Kocsardi, K. v Elegant Tiles P/L

"'l 3 1993 1

JUDGMENT No. .....,....,....... I ..,.,.. , .... !

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

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MINUTES OF ORDERS

Drummond J
14 May, 1993
Brisbane

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the applicant by its counsel undertaking to take action forthwith to institute appropriate proceedings against Elegant

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Porcelain Pty. Ltd. and Elegant Marble & Granite Pty. Ltd. and I

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

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The first respondent, by itself its servants or agents, be restrained from dealing in any manner whatsoever with any of its assets until 4.00 p.m. on Monday, 17 May, 1993 or earlier order.
Elegant Porcelain Pty. Ltd., by itself its servants or agents, be restrained from dealing in any manner whatsoever with any of its assets until 4.00 p.m. on Monday, 17 May, 1993 or earlier order save that it is at liberty to pay the wages that fall due in the ordinary course of business to any of its employees prior to 4.00 p.m. on Monday, 17 May, 1993 not being wages payable to either of the fourth respondents.
Elegant Marble & Granite Pty. Ltd., by itself its servants or agents, be restrained from dealing in any manner whatsoever with any of its assets until
4.00 p.m. on Monday, 17 May, 1993 or earlier order
save that it is at liberty to pay the wages that fall due in the ordinary course of business to any of its employees prior to 4.00 p.m. on Monday, 17 May, 1993 not being wages payable to either of the fourth respondents.
The costs of today are reserved to Monday, 17 May,
1993.
The first and fourth respondents, Elegant Porcelain Pty. Ltd. and Elegant Marble & Granite Pty. Ltd. have liberty to apply on oral notice to the solicitor for the applicant and the solicitor for the second respondent to vary or discharge the above orders.

THE COURT DIRECTS THAT:
1. The first and fourth respondents, Elegant Porcelain Pty. Ltd. and Elegant Marble & Granite Pty. Ltd.

must file and serve on the solicitor for the applicant and the solicitor for the second
respondent any affidavits on which they propose to rely at the hearing on Monday, 17 May, 1993 by no later than 11.00 am on Monday, 17 May, 1993. It shall be sufficient compliance with this direction to serve copies of the affidavits by facsimile, although the sworn originals must be filed in the Court by 4.00 pm on Monday 17 May 1993.
The first and fourth respondents, Elegant Porcelain Pty. Ltd. and Elegant Marble & Granite Pty. Ltd. have leave, either supplementary to or in substitution of the affidavit material referred to in direction 1, to deliver by facsimile to the solicitor for the applicant and the solicitor for the second respondent by 11.00 a.m. on Monday, 17 May, 1993 a letter setting out in sufficient detail
to give proper notice to the applicant and second respondent a summary of the evidence which any of the respondents or Elegant Porcelain Pty. Ltd. or Elegant Marble & Granite Pty. Ltd. may wish to adduce but which they are unable to put in affidavit form to meet the 11.00 a.m. deadline.
The applicant has leave to join Elegant Porcelain Pty. Ltd. and Elegant Marble & Granite Pty. Ltd. and to amend the application accordingly.

The matter is adjourned to 2.15 p.m. on Monday, 17
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 )
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

Coram: Drummond J
Place: Brisbane

Date: 14 May, 1993

EX TEMPORE REASONS FOR JUIX;EIENT

This an application for interlocutory relief, essentially for an order that the first respondent pay to the applicant a sum slightly in excess of $146,000.00 received by the first respondent from the third respondent, the payment to be made on appropriate undertakings by the applicant to ensure preservation of those moneys pending determination of the action. The applicant also applies for leave to amend the application to seek orders appointing receivers of the assets and business of the first respondent and of related companies, Elegant Marble and Granite Pty. Ltd. and Elegant Porcelain Pty. Ltd., pending determination of the action.

The action arises out of arrangements between the applicant and the first and second respondents concerning tiles to be imported from Spain by the first respondent.

The material, other than information obtained by the applicant from the third respondent bank pursuant to my order of 13 May, 1993, was served on the first and fourth respondents on 11 May, 1993.

The first and fourth respondents were represented before me on 13 May, 1993 by Messrs. Clayton Utz who had just then been retained and had no instructions. Clayton U t z again appeared before me today as solicitors for those respondents. They remain in the position of not having any instructions with respect to the facts of the case. They received the information which the applicant obtained from the third respondent bank yesterday only this morning at the door of the

court. They seek an adjournment to enable instructions to be
obtained.

