any form of costs order.
This principle is well established and requires no further consideration. It arises as a matter of plain common sense. I consider first the relevant legal principles applicable to my determination of this primary costs issue.
Legal Principles
The principles in relation to a grant of indemnity costs in the context of what is described as an informal offer of settlement are well settled. They are usefully gathered in the decision of Bleby J in Sands v Channel 7 Adelaide Pty Ltd & Anor No.2.[1]
[1] [2009] SASC 365; 25 November 2009.
These principles in summary, are as follows:
1.   A court will only depart from the usual rule that costs are to be awarded on a party and party basis if there is some special or unusual feature within the case and such an unusual feature may be an imprudent refusal to accept an offer of settlement.[2] Another special or unusual feature is if an action has been commenced or continued in circumstances where: ‘… the applicant properly advised, should have known that he had no chance of success…’[3]
[2]    Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233; Pozzan v Gibbons (No.2) [2006] SASC 163.
[3]    Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 401. Krix v Citrus Board of (SA) (2003) 87 SASR 229, 245-246.
2.   If a party does not file an offer of settlement in accordance with the court rules, then the rules relating to filed offers can have no direct application.
3.   In those circumstances, a Court is entitled to have regard to offers made when considering the question of costs.[4]
[4]    Pirrotta v Citibank Ltd (1998) 72 SASR 259. Glenmont Investments Pty Ltd v O’Loughlin [1999] SASC 504.
4.   An informal letter of offer may be the basis for awarding indemnity costs if the rejection of the offer within that letter is unreasonable in all of the circumstances.[5] An informal offer should comply with the spirit and intention of the rules regarding filed offers.[6]
[5]    Pozzan v Gibbons (No.2) (Supra).
[6]    Morris v McEwen (2005) 92 SASR 281.
5.   The existence of an informal letter of offer letter is one of a number of factors to be considered by a Court when exercising its costs discretion.
6.There are a number of considerations to be taken into account when assessing an informal letter of offer letter and in no particular order they are:-
6.1    Whether the offer could have been lodged pursuant to the rules in relation to filed offers;
6.2    Whether there were any difficulties perceived in framing an appropriate offer;
6.3    Any difficulties that arise because of the involvement of other parties in litigation;
6.4    The proximity of trial at the time that the offer was made and the time during which a party may consider the offer;
6.5    The commitments to which the recipient party may be subject at the time; and
6.6    The extent of whether the circumstances of the offer, or its terms, differ from the circumstances or terms and conditions lodged in accordance with the rules.[7]
7.An assessment of the merits of the offer must be made at the time that the offer is received. The Court should not engage in hindsight reasoning when assessing reasonableness and unreasonableness. The Court will take into account whether the issues at trial had crystalised, whether the costs component of the offer justified acceptance and the particular strength of the parties’ cases.
8.As the rules of court do not contemplate a delivery of an offer during the course of the trial, any such offer will, in general, fail to comply with the spirit and intention of the rules on filed offers which require offers to be filed prior to trial. It will rarely be the case that an informal letter of offer delivered during trial and once it is well underway will be effective on a claim for indemnity costs.[8]
[7]    Morris v McEwen (2005) 92 SASR 281, [75], 300-301.
[8]    Sands v Channel 7 Adelaide Pty Ltd & Anor (No.2) [2009] SASC 365, [30].
In my opinion those are the relevant principles to be applied in the determination of this application.
I accept the submission of the applicants that the stage of the proceedings at which the informal letter of offer was received is a factor to consider in the determination of costs. That must also be assessed in the background of the orders of the court for the accelerated hearing of this action.
In the application of settled principle, I am unable to accept the submission of the applicants that based upon the informal letter of offer, the applicants are entitled to an order for indemnity costs.
In reaching my decision I need only focus upon two matters. The offer was delivered on the second day of trial. In context and from the applicant’s viewpoint, by that time nothing significant had changed since the date that the matter had been set for trial late in 2021. There had been some necessary delays in the commencement of the trial due to the parties’ difficulties in complying with the accelerated pre-trial timetable and orders and these delays were only of a very short duration. Even though the parties witness statements were filed reasonably proximate to trial, they did not disclose matters that appear to have affected the approach taken by the applicants; and all of the identified contentious issues were well understood between the parties from their pleadings. These are matters of fact and degree and I accept that because of the accelerated pre-trial programme, greater leniency should be afforded to the applicants than may otherwise be the case in relation to the time allowed to assess the merits of the respondent’s position and to make informed offers. This is for a number of reasons including the fairly rigid time compliance requirements of the court rules.
