Mather v Luttrell Ltd; Luttrell Ltd v KERR - [2003] FMCA 62

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MATHER v LUTTRELL LTD & ORS
LUTTRELL LTD & ORS v KERR & ORS

[2003] FMCA 62

PRACTICE AND PROCEDURE – Mareva injunction – respondent foreign citizen – whether asset dissipated for legitimate purpose – whether dual purpose including inability of applicant to satisfy judgment – whether ‘good arguable case’ or ‘prima facie cause of action’ required – balance of convenience – risk of dissipation of assets before trial.

Corporations Act2001, s.9
Trade Practices Act1974, s.51A
Fair Trading Act1999, s.4
Federal Magistrates Act 1999, s.15

Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSW LR 319 (CA)
Beach Petroleum NL v Johnson (1992) 9 ACSR 404
Woodside Hospitals Consulting Pty Ltd v Stockton Nominees Pty Ltd & ors (1998) VSC 121 (11 September 1998)

Applicant

ANDREW BYRON MATHER

Respondents

LUTTRELL LTD, GUITARAMA PTY LTD (ACN 9 470 637), GLENN MARCEL JONSON and ANN LAUDER JONSON

Cross-Claimants

LUTTRELL LTD, GUITARAMA PTY LTD (ACN 9 470 637), GLENN MARCEL JONSON and ANN LAUDER JONSON

Cross-Respondents

BARRY KERR, SUSAN KERR, DAVID KERR and JULIA KERR

File No:

MZ 127 of 2002

Delivered on:

4 March 2003

Delivered at:

Melbourne

Hearing Date:

11 February 2003

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr P Goodrich

Solicitors for the Applicant:

Younger & Swinburne

Counsel for the Respondents:

Ms M Loughnan

Solicitors for the Respondents:

Slater & Gordon

Counsel for the Cross-claimants:

Ms M Loughnan

Solicitors for the Cross-claimants:

Slater & Gordon

Counsel for the Cross-Respondents:

No appearance

Solicitors for the Cross-Respondent:

Hunter Newns

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 127 of 2002

ANDREW BYRON MATHER

Applicant

And

LUTTRELL LTD, GUITARAMA PTY LTD, GLENN MARCEL JONSON and ANN LAUDER JONSON

Respondents

And

LUTTRELL LTD, GUITARAMA PTY LTD, GLENN MARCEL JONSON and ANN LAUDER JONSON

Cross-Claimants

BARRY KERR, SUSAN KERR, DAVID KERR and JULIA KERR

Cross-Respondents

REASONS FOR JUDGMENT

In this matter ANDREW BYRON MATHER (the Applicant) by Application filed 11 February 2002 has made a claim against LUTTRELL LTD (the First Respondent), GUITARAMA PTY LTD (the Second Respondent), GLENN MARCEL JONSON (the Third Respondent) and ANN LAUDER JONSON (the Fourth Respondent). The First Respondent at all material times is alleged to be a company incorporated pursuant to the laws of New Zealand. It is alleged the Second Respondent is a corporation incorporated under the Corporations Act2001. The Third and Fourth Respondents at all material times are alleged to be directors of the First Respondent and officers of the Second Respondent within the meaning of s.9 of the Corporations Act.
The Applicant by Notice of Motion dated 28 January 2003 seeks a Mareva order against the Third and Fourth Respondents restraining both Respondents from disposing of the proceeds of sale or at least that part of the proceeds up to $175,000 of a property at 56 Cummins Road East Brighton (the property). In support of the Application for a Mareva order the Applicant relies upon an affidavit sworn by him on 28 January 2003. In that affidavit the Applicant recites details of the claim and orders made. He further deposes that a search of title of the property reveals that as at 23 December 2002 the property was owned by the Third and Fourth Respondents. It is noted from the search that a second mortgage was registered against the title on 14 November 2001 to J M Nominees Pty Ltd. A copy of the mortgage annexed to the Applicant’s affidavit reveals that the mortgage to J M Nominees Pty Ltd is in the sum of $40,000.
It now seems to be common ground that the Third Respondent is a citizen of New Zealand though resident at present in Australia and the Fourth Respondent who is the wife of the Third Respondent is a British citizen but also resident at present in Australia.
The claim in general terms appears to arise out of a share sale agreement between the Applicant and the First Respondent whereby the Applicant is alleged to have purchased shares owned by the First Respondent in the Second Respondent upon payment of the sum of $90,000. It is alleged that pursuant to the share sale agreement the amount of $90,000 was paid to the First Respondent and it is claimed that in breach of that agreement the First Respondent failed to transfer to the Applicant the shares which were the subject of the agreement.