The applicant's material which is before me now suggests a disturbing state of affairs so far as the conduct of the first respondent and those associated with it, including Mr. Morales, one of the fourth respondents, is concerned. The second respondent, who is involved in litigation in the District Court with respect to the tiles the subject of the present proceedings, and who obtained interlocutory orders against the first respondent in that action, does not dispute the factual position asserted to exist by the material relied on by the applicant today. The second respondent has in fact material which, it submitted, confirmed the improper conduct by the first and fourth respondents that the applicant asserts is established by its material, but that evidence is, so far as it goes, equivocal, and I do not accept it has the effect suggested.

I have said that the evidence reveals a disturbing picture so far as the conduct of the first respondent, and those associated with it, is concerned. I emphasise that I make that comment in full recognition that I have seen material coming, essentially, only from the applicant and have not heard the first and fourth respondents' version of events. That evidence shows, among other things, firstly, that on 19 March, 1993 the first respondent obtained payment of approximately $146,000.00 from the third respondent bank by calling on an unconditional bank bond which was issued by the bank after receipt of funds made available by the applicant.

Secondly, that the first respondent was only entitled to call on this bond if the tiles in question had been delivered and accepted by the second respondent in terms of clause 6.1 of the agreement between those two respondents. Although the bond is unconditional, it was part of a wider lot of contractual arrangements involving the first and second respondents and the applicant, which had this effect.

Thirdly, the first respondent certified to the bank, the third respondent, that the tiles had been delivered in order to gain access to the $146,000.00 on 19 March, 1993.

Fourthly, this certificate was false. The first and fourth respondent's solicitors, Messrs. Clayton Utz, by letter dated 13 May, 1993, offered undertakings to the applicant, not accepted by the applicant, to import the tiles expeditiously.

table that the tiles will not arrive until 26 June, but that

Their solicitor stated before me this morning from the bar

property has already passed to the first respondent. As I have said, there is no evidence coming from the respondent, this is just a statement made by their legal representatzve from the bar table.

Fifthly, in view of the terms of the agreement between the first and second respondent, it seems clear that the first respondent is not, even now, entitled to draw down, or would not, even now, be entitled to drawn down, the $146,000; the tiles not having been delivered or accepted by the second respondent.

Sixthly, the $146,000.00 was paid into the first respondent's account with the third respondent bank, turning an $80,000.00 debit into a $67,000.00 credit. There were no significant activities in this account, either by way of deposit or withdrawal, between then and 19 April, although bank charges reduced the balance to $65,000.00 on 19 April, 1993, when a single withdrawal of $30,000.00 was made, reducing the balance to $35,000.00 credit. The evidence before me concerning this account is incomplete, but between 27 April, 1993, when the account balance was $34,225.00 credit, and 6 May, 1993, the balance fell to a debit of about $25,000.00. So far as the evidence shows, there were no deposits to this account after the $146,000 was lodged on 19 March. However, on 7 May, 1993 the first respondent obtained overdraft accommodation to the extent of $100,000.00 from the

third respondent bank.

The facility expires on 3 July, 1993.

It replaced another short-term facility which expired on 30 April last. It appears the purpose of this facility was to provide working capital, not for the first respondent it would seem, given the pattern of operations of its account to which I have referred, but probably for its associated company, Elegant Marble and Granite Pty. Ltd.. The facility appears to have been sought for the "Elegant Group" according to bank documents before me, of which the first respondent and Elegant Marble and Granite Pty. Ltd. are, so far as the bank documents reveal, the only two members. My attention has, however, been drawn to the affidavit sworn by Mr. Morales, one of the fourth respondents, in the District Court proceedings in which he refers to another company with which he is associated, Elegant Porcelain Pty. Ltd., which is carrying on business as a trading company.

Seventhly, on 12 May, 1993, when the first respondent had overdraft accommodation to the extent of $100,000.00 and when the balance of its account then stood at a debit of $25,000.00, a single withdrawal of $70,000.00 was made, nearly exhausting the first respondent's overdraft facility. This was the day after the applicant's material, including its application for interlocutory relief, was served on the first and fourth respondents.