Even allowing for that exigency, I am satisfied that an offer filed on the second day of trial that does not state a period during which the offer may be accepted is not an effective offer that, if it is refused, may attract the principles enunciated in the decision in the discussion Calderbank[9] as they have now been developed in the decisions of the Supreme Court.
[9] Calderbank v Calderbank [1976] FamLaw 93; [1975] 3 All ER 333; [1975] 3 WLR 586.
The reasons are largely self-evident and they include that the offer was delivered at a time when the parties are fully and thoroughly engaged in the trial of the matter. At those times, it becomes almost impossible to give separate and proper consideration to an informal offer of settlement. This requires time for consideration, instructions and then proper advice.
The second obvious consideration is that the offer is not in the form of what may be described as an offer of settlement contemplated by the relevant authorities although this is quite secondary to the principal first consideration. The letter was not marked without prejudice save as to costs in the usual way. It may have been intended as an open letter but that is not apparent, and no submissions were made on that point. That appears to have been the intention, otherwise the common law concerning an apparently privileged document applies and so the attribution of without prejudice privilege. If that be the case, then s 67 C Evidence Act 1929 may have application and so the letter could not be put before the court in the absence of the consent of the other parties. That issue has not been ventilated. I will assume that the plain and obvious intention of the applicants in identifying the Calderbank principles is that the letter is to be treated as marked without prejudice save as to costs.
All of that said, I am not satisfied that there is any basis to award costs to the applicants as against the respondents on an elevated scale. The order is that the applicant have their costs of the proceedings as between themselves and the respondent on the claim and against both respondents on their cross claim against the applicants on a party and party basis.
The third parties have also made application for an award of costs in their favour against the respondents on an indemnity basis under UCR 194.3(1)(a) which provides:
194.3—Costs orders
(1)     The Court may order that costs be awarded—
(a)     on the standard costs basis, solicitor/client basis, indemnity basis or another basis specified by the Court;
(b)     in accordance with the Higher Courts costs scale, Magistrates Court costs scale, Minor Civil costs scale or Fast Track costs scale; or
(c)     on a combination of different bases or scales for different components of costs.
(2)The Court may order that interest be payable on an award of costs in respect of a time before judgment is entered for the costs.
(3)The Court may order that costs (including any interest) be awarded on a lump sum or partial lump sum basis.
(4)The Court may order that costs awarded to a party be set-off against any liability of the party (including a liability for costs).
(5)The Court may refer any question about costs (including whether costs should be ordered, who should pay costs or the basis on which costs should be paid) for inquiry and report or determination by a taxing officer.
The third parties submit that there was no valid or legitimate basis for the joinder of the third parties. They contend that there was a complete misapprehension on the respondents’ part that the joinder of the third parties would lead to a settlement between the respondents and the applicants favourable to the respondents. So much was not completely apparent to me during the course of the trial. From the outset, it was apparent that the third parties and the applicants were estranged and had been so for a number of years. Scott Hruska, a third party, had made a very substantial claim upon his parents, the applicants, arising out of his tenure as the proprietor at the restaurant and his expenditure upon its improvement, largely for their benefit. There was a form of rapprochement between them and the timing of that is unclear. It is known that the Deed terms did not include a contractual obligation upon the third parties to amend deposited plan D115527; that obligation fell upon the applicants and the respondents in what appears to have been a drafting error. Even so, the third parties set about to amend plan D115527 but disappointingly could not achieve that goal directly and would not deal with Mr Lohmeyer or on his terms. That was the genesis of another appropriately commercial solution proposed for the Deed lease to be amended in line with the protections within the first respondent’s filed caveat. This would render to nothing D115527 which could never obtain the applicants permission to be registered. This solution which was agreed by the applicants and the third parties did not eventuate due to the intransigence of the respondents. A solution using this method would have satisfied the obligations of the applicants and respondents under the Deed.
In submissions, the third parties contend:-
1. There were repeated approaches by the third parties to the respondents before and during the trial seeking a resolution of the action. There is no evidence on the topic before the court. I was told in submissions that it was not intended to lead such evidence because of the state of penury of the respondents. I therefore put that submission to one side.
2. In those negotiations, it became clear that the respondents were using the third party proceedings as a form of ‘blunt instrument’ to force a settlement with the applicants. There is no evidence on that topic before the court for the same reason. Also, the negotiations are most likely to have been privileged and so attract the restriction on dissemination provided under s 67 C of the Evidence Act 1929. I consider that s 59 J of that Act has no application here.
3. A chronology is attached to the written submissions of the third parties. In oral argument, Mr Adams conceded that there is no proof of its content and the third parties did not intend to provide such proof for the same reasons.
