Temsign Pty Ltd & Ors v Biscen Pty Ltd & Ors Quick Sign Shops (Australia) Pty Ltd v J & J Bone Pty Ltd
[1996] FCA 616
•15 Jul 1996
LIMITED DISTRIBUTION
CATCHWORDS
INJUNCTIONS - application for leave to appeal to vary terms of Mareva injunction - order limiting appellant's access to $50,000 for living expenses and legal costs - exercise of discretion requires broad inquiry - whether "by-and-large" approach appropriate - setting aside of $50,000 reasonably open.
INJUNCTIONS - prohibition upon further application to vary orders prior to trial - whether such an order permissible in the exercise of judicial discretion - no power to deprive Judge of jurisdiction to vary or discharge interlocutory injunction - order made to prevent abuse of court process - four previous contested hearings - no point of principle raised - leave to appeal refused.
No. WAG 102 of 1995
TEMSIGN PTY LTD. AS TRUSTEE FOR THE QUICK SIGN SHOPS (AUSTRALIA) UNIT TRUST & ORS. v BISCEN PTY. LTD. & ORS.
No. WAG 77 of 1995
QUICK SIGN SHOPS (AUSTRALIA) PTY. LTD. v J. & J. BONE PTY. LTD. & ANOR.
BEAUMONT, DRUMMOND AND SUNDBERG JJ.
PERTH
15 JULY 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
WESTERN AUSTRALIA DISTRICT REGISTRY)
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
No. WAG 102 of 1995
BETWEEN:TEMSIGN PTY LTD AS TRUSTEE FOR THE QUICK SIGN SHOPS (AUSTRALIA) UNIT TRUST
First appellant
LISA JANE BAILEY
Second appellant
SARAH ANNE BAILEY
Third appellant
AND:BISCEN PTY LTD
First respondent
IAN STUART HUNGERFORD AND DARELLE CHRISTINE HUNGERFORD
Second respondents
CLAIRE MICHELLE DARCY AND GRAHAM JAMES DARCY AS TRUSTEES FOR THE C.M. DARCY TRUST
Third respondents
CLAIRE MICHELLE DARCY AND GRAHAM JAMES DARCY
Fourth respondents
DARREL WAYNE DONOVAN AND PATRICIA ANNE DONOVAN
Fifth respondents
MILLDON HOLDINGS PTY LTD
Sixth respondent
PAUL DAVID COCHRANE
Seventh respondent
2.
No. WAG 77 of 1995
AND BETWEEN QUICK SIGN SHOPS (AUSTRALIA) PTY LTD
First appellant
LISA JANE BAILEY AND SARAH ANNE BAILEY
Second appellants
J & J BONE PTY LTD
First respondent
JOHN FRANKLIN BONE & JANIS KATE BONE
Second respondents
CORAM: BEAUMONT, DRUMMOND AND SUNDBERG JJ.
PLACE: PERTH
DATE: 15 JULY 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
Applications for leave to appeal refused, with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
WESTERN AUSTRALIA DISTRICT REGISTRY)
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
No. WAG 102 of 1995
BETWEEN:TEMSIGN PTY LTD AS TRUSTEE FOR THE QUICK SIGN SHOPS (AUSTRALIA) UNIT TRUST
First appellant
LISA JANE BAILEY
Second appellant
SARAH ANNE BAILEY
Third appellant
AND:BISCEN PTY LTD
First respondent
IAN STUART HUNGERFORD AND DARELLE CHRISTINE HUNGERFORD
Second respondents
CLAIRE MICHELLE DARCY AND GRAHAM JAMES DARCY AS TRUSTEES FOR THE C.M. DARCY TRUST
Third respondents
CLAIRE MICHELLE DARCY AND GRAHAM JAMES DARCY
Fourth respondents
DARREL WAYNE DONOVAN AND PATRICIA ANNE DONOVAN
Fifth respondents
MILLDON HOLDINGS PTY LTD
Sixth respondent
PAUL DAVID COCHRANE
Seventh respondent
No. WAG 77 of 1995
AND BETWEEN: QUICK SIGN SHOPS (AUSTRALIA) PTY LTD
First appellant
LISA JANE BAILEY AND SARAH ANNE BAILEY
Second appellants
J & J BONE PTY LTD
First respondent
JOHN FRANKLIN BONE & JANIS KATE BONE
Second respondents
CORAM: BEAUMONT, DRUMMOND AND SUNDBERG JJ.
