Jadewest 2024 Pty Ltd v BTFMS Pty Ltd - [2024] WASC 166

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   JADEWEST 2024 PTY LTD -v- BTFMS PTY LTD [2024] WASC 166
CORAM:   HILL J
HEARD:   1 MAY 2024
DELIVERED          :   1 MAY 2024
PUBLISHED           :   8 MAY 2024
FILE NO/S:   CIV 1487 of 2024
BETWEEN:   JADEWEST 2024 PTY LTD
First Plaintiff

SILVER FOX (WA) PTY LTD
Second Plaintiff

PINETTA NOMINEES PTY LTD
Third Plaintiff

AND

BTFMS PTY LTD
First Defendant

BENJAMIN-CHARLES WALTER VELLA
Second Defendant

Catchwords:

Practice and procedure - Application for freezing order - Ex parte application - Where first plaintiff claims to be trustee of accounting practice - Where second defendant located out of jurisdiction - Where second defendant operates accounting practice out of jurisdiction - Claim that second defendant diverted payment of invoices to first defendant - Whether there is a risk of dissipation of assets - Where assets are liquid - Turns on own facts

Practice and procedure - Application for interim injunction - Where first plaintiff claims to be trustee of accounting practice - Whether injunction should be granted to preserve value of accounting practice - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA) O 52A r 5

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff	:	N Lucarelli KC & B J Tomasi
Second Plaintiff	:	N Lucarelli KC & B J Tomasi
Third Plaintiff	:	N Lucarelli KC & B J Tomasi
First Defendant	:	No appearance
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Forbes Kirby
Second Plaintiff	:	Forbes Kirby
Third Plaintiff	:	Forbes Kirby
First Defendant	:	No appearance
Second Defendant	:	No appearance

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

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Australian Receivables Ltd v Tekitu Pty Ltd [2008] NSWSC 433
Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014
Rimex Wheel Pty Ltd v Wulff [2018] WASC 180

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 1 May 2024, the plaintiffs filed a writ of summons. The plaintiffs' claim arises in respect of three matters:
(a)an accounting practice which is referred to in the writ and statement of claim as the BA Accounting Practice;
(b)properties which were previously owned by the second plaintiff as trustee of the White Eagle Unit Trust in West Kalgoorlie; and
(c)properties located at 53 Ida Street and 53A Ida Street in Bassendean.
At the same time, the plaintiffs filed a notice of motion for an injunction and for a freezing order in respect of one bank account as well as the properties at Bassendean. The notice of motion came on for hearing before me on an urgent basis this afternoon.
In support of the application, the plaintiffs read two affidavits:
(a)an affidavit of Christine Louise Vella, the sole director and shareholder of the first and third plaintiffs and a director and joint shareholder of the second plaintiff, filed 1 May 2024; and
(b)an affidavit of Melissa…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] WASC 166
Decision Date: 8 MAY 2024

CaseChat Overview and Summary

The parties involved in this case were Jadewest 2024 Pty Ltd and BTFMS Pty Ltd. The first plaintiff, Jadewest 2024 Pty Ltd, claimed to be the trustee of an accounting practice and sought an ex parte freezing order and an interim injunction. The defendants were the second defendant, who was located outside the jurisdiction, and the first defendant, who was alleged to have received diverted payments of invoices from the first defendant. The dispute centred on the risk of dissipation of assets, particularly liquid assets, and the need for an injunction to preserve the value of the accounting practice.

The legal issues that the court had to decide involved the application for a freezing order and an interim injunction. The court had to determine whether there was a substantial risk of the defendants disposing of or diminishing the value of their assets, thereby risking the satisfaction of a prospective judgment. Additionally, the court had to weigh the balance of convenience in granting an interim injunction to protect the value of the accounting practice. These issues were critical as they involved the preservation of assets and the potential impact on the plaintiffs' ability to enforce a judgment if granted.

In making its decision, the court applied established legal principles regarding the granting of interlocutory injunctions and freezing orders. The court examined whether there was a serious question to be tried and whether the balance of convenience favoured the grant of the injunction. The court noted that the principles for granting a freezing order required the plaintiff to demonstrate a sufficiently substantial risk of dissipation of assets. The court also highlighted that the adequacy of damages was not a relevant aspect of the balance of convenience in equity's exclusive jurisdiction. The court considered the strength of the plaintiff's case, the risk of frustration of a prospective judgment, and other relevant discretionary factors. Based on these considerations, the court concluded that the application for the freezing order and interim injunction was not warranted.

The court ultimately denied the application for the freezing order and interim injunction, finding that the plaintiffs had not established a sufficiently substantial risk of dissipation of assets. The court emphasised the need for clear evidence to support such claims, noting that mere assertions or suspicions were insufficient. The court's decision was grounded in the principles of discretion and the need to balance the interests of all parties involved.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The principles to be applied on an application for an interlocutory injunction are well-known and are not in dispute. The court must consider whether there is a serious question to be tried and whether the balance of convenience favours the grant of the injunction.[1] [1] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. In relation to the balance of convenience, the learned authors of Ford and Lee: Law of Trusts express the view that where an injunction is sought in equity's exclusive jurisdiction, the adequacy of damages is not a relevant aspect of the balance of convenience.[2] Commentary has suggested that is not sufficient for a trustee to answer a claim by a beneficiary for an injunction to restrain a breach of trust by contending the beneficiary be left to a pecuniary remedy and for the breach of trust to continue. Similarly, in relation to a freezing order, the principles that are to be applied by the court are well-known. The plaintiffs' application is made pursuant to O 52A r 5 of the Rules of the Supreme Court 1971 (WA) (Rules), which relevantly provides that: (1)this rule applies if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the Court; and (2)the Court may make a freezing order or an ancillary order or both against a prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment will be wholly or partly unsatisfied because the assets of the prospective judgment debtor are disposed of, dealt with or diminished in value. The purpose of a freezing order is to prevent frustration or abuse of the process of the court, not to provide security in respect of a judgment or order, nor to substitute for the use and methods of execution. Before the discretion to make a freezing order is enlivened, I must be satisfied that:(a)the plaintiffs have a good arguable case against the defendants on either an accrued or prospective cause of action that is justiciable in the court; and(b)there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of the defendants might be removed or otherwise disposed of, dealt with or diminished in value. The danger of dissipation must be sufficiently substantial and not merely a suspicion. It is necessary for the plaintiffs to establish by evidence and not assertion that the defendant is likely to remove assets from the Court's jurisdiction. The fact that assets within the jurisdiction are moveable and the defendants are located outside the jurisdiction is not sufficient to warrant an inferential finding that there is a danger of dissipation. There must be evidence before the court from which a prudent, sensible, commercial person can properly infer a danger of default if assets are removed from the jurisdiction.[3][3] Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014 [12]. The remedy is discretionary. The strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant the orders sought.