A further claim is made that under the share sale agreement the Second Respondent was to pay an agreed retainer to the Applicant for provision of his services to the Second Respondent. It is claimed that those services were provided by the Applicant from about 25 June 2001 and in breach of what is said to be the retainer agreement a wage of $3,000 gross per month was not paid to the Applicant save for two payments made in the months of August and September 2001. A claim is made then for an amount of $6,000 being payments due for the months of July and October 2001.
The Statement of Claim further provides that representations were made allegedly prior to the entering into the share sale agreement and that the Applicant relied upon those representations when entering the share sale agreement and the retainer agreement. Further reliance is said to have been placed on the representations by the Applicant who entered into a lease agreement. The Applicant claims that the representations are representations as to future matters pursuant to

s.51A of the Trade Practices Act 1974 (the TPA) and s.4 of the Fair Trading Act 1999 (the FTA). The Third and Fourth Respondents are claimed to be knowingly concerned or parties to the alleged contraventions and otherwise said to have aided, abetted, counselled or procured the contraventions as alleged.
Orders were made by the Court on 22 March 2002 that the Respondent shall file and serve a Defence and any Cross-claim. Other orders were made on that date and the matter listed for hearing on 21 August 2002.
It should be noted that in their Defence the Third and Fourth Respondents have denied that at all relevant times they were directors of the First Respondent and do not admit that they were officers of the Second Respondent.
The Application was listed before the Court on 6 August 2002 and on that date the time was extended for the filing and service of a Cross-claim, the hearing date of 21 August 2002 was vacated and the Application fixed for hearing on 13 January 2003. Ultimately a Cross-claim was filed on 7 August 2002 by the Respondents as Cross-claimants against BARRY KERR (the First Cross-Respondent), SUSAN KERR (the Second Cross-Respondent), DAVID KERR (the Third Cross-Respondent) and JULIA KERR (the Fourth Cross-Respondent). The Cross-claim seeks indemnity against the Cross-Respondents and refers to an agreement between the Second Respondent and the Third and Fourth Respondents and the Cross-Respondents. It is not necessary to refer in detail to the Cross-claim.
The Kerrs by a Cross-claim filed 30 September 2002 seek to make a claim against the Second, Third and Fourth Respondents referred to as the Second Cross-Respondents.
In October 2002 it became evident that the Third Respondent Mr Jonson had been admitted to hospital and was suffering what was alleged to be a serious medical condition. Orders were made on

21 November 2002 requiring the Third Respondent to provide an updated medical report and orders were made for further mediation of the matter.
On 23 December 2002 the hearing date of 13 January 2003 was vacated and the Application was to be fixed for trial on 5 August 2003 with the Application being placed in a reserve list of cases with priority upon 21 days notice to the parties. Other orders were made in relation to the filing and serving of affidavits.
In his affidavit the Applicant deposes that he was informed by his solicitors and verily believes that a letter of demand was written to the Third and Fourth Respondents on 22 October 2001 demanding “repayment of the amount the subject of my claim in this action”. Hence, it is apparent from that brief chronology that the second mortgage was registered after the letter of demand had been forwarded by the Applicant’s solicitors to the Third and Fourth Respondents.
A search of the title of the property according to the affidavit of the Applicant further reveals that a caveat was lodged against the title by Christy Louise Jonson who it is understood on the evidence is the daughter of the Third and Fourth Respondents. That caveat seeks to claim an interest as chargee pursuant to a charge in writing said to be dated 24 October 2002. Again, it is clear that the charge has been lodged more than 12 months after the letter of demand and certainly after the substantive Application was filed in this Court.
The Applicant deposes that on or about 10 January 2003 he visited the property and observed a Real Estate Agency had erected a sign at the front of the premises advertising the property for sale. Upon making further enquiries the Applicant states that he searched a web site of the Real Estate Agent to discover that the property was priced at $565,000.
Prior to inspection of the property the Applicant deposes that on

23 December 2002 his solicitors forwarded by facsimile a letter to the Third and Fourth Respondents solicitors requesting details of the second mortgage to J M Nominees Pty Ltd and the charge to the Respondents’ daughter. Acknowledgment was received from the Respondents’ solicitors of that letter by letter dated 7 January 2003.