DATE: 15 JULY 1996
REASONS FOR JUDGMENT
BEAUMONT J.
Before the Court are two applications for leave to appeal in related matters.
In the principal proceedings at first instance, by reason of alleged contraventions of certain of the provisions of Part V of the Trade Practices Act 1974, in negotiations entered into with respect to a franchised sign making business, damages, rescission of agreements and other consequential relief are sought.
After the institution of those proceedings, an application was made in September 1995, ex parte, to a Judge of the Court (Carr J.) for relief in the form of Mareva injunctions. The applicants in the principal proceedings sought to restrain, pending the trial, the disposition of certain assets said to be under the control of the respondents to the principal proceedings, being members of the Bailey family, in particular Lisa Jane Bailey and Sarah Anne Bailey and a number of companies and trusts controlled by them, or as it would appear, by their accountant, Mr Kroonenburg.
On 15 September 1995, his Honour granted, on an ex parte basis, injunctive relief of the Mareva kind and adjourned the matter for further hearing later in that month, when orders varying those injunctions were made. Ultimately the matter came before his Honour again in October 1995 when his Honour was asked to continue the existing injunctions at an interlocutory hearing in which members of the Bailey family opposed that continuation. His Honour reserved his decision on that application; and on 10 October 1995, for the reasons he then gave, Carr J. made a series of orders, including Mareva injunctions restraining both the individual and the corporate respondents from dealing with certain of their assets.
The terms of his Honour's orders were summarised by the learned primary Judge in a later judgement given on 5 January 1996 as follows:
"1.Temsign was restrained from dealing with any of its assets other than in the ordinary course of business conducted within and restricted to Western Australia and to pay reasonable legal expenses;
The Bailey sisters were restrained from mortgaging or charging either the East Perth or Subiaco properties save and except in accordance with the terms of the orders and from disposing of mortgaging or charging or otherwise dealing in any manner with the share capital of Bowquest;
The Bailey sisters were permitted to mortgage, sell or cause to be sold the East Perth and Subiaco properties and were ordered to hold the money advanced upon any such mortgage and the net proceeds of any sale, in an interest bearing account to be agreed upon by the solicitors for the parties. Those monies were referred to as `the Funds';
The Bailey sisters were entitled to draw from the Funds interest accrued or the sum of $15,000 per annum whichever was the greater to be paid by equal monthly instalments in advance;
The Bailey sisters were entitled to draw from the Funds such money as they might from time to time;
(i)see fit to advance or otherwise make available to Temsign for the purposes of Temsign's ordinary course of business conducted and restricted to Western Australia subject to giving first 7 days notice in writing of their intention to do so to the solicitors for the applicants or;
(ii)require for reasonable legal expenses.
All parties were given leave to apply to vary or discharge the injunction within 48 hours."
The matter came again before his Honour on an urgent basis on 15 December 1995 when an order was made enabling $15,000 of the moneys held in the ANZ Bank account to be disbursed. There was a further application dealt with by his Honour on 22 December 1995 when another order was made enabling a further $8,000 to be disbursed from that account.
A further application made to his Honour on 4 January 1996. His Honour reserved his decision, and on 5 January 1996, his Honour varied his previous orders to some extent. However, on that occasion his Honour ordered that the respondents be restrained from disbursing any of the funds held in the ANZ Bank account at 940 Hay Street, Perth, until further order. Further orders were then made for the reasons then given by his Honour, but it is not necessary to mention them at this point.