4. It was accepted that at the opening of their case, the third parties agreed that they did not press their cross claims against any other party. They sought the finalisation of the Eastern Easement. The respondents refused to agree. It became necessary for the court to make orders for the registration of that easement under s 64 of the Real Property Act 1886.
The claim of the respondents against the third parties was without merit based upon the findings of the court about the Deed of 10 December 2017, the attached Deed lease and the equitable lease, the terms of which had been settled by May 2019 and were available in a final form by October 2019. Those findings however do not support the submissions of the third parties about the alleged discreditable conduct or abuse of process by the respondents.
The failure to agree to the Eastern Easement was an egregious failure of the respondents in the context of the litigation but I am satisfied that such conduct does not justify the imposition of indemnity costs because such conduct warrants the disapproval of the court. This approach of the respondents was fundamentally misguided but that is not a quality rarely seen in this or any other court. Something more is required.

It is of no benefit to suggest that the expense has been incurred when the commencement point of that requirement to incur costs was made at a time earlier than the commencement of proceedings. The genesis of the difficulties was deposited plan 115527 and then later, its amendment. This is the case even though I have little or no confidence that the outcome of the matter then would have been different due to the aberrant and incongruous approach taken by the respondents to a comparatively simple commercial problem. This approach is regrettable but is also not at all unfamiliar to the court.
In the circumstances, I order that the third parties are to have their costs of their cross claim against the first respondent and the respondents cross claims against them on a party and party basis.
The guarantee of Mr Friebe
In judgment No.2 I have set out in detail the substratum of fact upon which this issue is to be decided. There I set out in full the content of the 2012 lease and the guarantee therein given by Mr Friebe and its terms; the content of the Deed; the content of the equitable lease and its guarantee to be given by Mr Friebe; the negotiations between 2017 and 2019; and the equitable lease in the form of the amended Deed lease. I have found that this Deed lease bound Maxcem. That document envisaged a guarantee to be signed by Mr Friebe. None has been signed as occurred for the 2012 lease. Judgment No.2 also describes the parties’ pleadings. Mr Friebe admits that he is the sole guarantor of the obligations of Maxcem under the ‘current lease’ over the property of the applicants (statement of claim paragraph 3.2; defence paragraph 3).
In the pleadings there is a definition of the property (statement of claim paragraph 1.3) but there is no definition or identification of the ‘current lease’ as referred to in the statement of claim. The pleading then goes onto identify the Deed, the Deed lease and the factual issues giving rise to the claim. Those pleadings do not revert to the expression ‘current lease’ in context. Rather, the focus is upon the Deed lease; the negotiations between 2017 and 2019 through Mr Scarborough; the finalisation of the terms of that lease; the failure of its execution; and the equitable lease.
The equitable lease arises under the application of equitable principles by virtue of the acts of part performance and the availability of an order for specific performance of the May 2019 lease prepared by Mrs Scarborough. There is no executed form of lease (and guarantee) as settled by May 2019 which, in turn, differs in a number of ways compared to the 2012 lease. One important difference is the total demise of the leasehold area.
It was once the case that section 4 of the Statute of Frauds (Imperial act Charles IIC.3)(1677) operated to require that a guarantee be evidenced in writing. That is no longer the law of South Australia. Under Act 81 of 1982 assented to on 16^th September 1982, s 3, s4 of the Statute of Frauds has no force or effect in this state. It is possible therefore for an oral guarantee to be enforced if given and relied upon by an assured. In this case, there is no plea of such a guarantee. There is no form of executed guarantee except under the 2012 lease. There is no contention that an oral guarantee or lease arises. All that is referred to in the pleading is the ‘current lease’. Also, the relationship between the parties changed under the equitable lease which was reflected in the 2019 lease and it was a new obligation; so much was contemplated under the terms of the Deed and the Deed lease. There was to be a new annual rental set which was to apply under the Deed lease. It would be reflected in the form of the final lease prepared by Mr Scarborough.
The pleadings do not identify with any or sufficient particularity and therefore certainty, the meaning of the expression ‘current lease’ referred to therein. I am therefore unable to accept the submission that I may use the guarantee under the 2012 lease as, in effect, a cover all obligation of Mr Friebe to give the guarantee. I am unable to accept any contention that Mr Friebe has given an oral guarantee. I am therefore unable to accept any contention that Mr Friebe currently was a guarantor of the obligations of Maxcem under the equitable lease. In making that finding, I am mindful of the principles applicable to admissions in pleadings. These bind the party making the admission and at this stage of the proceedings, may only be withdrawn with the leave of the Court. Those principles have no application here because the admission is made about a ‘current lease’ when there can be no or no sufficient certainty of the meaning of that expression.
