Mr Gloss Pty Ltd v Henry Mischel

In the case of Mr Gloss Pty Ltd v Henry Mischel, the plaintiff, a company in the construction industry, sought to extend ex parte freezing orders against the defendants to prevent them from dissipating their assets. The dispute arose from an alleged breach of contract by the defendants, leading to a claim for damages. The matter was heard in the Supreme Court of New South Wales. The plaintiff argued that the defendants' serious dishonesty established a risk of asset dissipation, necessitating the extension of the freezing orders.

The primary legal issue before the court was whether the allegations of serious dishonesty were sufficient to establish a risk of asset dissipation, thereby justifying the extension of the freezing orders. The court considered the criteria under the Supreme Court (General Civil Procedure) Rules 2005 r 37A.05, which required the plaintiff to demonstrate an arguably good case and the risk of asset dissipation. The defendants contended that their assets were fully secured, and there was no real risk of dissipation.

The court found that while the allegations of serious dishonesty were significant, they did not establish a sufficient risk of asset dissipation. The defendants' assets were wholly secured, and the court was not persuaded that there was a real risk of the defendants dissipating their assets. Consequently, the court held that the plaintiff had not met the necessary threshold to extend the freezing orders. The application was dismissed, and the court emphasised that the risk of asset dissipation must be more than speculative to warrant such an order.

As a result of the court's decision, the ex parte freezing orders were not extended. The defendants were relieved of the additional burden of the freezing orders, and the plaintiff was required to proceed with its claims without the extended injunctive relief. This outcome underscores the stringent requirements for obtaining and extending freezing orders in Australia, particularly the necessity of demonstrating a real risk of asset dissipation.