Kirribilli Film Productions Pty Ltd v One Australia America's Cup Team 1995 Pty Ltd

[1995] FCA 377

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 88 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:KIRRIBILLI FILM PRODUCTIONS PTY LIMITED and ANAVALE HOLDINGS PTY LIMITED TOGETHER TRADING AS SPORTSMASTER PROGRAMS

Applicants

AND:ONE AUSTRALIA AMERICA'S CUP TEAM 1995 PTY LIMITED

First Respondent

JAMES R. ERSKINE

Second Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 7 June 1995

REASONS FOR JUDGMENT

BURCHETT J.:

In this matter, the first question is whether there is a serious question to be tried.  It seems to me that on a number of bases there is a serious question to be tried.  They have been elaborated as we have gone through the evidence and the argument, and I do not propose to re-state them all now.  But, as to one matter, there was some evidence indicative of a significant admission in relation to the infringement of copyright involved.  It was suggested that the admission was made in the course of discussions that were without prejudice.  It is, of course, trite law that a discussion can be without prejudice although those words are not used, just as a discussion in which those words are used may in fact not be covered by without prejudice privilege.  In this case it seems to me that the objection fails.  Reading the conversation in the context, so far as the evidence reveals it, I do not think that it was a without prejudice conversation, except perhaps to the extent of - and I emphasize perhaps - so much of it as may have been concerned with an attempt to fix a quantum.  In that regard, I refer to the decision of the Court of Appeal in Tomlin v Standard Telephones and Cables Limited (1969) 1 WLR 1378. It should be borne in mind that this conversation did not take place after the institution of proceedings, and in an attempt to settle them, but rather was more in the nature of a spontaneous reaction to the raising of a complaint.

If I am right in thinking that inferences arise from the evidence which make out a sufficient case at the interlocutory stage, it is also important that very little emerges by way of calling that case into question.  Indeed, there was a cessation of the activity complained of and a formal statement of that cessation.  I accept that Mareva relief should not be granted too readily, but this is a very peculiar case.  On the face of the material before me, it is strongly suggested that the corporate respondent is a one-venture company, or if not to be described with complete accuracy as a one-venture company, nevertheless, a company with a very precise primary objective, coupled with, possibly, a secondary objective which is at least as suggestive of risk of the dissipation of its assets as the primary objective itself.  In other words, once the primary objective failed, namely, when the America's Cup was not won, the secondary objective appears to have been the utilisation of the remaining assets, rather than merely their retention and investment.

Assertions have been made, and made with some emphasis, that the directors are honourable men, and that the assets will not be disposed of so as to defeat the claim brought.  But along with those assertions has been an intransigent refusal to offer any form of security for that assurance.  It seems to me that intransigence of this nature, in itself, gives rise to inferences.  There is, despite what Mr Cobden put to me, to my mind no rational basis on which it can be true that the company is not at any risk at all of dissipation of these assets, and yet at the same time it can have good reason to incur the cost of the present application, contested as it has been, rather than make a serious attempt to provide some real security for the verbal assurance that has been given by the solicitor's letter.

At the same time, on the balance of convenience, the assurance that has been given by words makes it difficult for the respondent company to suggest that it would really be seriously inconvenienced by being required to do that which it has said it will in any event do, namely, retain sufficient assets to meet the applicants' claim.  If that was truthfully asserted, it is difficult to see what is the apprehension of
loss to be put into the scales on behalf of the respondent company in weighing the balance of convenience.

I take the principle applicable to a request for a Mareva injunction to be that which was laid down in the judgment of Deane J in Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 623, where he said, citing from a judgment of Lord Denning, M.R. in Rahman (Prince Abdul) v Abu-Taha [1980] 1 WLR 1268 at 1273:

"[A] Mareva injunction can be granted against a man even though he is based in this country if the circumstances are such that there is a danger of his absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied."