A further application was made to the learned primary Judge on 15 March 1996, and on that occasion his Honour for the reasons he gave at the time, ordered that the previous orders be varied in a number of respects but, significantly for present purposes, his Honour made orders restricting access to the funds in the ANZ Bank account previously mentioned in these terms:
"2B.The first and second respondents may exercise such legal rights, to which they may respectively be entitled, to withdraw $50,000 from the funds held in account number 260237709 standing in the name of `Quick Sign Shops (Australia) Pty Ltd ACN 059 983 185 ATF Quick Sign Shops (Australia) Unit Trust T/A Quick Sign Shop' at the Australia & New Zealand Banking Group Limited's branch at 940 Hay Street Perth (`the Funds') and expend that amount as they see fit. The permission to withdraw that amount is co-extensive with and not additional to the permission conferred by paragraph 2B of the injunctive orders made on 13 October 1995 (as varied by the orders made on 15 December 1995, 21 December 1995 and 5 January 1996) in Application No. WAG 102 of 1995 as further varied by orders of today's date.
2C.Subject to sub-paragraph 2B hereof, the first and second respondents be restrained and an injunction is hereby granted restraining them whether by themselves or by their servants or agents from withdrawing any part of the balance of the Funds.
2D.The first and second respondents shall not make further application for orders allowing them to withdraw part or the whole of the balance of the Funds before the trial of this application."
These applications for leave to appeal by members of the Bailey family are essentially challenges to the reservation expressed in orders 2B, 2C and 2D, in two respects. First, they challenge the limit of the amount able to be withdrawn by members of the Bailey family to the sum of $50,000 (para. 2B); secondly, they contest the prohibition on any further application for withdrawal of any other amount from the account (para. 2D).
There is no challenge sought to be made on behalf of the present applicants to the grant, in principle, of Mareva injunctions in these matters. The attack sought to be launched is directed only at paragraphs 2B, 2C and 2D.
It is accepted by counsel appearing for each of the
parties before the Court today that the orders made by the learned primary Judge are interlocutory. That is clearly so in my opinion. The essential restraint is, as I have noted, a restraint until a further order and relevantly, the particular restraint, about which specific complaint is now sought to be made, is a prohibition upon access to the bank accounts for any amount in excess of $50,000 "before the trial of this application." It must follow that, as a matter of form as well as substance, the orders are truly interlocutory.
There are two consequences of this. The first, as is accepted on all sides, is that leave to appeal from any aspect of the orders is required. Secondly, being interlocutory orders it is, as a matter of power, open to any single Judge of the Court, if appropriate in the exercise of a Judge's discretion, to vary or discharge such an order (see, for example, Commissioner of Australian Federal Police v Cox (1986) 14 FCR 279).
On the face of para.2D of the orders, the making of any further application before the trial is prohibited. However, it follows from the comments above that, as a matter of power, his Honour could not effectively deprive himself, or for that matter any other single Judge of the Court, of jurisdiction, in any ultimate sense, should it become appropriate to exercise that jurisdiction to vary or discharge the Mareva injunctions already granted.
I will refer shortly to his Honour's reasons for judgment, but as I followed his Honour's process of reasoning, the basis upon which the apparent prohibition in para.2D was imposed was his Honour's indication that any further application for variation, based upon the same or perhaps similar material, should be treated as an abuse of the process of the Court, and for this reason, such an application should not be entertained. It would be a different thing if, to take a hypothetical example, material were to become available, in effect by way of fresh evidence, at a point of time subsequent to the delivery of the judgment given on 15 March 1996 which, arguably at least, could lead to a different exercise of the discretion in this area. But apart from mentioning this point in general terms, I need not pursue it as there is no such material before us. As has been noted, his Honour has given three separate sets of reasons for the grant of the Mareva injunctions, or for their variation.
In the reasons published on 10 October 1995, his Honour stated the general legal principles in this area in terms which, with respect, are unexceptional. In particular, his Honour noted that the purpose of a Mareva injunction is not to create security for an applicant, but to prevent the frustration of the Court's process. His Honour went on to note (in another context which is no longer material) that a practice has developed whereby Mareva orders should be varied to allow payment of debts incurred in the ordinary course of business, and to allow the defendant sufficient funds to meet reasonable living expenses.
