MORRIS v McConaghy Australia Pty Ltd
[2017] FCCA 1477
•28 June 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MORRIS v MCCONAGHY AUSTRALIA PTY LTD | [2017] FCCA 1477 |
| Catchwords: INDUSTRIAL LAW – Proposed application for an abridgement of time for freezing orders for preservation of assets. |
| Legislation: Fair Work Act 2009 (Cth) |
| Applicant: | JONATHAN MORRIS |
| Respondent: | MCCONAGHY AUSTRALIA PTY LTD (ACN 168 218 380) |
| File Number: | SYG 1137 of 2017 |
| Judgment of: | Judge Street |
| Hearing date: | 28 June 2017 |
| Date of Last Submission: | 28 June 2017 |
| Delivered at: | Sydney |
| Delivered on: | 28 June 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr E Cox |
| Solicitors for the Applicant: | Aus Ship Lawyers |
| Solicitors for the Respondent: | Mr S Jauncey Henry Davis York |
ORDERS
The application for interim relief is refused.
Costs reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1137 of 2017
| JONATHAN MORRIS |
Applicant
And
| MCCONAGHY AUSTRALIA PTY LTD (ACN 168 218 380) |
Respondent
REASONS FOR JUDGMENT
On 11 May 2017, this Court made orders referring the matter to mediation before a Registrar of the Court. At that time, the Court raised with the parties what the issues were and sought to ensure that the matter was right for a referral to mediation. Subsequent to the making of those orders, the applicant sought to have the matter relisted without the filing of an application in a case. The Court indicated that any relisting must be supported by an application in a case and affidavit.
On 27 June 2017, the solicitors for the applicant, without copying in the solicitors for the respondent, emailed the Court’s associate in relation to wishing to bring an application for an abridgement of time for freezing orders for preservation of assets. That email identified that an application in a case and supporting affidavits were attached. At 10:29am on 27 June 2017, the Court forwarded an email to all parties identifying that if an application in a case is filed, it would be made returnable for direction before the Court at 9:30am on 4 July 2017.
The Court noted in the email that the subsidiary the subject of the proposed freezing order is not a party to the proceedings and that the current proceedings do not involve the shareholder dispute. The email stated that the Court does not regard the material in the affidavit, together with these deficiencies, as justifying at this stage an urgent hearing. The email identified that it was for that reason the matter would be listed for directions on 4 July 2017. On 27 June 2017 at 10:57am, the solicitors for the applicant responded, asserting that the only significant asset of the respondent, namely, two vessels, is owned by its wholly owned subsidiary and will be sold prior to 30 June 2017.
The letter identified that the applicant wished to preserve those assets urgently. The letter stated:
If the judge is not able to hear the matter urgently, we assume that it is more appropriate for us to approach the duty Judge for an urgent listing.
The Court is the duty judge this week. The Court gave attention and consideration to the material that was provided to it before sending the email that was sent at 10:29am.
The email from the applicant’s solicitor was an inappropriate response. The email then identified, allegedly for convenience, attaching short minutes of orders in respect of which there would be sought an abridgement of time. Those short minutes of orders included, as a proposed order in the short minutes, the joinder of the subsidiary as a party to the proceedings. The joinder of a party to proceedings ordinarily would be done by an application in a case. That was one of the issues identified by the Court as a deficiency in the application.
At 12:20am, the Court responded identifying that leave to file the application in a case was refused. The Court identified that an interparty application for abridgement of time and, if appropriate, the fixing of a directions hearing or a hearing date will be heard at 11:00am today. This Court has the capacity to deal with urgent applications. Freezing orders are ones in respect of which there are well-recognised principles that have to be made out.
In the present case, part of the material that was provided in support of the alleged fear for a freezing order was email correspondence almost a year old. The other material provided identified, in substance, matters going to the shareholder dispute. That shareholder dispute is the subject of choice of law clauses for Hong Kong and China. No relief is presently brought before the Court in relation to the shareholder dispute. If an application was made in relation to the shareholder dispute and the Court was satisfied it was an associated matter, the Court might be in a position where it could be persuaded to grant relief by way of appointment of a provisional liquidator or a receiver. The email sent by the Court at 10:29am was clear and should not have been the subject of a further communication of the kind that was sent at 10:57am by the applicant’s solicitor.