That certainly poses, as one of the alternative grounds, a positive act fraudulent in nature, namely, absconding from the jurisdiction in order to avoid a liability.  But it also nominates alternatives of a more objective kind, involving simply that in point of fact the manner in which it is to be anticipated the assets may be dealt with is such a manner as to create a situation, or as to be liable to create a situation, in which the claim may not be able to be satisfied.

It seems to me that Gleeson CJ in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 324-325 was adopting this approach. Adopting it in the present case, I consider that the applicants have made out a case for
interlocutory relief by way of a Mareva injunction, and that they ought to obtain relief, together with an order that the costs of this application be their costs in the principal proceeding.  However, I think there is much to be said for affording the parties an opportunity to play a part in the formulation of the actual order, rather than that I should impose upon them an injunction, when the purposes of the injunction may be equally secured, and perhaps with less difficulty to a party, if they are given the opportunity to work out an appropriate way of achieving this.  Accordingly, what I indicate is that, failing agreement, I would be prepared to make an order in the nature of a Mareva injunction by which the amount to be secured would be the sum of $200,000. 

I should add that there was an argument presented by counsel for the respondents on the subject of quantum, in which he suggested that the applicants had failed to establish that any relief that they might otherwise be entitled to should be measured by any particular amount.  I consider that the court is able to make an estimate on this evidence.  After all, at the final hearing, the court will have the task of assessing a figure which may well, in large measure, be a matter of general damages, and furthermore, the court is well equipped, by the very nature of the way courts are composed and function, to form a very fair idea of the costs.  I think the costs that a plaintiff is likely to incur in establishing his claim must be a factor that a court is entitled to take into account in assessing the amount for which a Mareva injunction may issue.  Having regard both to the amount that might reasonably be regarded as the figure likely to be obtained, on the basis of the prima facie case that I have found established, and also the costs that I think will inevitably be incurred in the establishment of the applicant's case, I think I am well justified in fixing the figure of $200,000 as a very conservative figure.  I think one should be conservative when fixing a figure for a Mareva injunction.

In the application for security for costs, it seems to me that this case squarely falls within the jurisdiction of the court to award security for costs, whether one looks to s. 56 of the Federal Court Act or to the specific provision of the Corporations Law.  For the applicants, it was pointed that I have already held on their Mareva injunction application that there was a sufficient case made out; but that, of course, does not mean that the matter is a complete certainty, and it does not appear to me to provide any significant reason why security for costs should not be ordered.

The fact is that, on the evidence before me, if the respondents are successful in the action, they may have a difficulty in recovering costs pursuant to any costs order that may be made.  No evidence has been put on to suggest that an order for security for costs would be at all likely to have the effect of stultifying the applicants' action.  The onus, of course, is upon them in that regard.  In my opinion, it is an appropriate case in which to make an order for security for costs.  However, such an order should not be measured on the basis of attempting to allow precisely the estimate of the costs to be incurred which has been put into evidence.  I do not think that is ever the correct approach.  It is to be in the amount which, in all the circumstances, the court thinks ought reasonably to be provided by way of security for costs.

A specific element by way of deduction, in this case, is the fact that the estimate includes the costs which the respondents have incurred in resisting what I have held to be an appropriate application for Mareva relief.  That, of course, would, in any event, have to be deducted, since the costs order that I have indicated I will make is that the costs of that be the applicants' costs in the cause.

Accordingly, I have come to the conclusion that the appropriate amount in respect of which to order security is the sum of $40,000.  The payment of that, of course, could be staged, since nothing like that sum has been incurred as yet, and I think the parties should have the opportunity to try and work out an appropriate form of order.  Therefore, I direct that the respondents bring in at 9.30 a.m. on Friday, when the applicants will be bringing in their short minutes in respect of the Mareva relief, short minutes in respect of security for costs.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:  Date: 9 June 1995

Counsel for the Applicants:      Mr J.J.J. Garnsey Q.C. with Mr P.W.J. Gray

Solicitors for the Applicants:    Manion McCosker

Counsel for the Respondents:     Mr R. Cobden

Solicitors for the Respondents:   Abbott Tout

Date of hearing:                 7 June 1995