Northcorp Ltd & Amex Corporation Pty Ltd v Allman Properties (Australia) Pty Ltd

[1993] QCA 365

IN THE COURT OF APPEAL	[1993] QCA 365
SUPREME COURT OF QUEENSLAND

Appeal No. 86 of 1993.

Brisbane

[Northcorp v. Allman Properties]

BETWEEN

NORTHCORP LIMITED

(First Plaintiff)

First Respondent

AND

AMEX CORPORATION PTY LTD.

(Second Plaintiff)

Second Respondent

AND

ALLMAN PROPERTIES (AUSTRALIA) PTY LTD

(First Defendant)

First Appellant

AND

GEORGE FREDERICK ALLANSON and

AUBREY DESMOND CHICHLOW

(Second Defendants)

Second Appellants

AND

MANISA PTY LTD

Third Defendant

BY ORIGINAL ACTION

BETWEEN

ALLMAN PROPERTIES (AUSTRALIA) PTY LTD

(Plaintiff by Counterclaim)

First Appellant

AND

NORTHCORP LIMITED

(First Defendant by Counterclaim)

First Respondent

AND

EXPOCOURT PTY LTD

(Third Defendant by Counterclaim)
Third Respondent
____________________________________________________________

_____

Mr Justice Pincus
Mr Justice Ambrose

Justice White

____________________________________________________________

_____

Judgment delivered 04/10/93.

Judgment of the Court.

____________________________________________________________

_____

APPEAL DISMISSED WITH COSTS.

____________________________________________________________

_____

CATCHWORDS:	INJUNCTIONS - MAREVA - test to be applied - anticipated dissipation of assets - whether dissipation has to be for the purpose of preventing recovery of the amount of any judgment obtained before a Mareva injunction can be granted.
Counsel:	Mr L Harrison QC for the appellants. Mr B Laurie for the respondents.
Solicitors:	McCullough Robertson for the appellants. Barry Bateman Clapin for the respondents.
Hearing Date:	26 August 1993.

THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 86 of 1993

Brisbane

Before Pincus J.A.
Ambrose J.
White J.

[Northcorp v. Allman Properties]

BETWEEN

NORTHCORP LIMITED

(First Plaintiff)

First Respondent

AND

AMEX CORPORATION PTY LTD.

(Second Plaintiff)

Second Respondent

AND

ALLMAN PROPERTIES (AUSTRALIA) PTY LTD

(First Defendant)

First Appellant

AND

GEORGE FREDERICK ALLANSON and

AUBREY DESMOND CHICHLOW

(Second Defendants)

Second Appellants

AND

MANISA PTY LTD

Third Defendant

BY ORIGINAL ACTION

BETWEEN

ALLMAN PROPERTIES (AUSTRALIA) PTY LTD

(Plaintiff by Counterclaim)

First Appellant

AND

NORTHCORP LIMITED

(First Defendant by Counterclaim)

First Respondent

AND

EXPOCOURT PTY LTD

(Third Defendant by Counterclaim)
Third Respondent

JUDGMENT OF THE COURT

Judgment delivered 04/10/93.

This is an appeal against the grant of a Mareva injunction in which the question raised is essentially whether the plaintiff had to show that a disposition of assets by the defendant had the purpose of preventing recovery of the amount of any judgment which might be obtained in the plaintiff's action.

When the appeal was called on, Mr Harrison Q.C. applied for and was granted an extension of time within which to file and serve a notice of appeal. That was necessary, if the appeal was to be heard, since owing to an error on the part of solicitors, it was not appreciated until too late that the judgment sought to be attacked had been entered.

Since there was no suggestion of any prejudice to the respondents, and it was clear that an appeal was intended from the outset, the Court granted the indulgence sought.

A number of claims are involved, but the only one whose character it is necessary to explain has been brought by the third respondent ("Expocourt") against the first appellant ("Allman"), claiming a sum in excess of $12M in respect of an alleged breach of a contract of sale. It is unnecessary to analyse the nature of the claim, since it is not in issue that Expocourt has shown a prima facie case. The evidence was that Allman owns land, part of which has recently been the subject of a contract for sale for a sum in excess of $7M. Allman is owned by two other parties to the proceedings, Messrs Crichlow and Allanson, who have, according to evidence before the primary judge, had certain differences which have been resolved by an agreement for payment of $1.6M to Crichlow. The judge inferred, and that inference was not challenged, that payment of the $1.6M might include some distribution of funds from Allman to beneficiaries under a trust. The judge held that the inference was open that Allman's assets were being or were likely to be disposed of, so that there was a danger that Expocourt would not be able to have its judgment satisfied.

