Malhotra v Tiwari

[2005] VSC 260

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 6864 of 2002

DINESH MALHOTRA	Plaintiff
V
SHEELA TIWARI	First Defendant
and
S & D INTERNATIONAL PTY LTD (as trustee for the S & D International Unit Trust)	Second Defendant

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JUDGE:	CUMMINS J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 June 2005
DATE OF JUDGMENT:	30 June 2005
CASE MAY BE CITED AS:	Malhotra v Tiwari & Anor
MEDIUM NEUTRAL CITATION:	[2005] VSC 260

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PRACTICE COURT – Mareva injunction – Extension in limited terms.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J.M. Selimi	Starnet Legal Pty Ltd
For the First Defendant	Mr V. Kooblal	Boyle Telfer and Kooblal
For the Second Defendant	Mr R.S. Randall	Madgwicks

HIS HONOUR:

1. This is the return of Orders made by Smith J on 15 June 2005 upon a summons filed on 14 June 2005 on behalf of the plaintiff for Mareva relief.

1. By judgment given on 16 February 2005 in this proceeding, Her Honour Justice Balmford gave judgment for the plaintiff.  The plaintiff had taken proceedings seeking a declaration that he is a joint beneficial owner of three properties being first, an Indian grocery store business conducted at 580 Barkly Street, West Footscray, under the name of Bharat Traders International;  the shop and dwelling at 580 Barkly Street, West Footscray, in which the business was conducted;  and a vacant block of residential land at 45 Boronia Drive, Hillside via Melton.  The first defendant had been the wife of the plaintiff.  The second defendant company was formed on 29 July 1996, since when it had owned and operated the business.  The S & D International Unit Trust, for which the company was the trustee, was created at the same time.  The company then purchased 580 Barkly Street.  The Hillside property was purchased by the company in 2002, and both those properties were still owned by it at the time of judgment.  The first defendant has been, since the formation of the company, a director of the company;  the holder of the only two issued shares in the company;  and the only holder of the issued units in the unit trust.  The principal relief sought by the plaintiff was a declaration that he was a joint beneficial owner of the properties, principally on the ground that the defendants held one half of each of the properties on an express trust for him.

1. It was common ground before Her Honour, subject only to two submissions of the first defendant, that if the Court were satisfied as to the making of certain representations by the defendant, on all of which the plaintiff relied, the effect of those would have been to entitle the plaintiff for the relief which he sought.  The first defendant submitted that even if the Court were so satisfied, first, the Plaintiff did not come to the Court with clean hands and was disentitled to relief;  and second, that the Court was unable to mould appropriate terms.

1. Her Honour, in an extensive judgment, reviewed the evidence and issues before her.  In paragraphs 191 and 192 of her judgment she considered the credibility of the plaintiff and of the first defendant.  In paragraph 202 she expressed conclusions after that comparative analysis.  She concluded in paragraph 211 that the plaintiff had, on his own evidence, engaged in illegal and unconscionable conduct, which was set out at paragraphs 40 to 53 of the judgment, but that he would not have benefited from that wrong and that he was not disentitled to a 50 per cent share by virtue of that circumstance.  Her Honour concluded that there should be judgment for the plaintiff. 

1. A Notice of Appeal was filed by the defendants on 18 March 2005.  The preliminary matter came on before Chernov and Eames JJA on 22 April 2005, but on 21 June 2005 the appeal was discontinued by notices filed in the Court. 

1. However, shortly prior to that discontinuance, on 14 June 2005 the plaintiff, by summons filed that day, sought Mareva relief.  The application by the plaintiff was supported by a lengthy affidavit by him, sworn 14 June 2005 and a supplementary affidavit by him sworn on 15 June 2005.  In the event, Smith J, on 15 June 2005 granted Mareva relief in the terms set out in the Order and which I do not need to recite, returnable today.  Thus the matter has come before me.

1. Further affidavits by the plaintiff have been filed for today’s hearing, being of 27 June 2005 and two affidavits today, dealing with matters which have arisen in the interim.

