QPG1 Pty Ltd ACN 611 568 962 v Hemant Investments Pty Ltd as Trustee for Hemant No. 1 Investment Trust ACN 626 501 157

[2023] QSC 91

SUPREME COURT OF QUEENSLAND

CITATION:

QPG1 Pty Ltd ACN 611 568 962 v Hemant Investments Pty Ltd as Trustee for Hemant No. 1 Investment Trust ACN 626 501 157 & Ors [2023] QSC 91

PARTIES:

QPG1 Pty Ltd ACN 611 568 962

(Applicant)

v
Hemant Investments Pty Ltd as Trustee for Hemant No.1 Investment Trust ACN 626 501 157

(First Respondent)
And
Kent Byron Lange
(Second Respondent)
And
Gerald Gavi
(Third Respondent)

FILE NO/S:

BS 3972/23

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

5 May 2023

DELIVERED AT:

Brisbane

HEARING DATE:

6 April 2023

JUDGE:

Martin SJA

ORDER:

1.   Proceedings BD3064/20 be transferred from the District Court to the Supreme Court.

2.   The applicant has leave to file and serve an amended claim and statement of claim within 14 days.

3.   Kent Byron Lange and Gerald Gavi be added as defendants.

4.   The application is otherwise dismissed.

5.   I will hear the parties as to costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZING ORDERS – where freezing order is sought – where matter is interlocutory – whether there is an arguable case to justify a freezing order – whether there is a real risk that a potential judgment will go unsatisfied

Uniform Civil Procedure Rules 1999 (Qld), r 260D

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, cited
Palmer v Parbery & Ors (No 4) [2019] QCA 27, considered

TTMI Ltd of England v ASM Shipping Ltd of India [2006] 1 Lloyds Report 401, considered
Riley Mackay Pty Ltd v Mackay [1982] 1 NSWLR 264, considered

COUNSEL:

T Matthews KC for the applicant
J Sweeney for the respondents

SOLICITORS:

Bridge Brideaux Solicitors for the applicant
Redchip Lawyers for the respondents

1. The applicant (QPG1) seeks a number of orders. The respondents do not oppose the following orders:

   (a)that QPG1 have leave to file an amended claim;

   (b)that Kent Lange and Gerald Gavi be added as defendants; and

   (c)that proceedings BD3064/20 be transferred from the District Court to the Supreme Court.

2. The debate was with respect to QPG1’s application for a freezing order and, to a lesser extent, its application to file an amended statement of claim in the form attached to an affidavit filed in this matter.

   Preliminary point

3. Mr Matthews KC objected to a number of paragraphs in the affidavit of Robert Champney (a solicitor of Redchip Lawyers) on the basis that “the present application is an Originating Application for final relief [and] hearsay is inadmissible.” The paragraphs objected to are hearsay.

4. The relief sought is not final. The relief relating to the pleadings and the transfer are interlocutory matters. The relief concerning a freezing order is, likewise, an interlocutory order.[1] Hearsay evidence is allowed.

   [1]Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [51].

   The arrangement between the applicant and the respondents

5. In September 2018, a company called QPG Realty Pty Ltd entered into agreements with the first respondent (Hemant). Those agreements related to the appointment of a selling agent and a marketing agreement in respect of the sale of lots of land at Collingwood Park. Hemant had contracted to buy those lots from an associated company to the applicant. The case advanced for QPG1 may be summarised in this way:

   (a)in 2019 Hemant lodged a development application for creation of the new lots and that subsequently occurred;

   (b)in 2019 and 2020 QPG Realty performed marketing activities in respect of the sale of the lots – a number of the lots were sold but no notifications of sale were made nor were any payments made to QPG Realty;

   (c)in July 2020 QPG Realty assigned any debt due and owing at that date and in the future by Hemant to QPG1; and

   (d)QPG1 alleges that, pursuant to the original agreements and the assignment from QPG Realty to it, that Hemant owes it $1,940,950.00.

6. The second and third respondents are being joined because QPG1 wishes to take action against them under an alternative claim for a breach of s 18 of the Australian Consumer Law.

   Should a freezing order be granted?

7. An applicant for a freezing order must satisfy the requirements in r 260D of the Uniform Civil Procedure Rules1999. It provides:

   “260D     Order against judgment debtor or prospective judgment debtor or third party

   (1)   This rule applies if judgment has been given in favour of an applicant by the court or another court and there is sufficient prospect that the judgment of the other court will be registered in or enforced by the court.

   (2)   This rule also applies if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—

   (a)     the court; or

   (b)     another court and—

   (i)there is a sufficient prospect that the other court will give judgment in favour of the applicant; and

   (ii)there is a sufficient prospect that the judgment of the other court will be registered in or enforced by the court.

   (3)   The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—

   (a)the judgment debtor, prospective judgment debtor or another person might abscond; or

   (b)the assets of the judgment debtor, prospective judgment debtor or another person might be—

   (i)removed from Australia or from a place inside or outside Australia; or

   (ii)     disposed of, dealt with or diminished in value.

   (4)The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied, having regard to all the circumstances, that—

   (a)there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—

   (i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or

   (ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or

   (b)a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

   (5)This rule does not affect the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so.”

8. In Palmer v Parbery & Ors (No 4),[2] McMurdo JA (with whose reasons Fraser and Gotterson JJA agreed) said:

   “[8] … By r 260D(3), a freezing order may be made against a prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment will be wholly or partly unsatisfied because the debtor might abscond or because the assets of the debtor might be removed from Australia or a place inside or outside Australia or disposed of, dealt with or diminished in value.

