Uniflex (Australia) Pty Ltd v Hanneybel
[2000] WASC 231
•8 SEPTEMBER 2000
UNIFLEX (AUSTRALIA) PTY LTD -v- HANNEYBEL [2000] WASC 231
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 231 | |
| Case No: | CIV:1541/1998 | 8 SEPTEMBER 2000 | |
| Coram: | HASLUCK J | 8/09/00 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application to set aside injunction granted | ||
| PDF Version |
| Parties: | UNIFLEX (AUSTRALIA) PTY LTD WARREN DAVID HANNEYBEL |
Catchwords: | Mareva injunction Principles relevant to grant of injunction Application to set aside injunction on grounds that defendant requires access to his resources to defend criminal charges Application to set aside granted |
Legislation: | Nil |
Case References: | Dietrich v R (1992) 177 CLR 292 Mitchell v Saengjan (1994) 117 FLR 273 Ninemia Maritime Corporation v Trave GmbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412 Patterson v BTR Engineering (Australia) Ltd (1989) 18 NSWLR 319 Perth Mint v Mickelberg (No 2) [1985] WAR 117 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
WARREN DAVID HANNEYBEL
Defendant
Catchwords:
Mareva injunction - Principles relevant to grant of injunction - Application to set aside injunction on grounds that defendant requires access to his resources to defend criminal charges - Application to set aside granted
Legislation:
Nil
Result:
Application to set aside injunction granted
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Representation:
Counsel:
Plaintiff : Mr J A Chaney
Defendant : Mr P G Clifford
Solicitors:
Plaintiff : Karp Steedman Ross-Adjie
Defendant : Paiker & Overmeire
Case(s) referred to in judgment(s):
Dietrich v R (1992) 177 CLR 292
Mitchell v Saengjan (1994) 117 FLR 273
Ninemia Maritime Corporation v Trave GmbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412
Patterson v BTR Engineering (Australia) Ltd (1989) 18 NSWLR 319
Perth Mint v Mickelberg (No 2) [1985] WAR 117
Case(s) also cited:
Nil
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1 HASLUCK J: This is an application by the defendant for an order that the injunction granted before her Honour Wheeler J in chambers on 9 February 1999 be set aside. I pause to note that the order in question is referable to an earlier order for injunction made by White J in chambers on 17 August 1998.
2 I will come to the particularity of White J's order in a moment. In essence, it was made in response to an application for a Mareva injunction and the tenor of the order is reflected in par 1: that the defendant be restrained from removing all or any of his assets wherever they are situated, or charging the same. Various qualifications and embellishments then appear in the body of the order.
3 In order to understand the basis of the application before me it is necessary to look at the history of this matter. I note from the materials before me that, in summary, the defendant was previously employed by the plaintiff and in March 1998 was dismissed. The plaintiff has commenced proceedings in which it alleges that the defendant received cash cheques intended for the plaintiff in respect of goods purchased from the plaintiff and used those cheques for his own purposes.
4 The defendant admits with respect to at least some of the cheques that he did not deposit them to the plaintiff's account but used them himself. He says, however, that the goods were not actually purchased from the plaintiff. Rather, he says, because of the plaintiff's supply problems from time to time, the defendant found alternative goods from other sources, paid for them with his own money, supplied them to the customers and then reimbursed himself from the cash cheques. He says he made no profit on these transactions.
5 The plaintiff brought on the application for a Mareva injunction and that was heard by White J in chambers on 4 August 1998. Some time later, White J handed down his judgment in response to the application. In that judgment his Honour summarises the case being advanced by the plaintiff in terms which broadly correspond with the description I have just given, but providing greater particularity as to the various cheques involved. His Honour notes that the total amount involved in the plaintiff's case involves a substantial sum, in excess of $350,000.
6 In responding to the application for the injunction his Honour noted that the plaintiff had made out a good and arguable case in the manner allowed for and required by Perth Mint v Mickelberg(No 2) [1985] WAR 117. His Honour then went on to say that it was necessary to
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- consider whether there was a real risk that if the injunction was not granted, the defendant would remove or dissipate his assets.
