Manda Capital Holdings Pty Ltd v Pappas - [2024] VSC 495

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2022 05392

MANDA CAPITAL HOLDINGS PTY LTD (ACN 168 795 088)	Plaintiff
v
CHRIS PAPPAS	First Defendant
STATEMARK PTY LTD (ACN 104 121 600) (and others according to the schedule)	Second Defendant

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JUDGE:	Connock J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 August 2024
DATE OF JUDGMENT:	21 August 2024 ex tempore; revised 23 and 26 August 2024
CASE MAY BE CITED AS:	Manda Capital Holdings Pty Ltd v Pappas
MEDIUM NEUTRAL CITATION:	[2024] VSC 495

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PRACTICE AND PROCEDURE — Freezing order — Good arguable case test — Third party freezing order — Applicable principles — Different to interlocutory injunction — Supreme Court (General Civil Procedure) Rules 2015 (Vic) ord 37A — Property Law Act 1958 (Vic) s 172 — Property Law Act 1958 (Qld) s 228 — Alienation of property with intent to defraud creditors — Inherent jurisdiction — Ancillary orders general principles — Personal Property Securities Act 2009 (Cth) ss 19, 20, 50, 296, 297, 298, 299 — Constructive knowledge — Taking free from a security interest — Onus of proof in proceedings under the Personal Property Securities Act 2009 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff / Defendants by counterclaim	S D Hay KC with I Hristovski	Meerkin & Apel
For the First and Second Defendants / Plaintiffs by counterclaim	J Searle	Holding Redlich
For the Third Defendant	C G Juebner KC with L Stanistreet	Pharmacis Canning Lawyers

TABLE OF CONTENTS:

Introduction and summary.............................................................................................................. 1

Material Relied Upon....................................................................................................................... 2

Background and Evidence............................................................................................................... 3

Plaintiff's Submissions.................................................................................................................. 22

Third Defendant's (Ms Woodruff) Submissions...................................................................... 30

Freezing Orders – Principles and Observations........................................................................ 42

Consideration and Disposition..................................................................................................... 54

Conclusion and Orders................................................................................................................... 74

HIS HONOUR:

Introduction and Summary

By its summons filed 8 July 2024, the plaintiff sought relief including: joining Josephine Woodruff as the third defendant; joining Point Bay Developments Pty Ltd (ACN 627 498 944) (PB Developments) as the fourth defendant; granting leave to file and serve an amended statement of claim; freezing and ancillary orders against Ms Woodruff; freezing and ancillary orders against PB Developments; and ancillary orders against the first defendant (Mr Pappas Senior) and the second defendant (Statemark).

The applications were originally proposed to be made ex parte but, following communication with the Court, the applications were made on notice to each of the defendants, Ms Woodruff and PB Developments. At an urgent hearing held before me on 16 July 2024 for the purpose of addressing an application for interim orders:

1) The defendants, Ms Woodruff, and PB Developments were each separately represented by counsel and senior counsel respectively.

2) Ms Woodruff was joined to the proceeding as the third defendant.

3) The third defendant, by her counsel, undertook that she would not in any way deal with, encumber, transfer or diminish the value of the 100 shares registered in her name in the capital of Point Bay Developments Pty Ltd (PB Shares

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] VSC 495
Decision Date: 21 August 2024 ex tempore; revised 23 and 26 August 2024

CaseChat Overview and Summary

Manda Capital Holdings Pty Ltd applied for an interlocutory freezing order against the defendant, Pappas, to prevent him from disposing of assets in anticipation of a final judgment. The application was brought under the inherent jurisdiction of the court and pursuant to the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ord 37A. The court was required to determine whether the applicant had demonstrated a good arguable case, and if so, whether a freezing order should be made.

The court considered the principles applicable to freezing orders, distinguishing them from interlocutory injunctions, and the test for establishing a good arguable case. It noted that the applicant must show that it is likely to succeed at trial and that the balance of convenience favours the granting of the order. The court also examined the relevant statutory provisions and whether the applicant could rely on the Alienation of Property with Intent to Defraud Creditors Act, as well as the principles governing ancillary orders. Furthermore, the court addressed the applicant's reliance on the Personal Property Securities Act 2009 (Cth) and the onus of proof in proceedings under that Act.

The court found that the applicant had not demonstrated a good arguable case on the evidence presented, and accordingly refused the application for a freezing order. The court considered the evidence insufficient to establish the likelihood of success on the merits, particularly in relation to the applicant's claims under the Personal Property Securities Act 2009 (Cth). The court also noted that the balance of convenience did not favour the granting of the order. Consequently, the application was dismissed, and no freezing order was made against the defendant.

Orders