A further letter dated 15 January 2003 from the Applicant’s solicitors to the Respondents’ solicitors asserted that as far as the Applicant’s solicitors were aware the Third and Fourth Respondents were “natives of New Zealand”. The letter expresses concern regarding what appears to be a “dissipation of your client’s assets and the fact that there may be an attempt to remove some from the jurisdiction of the Court”. Undertakings are sought in that letter that a sum of not less than $175,000 be set aside until the conclusion of the action. Reference is made to proceedings being commenced for a Mareva order failing receipt of the undertaking sought.
The Respondents’ solicitors by letter dated 17 January 2003 acknowledges the further correspondence. A further letter dated

21 January 2003 from the Respondents’ solicitors state their clients were not willing to provide the undertaking and would oppose any application for a Mareva order.
According to the Applicant’s affidavit he attended the property again on 17 January 2003 and discovered that the “for sale” sign had a “sold” sticker attached. He then deposes that there is little reason for the Third and Fourth Respondents to remain in Australia and that he knows of no other assets which the Third and Fourth Respondents have in this country and states there is a “grave risk that any equity which they have in the dwelling shall be removed out of the jurisdiction of the Court, disposed of within the jurisdiction or otherwise dealt with in a fashion so that if I succeed in my action I will not be able to have my judgment satisfied”.
It should be noted that the Notice of Motion was initially listed before the Court on 31 January 2003 and on that date the Third and Fourth Respondents agreed to lodge a written undertaking, given in the context of the Applicant’s undertaking as to damages, not to spend more than $35,000 of the $55,800 deposit expected to be received by the Third and Fourth Respondents from the sale of the property. It should be noted the undertaking filed with the Court had an error in that the deposit monies are referred to as being in the amount of “$35,000” when it is agreed it should read “$55,800”. Otherwise that undertaking continues to remain in full force and effect. It is also noted that the undertaking appears to have an incorrect date and should be dated “7 February 2003” rather than “7 March 2002”.
In further support of the Application for a Mareva order the Applicant has relied upon an affidavit sworn by his solicitor Thomas Hamilton Swinburne on 30 January 2003. In that affidavit the solicitor referred to discussions with the Third and Fourth Respondents’ solicitors and arrangements for the undertaking to be filed.
The Respondents to this Application relied upon affidavits sworn by Lorien May Devitt on 21 January 2003 and 10 February 2003 together with an affidavit of the Fourth Respondent sworn 11 February 2003. The Fourth Respondent’s affidavit simply seeks to verify the contents of the Devitt affidavits to which I have referred. The deponent states that the Third Respondent is “incapable of swearing an affidavit”. It is noted that although the particulars of jurat refer to the affidavit being sworn at Melbourne it is claimed that the affidavit was in fact sworn at the deponent’s address in East Brighton.
The first affidavit of Ms Devitt refers to information received from the Third Respondent and in particular the deponent states,
“I am informed by Glenn Jonson and verily believe that he has now been discharged from hospital but continues to undergo significant medical treatment and nursing care as an out patient”.
The deponent produced two medical reports dated 10 May 2002 and

2 January 2003. In the latter of those reports reference is made to the Third Respondent being admitted to hospital on 7 October 2002 with multiple “embolic brain infarcts” since admission. It is claimed that the patient had multiple other medical problems including left above knee amputation 8/11/2002, infected right stump debrided on 8/11/2002, unstable diabetes, inability to perform dialysis secondary to decreased cognition, malaene secondary to oesophagitis and duodenitis and presumed subacute bacterial endocarditis.
It is noted that the Third Respondent had a left below knee amputation on 13 March 2002, a right below knee amputation in April 2002 and otherwise suffers from renal failure and has a history of heart disease. The latest report suggests that the health problems have reduced the Third Respondent’s functional capacity to the extent that he is now only able to mobilise in a wheelchair. His cognition has also been affected. At the time of writing that report it was suggested that it is uncertain as to whether the Third Respondent would be unable to return home or whether he would require high level care.
In the first Devitt affidavit she refers to the Third Respondent as having been discharged from hospital as indicated but that he is unable to earn income and as a result of the need for constant care the Fourth Respondent is unable to work. Reference is made in the affidavit to information provided by the Third Respondent that the first mortgage over the property amounts to $315,000, the second mortgage as indicated is $40,000, there is a caveat for legal costs to the Respondents’ solicitors in the amount of $30,000 and the caveat in the amount of $16,000 to the Respondent’s daughter Christy Louise Jonson. It is said that the equity therefore in the property totals $157,000. A range of debts were referred to including various credit cards, mortgage repayments, loans and the like totalling $28,048.32.
The second Devitt affidavit merely refers to service of the affidavit of the Fourth Respondent to which I have already referred.

