Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd

[2004] NSWSC 1238

CITATION:	Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2004] NSWSC 1238
HEARING DATE(S):	13 - 15 December 2004
JUDGMENT DATE:	15 December 2004
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Further money released from Mareva restraint to meet costs of proceedings.
CATCHWORDS:	EQUITY [340] - Equitable remedies - Injunctions - Interlocutory injunctions - Injunctions to preserve property pending determination of rights - Mareva injunctions - Other matters - Need to fund litigation - Whether funds available to party from other sources.
PARTIES :	3081/97 Peter Lawrence Lewis (P) Lamru Pty Ltd (Applicant) Kation Pty Ltd (Respondent) Brian Raymond Silvia (Liquidator) 1750/02 Lamru Pty Limited (P) Kation Pty Limited (D1) Peter Lawrence Lewis (D2) Mark Lewis (D3) Nortex Pty Ltd (In Liq) (D4)
FILE NUMBER(S):	SC 3081/97; 1750/02
COUNSEL:	J Baird (Solicitor) (P L Lewis & Kation P/L) S J Motbey (Lamru P/L) V R W Gray then P A Somerset (Solicitor) (Liquidator & Nortex P/L)
SOLICITORS:	Kemp Strang (P L Lewis & Kation P/L) Lyons & Lyons (Lamru P/L) Abbott Tout (Liquidator & Nortex P/L)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

WEDNESDAY, 15 DECEMBER 2004

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LIMITED (In Liq)
1750/02 LAMRU PTY LIMITED v KATION PTY LIMITED & ORS

JUDGMENT (Application for further release of moneys held under Mareva Orders)

1 HIS HONOUR: This is an application for a further release for the purpose of the payment of Mr Motbey's fees from the fund held under Mareva orders. The fees are claimed at a rate corresponding to $220 per hour and $2,200 per day, which is the rate at which, in an earlier judgment, I have indicated I am prepared to make releases, without in any way making a ruling on the ultimate rate at which such fees should be paid by his client or, if appropriate, other parties.

2 The basis on which Mr Baird has contested this application is that there have been various changes since February 2004, when undertakings were given to the Court by Mr Lamb and Ecodownunder Pty Limited (“Ecodownunder”). In general terms, the requirement of those undertakings that a monthly account of Ecodownunder's affairs be delivered to the Lewis interests has been complied with. A summary of those accounts over the months from February to October 2004 is in evidence before me, as well as some of the accounts themselves.

3 Mr Baird, the solicitor for the Lewis interests, submits that, upon an examination of the situation shown by those accounts, it is no longer necessary for the relevant fees - in this case in a figure of some $15,000 - to be released from the fund, as they could be made available out of the business of Ecodownunder. The sources shown in the accounts which he suggests are potentially available for that purpose are: a profit for the month of October of $8,769; and a figure for stock at the end of that month of $234,168, out of which sales could be made sufficient to meet the relevant legal fees. Mr Lamb conceded in the witness box that such sales could be made by the end of January 2005.

4 Mr Baird submits that the summary of the Ecodownunder accounts shows improvement in its situation in three ways: one is by an increase in net assets, largely (in general terms) in line with the current stock figure; an increase in that stock figure of some $30,000 since February and more than $60,000 over the lowest stock figures in April and May 2004; and a decrease in liabilities, principally, the liability to Mr Nigel Ower that was $200,000 in February 2004 was reduced to $150,000 by the end of May 2004 and since June 2004 it has been shown as reduced to $60,000. The evidence shows that that appears to be an amount which Mr Ower is prepared to accept in discharge of his claim. There is, however, some difficulty, in that his preparedness to reduce the amount to as little as $60,000, rather than $120,000, is conditional upon Mr Lamb’s agreement to that figure. On the evidence, that agreement has never been given.

5 There is a deal of substance in the submissions that Mr Baird has made to me. However, I do not think that the time has arrived where it can be concluded that funds are available from that source for counsel’s fees. The fees involved are for work that will have been done and charged by the end of this week, and I do not think the suggestion reasonable that counsel should wait upon the end of January and the contingency of the sale of stock to be paid. Secondly, there seems to be some criticism of Mr Lamb in that he has been building up the business (rather than devoting funds to payment of debts or legal costs). But the stock increase since February 2004 is only about $30,000. The profit figure of $8,769 for October is the first profit figure of any substance since then, and it would seem that there has been an overall loss in the business between February and October.

6 The business is a very modest one. Mr Lamb is not living out of its proceeds, but he and his wife are living on her salary or wage. It seems to me that it may well be to everybody's advantage in the long run if the business is allowed to be viable and to perhaps start to produce some real profits. If it can be regarded as being overall in profit at the moment, that is a situation that is very recent and very marginal. There is still at least $60,000 owing to Mr Ower, and perhaps $120,000, which may be demanded any day. I do not regard funds as being, at the moment, in any way realistically available out of the business of Ecodownunder as a source of funds for payment of the legal fees.

7 This does not mean that a time may not come when profits of the business may be regarded as appropriately available for payment of legal fees, particularly in circumstances where the Lewis interests would be prepared to see a variation of the February 2004 undertakings so as to permit funds to be used for those legal fees in preference to replenishment of the protected fund, which is required by those undertakings after the Ower debt has been discharged. Those considerations lead me to the conclusion that, so far as the present application is concerned, an order should be made for the release of funds as sought.

8 Mr Motbey has applied for an order for costs of the application in Lamru's favour. There is something to be said for the proposition that it was a contested application, which was run by the Lewis interests and lost. On the other hand, the policy that I have adopted to date in relation to these release applications is that the costs should be reserved, and I do not see anything about this application that distinguishes it from the point of view of costs as compared with those earlier applications. In those circumstances, for the sake of consistency, the order that I make is that the costs of this application be reserved.

**********

Last Modified: 07/16/2007