Kocsardi, K. v Elegant Tiles P/L

[1993] FCA 412

41a , \ss3

JUDGMENT NO. ....m.w .o-"-wo-*

IN THE FEDERAL COURT OF AUSTRALIA )	NO. QG 67 of 1993
QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

BETWEEN: KAROLY KOCSARDI

Applicant

AND :  ELEGANT TILES PTY. LTD.
A.C.N. 057 256 641

First Respondent

AND :  PORSAN AUSTRALIA PTY. LTD.
A.C.N. 056 107 192

Second Respondent

AND:  NATIONAL AUSTRALIA BANK LTD.

Third Respondent

AND :	EDWARD MORALES & PEDRO TEJERO MORALES Fourth Respondent
AND :	ELEGANT PORCELAIN PTY. LTD. A.C.N. 057 050 218

Fifth Respondent

AND :  ELEGANT MARBLE & GRANITES PTY. LTD.
A.C.N. 057 284 992

Sixth Respondent

whatsoever with any of its assets.

MINUTES OF ORDERS

2 3 JUN 1993

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	17 May, 1993  AUSTRALIA PRINCIPAL

WHERE MADE: Brisbane REGISTRY

UPON the applicant by its counsel giving the usual undertaking as to damages THE COURT ORDERS THAT:

1. The first respondent, by itself its servants or agents, be restrained from dealing in any manner

   The fourth respondents, by themselves their servants or agents, be restrained from dealing in any manner whatsoever with any of their assets.

   The fifth respondent, by itself its servants or agents, be restrained from dealing in any manner whatsoever with any of its assets.

   The sixth respondent, by itself its servants or agents, be restrained from dealing in any manner whatsoever with any of its assets.

   The first, fourth, fifth and sixth respondents have liberty to apply on notice to the solicitor for the applicant to vary or discharge the above orders.

   The third respondent forthwith allow the applicant to inspect and take copies (at the applicant's expense) of such documents held by the third respondent as relate to the affairs, assets or liabilities of any of the fourth, fifth or sixth respondents.

7.        The third respondent has liberty to apply on oral notice to the solicitors for the applicant for an order varying or discharging order 6.

1. The first and fourth respondents pay the applicant's costs of and incidental to the application for interlocutory relief to be taxed.

9.        The fifth and sixth respondents pay the applicant's costs of today.

THE COURT DIRECTS THAT:

1. Messrs. Clayton Utz have leave under 0. 45, r. 7(3)

The second respondent has liberty to apply, if it is to withdraw as the solicitors on the record for the first and fourth respondents. so advised, for an order that the first and fourth respondents pay its costs of the application on Friday, 14 May, 1993.
NOTE:	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )	No. QG 67 of 1993
QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

BETWEEN: KAROLY KOCSARDI

Applicant

AND :  ELEGANT TILES PTY. LTD.
A.C.N. 057 256 641

First Respondent

AND:  PORSAN AUSTRALIA PTY. LTD.
A.C.N. 056 107 192

Second Respondent

AND:  NATIONAL AUSTRALIA BANK LTD.

Third Respondent

AND:	EDWARD MORALES h PEDRO TEJERO MORALES Fourth Respondent
AND :	ELEGANT PORCELAIN PTY. LTD. A.C.N. 057 050 218

Fifth Respondent

AND :  ELEGANT MARBLE & GRANITES PTY. LTD.
A.C.N. 057 284 992

Sixth Respondent

Coram:  Drummond J

Place: Brisbane

Date:  17 May, 1993

EX TEMPORE ReASONS FOR JUDWNT

This matter was before me on Friday afternoon last
when I made what I then described as draconic Mareva
injunctions against three companies. At that time, and indeed
on the Thursday morning when the matter first came before me,
the three companies, who are now the first, fifth and sixth
respondents, and the principals of those companies, Mr. Edward
Morales and Mr. Pedro Morales, were represented by Messrs.

Clayton Utz.

On Friday, the matter was adjourned over to 2.15 this afternoon, effectively because Clayton Utz then asked for an opportunity to put before me material on behalf of the respondents which, so I was told by Mrs. Milner, the solicitor from Clayton Utz who appeared on Friday, would throw an entirely different complexion on the picture created by the evidence that was put before me on behalf of the applicant.

Instead of seeking to put any evidence on behalf of the respondents before me this afternoon, Mrs. Milner filed an affidavit and sought leave to withdraw, leave which I ultimately granted. The affidavit seems to me to reveal a

most curious state of affairs in that Clayton Utz have only	ever acted on the information provided, and instructions
given, by another firm of Brisbane solicitors, Messrs. Mylonas & Associates. The material before me on Friday indicated that
Mylonas & Associates were the solicitors who actually acted on the record for the first respondent in these proceedings in a District Court action brought against the first respondent by the second respondent in these proceedings. Mrs. Milner's affidavit goes on to depose to proceeding for a time on the
advice of Mr. Mylonas that Mylonas & Associates would attend to the preparation of the affidavit material to be used this afternoon on behalf of the respondents, but that this morning Mr. Mylonas advised Mrs. Milner that Mr. Morales - and it is not clear whether it is Edward or Pedro - did not wish to put any material before the court this afternoon and did not wish to have anyone appear for him this afternoon and that Clayton Utz's instructions to act for the respondents were, in effect, terminated.
Mrs. Milner, at that stage, contacted the counsel she had retained to appear for the respondents and told him of the withdrawal of instructions. She goes on and says that she received a call later this morning from another solicitor, Mr. Flint, of Messrs. Gadens Ridgeway, advising that Mr. Edward Morales had retained him, Mr. Flint. Mr. Flint sought information from Mrs. Milner as to what took place on Friday. Mr. Flint told Mrs. Milner that Mr. Edward Morales denied ever having given instructions, presumably to Mylonas & Associates
which were transferred through to Clayton Utz, to give the undertakings that were offered but not accepted in court on
Friday.
Mr. Flint also added, curiously enough, that although he had been retained by Mr. Edward Morales, he did not have instructions at that stage to appear for any of the respondents this afternoon. Mr. Flint, as he promised, contacted Mrs. Milner shortly before court this afternoon and