I am satisfied that the 2012 lease, and so the guarantee under it, was operational and had effect in accordance with the obvious and apparent intention of the parties based upon that lease document in the background of the whole of the surrounding circumstances. One of those circumstances was the Deed, the Deed lease and what followed into 2019 in the background that Maxcem behaved in relation to the demised premises as if the 2019 lease had been executed. However, these do not amount to acts sufficient to identify an obligation upon Mr Friebe to guarantee the obligations of Maxcem in favour of the applicants under the equitable lease. Similarly there can be no possibility of what has been described as an equitable guarantee. The principles of equity apply in relation to the equitable lease but they will not assist in the context of a guarantee. None was pleaded. It did not arise on the evidence. It follows that Mr Friebe is only liable to pay to the applicants the outstanding obligations (if any) owed by Maxcem under the 2012 lease under his guarantee given under that document. That is the limit of his personal liability.
The caveats
I am satisfied that each of the caveats dealings 12773502 and 13657972 lodged by the first respondents on 4 August 2017 and 16 November 2021 respectively and the caveat dealing 13648883 lodged by the first respondent over the land of the first third party previously identified as Certificate of Title 5405 Folio 396 but now identified as Certificate of Title Volume 6273 Folio 683 and Certificate of Title Volume 6273 Folio 684 should be uplifted by the Registrar General.
I am satisfied that on the principal proceedings on the claims of the applicants against the respondents, on the cross claims of the respondents against the third parties and the applicants and on the cross claims of the third parties against the respondents, the following orders may be made (upon the application of the applicants and the third parties):-
1.The first respondent has breached the terms of the equitable lease over the property previously identified as Certificate of Title Volume 6060 Folio 644 but now identified as Certificate of Title Volume 6273 Folio 685, located at 15 Onkaparinga Road, Verdun SA 5245 (Premises) and its licence over the premises.
2.The first respondent is liable to pay to the applicants outstanding rent and outgoings under the lease in the amount of $531,597.38.
3.The lease and the licence stand terminated.
4.The applicants be entitled to re-enter the premises forthwith.
5.The applicants are entitled to damages on account of any repairs to the premises consequent upon failure to maintain the premises.
6.The caveat dealings 12773502 and 13657972 lodged by the First Respondent over the Premises on 4 August 2017 and 16 November 2021 respectively, and the caveat dealing 13648883 lodged by the first respondent over the land of the first third party previously identified as Certificate of Title Volume 5405 Folio 396 but now identified as Certificate of Title Volume 6273 Folio 683 and Certificate of Title Volume 6273 Folio 684, respectively, be uplifted by the Registrar General upon receipt of these orders.
7.The first and second third parties’ application issued against the applicants on 3 February 2022 [FDN 54] be discontinued with each party to bear own costs.
8.The applicants have their costs of the action against the first respondent on their claim and on the respondents cross claim on a party and party basis.
9.The third parties have their costs of their claim against the first respondent and the cross claims of the respondents against them in the action on a party and party basis.
10.Liberty to apply on short notice.
In the course of the arguments about costs and ancillary orders the court has received a number of emails from Mr Friebe, the second respondent. He has also made oral submissions. I am satisfied from the information received in the course of the trial and subsequently from Mr Friebe that neither of the respondents own any real property in South Australia. I am also satisfied that the company Maxcem Pty Ltd owns no assets and it has ceased to trade. In his submissions, Mr Friebe has informed me that he is in a state of penury. The applicants now seek the assistance of the Court to make orders freezing the assets of the respondents that may still exist. This application is made in aid of the execution of their judgment, the details of which I have set out above.
For the purposes of this aspect of the application, the applicants read the affidavits of Louise Antionette Hruska dated 29 June 2023 (FDN 184) and 12 July 2023 (FDN 188).
I am satisfied that in May 2023, the respondents commenced removing property in the form of fixtures and fittings from the leasehold premises and that the respondents have abandoned the premises. On the basis of the affidavit material tendered before me, I am satisfied that the whole of the plant and equipment and fixtures and fittings within the restaurant portion of the premises have been removed including a large amount of kitchen equipment which the applicants contend belong to them. These comprise a commercial double deep fryer unit, two freezers, a Garland Overhead Grill, a fridge, workbenches on wheels, a fixed stainless steel meal preparation bench, a commercial dishwasher and stove and sundry other kitchen equipment and utensils.