1. On behalf of the first defendant, an affidavit sworn by her on 24 June 2005 and by Prodike Tiwari also of 24 June 2005, had been filed, together with an affidavit of Mr Dean Mond, Principal of David Mond and Associates, sworn today;  and on behalf of the second defendant, an affidavit of 15 June 2005 of Mr P.R. Vince, company administrator, of 30 June 2005 and of Mr S.L. Horne, company administrator of 30 June 2005.  All of those affidavits, except one or two, had substantial exhibits thereto.

1. In support of the continuance of the 15 June 2005 Orders on behalf of the plaintiff, Mr Selimi for the plaintiff submitted that the plaintiff before me, as before Smith J, was simply seeking to preserve the fruits of the judgment obtained before Balmford J, to prevent dissipation of assets thereafter and that, at base, the real question is the efficacy of the enforcement provisions of the Court.

1. In the affidavit material on behalf of the first defendant, it is revealed that subsequent to the Order of Smith J of 15 June 2005, a creditors’ meeting was held yesterday, 29 June 2005;  and that, indeed, was contemplated by the Order of Smith J adjourning the matter over to today.  At the meeting yesterday there was a resolution to adjourn the meeting, which was defeated.  The meeting proceeded and a resolution was passed by a majority, both in number and in value, that the company been placed in liquidation.  Thus it is put, on behalf of the first defendant, that the company now is in liquidation.

1. Essentially, it was put by Mr Kooblal, in intelligently directed submissions which were well supported by authority, on behalf of the first defendant that the Order sought be discharged because there is sufficient clothing of a protective sort by the circumstance of the creation of the liquidation, or even at the least, administration.  Mr Kooblal put that the corporate position was, to use his expression, in paralysis;  and that on the personal side of the matter, that equally was protected by the secured position of the ANZ.  He thus put, in essence, that the administrators, now the liquidators, were the protectors and thus the protection provided by a Mareva injunction was at least unnecessary and, indeed, otiose.

1. However, I am not persuaded in the holistic circumstances of this case that some form of Mareva protection ought not remain.  There has been a judgment obtained in the Court.  True it is, as Mr Kooblal submitted, that there is protection now in the form of liquidators, and hitherto administrators;  but given the history of the litigation, and having reviewed the voluminous file overnight;  it appears to me that it is prudent and justified that some of the Mareva relief remain, at least, for the time being.

1. I propose to refer the matter to the Corporations List and in that list the Judge allocated to the case can review the matter more fully than is possible in the limited time in the Practice Court;  a busy Court with multiple matters being heard, both yesterday and today.

1. I was assisted by the submissions of Mr Selimi, and by the submissions of Mr Randall on behalf of the second defendant.  I agree with Mr Randall that paragraph A(3)(c) ought not remain in Mareva injunction.  The perishable assets, both of goodwill and of good, in my view, ought to be able to be dealt with by the liquidators;  previously, the administrators.  Accordingly, I do not propose to grant paragraph (3)(c).  Further, I do not propose to grant paragraph (4);  the matter should be referred to the Corporations List Judge in the normal course;  and I do not propose to grant paragraph B.  The company books have already been provided.  It is inappropriate, in my view, to require provision of the files of the previous administrators, now the liquidators;  that again, can be dealt with by the Corporations Judge. 

1. Subject, however, to those deletions, I consider it is appropriate to extend the Mareva protection which is sought by the plaintiff.  After all, there has been a judgment of the Court after a lengthy and comprehensive hearing.

1. I propose to give all parties liberty to apply.  I would expect that this matter will be further ventilated before the Corporations List Judge at an early date rather than put off until a much later date is reached when all the material is before that Judge.

1. The Order I make is temporary only in the sense that it is to be referred to the Corporations List Judge for further consideration.  I will not set a date on it;  I will simply give liberty to apply and then the parties themselves, depending upon the factual situation, can activate the matter before that Judge.

1. Accordingly, on the basis of the undertakings given by the plaintiff, I propose to make Order A1 (i), (ii), (iii) and (iv);  Order 2 (i), (ii) and (iii);  Order 3 (a) and (b);  Order C;  Order D:  Order E;  and I will Order F, liberty to apply to the Judge in the Corporations List;  and I will sign an Order provided to my Associate tomorrow formally to that end, and I will initial these minutes in the meantime so that the matter is duly recorded.