Orix Australia Corporation Ltd v Moody Kiddell and Partners Pty Ltd

[2004] NSWSC 1211

CITATION:	Orix Australia Corporation Ltd v Moody Kiddell & Partners Pty Ltd & Ors [2004] NSWSC 1211
HEARING DATE(S):	25 November, 2004
JUDGMENT DATE:	25 November 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Motion dismissed with costs.
CATCHWORDS:	INJUNCTIONS - ASSET PRESERVATION - ORDER - Alleged fraudulent transaction - no evidence of participation by one defendant - no evidence that second defendant sought to gain personally from transaction - no evidence of risk of dissipation of assets.
PARTIES :	Orix Australia Corporation Ltd - Plaintiff Moody Kiddell & Partners Pty Ltd - First Defendant Christine Mathers - Second Defendant Terry Moody - Second Defendant Nelson Equipment Pty Ltd - Fourth Defendant Gregory Markham Nelson - Fifth Defendant Allied Shipping Service Co Pty Ltd - Sixth Defendant Raymond Alexander McCormick and Gweneth Aileen McCormick - Seventh Defendants Queensland Construction Equipment Pty Ltd - Eighth Defendant
FILE NUMBER(S):	SC 6113/04
COUNSEL:	L. Nikolaidis (Sol) - Plaintiff Ex parte - Defendants
SOLICITORS:	M.D. Nikolaidis & Co - Plaintiff Ex parte - Defendants

JUDGMENT – Ex tempore

1    The Plaintiff seeks asset preservation orders or Mareva type injunctions against the First and Second Defendants. The proceedings arise out of an alleged fraud perpetrated by what is said to be a combination between the First Defendant, which is a finance broker, the Second Defendant, who is an employee of the First Defendant, the Fourth Defendant (Nelson Equipment Pty Ltd) and its Director, Gregory Nelson (the Fifth Defendant), the Eighth Defendant (“QCE”) and its Directors, or at least one of them, Mr McCormick (one of the Seventh Defendants).

2    The fraud is said to be that the Fourth Defendant sold to the Plaintiff equipment which did not in fact exist and then passed the sale proceeds to the QCE. The structure of the transactions is said to be that, in reality, it was QCE which wished to buy equipment. For some reason or other, it did not approach the financier, Orix, directly but wished to make it appear that it was Nelson Equipment Pty Ltd that was buying the equipment.

3    The fraud is said to have been perpetrated by arrangements and discussions between Mr Raymond McCormick on behalf of QCE, Mr Gregory Nelson on behalf of the Fourth Defendant, and Miss Christine Mathers, the Second Defendant, on behalf of the First Defendant.

4    The Plaintiff seeks asset preservation orders against both the First Defendant and the Second Defendant on the grounds that there is a strong prime facie case that both of those Defendants have participated in the fraudulent scheme so that there is ground to believe, having regard to that dishonesty, that they would make away with their assets to defeat the any judgment obtained against them, unless restrained.

5    That the Court can take into account the apparent dishonesty of a defendant in considering whether or not to grant an asset preservation order in anticipation of a judgment is well established and I need not cite the authorities. However, in this case it seems that if the case against the Defendants is proved by the Plaintiff on the evidence presently indicated, the only dishonest person involved on behalf of the brokers, the First Defendant, was the Second Defendant who is an employee and not a director.

6    Mr Hale SC, who appears for the Plaintiff, very properly and fairly admits that as the evidence presently stands he is not able to suggest that any of the Directors of the First Defendant themselves were active participants in the alleged fraud.

7    It seems to me that there is a prima facie case that the Second Defendant, Miss Mathers, participated in a fraudulent scheme between the Fourth Defendant and the Eighth Defendant. She however, of course, denies the account of matters given by the Plaintiff and by Mr Nelson. If her evidence is accepted then she has a sufficient and proper explanation as to the part that she played in these transactions.

8    However, as matters presently stand, I am disposed to think that there is a sufficient prima facie case of dishonesty against the Second Defendant. I am not at all persuaded there is a sufficient prima facie case of dishonesty against the First Defendant although the First Defendant may be liable for the acts of the Second Defendant on any number of other bases than active participation in dishonesty.

9    As matters presently stand therefore, I would not be prepared to make any orders as sought against the First Defendant.

10    It now falls to consider whether I should make any orders against the Second Defendant. Mr White, who appears for the First and Second Defendants, points out that there is no evidence whatsoever that the Second Defendant is likely to make away with any of her assets to avoid the consequences of a judgment against her.

11    Mr Hale, again, rightly and properly concedes that there is no direct evidence that the Second Defendant would make away with her assets. He does say, however, that the case of dishonesty against her would tend to show that she is likely to make away with her assets unless she is restrained.

12    I think that I have to take into account that asset preservation orders of this character should be made only when a strong reason is made out; that reason must include a real likelihood of dissipation of assets. Dishonesty is certainly an element to be taken into account, but there are various types of dishonesty. Dishonesty which involves appropriation by a defendant of the property of another is much more likely to give rise to the necessity for an asset preservation order than dishonesty which may be explicable for other motives than personal gain.

13    In the present case, there is no evidence that Miss Mathers has herself appropriated any part of the profits of these allegedly fraudulent transactions. It does not seem, as the evidence presently stands, that she had anything to gain from participating in the transactions other than procuring a brokerage commission for her employer. Therefore it seems to me that the dishonesty alleged against her is not of such character as, on its face, indicates a likelihood that she is likely to make away with her personal assets to avoid the consequences of a judgment.

14    I am not satisfied that the grounds for the relief sought have been made out against either the First or the Second Defendant.

15    The motion as against the First, Second and Third Defendants filed on 12 November 2004 is dismissed.

16    The Plaintiff will pay the costs of such of the Respondents to that motion as have actually incurred costs in relation to the motion. As to which respondents in fact incurred costs will be a matter for the costs assessor.

17    I order that the proceedings stand into the Expedition List on Friday 3 December 2004.

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Last Modified: 12/17/2004