On 10 July 2023, the second respondent by email said that he wished to remove a shipping container and a marquee left on the premises. It appears that the respondents claim a proprietary interest in these assets. I am satisfied that the container and the marquee are the only assets of value connected with the respondents known to the applicants. I am satisfied that the marquee has solid wooden walls, is hardwired and its support uprights have been concreted into the ground.
The applicants aver in the affidavit of Mrs Hruska, and I accept, that in the event that any further assets of the respondents are removed from the premises, there will be no possibility for the applicants to satisfy even a tiny fraction of the respondent’s indebtedness in the amount of $531,597.38. This does not take into account the amount to be assessed by the Magistrates Court. Also, I am satisfied that this assessment does not taken into account any further rent reviews that were required to be undertaken under the terms of the equitable lease.
I am satisfied that both of the respondents are impecunious. They are insolvent. I am also satisfied from the affidavit evidence filed by the applicants and in respect of which there has been no answering material filed, that, apart from two items which I have discussed above, the respondents have removed all items of plant and equipment of value from the property and have thereby prevented the applicants from recovering any of its judgment losses whether through sale or otherwise of those assets. I am satisfied that the only two assets of any value belonging to the respondents and which remain within the power of the applicants are the marquee and the shipping container currently on the premises. I am also satisfied from the evidence that the marquee is fixed to the premises of the applicants, its removal will require damage to those premises and I am satisfied that such damage would not be remediated by the respondents. I am also satisfied from the affidavit evidence that there is waste and other valueless items upon the property of the applicants which are required to be cleaned up at the cost of the respondents but will be paid for by the applicants. I am therefore satisfied that damages in the current circumstances can never be an adequate remedy.
Under UCR 112.14, 112.15 and 112.17, I have the power to make a freezing order in aid of a judgment in order to prevent the frustration of the courts process and to meet a danger that a judgment will be wholly or partly unsatisfied. Under UCR 112.14 (2) I may make an order restraining a respondent from removing any assets located in Australia or diminishing the value of those assets. Those rules provide:-
112.14—Freezing order
(1)The Court may make an order (a freezing order), with or without notice to a respondent, for the purpose of 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.
(2)A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
Prescribed form—
Form 82B Freezing Order
Note—
For an application in respect of an anticipated proceeding, see Chapter 19 Part 13.
112.15—Ancillary order
(1)The Court may make an order (an ancillary order) ancillary to a freezing order or prospective freezing order as the Court considers appropriate.
(2)Without limiting the generality of subrule (1), an ancillary order may be made for either or both of the following purposes—
(a)     eliciting information relating to assets relevant to the freezing order or prospective freezing order;
(b)     determining whether the freezing order should be made.
112.16—Respondent need not be party to proceeding
The Court may make a freezing order or an ancillary order against a respondent even if the person is not a party to a proceeding in which substantive relief is sought against the person.
112.17—Order against judgment debtor or prospective judgment debtor or third party
(1)     This rule applies if—
(a)     judgment has been given in favour of an applicant by—
(i)    the Court; or
(ii)     for a judgment to which subrule (2) applies—another court; or
(b)     an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(i)    the Court; or
(ii)     for a cause of action to which subrule (3) applies—another court.
(2)This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court.
(3)     This subrule applies to a cause of action if—
(a)     there is a sufficient prospect that the other court will give judgment in favour of the applicant; and
(b)     there is a sufficient prospect that the judgment will be registered in or enforced by the Court.
(4)The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur—
(a)     the judgment debtor, prospective judgment debtor or another person absconds; or
(b)     the assets of the judgment debtor, prospective judgment debtor or another person are—
(i)    removed from Australia or from a place inside or outside Australia; or
(ii)     disposed of, dealt with or diminished in value.
(5)The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that—
(a)     there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or
(b)     a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
(6)Nothing in this rule affects the power of the Court to make a freezing order or ancillary order if the Court considers it is in the interests of justice to do so.
The first respondent is currently the judgment debtor of the applicants as judgment creditors. Under UCR 112.17 (4), I may make an order against the judgment debtor if I am satisfied there is a danger that the judgment will be wholly or partly unsatisfied if the assets of the judgment debtor are to be disposed of or diminished in value. I am satisfied that it is appropriate to make a freezing under UCR 112.15 and 112.17. I order that the applicants bring in a form of orders consistent with those rules and this judgment. I am also satisfied that it is appropriate, in these circumstances, to make an ancillary order under UCR 112.15 (1) and (2)(a) eliciting information in relation to assets relevant to the freezing order.
The applicants are to bring in a form of order which reflect this freezing order made under UCR 112. I give liberty to apply generally.