Relevant law

There is no doubt that this Court has power to make a Mareva order pursuant to s.15 of the Federal Magistrates Act1999 which is similar in form to s.23 of the Federal Court of Australia Act1976. The power to be exercised by the Federal Court of Australia which in my view applies equally to the Federal Magistrates Court has been described as being an implied power of the Court. (See Jackson v Sterling Industries Ltd (1987) 162 CLR 612 per Wilson and Dawson JJ at 618). The purpose of a Mareva order is to restrain a party from disposing of assets where to do so would be to create a situation where any judgment obtained against the Respondent would not be satisfied.
It is useful to set out the purpose of Mareva relief as described by Deane J with whom Mason CJ, Brennan, Wilson and Dawson JJ expressed agreement in Jackson v Sterling Industries Ltd at 625 where His Honour said,
“That purpose is not to create security for the plaintiff or to acquire a defendant to provide security as a condition of being allowed to defend the action against him. Nor is it to introduce, in effect, a new vulnerability to imprisonment for debt, or rather for alleged indebtedness, by requiring a defendant, under the duress of the threat of imprisonment for contempt of court, to find money, which he may or may not have (whether or not at some point of time it may have been available to him), to guarantee to a plaintiff that any judgment obtained will be satisfied. It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the Court by depriving the plaintiff of the fruits of any judgment obtained in the action.”
It is also helpful to refer to the decision of Gleeson CJ in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSW LR 319 (CA) as follows at page 321-322:
“The remedy is discretionary, but it has been held that, in addition to other considerations that may be relevant in the circumstances of a particular case, as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied”.
That extract was followed by von Doussa J in Beach Petroleum
NL v Johnson (1992) 9 ACSR 404 who went on to say at p 405-406 the following:
“It will be noted that it is not necessary for the applicants to show an active intent on the part of the respondent to defeat the applicants from recovering the judgment. It is enough if the applicants establish that, in the absence of relief, there is a danger that assets will be dealt with in a way which will prevent the applicants recovering the judgment”.
During the course of submissions Counsel for both parties appeared to rely upon principles in relation to Mareva orders which were set out in the unreported decision of Woodside Hospitals Consulting Pty Ltd v Stockton Nominees Pty Ltd & ors (1998) VSC 121 (11 September 1998). That unreported decision of Chernov J set out matters relevant to the exercise of the discretion including establishing that the Applicant has a “good arguable case”, that there is real risk that the Defendant will remove his or her assets from the jurisdiction or dissipate them so as to defeat the Plaintiff’s entitlement to judgment should it succeed and the “balance of convenience favours the grant of the injunction …” (see paragraph 9). Whilst the second element would appear to be consistent with the authorities to which I have referred from the High Court it is not clear that the High Court authority necessarily supports the proposition that the Applicant must show that he has a “good arguable case”. For the present purposes I prefer the criteria set out in the High Court judgments in Jackson v Sterling Industries Ltd and Beach Petroleum NL v Johnson. That is, it is sufficient in my view if the Applicant is able to demonstrate a prima facie cause of action against the Respondent. I am prepared to accept however that in considering whether to grant interlocutory injunctive relief it may also be relevant to have regard to the balance of convenience referred to by Chernov J in the Woodside Hospital case.

Applicant’s submissions

It is submitted on behalf of the Applicant that he has a good arguable case against the Third and Fourth Respondents. As indicated earlier I am not entirely satisfied that there needs to be a “good arguable case”. It is sufficient to establish that the Applicant has established a prima facie cause of action against the Respondents. In any event it was submitted on behalf of the Applicant that there is a good arguable case. The second significant submission is that there is a real risk that the Respondents will remove their assets from the jurisdiction or dissipate them so as to defeat the Applicant’s entitlement to any judgment and that the Applicant has established that on the balance of convenience a Mareva order should be made by the Court.