However, in that first set of reasons, his Honour expressed the view that he did not consider the timing of appointments of agents to sell the East Perth property and the Subiaco property had been satisfactorily explained. The same observations applied to certain corporate rearrangements which he had described. He went on to say that there had apparently been no attempt made to deal separately with the affairs of the Bailey sisters and the corporate and trust interests in the respondent group. But, as his Honour reminded himself, once more, the purpose of a Mareva injunction was not to create security for an applicant but to prevent disposal of assets in such a manner as will frustrate the Court's process. He went on to say:
"Accordingly, if circumstances change they may well be a basis for permitting the respondents to deal with the proceeds [of sale] in a manner consistent with the principles underlying the grant of such interlocutory relief."
Again, in his reasons published on 5 January 1996, his Honour articulated correctly, with respect, the approach that should govern the exercise of the discretion of the Court in dealing with an application for a Mareva injunction. His Honour repeated that the purpose of the injunction, so far as is possible in the circumstances, is to prevent the frustration of the Court's process. On that occasion his Honour addressed the question whether changes had occurred in the circumstances of the respondents since 10 October 1995, and whether any further factual material had emerged, which might assist in deciding how to maintain a reasonable balance between the frustration of the Court's process (which may result from the dissipation of the respondent's assets) and the reasonable requirements of Temsign's business and of the Bailey sisters to meet personal expenditure and to pay their reasonable costs.
In my opinion, his Honour correctly stated the legal question to be addressed on that occasion. Having posed that question, his Honour went on to address the material then before the Court and in essence concluded that he was not satisfied with the version of events sought to be given on behalf of the present applicants. I will not attempt to summarise that material, but I refer in particular to his Honour's observations at pages 17 to 19 of those reasons. His Honour concluded by saying that in the balancing of the respective interests required, he should make some modifications to the orders already made. His Honour did this in what he described as the "unusual circumstances of the present matter", and referred also to the duty of the Court of its own motion to take steps as it felt necessary to ensure that its process is not abused. As a result, his Honour ordered that there be no further payments out of the ANZ Bank account until further order, and that in the event of the mortgage or sale of the West Leederville property or any other dealing with that property, there should be orders compelling the Bailey sisters to cause the Bowquest Company to repay certain amounts in reduction of the amount secured on the West Leederville property. Other orders were then made to which I need not refer.
I now turn to the reasons for judgment, of 15 March 1996, the subject of the present applications for leave to appeal.
It is necessary at the outset to note, but not to pursue, part of the context of the application at first instance on that occasion, being an application on behalf of the present applicants to discharge the injunctions previously granted, brought upon the basis that the present respondents had been, it was claimed, in breach of their duty of disclosure to the Court. I say that it is not necessary to pursue this matter because to some extent his Honour was persuaded that there was force in the submission put in that connection on behalf of the present applicants. Nonetheless, having considered that the Court still had an ultimate discretion in the matter, his Honour took the matter into account, but otherwise declined to discharge or vary the injunctions in any fundamental respect.
In that hearing (that is on 15 March) there was also material before his Honour relied on by the present respondents to reinforce their previous submission that there had been, in essence, a lack of candour on the part of the present applicants in the disclosure of the assets otherwise available to them to meet living expenses and the costs of the present litigation, which is now fixed to commence in October of this year. Again, I will not seek to summarise his Honour's factual conclusions in that regard, but having considered all the material, his Honour in an ex tempore judgment said:
"What I propose to do is, rather than have this matter come back time after time, I propose to allow a degree of access to the funds which, as I understand it, are approximately $250,000 in an ANZ Bank account. I propose to allow the respondents to have access to $50,000 of that money on the basis that they can choose how they propose to apply that, but that the injunction will otherwise remain and that there will be no further releasing of funds from that sum of a quarter of a million dollars."
His Honour later went on to say:
"To clarify the matter, the slate will be relatively wiped clean in that the new injunction will freeze the proceeds of the Subiaco and East Perth properties, except to the extent of $50,000 which may be taken and used as the respondents see fit, on the basis that there will be no further access to those funds until the trial of the action."
It was for those reasons that his Honour made orders 2B, 2C and 2D previously mentioned.
