S.K.R.A.P.E.Y. Nominees Pty Ltd v Still and Ors No. Scciv-04-53

S.K.R.A.P.E.Y. NOMINEES PTY LTD v STILL and ORS
[2004] SASC 15
Civil

PERRY J. (ex tempore) This matter comes to this Court by way of a notice of appeal from a judgment or order of a judge of the District Court made on 15 January 2004 in which the District Court judge refused an application by the appellant, S.K.R.A.P.E.Y. Nominees Pty Ltd (“S.K.R.A.P.E.Y.”) for what is described in the notice of appeal as an “interim and urgent injunction”.
Concurrently with the filing of the notice of appeal there was filed in this Court a notice for specific directions in which S.K.R.A.P.E.Y. seeks an urgent interim injunction in the same terms as was sought in the District Court proceedings.
The application that was heard in the District Court, from the refusal of which the appeal was brought, seeks an order that the third defendant to the proceedings in the District Court, SJFH Pty Ltd as trustee for the Wright and Hill Family Trust, pay into the registry of the District Court “all moneys payable to Brian Trevor Still and/or Grandene Pty Ltd, or any other person or corporation as a consequence of the transfer of a hotel licence and business in respect of premises situated at 1 Hallett Street, Tarlee, SA 5411 and known as Sir James Fergusson Hotel”.
When the matter was listed before me for hearing I informed Mr Turon, counsel for the appellant, that for a number of reasons it was not practical to deal with the matter as an appeal. However, I was prepared to deal with the matter de novo on the footing that it should be treated as an application for an injunction, in the terms in which I have indicated, made directly to this Court.
He was happy for the matter to proceed on that footing, so that it is no longer relevant to refer to the District Court proceedings, except as a matter of history.
Mr Turon then developed an argument predicated on the basis that what was sought was an injunction in the nature of a Mareva injunction. For the reasons which follow, to present the matter in that way gives rise to insuperable difficulties.
Turning to the transaction and dealings said to have given rise to an entitlement on the part of S.K.R.A.P.E.Y. to the injunction sought, I should first explain that S.K.R.A.P.E.Y. is a company of which Ronald Arthur Parry is the director and secretary. The company was incorporated to manage certain funds paid by way of damages to which Mr Parry’s son became entitled as a consequence of a motor vehicle accident which occurred as long ago as 1986.
From the moneys held by S.K.R.A.P.E.Y. a cash loan was made to Brian Trevor Still, evidenced by a document headed “Cash Loan Agreement”. That agreement, which is dated 26 February 2001, evidences a loan of $55,000 from S.K.R.A.P.E.Y. to Mr Still.
Mr Still is the sole shareholder and director of the defendant company, Grandene Pty Ltd (“Grandene”), which conducts the business of the Sir James Fergusson Hotel at Tarlee. Grandene is the lessee of the premises.
It seems likely that the moneys borrowed by Still from the plaintiff have been put into that business.
Default in repayment of the loan eventuated, as a result of which a letter of demand on behalf of S.K.R.A.P.E.Y., addressed to Mr Still, was sent by Lindquist Partners to Mr Still on 21 July 2003.
That letter demanded payment of $61,147.95 within seven days of the date of the letter.
The money was not paid, but at about the time that the letter was sent, Mr Still confirmed to Mr Parry that he was attempting to sell the hotel business and that the outstanding sums owed to S.K.R.A.P.E.Y. would be paid to it on settlement of the sale of the hotel business. Mr Parry asserts that Mr Still went so far as to say S.K.R.A.P.E.Y. would be “first in line to be paid”.
In November 2003 Mr Parry became aware that the hotel lease, and presumably the associated business, had been sold. It appears that the purchasers are SJFH Pty Ltd as trustee for the Wright and Hill Family Trust (“SJFH”)
Upon Mr Parry becoming aware of that circumstance, he proffered to Mr Still an acknowledgement of the debt and a procuration order prepared by Mr Parry’s solicitors. The acknowledgement was an acknowledgement by the hotel broker responsible for dealing with settlement of the sale of the business, that he would pay $63,800 from the proceeds of sale to S.K.R.A.P.E.Y.. The procuration order was in the form of a direction to the hotel broker by Mr Still to do so.
Neither document was ever signed.
Subsequently Mr Parry was informed that settlement of the sale of the hotel was due to take place on 19 January 2004 at 10.30 am.
This precipitated the urgent application first to the District Court, then to this Court.
A Mareva injunction, if granted, would ordinarily restrain the disposal by the defendant of assets which might otherwise be disposed of, to the detriment of the plaintiff who has an arguably valid claim against the defendant. Sometimes Mareva injunctions may be directed to a third party holding assets of the defendant.
What is essential in order to justify a Mareva injunction is that there be at least an arguable case that moneys are owed by the defendant, and some evidence that there is a real risk of the disposal of the assets in circumstances which would prejudice the recovery of any judgment which might be obtained with respect to the moneys owing.
In this matter the formal order sought, which has been put before me in the terms of minutes of order, could not in any way be construed as a Mareva injunction.
If an order was made in those terms, it would direct the purchasers of the hotel business, SJFH, to pay all moneys payable to Mr Still, or Grandene, or any other person or corporation as a consequence of the transfer of the hotel licence and business, into court.
That would have the quite extraordinary consequence that instead of the vendor receiving the moneys on sale, they would be paid into court. Clearly a sale would never proceed if such an order was made.
Furthermore, clearly, the order in no way gives expression to anything resembling a Mareva injunction.
When I drew Mr Turon’s attention to this, he acceded to the suggestion I made, namely that the only conceivable order which could be made in the form of a Mareva injunction would be an order that Grandene be restrained from disposing of any net proceeds of the sale which may be in its hands following the settlement, and which it might otherwise hold for or on behalf of Mr Still.
However, the difficulty in acceding to the possibility of making an order in those terms is that there is absolutely no indication before me that there will be any net proceeds of sale in the hands of Grandene following settlement. No information has been given to the Court as to whether or not there are any secured creditors of Grandene; whether there are any encumbrances which would have to be discharged in order for the settlement to take place; as to the nature and extent of any unsecured creditors of Grandene who might be prejudiced, in the sense that a preference might be established in favour of S.K.R.A.P.E.Y. if such an order was to be made; and neither is there any information before the Court which could possibly lead to the conclusion that net proceeds of sale in the hands of Grandene would be held for or on behalf of Mr Still.
Mr Turon valiantly attempted to pierce the corporate veil, but the arrows did not even make a dent in it.
In my view, the application to the Court is completely misconceived and there is no possible basis upon which it could be granted.
The application is dismissed.

[2004] SASC 15

16 January 2004