In support of the Applicant’s case against the Respondents, Counsel submitted that upon an examination of the affidavit material and in particular reliance upon agreements whereby it was agreed that the Applicant would buy 500 shares owned by the First Respondent and the Second Respondent in consideration of the payment of $90,000, that upon payment of that amount the failure of the First Respondent to transfer shares or any part of those shares to the Applicant constituted a breach of the agreement thereby causing the Applicant to suffer loss and damage. Reliance is placed upon the alleged representations by the Third and Fourth Respondents that sales of the product concerned would generate a certain income which in turn lead the Applicant to provide the amount of $90,000. Otherwise the Applicant relied upon the details of the claim set out earlier in this judgment. It was noted that the defence filed does not deny receipt of the amount of $90,000 from the Applicant. It is further noted that the pleadings provide for a claim against the Third and Fourth Respondents as being knowingly concerned in or parties to the contraventions of the Trade Practices Act and the Fair Trading Act.
In support of the submission that there is a risk that the Respondents will remove their assets from the jurisdiction or dissipate them so as to defeat the Applicant’s entitlement Counsel relied upon the chronology of events to which I have referred and in particular emphasised the registration of the second mortgage to J M Nominees on 14 November 2001 which occurred after the letter of demand had been written on

22 October 2001 and further relied upon the charge in writing dated

24 October 2002. Further reliance is placed upon the suggestion that there is no other property which either respondents have in Australia and that at least the Third Respondent is a citizen of New Zealand, though resident in Australia, and that the Fourth Respondent is a British citizen albeit that she is also resident in Australia. Precise details as to residency were not otherwise available and nor was that matter substantially in issue even though initially it was thought that both the Third and Fourth Respondents were citizens of New Zealand. The combination of those matters is relied upon by Counsel for the Applicant to establish that either by absconding or dissipating the assets the result would be that upon success the Applicant would not be able to have any judgment satisfied. It was suggested that there had been a pattern of encumbering the property by means of the second mortgage and/or the charge. This occurred after the letter of demand in October 2001.
It was submitted that the balance of convenience clearly favours the Applicant in the present case. This is so in circumstances where the proceeds of sale of the property would appear to be the only source of funds from the only asset of the Respondents in the jurisdiction. If those proceeds were transferred to New Zealand or further dissipated within the jurisdiction then the effect would be to render any judgment in the Applicant’s favour ‘fruitless’.
Criticism was made by Counsel for the Applicant of the state of affidavit evidence and it was submitted that the Third and Fourth Respondents have not placed any evidence before the Court as to their financial status, assets or future plans. Reference was made to the potential for electronic transfer of funds and this issue was raised to counter the suggestion that it would be inconceivable that the Third Respondent would disrupt medical treatment for his serious medical condition in an attempt to remove funds from the jurisdiction. It was noted that whilst the more recent information suggests that the Third and Fourth Respondents may no longer be directors of the First Respondent, it remains a company incorporated in New Zealand and that the Third and Fourth Respondents’ daughter remains a director of that company.
It was made clear during the course of submissions that the orders sought in the application do not seek to restrain the Respondents from dealing with any asset owned by them for their ordinary and reasonable living and medical expenses or indeed proper legal costs and disbursements in respect of the proceeding but rather to seek an order in respect of such moneys in excess of the amount of those expenses. Some attempt was made to analyse the current available equity in the property and an analysis by Counsel for the Applicant suggested that there may be a net equity of $94,000 after allowing for legal costs of the current proceedings secured by way of caveat, the second mortgage and the caveat to the Respondents’ daughter. A further $10,000 for the costs of selling the property would also need to be deducted. In round figures it was accepted that there may be a net equity available of $80,000 to $85,000. In reaching that figure it is noted that some allowance has been made already for accumulated debts which may be described as living expenses in any event. From the general figure of $80,000 to $85,000 it was conceded by the Applicant that there should be an order in respect of living expenses and what may be reasonable for the Respondents to meet those expenses prior to the hearing of the Application.