The problems faced by the applicant in the present case in respect of a freezing order are ones in which the assets that it seeks to attach are not those of the party to the current proceedings. The party to the current proceedings, the applicant alleges, was an employer that has failed to pay the applicant. The evidence in support of that alleged contract of employment are minutes of a meeting of a parent company. The minutes of the meeting of the parent company do not support, on their face, an employment contract by the applicant with the respondent.
The respondent put in issue the existence of an employment contract and also clearly pleads an alleged variation of what the true agreement was in respect of the employment of two persons by the Cayman Islands entity. The respondent identified substantial payments having been made consistent with what was alleged to be the varied agreement. Part of the communications put before the Court in support of the freezing order reflect a skirmish in respect of the clarity of the defence and the alleged amendment agreement.
The respondent was clear in identifying the nature of the amendment and this Court had earlier identified, at the time it fixed the matter for mediation, that it would not likely entertain interlocutory skirmishes. The nature of the evidence that has been annexed is not evidence that identifies an arguable case for the urgent grant of a freezing order. The nature of the evidence is of a kind that might justify consideration of urgent relief on an interparty basis in respect of the shareholder dispute.
The disagreement between the directors in relation to directors’ meetings dealing with bank accounts and sale of assets of the subsidiary are all matters going to the shareholder dispute. The Court raised with the applicant today its concern that the applicant wished to proceed on the same application in respect of which this Court had refused leave. That application in a case did not identify, at the very minimum, the potential joinder addressed in the short minutes of order addressed in the further email of which I have made criticism.
To come back to the Court on the same application when the Court had pointed out obvious deficiencies is not satisfactory. Be that as it may, Mr Cox has alleged that the subsidiary is the subject of two imminent sales of vessels in respect of which Mr Cox seeks to assert a fear that the assets may be dissipated. The Court indicated its concern in relation to whether it was sought to bring forward the shareholder dispute and that that was a matter of a kind which might give rise, on an inter partes basis, to consideration of relief of the kind I have earlier identified.
Mr Cox submitted that notwithstanding that the subsidiary was not a party to the proceedings, the Court has power to grant a freezing order. The concerns expressed by the Court are not ones confined to the question of joinder of a party and reflect the strength of the applicant’s case on the material currently before the Court and what appears to be the true nature of the dispute between the parties.
Where the applicant does not wish to bring forward the shareholder dispute for urgent relief before the Court, the Court is not willing, at this stage, to entertain the grant of urgent interim relief in circumstances where the Court can hear the matter finally on 17 August 2017. The Court is also of the view that any issue in respect of whether an abuse of process order should be made if the applicant succeeds can be dealt with and explored on that hearing date. Further, the earliest hearing date that this Court could allocate for a matter of the current kind, taking into account the Court’s assessment of its real urgency, would be 17 August 2017 on an inter partes hearing. The Court is not satisfied that this is the type of case in which the Court should entertain an ex parte application for the grant of freezing order relief.
The shareholder dispute has been going on for some time, and the proceedings were commenced on 12 April 2017. There is no allegation of fraud or dishonesty, but rather the applicant seeks to rely on a communication made over a year ago in an email to support grounds to justify an order to restrain as an abuse of process. The applicant’s evidence is not sufficient, at this stage, to justify the Court granting any greater urgency to the application, notwithstanding the potential sale of assets of a related entity that is not a party to the proceedings. There is no prima facie case for an injunction on the current state of the proceedings and …
The other evidence, as indicated, might be evidence significant in relation to the appointment of a receiver in a partnership dispute or shareholder dispute, but does not assist this Court in respect of a case brought under the Fair Work Act2009 (Cth).
The Court also takes into account the limited evidence in respect of the employment contract propounded by the applicant against the respondent.
If the applicant was in fact being paid a salary for services being provided in Australia, there would be tax obligations that would attach to employment from that salary. That will be an issue that the Court can explore at the hearing on 17 August 2017. It is for these reasons the Court will not entertain either an abridgement of time for service of the application in a case if the applicant seeks to the file the same or grant ex parte interim relief prior to the hearing on 17 August 2017.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 26 October 2018
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