His Honour was satisfied that there was a proper basis for granting a Mareva injunction; he made an order in terms which are not criticised.

The principal point taken, as appears from what has

been said above, is that the judge applied the wrong test.
Mr Harrison QC argued for the appellants, substantially on
the basis of the High Court's reasons in Jackson v. Sterling
Industries Limited (1987) 162 C.L.R. 612, that it is not
enough for a plaintiff claiming a Mareva injunction to show
that there is a danger of dissipation of assets which is
likely to preclude recovery of the amount due on any
judgment obtained; Mr Harrison contended that Jackson is
authority for the proposition that the dissipation of assets
must have the purpose of preventing recovery of any judgment
obtained.

It is true that some of the expressions there used might be so read, but none of them necessarily supports Mr Harrison's argument. Examples of the passages to which we were referred are the statements of Deane J at p. 622 :

"Orders preventing a defendant from disposing of his assets so as to create a situation in which any judgment obtained against him would not be satisfied may be part of the recent development...

Initially, injunctive orders to preserve assets were made to prevent a non-resident defendant from removing assets from the territorial limits of a court's jurisdiction so as to frustrate the effectiveness of any judgment that might be obtained..."

The expression "so as to", as was submitted by Mr Laurie for the respondent, does not necessarily mean "with the purpose of". Further, Jackson's case was not one in which the distinction presently in question was relevant. The problems there were first, whether the terms of s. 23 of the Federal Court of Australia Act 1976 gave power to a Federal Court judge to require a respondent to provide security in a stated sum for a judgment expected to be obtained against him; secondly, it was a question whether such an order could be made by a court of general jurisdiction, apart from any statutory grant of power.

It is necessary to make some further reference to authority, but it should be noted at the outset that the restriction suggested by Mr Harrison's argument might in some instances have an inconvenient operation. It would apply to inhibit the Court where the plaintiff appeared to have a strong cause of action, based on plain fraud, as, it appears, the cause of action in Jackson v. Sterling Industries Limited was thought to be. The restriction would prevent the grant of a Mareva injunction in such a case even where the plaintiff could show that assets, the proceeds of the fraud, were being dissipated and that a failure to grant an injunction might deprive the plaintiff of any chance of recovery, but an actual purpose of defeating the judgment could not be shown.

A recent consideration of the scope of the Mareva jurisdiction is that of the New South Wales Court of Appeal in Patterson v. BTR Engineering (Aust) Ltd (1989) 18 N.S.W.L.R. 319. There, Gleeson CJ said:

"The remedy is discretionary, but it has been held that, in addition to any 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.".

His Honour's formulation of the second requirement cannot be reconciled with Mr Harrison's contention. The matter assumes some importance, because the principal point at issue in the case was the content of the second requirement.

Meagher JA agreed "in broad terms" with the reasons of Gleeson CJ. Meagher JA said that the jurisdiction to grant Mareva injunctions must be accepted and went on :

"To obtain such an injunction a plaintiff must prove two ingredients: first, that he has a prima facie case against the defendant, and secondly, that there is some risk of a dispersal by the defendant of his assets so as to defeat the value of the plaintiff's victory if he ultimately wins.".

His Honour slightly qualified the second requirement at the end of his reasons by saying that :

"...the plaintiff is required to prove, on the balance of probabilities, that there is a real risk of the dissipation of assets".

In Beach Petroleum NL v. Johnson (1992) 9 A.C.S.R. 404 von Doussa J followed the formulation of Gleeson CJ in this case. We have also noted that a commentator has pleaded, in vol. 108 L.Q.R. at 179, for a flexible interpretation of the Mareva jurisdiction.

It is not necessary, for the purposes of the present case, to decide any question concerning the principles on which such injunction should be granted, other than that we have defined above, namely whether the plaintiff has to show that the purpose of the defendant's disposition, occurring or apprehended, is to prevent recovery of the amount of any judgment. On that point, our opinion is in favour of the respondents.

Mr Harrison raised the question whether the evidence sufficiently showed that Allman's ability to meet a judgment would be affected by the distribution of funds referred to in the evidence; he suggested that Allman might have ample funds. On that point, it is necessary to say no more than that the view was open that the distribution of funds from the land sale would have a substantial effect upon Allman's ability to meet a judgment, because it appeared that it had no assets of any consequence other than the land in question.

In the result, the appeal will be dismissed with costs.