   [9] As the primary judge identified, there were relevantly three questions to be considered as against each of the appellants, namely whether there was a good arguable case against that party, whether there was the requisite danger that a judgment would be unsatisfied because the assets of that party would be dissipated and whether it was in the interests of justice that a freezing order be made.”

   [2][2019] QCA 27.

9. Later in his reasons, McMurdo JA referred with approval to the reasoning of Clarke J in TTMI Ltd of England v ASM Shipping Ltd of India.[3] In that judgment, Clarke J said:

   [3][2006] 1 Lloyds Report 401.

   “[25] The purpose of the Mareva jurisdiction is sometimes referred to as the prevention of the “dissipation of assets.” Without explanation that phrase is, itself, obscure. As Colman J stated in Gangway Ltd v Caledonian Park Investments (Jersey) Ltd (2001) 2 Lloyd’s Rep 715 the underlying purpose of the jurisdiction is not to provide a claimant with security for its claim but to restrain a defendant from evading justice by disposing of assets otherwise than in the ordinary course of business so as to make itself judgment proof with the result that any judgment or award in favour of the claimant goes unsatisfied.  The purpose is not to provide security for the claimant in respect of his claim. It is well established that it is not necessary to establish that the defendant is likely to act with the object of putting his assets beyond reach. What has to be shown is that there is, absent an injunction, “a real risk that a judgment or award in favour of the plaintiffs would go unsatisfied”: The “Niedersachsen” [1983] 2 Lloyd’s Rep 600. That formulation cannot, however, be regarded as a complete statement of the law. A defendant may be likely to make perfectly normal dispositions, such as the payment of ordinary trading debts, the effect of which may be that, when any award is made, it is, in whole or in part unsatisfied when, absent those payments, it might have been satisfied or satisfied to a greater extent. Something more than a real risk that the judgment will go unsatisfied is required.

   [26] Thus in a case in the Court of Appeal of Ontario-Chitel v Robart [1982] 39 O.R. (2d) 513, 532-533 the court said:

“The applicant must persuade the court by his material that the defendant is removing or there is a real risk that he is about to remove his assets from the jurisdiction to avoid the possibility of judgment, or that the defendant is otherwise dissipating or disposing of is assets, in a manner clearly distinct from his usual or ordinary course of business or living, so as to render the possibility of future tracing of the assets remote, if not impossible in fact or in law”.

[27] To similar effect, in Ketchum International Plc v Group Public Relations Holdings [1997] 1 WLR 4 Stuart Smith LJ referred to the jurisdiction of the Court of Appeal to ensure that its judgments on appeal were not rendered valueless “by an unjustifiable disposal of assets”.” (emphasis added)

1. That approach is consistent with what was said by the New South Wales Court of Appeal in Riley Mackay Pty Ltd v Mackay:[4]

   “…the jurisdiction to grant the injunction is not to be exercised simply to preclude a debtor from dealing with his assets, and in particular to prevent him from using them to pay his debts in the ordinary course of business. It is directed to dispositions which do not fall within this category and which are intended to frustrate, or have the necessary effect of frustrating, the plaintiff in his attempt to seek through the court a remedy for the obligation to which he claims the defendant is subject.” (emphasis added)

   [4][1982] 1 NSWLR 264 at 276.

2. The first element which an applicant must satisfy is that there is a good arguable case against each of the respondents. It is difficult to make any assessment at this stage of proceedings where there is yet to be an amended statement of claim filed. The pleadings as they currently stand show a dispute about the status of agreements alleged to exist. The proposed pleading against the second and third respondents is of little relevance given that no freezing order is sought against them.

3. The second factor to be considered is often the most important. Has an applicant demonstrated that there is a real risk that a judgment in its favour will go unsatisfied? And will that occur because of actions taken by a respondent which are outside the ordinary course of business?

4. The applicant has not shown this. QPG1 relies on what it says is a failure by Hemant to pay sums under an agreement. But Hemant says it is not required to make those payments. There is no evidence to suggest that Hemant has acted or is acting in a way which is clearly distinct from the usual ordinary course of business.

5. The order sought by QPG1 is unusual. It asks the court to order that from the sale proceeds of the relevant lots an amount of $10,000 plus GST per lot and 5% of the gross sale price of any lots sold be paid into court. Such an order would come within the definition of “security for the claimant” which is not the purpose of a freezing order.

6. QPG1 also seeks that a mortgage be granted in favour of the applicant securing the sum it seeks. Again, that is a security.

7. QPG1 seeks an order that a fixed amount be paid from the proceeds of sale and that that order take effect without reference to the rights of the registered mortgagees. And then, in addition to having that amount paid into court, a mortgage is sought. There may be very unusual instances where one or other of those orders might be appropriate. They are not appropriate in this case.

8. QPG1 has failed to demonstrate the necessary level of risk which would justify the making of a freezing order.

9. There was nothing, apart from the contention about risk (which I have rejected), which touches upon the interests of justice.

   An amended statement of claim

10. Hemant has some objections to the proposed amended statement of claim. Those objections were not the subject of debate in the application. Rather than making the order sought, I think it is sufficient to order that QPG1 have leave to file and serve a claim and an amended statement of claim. The respondents may then take such action as they see fit.

    Orders

11. I make the following orders:

    (a)that proceedings BD3064/20 be transferred from the District Court to the Supreme Court;

    (b)that QPG1 has leave to file and serve an amended claim and amended statement of claim within 14 days;

    (c)that Kent Byron Lange and Gerald Gavi be added as defendants to the proceedings transferred from the District Court; and

    (d)the application is otherwise dismissed.

12. I will hear the parties on costs.