told Mrs. Milner that he had instructions from Mr. Morales not to appear on behalf of any of the respondents. Effectively, that is where the matter lay. It is against that background that I gave Clayton Utz leave to withdraw.

The position before me today is no different, factually, from that which was before me, and which I outlined in the oral judgment I gave, on Friday afternoon last. In fact, the inferences that can be drawn adverse to the respondents are, I believe, strengthened by the curious transactions that have occurred between Mrs. Milner of Clayton Utz and the other solicitors, Mr. Mylonas and Mr. Flint. It seems to me that, on the material before me now, this is very plainly a case where the applicant is entitled to such assistance from the court as is proper to try to ensure that the $146,000.00 which he provided, and to which I referred in my judgment of Friday, is not irretrievably lost to him.

The interlocutory relief which is sought today, and which will stand until the determination of the proceedings,

is, firstly an order, which I take to be accompanied by an

offer of appropriate undertakings, to pay the $146,000.00 in question to the applicant or into court. The difficulty with the claim for that form of interlocutory relief seems to me to be that it would only be appropriate if there was evidence before me to show that the $146,000.00 remained in existence as a fund in the hands of one or other of the respondents. Far from there being any evidence that those moneys remain in

existence in specie, the evidence all points to those moneys having been dissipated, one way or the other, by the first respondent paying out to unidentified recipients, but probably one or other of the fifth and sixth respondents, all those moneys between about March and Wednesday of last week. I do not think that it would be proper therefore to make the order for the payment in of the $146,000.00 in circumstances in which it appears highly probable that that fund does not exist in specie and in circumstances in which such an order would almost certainly be breached and a contempt arise.

The next form of interlocutory relief sought is an order appointing a receiver in relation to the first, fourth, fifth and sixth respondents. The difficulty with this application seems to me to be that the appointment of a receiver on an interlocutory basis is only really appropriate where the dispute concerns property and there is evidence that that property may be in jeopardy if steps are not taken by the court to preserve it until the determination of the action.

That is not this case. The applicant makes no claim at all to	any of the property of any of the respondents, including the
businesses of the first, fifth and sixth respondents in respect of which it sought the appointment of a receiver. The claim appears to me to be a simple money claim for money received to the use of the first respondent and related claims based upon the receipt of $146,000.00 by the first respondent. That does not seem to me to be a case in which there is any foundation for appointing a receiver.
The final form of interlocutory relief which the applicant seeks is, in effect, a continuation of the Mareva injunctions which I granted on Friday last in respect of the first respondent and now the fifth and sixth respondents. An application is made to extend those injunctions to the fourth respondents. It seems to me in the circumstances as they now stand, the justification for granting such relief is even stronger than it was on Friday last. I therefore propose to grant injunctions essentially in the terms of those which I granted on Friday last against all respondents.
The Mareva jurisdiction is recognised as having the capacity to cause great disruption to the business and private activities of persons to whom injunctions of that kind are directed. I am aware that this jurisdiction is said, as a general rule, only to be able to be exercised in circumstances in which that disruption is minimised, to the greatest extent possible, consistent with the proven claims of the applicant to be protected against the risk of the respondents
dissipating assets prior to the applicant being able to prove
his claim and get a judgment. That normally takes the form of
an exclusion from the operation of the Mareva injunction of moneys needed by the respondents to meet ordinary living expenses and ordinary business expenses. However, the circumstances of this case are really rather extraordinary for the reasons that I have outlined. It seems to me that I would be justified in those extraordinary circumstances in issuing Mareva injunctions against the respondents which will constitute absolute prohibitions against them dealing with any of their respective assets until the trial of the action. I will of course give them liberty to apply to vary or discharge the injunction.
Application is made for leave to tax the costs which I ordered the first and fourth respondents to pay. The basis for the application is that today's hearing was only necessitated by the application made on behalf of those respondents on Friday for an adjournment of the application until today to enable the first and fourth respondents to put material before the court which would contradict the material relied on by the applicants. Mrs. Milner, who appeared for the respondents on Friday, made a point of putting on the record the fact that, despite some comments I had made in giving my reasons, Clayton Utz had taken instructions from the first and fourth respondents which made it clear, so Mrs. Milner told me, that the factual position that the respondents asserted existed was quite different from that upon which the
applicant relied.
I have already referred to the somewhat extraordinary picture that emerges in relation to the respondents' arrangements with the various solicitors, including Clayton Utz, who have had some involvement in the last few days with this matter, on behalf of at least the fourth respondents. In these circumstances, it seems to me to

be appropriate to grant the applicant leave to tax the costs

which I have ordered the first and fourth respondent to pay.

I certify that this and the preceding
seven pages are a true copy of the
reasons for judgment herein of the

Honourable Mr. Justice Drummond.

Associate: A'ud

Date:  17 May, 1993