As I have said, Mrs. Milner seeks time to take instructions from the first and fourth respondents and to

consider what material, if any, will be put before me. She says the facts may turn out to be quite different from the factual picture presented by the applicant's evidence and not disputed by the second respondent. She says this on the basis that it must be accepted as a possibility; she does not know, because she has had no opportunity, as yet, to ascertain the position from her clients. But what she says may well be true, hence her entitlement to the adjournment which she seeks.

However, I note that Mrs. Milner did agree that if the facts turn out to be as asserted by the applicant, the urgent intervention of this court against her clients would be called for. As I have said, the first and fourth respondents must have an opportunity to put material before the court if they wish. In the circumstances, only a short adjournment is appropriate. Mrs. Milner does not argue against 2.15 p.m. on Monday as being the time when the hearing should resume.

The applicant asks that until then a very draconic Mareva restraint should issue against the first respondent, Elegant Marble and Granite Pty. Ltd. and Elegant Porcelain

Pty. Ltd..

The applicant, by its counsel, undertakes, in
effect, to institute appropriate proceedings forthwith against

Elegant Marble and Granite Pty. Ltd. and Elegant Porcelain

Pty. Ltd. .

I take into account, firstly, the matters I have referred to, being matters 1 to 7 already mentioned, and, secondly, that when the matter came before me yesterday, and it was then adjourned to today, it was made clear by me in an exchange with Mr. Harley of Messrs. Clayton Utz, who then appeared for the first and fourth respondents, that those

respondents might well be in considerable difficulty if they had drawn down the $146,000.00, if they were only entitled to do that upon delivery of the tiles. Yet the first and fourth respondent's solicitor remains without instructions as to any of the facts relevant to the claim for interlocutory relief. All that has happened is that there has been certain correspondence passing between the solicitors for those respondents and the applicant's solicitor, in which various undertakings, not acceptable to the applicant, have been offered by those respondents. Finally, I take into account that if the draconic restraints sought by the applicant are issued, they will be on terms that the first and fourth respondents, and the other two companies that I have referred to, have liberty to apply to me at any time between now and 2.15 p.m. on Monday, including over the coming weekend, to vary or discharge any such restraints.

Mrs. Milner, after the matter had been stood down to enable her to contact her clients, offered undertakings

restraints sought in relation to the first respondent, Elegant

essentially in tens of what I have called the draconic Mareva

Marble and Granite Pty. Ltd.. She did not mention the third company because it had not been mentioned in the proceedings up to that time. My attention was only drawn to the existence of that company in discussions which took place a few moments ago. Mr. Lilley submitted that orders should be made rather than these undertakings being accepted because no officer of any of the respondent companies is present in court.

Mrs. Milner, however, submitted that Elegant Marble and Granite Pty. Ltd., if it were to be so restrained, should nevertheless not be precluded from paying wages which she says she is instructed will fall due for payment today.
Upon the applicant, by its counsel, undertaking to take action forthwith to institute appropriate proceedings against Elegant Marble and Granite Pty. Ltd. and Elegant Porcelain Pty. Ltd. and upon the applicant by his counsel giving the usual undertaking as to damages, I will order that the first respondent by itself, its servants and agents be restrained from dealing in any manner whatsoever with any of its assets until 4.00 p.m. on Monday 17 May or earlier order.
I will also order upon those same undertakings that Elegant
Marble and Granite Pty. Ltd. by itself, its servants and agents is hereby restrained from dealing with any of its assets in any manner whatsoever save that it is at liberty to pay the wages that fall due in the ordinary course of its business to any of its employees prior to 4.00 p.m. on Monday,

respondents. 17 May not being wages payable to either of the fourth

I make, upon the same undertakings, an identical
order against Elegant Porcelain Pty. Ltd. to that which I have
made against Elegant Marble and Granite Pty. Ltd..
I give the first and fourth respondents and Elegant
Marble and Granite Pty. Ltd. and Elegant Porcelain Pty. Ltd.
liberty to apply on oral notice to the applicant and the

second respondents solicitors to vary or discharge the orders !:
I have made.
I certify that this and the preceding
nine pages are a true copy of the
reasons for judgment herein of the
Honourable Mr. Justice Drummond.
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Associate : -

Date: 14 May, 1993

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

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

The matter is adjourned to 2.15 p.m. on Monday, 17 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	)
GENERAL DIVISION	1

[1993] FCA 337

14 May 1993