It is clear, in my opinion, that in the exercise of the discretion given to the Court in this area, his Honour was embarking upon a broad inquiry. The authorities show that that inquiry is not confined to the assets or income to which a party has a strict legal entitlement. In my view, his Honour was entitled, perhaps bound, to go beyond those sources of assets or income in deciding whether in fairness an injunction should run and upon what terms and conditions it should run.
As I have said, in my opinion, his Honour correctly stated the legal principles to be applied in this area generally. He recognised that fairness often requires that an allowance be made in favour of a respondent to a Mareva injunction permitting access to some equitable portion of the assets frozen by the terms of the injunction. At the same time, where as here the injunction does not operate against each and every asset owned or controlled by a respondent, a practical onus must lie upon a respondent who seeks to persuade the court that access should be preserved to a particular portion of property encumbered by the terms of the injunction.
In undertaking that specific exercise, his Honour was urged to consider a report prepared by an expert accountant, Mr. Marlborough. His Honour, however, said in his reasons that he did not propose to take Mr. Marlborough's report into account.
The report is a lengthy one, although it does not purport to be anything in the nature of an audit of the affairs of the present applicants. Given the size of the report and the complexity of the dealings with which it seeks to deal, it is not appropriate, nor necessary, that I attempt to summarise it. However, it should be noted that necessarily Mr. Marlborough was dependent upon instructions given by the present applicants as to the character to be attributed to particular dealings in the period in question. In that connection, his Honour expressed in each of the judgments which I have mentioned the serious reservations that he held. Although Mr. Cornes on behalf of his clients has urged us in a careful submission to conclude otherwise, I am of the view that the learned primary Judge was justified in at least expressing reservations about the information that had been propounded by the applicants and by Mr. Marlborough to the Court.
Once it is accepted that the primary Judge was justified in expressing those reservations, it must follow, I think, that the exercise embarked on by his Honour was essentially one of fact about which it is difficult in the extreme to persuade an appellate court that it should interfere. I certainly see no basis for our interfering on the material before us. As I see it, the exercise that his Honour was asked to perform, and did undertake, was to form an assessment or a judgment as to what would be, in fairness and as an equitable adjustment, the setting aside of an amount to which recourse could be had on behalf of the present applicants for the two purposes mentioned, that is for living expenses and for costs.
From his Honour's process of reasoning and from the very amount that his Honour nominated, namely the sum of $50,000, it is obvious that his Honour took a "by-and-large" approach to this question. I certainly see nothing wrong with that. Indeed, with respect, it is hard to envisage that any other approach was open. The sum of $50,000 was, I think, a figure that was at least reasonably open to his Honour, and I would not seek to interfere with it.
The other matter that remains is the prohibition contained in paragraph 2D of the orders made by his Honour.
For the reasons I have already given, when that order is viewed in its proper context, that is to say, viewed in the light that any further application made on the existing, or similar, material would be an abuse of process, I am of the view that it was reasonably open to his Honour, in the special circumstances of this case, to make such an exceptional order. I bear in mind that, at this stage, his Honour, over a period of 6 months, had entertained five contested hearings in what is, on any view, an interlocutory aspect of this dispute. It follows, I think, that, although on its face, the terms of paragraph 2D appear to raise a point of principle which could justify the grant of leave, I am of the view that, upon analysis, the point is without sufficient substance to justify the grant of leave.
For all those reasons I would refuse leave to appeal in each matter.
DRUMMOND J: I agree with the reasons given by the learned presiding Judge for the order he proposes, and with that order.
SUNDBERG J: I, too, agree and have nothing to add.
(Counsel addressed on costs)
BEAUMONT J: The Court is of the view, having heard counsel, that costs should follow the event. The order therefore will be in each case, application for leave to appeal is refused, with costs.
I hereby certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment herein of the Court.
Dated:
Associate
Counsel and Solicitors for Mr. M. Cornes, instructed
Appellants: by Barker Gosling
Counsel and Solicitors for Mr. C.G. Colvin, instructed
Respondents: by Hotchkin Hanly
Date of hearing 15 July 1996
Date Judgment delivered 15 July 1996
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