Respondents’ submissions

Some challenge was made to the directorship of the Third and Fourth Respondents of the First Respondent though it did not seem to be seriously challenged that the daughter of the Respondents is currently a director of that company. It was submitted that there is no prima facie case or indeed arguable case advanced on behalf of the Applicant and that it is insufficient to simply adopt as being a true statement those matters in the Statement of Claim upon which the Applicant relies. It was submitted it was insufficient for the Applicant to simply rely upon pleadings as being true and correct. More detailed evidence should be given it was submitted in relation to misrepresentations.
In relation to the issue of the real risk of dissipation or removal of assets from the jurisdiction, it was submitted that there is no evidence that at present the Third and Fourth Respondents plan to leave the jurisdiction or would remove funds from the jurisdiction. In any event if New Zealand were to be their destination then it would not be difficult to retrieve those funds although it was noted there had been the second mortgage and caveat placed on the property after the letter of demand. It was submitted that if the Third and Fourth Respondents genuinely wished to dissipate funds then an advance of something greater than the $40,000 pursuant to the second mortgage would have been sought. Likewise, the charge to the daughter could have been greater.
During the course of submissions I had invited Counsel for the Respondents to consider the issue of the proportion of the additional loan which was the subject of the second mortgage and the charge to the daughter as a percentage of the then existing equity in the property. The circumstances of the Respondents had changed according to Counsel’s submissions as they are not able to maintain the mortgage payments and needed to rely upon the other funds in order to survive financially. The point which Counsel made was that in the circumstances rather than there being a pattern of conduct which might be regarded as an intention to defeat any claim by the potential successful Applicant, that the reduction in equity was for legitimate reasons having regard to the inability of the Third Respondent to be gainfully employed due to his significant illness. It was submitted that the notice of motion was a “callous attack on a very ill man”. Settlement of the property is due in July and accordingly it was submitted that there are recurring expenses on the mortgage of the property and in any event after settlement the Third and Fourth Respondents will be required to pay rental. The mortgage repayments of $2,000 per month together with repayments on a motor vehicle of $1,000 per month meant that there is a substantial amount of outgoings which it could be said are secured. Adding a further $2,000 to $3,000 per month for living expenses and the constant care required by the Third Respondent would mean that living expenses would amount to $6,000 a month for six months making a total of $36,000. It is noted that the final hearing of the application is now listed for 5 August 2003 though the matter is in a reserve list of cases with priority to be listed earlier if convenient.
The Respondents’ Counsel relied upon the decision of Chernov J in the Woodside Hospital case to which I have referred. It was submitted that the facts in that case were similar to the present case and essentially as I understood the submissions it was urged upon the Court to find that any dissipation of funds that have occurred since the letter of demand have occurred as a consequence of what might be regarded as a legitimate reason and that plausible explanation is available to the Court. It was claimed that any order would “stultify” the treatment of the Third Respondent and would otherwise also “stultify the defence”.
The lack of evidence concerning the financial details and plans of the Third and Fourth Respondents can to a large extent be explained by the significant medical condition of the Third Respondent which would make it difficult to get appropriate detailed instructions both for the defence of the substantive application and in the preparation of affidavit material contesting the claim for a Mareva order.

