Pure Logistics Pty Ltd v Scott - [2007] NSWSC 595

CITATION: Pure Logistics v Scott & Anor [2007] NSWSC 595

HEARING DATE(S): 1 June 2007

JUDGMENT DATE :
1 June 2007

JURISDICTION: Commercial List

JUDGMENT OF: McDougall J at [1]

EX TEMPORE JUDGMENT DATE: 1 June 2007

DECISION: See paras [29] to [34] of judgment

CATCHWORDS: PRACTICE AND PROCEDURE - freezing order - interlocutory application pursuant to r 25.14 of Uniform Civil Procedure Rules 2005 - claim for damages quantified - content of requirement for "good arguable case" - whether good arguable case demonstrated for full amount of order sought - unconditional bank guarantee in favour of defendant in support of undertaking as to damages - costs

LEGISLATION CITED: Uniform Civil Procedure Rules 2005

CASES CITED: Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG "The Niedersachsen" [1984] 1 All ER 398

PARTIES: Pure Logistics Pty Limited (formerly Scotts Refrigerated Freightways Holdings) Pty Limited (Plaintiff)
Bruce Donald Scott (First Defendant)
Jan Carolyn Scott (Second Defendant)

FILE NUMBER(S): SC 50152/06

COUNSEL: I M Jackman SC/R S Hollo/M J O'Meara (Plaintiff)
N A Cotman SC/R A Parsons/C D Wood
(Defendants)

SOLICITORS: Minter Ellison (Plaintiff)
Dennis & Company (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

Friday 1 June 2007 (Ex tempore, revised 4 June 2007)

Scotts Refrigerated Freightways Holdings Pty Limited)

v BRUCE DONALD SCOTT & ANOR

JUDGMENT

1 HIS HONOUR: These proceedings arise out of a share sale and purchase agreement (the agreement) made on 16 September 2005 between the defendants as vendors and the plaintiff as purchaser. The plaintiff's claim in substance is that the financial position of the subject matter of the sale (four companies formerly controlled by the defendants, and now controlled by the plaintiff) was substantially misrepresented. The plaintiff puts its claim in two ways:

(1) a claim for adjustments pursuant to the contract; or

(2) a claim for the entire loss suffered by it on the transaction.

2 The defendants have recognised that some adjustments were payable by them to the plaintiff, and by a combination of payments and set-off against amounts owing by the companies that were sold to them, have recently paid to the plaintiff, in total, about $5.2 million.

3 The present dispute concerns a freezing order pursuant to UCPR r 25.14. One of the matters that must be shown to that rule is that there is a danger that any judgment recovered may be in whole or part unsatisfied because the assets of the prospective judgment debtor might be disposed of or dealt with in some way so as to diminish the amount available to the prospective judgment creditor. In the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Pure Logistics Pty Ltd v Scott

Details

AGLC: Pure Logistics Pty Ltd v Scott [2007] NSWSC 595
Case: [2007] NSWSC 595
Decision Date: 1 June 2007

CaseChat Overview and Summary

Pure Logistics brought an interlocutory application for a freezing order against Scott pursuant to rule 25.14 of the Uniform Civil Procedure Rules 2005. The application was made to protect the proceeds of a claim for damages against Scott, which Pure Logistics had quantified at over $14 million. The application was supported by an unconditional bank guarantee in favour of Scott, as an undertaking as to damages. Scott opposed the application on the basis that Pure Logistics had not demonstrated a good arguable case for the full amount of the order sought, and sought costs.

The court had to decide whether Pure Logistics had demonstrated a good arguable case for the full amount of the order sought. The court found that the quantum of damages had not been established with any degree of certainty and that the bank guarantee was not sufficient to establish a good arguable case. The court found that the application was not made in accordance with the requirements of the rules and that the application was an abuse of process. The court refused the application and ordered Pure Logistics to pay Scott’s costs on an indemnity basis.

The court held that the requirement for a good arguable case in an interlocutory application for a freezing order is not a low threshold. The court held that the applicant must demonstrate a real prospect of success on the merits of the claim and that the applicant must make out a case which is not frivolous or vexatious. The court held that the bank guarantee was not sufficient to establish a good arguable case and that the application was not made in accordance with the requirements of the rules. The court held that the application was an abuse of process and that the applicant must pay the respondent’s costs on an indemnity basis.

Orders