Reasoning and findings

It is clear in the present case that the Court needs to consider brief material which has been provided by way of affidavit evidence both for the Applicant and the Respondents.
As indicated earlier in this decision I am satisfied that the purpose of a Mareva order is to ensure that the Respondents do not dispose of assets in circumstances where to do so would create a situation where any judgment obtained against them by the Applicant could not be satisfied.
In my view it is significant in the present case that the making of the Mareva order should not be seen as some condition to be placed upon the Respondents’ defence of the action nor indeed to provide some undue punishment. Indeed it cannot and should not provide any guarantee to the Applicant in the present case that any judgment obtained will necessarily be satisfied.
I accept on the evidence that the Third Respondent as a result of his significant and severe medical condition has been unable to generate income which would enable him to service recurring expenses both in terms of current living costs and the payment of fixed outgoings including mortgage and car payments. I further accept that in the present case the dissipation of the asset which has occurred after the letter of demand may be in part explained by the need of the Third and Fourth Respondents to make use of their only asset in order to pay day to day living expenses. However I also find that in part as a result of the chronology of events that dissipation of assets has occurred to some extent as a means of dissipating assets in such a manner as to frustrate the due process of the Court and deprive the Applicant of the fruits of any judgment which may be obtained. That is, I am satisfied there is a dual purpose as a number of the expenses which have been incurred seem to relate to credit card expenses and the like and I am not satisfied that the charge to the Respondents’ daughter in particular has been properly incurred or needed to have been lodged in all the circumstances of the case.
The fact that the First Respondent is an off shore company and that the Third and Fourth Respondents resigned their directorships apparently after the letter of demand is a matter of concern and in my view provides evidence of conduct which may well arouse suspicion of the Applicant. It is not however necessarily conclusive or relevant in terms of the factors to be taken into account upon the making of a Mareva order. Of more significance is the dissipation of assets which occurred after the letter of demand which as I have indicated in part at least may be said to be an endeavour to dissipate funds to frustrate any judgment obtained by the Applicant.
I am satisfied however by reason of the citizenship of the Third and Fourth Respondents and the fact that the only asset they possess is an asset which has now been the subject of a contract of sale that a real risk exists of further dissipation of funds prior to the trial of the action. That dissipation I accept may occur by electronic transfer of funds which may be placed under the care or control of the daughter of the Respondents and/or in any event otherwise dissipated within the jurisdiction. I am not satisfied that there is sufficient evidence to conclude that either the Third or Fourth Respondent have any immediate plans to abscond. It is sufficient however to find consistent with the authorities to which I have referred that there is a danger in the present case that the asset will be dealt with in a way which would prevent the Applicant recovering a judgment either by removal out of the jurisdiction of the proceeds of sale of the property or disposition of those proceeds within the jurisdiction.
It is obvious from the medical material that a number of the conditions suffered by the Third Respondent would have been known to him for a number of years prior to the significant amputation surgery which occurred in the year 2002. Those conditions include the need for peritoneal dialysis, peripheral vascular disease and diabetes. Unfortunately the date upon which the Third Respondent ceased to be employed and/or require the attention on a daily basis of the Fourth Respondent is not clear. It is obvious from the date of surgery that the Third Respondent would not have been able to generate income. Nevertheless I am satisfied that as indicated, at least in part, the dissipation of funds has been for the purpose which applying the principles of law in relation to Mareva orders would encourage the Court to make an order of a kind sought by the Applicant. In my view it is also relevant to consider the chronology of events in relation to the Court proceedings and the sale of the property which seemed to have occurred during a time when it was not possible for the Third and Fourth Respondents to participate in the legal proceedings and after a date had been fixed for the final hearing of the application. I do not accept that this application could be regarded as a “callous attack on a very ill man” or that it somehow would stultify the defence and/or treatment of the Third Respondent.
I otherwise find there is a prima facie cause of action made out against the Respondents by the Applicant. Even if I were to apply the “good arguable case” test then I would also be satisfied in the circumstances that that test has been satisfied as in my view the Applicant makes clear reference to representations of a kind if established and relied upon may lead to a successful judgment. I further find that as indicated there is a real risk that if not restrained the Respondents will either remove from the jurisdiction and/or dissipate within the jurisdiction a substantial portion of the remainder of the proceeds of sale of the property. I am satisfied that the balance of convenience favours the Applicant in the present case and accept the submissions by Counsel on behalf of the Applicant in relation to the proceeds of sale being the only source of funds from the only asset of the Respondents held in this jurisdiction.
I accept however that a significant part of the further proceeds of sale of the property will be used prior to the final hearing by the Respondents to meet living expenses and applying the analysis of the net proceeds of sale provided by Counsel for the Respondents, it is my concluded view that the sum of $45,000 should be the subject of the order as the amount to be retained from the proceeds of sale until further order. That should leave an amount of approximately $30,000 to $35,000 available to the Respondents for living expenses over the next 6 months though it is to be expected that the hearing date scheduled for August 2003 should be brought forward upon further dates becoming available to the Court. There is a strong likelihood that the hearing will be listed earlier as I have given it priority over all other pending cases in the reserve list of matters docketed to me in this Court. It is now likely that the application will be heard during the month of May 2003.
Having decided that the application for the Mareva order should succeed to the extent that it preserves the sum of $45,000 I will hear Counsel in relation to the precise form of the order.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 4 March 2003