7 In the course of discussing that precept, the learned Judge drew attention to the decision of the Court of Appeal in New South Wales in Patterson v BTR Engineering (Australia) Ltd (1989) 18 NSWLR 319. The point is made in that case that a remedy of the kind being applied for is discretionary. A prima facie cause of action has to be established and it must also be established that a danger exists that by reason of the defendant's absconding, or of assets being removed out of the jurisdiction, or disposed of within the jurisdiction, or otherwise dealt with in some fashion, the plaintiff if he succeeds, will not be able to have his judgment satisfied.
8 It becomes apparent when one reviews the reasoning of his Honour White J that his Honour was troubled by a paucity of evidence on the plaintiff's case before him as to whether there had been the demonstration of a risk that the defendant might disperse or dissipate his assets. He was not satisfied that some slight evidence concerning the possibility of the defendant moving to Thailand in order to establish a business there was sufficient. Indeed, his Honour concluded:
"Standing alone that evidence would not suffice to persuade me that the plaintiff had demonstrated the existence of any such danger as is referred to in the authorities."
9 Ultimately his Honour concluded that because the plaintiff's case involved allegations of gross dishonesty in respect of a substantial sum of money, with some indications of a lack of candour on the part of the defendant, on balance the injunction should be granted. Reference was made in support of that conclusion to the reasoning of Mildren J in Mitchell v Saengjan(1994) 117 FLR 273.
10 Nonetheless it does appear from his Honour's reasoning that he saw the plaintiff's application as being finely balanced and it was with some reluctance that he exercised his discretion to grant an injunction of the kind applied for.
11 Before leaving the discussion of principles I have just mentioned, I note that his Honour did not directly refer to another consideration which is often thought to be important in these cases, and that is the principle referred to in Seaman Civil Procedure at par 52.1.32. The jurisdiction cannot be invoked for the purpose of providing security to plaintiffs even
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- when they appear likely to succeed and the order would impose no real hardship on the defendants.
12 The defendant by counsel before me relies upon that expression of view and refers to the case of Ninemia Maritime Corporation v Trave GmbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412. Thus, it emerges from both authorities that in exercising the discretion concerning the grant of a Mareva injunction one has to be careful that in providing the plaintiff with a safeguard against the risk of assets being dissipated one is not simply using the instrument of the injunction in order to provide a security to the plaintiff which may be of use if a judgment has to be enforced after the trial has taken place and the plaintiff has secured a verdict.
13 It was against the background I have described that the detailed order for an injunction was made by his Honour White J on 17 August 1998. It will now be useful to look at the terms of that order in more detail . I mentioned that par 1 contains a restraint upon the defendant dealing with his assets generally. Reference is made in that regard particularly to his share in the land known as 10 Iona Place, Greenwood, and certain bank accounts that are specified.
14 In par 2 of the order one finds that an arrangement is made for the defendant's half share in a property at 56 Railway Road, Rockdale, in the state of New South Wales to be transferred into a joint trust account to be opened in the joint name of the solicitors representing the plaintiff and the defendant.
15 In par 3 provision is made for the generality of the order to be qualified so as to allow to the defendant ordinary living expenses up to an amount of $850 and for costs reasonably incurred in defending the civil proceedings up to an amount of $50,000, and with permission to operate a bank account. Provision was also made for the defendant to file and serve an affidavit disclosing his assets and the location of them. There was also liberty to apply and other incidental orders.
16 It followed from these events that the Rockdale property was sold. In the manner envisaged by White J's order, the proceeds of the sale found their way to the bank account under the control of the solicitors. Subsequently, there have been withdrawals upon that account in the manner envisaged by the order so that the defendant would have his living expenses and have some provision for legal costs.
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17 I pause here, in reviewing the circumstances of the matter as they were presented to White J, to note that in August 1998, the statement of claim before his Honour in an important respect in par 4 was expressed in these terms:
"4. On various dates between 1 July 1995 and 17 February 1998 the defendant:
4.1 failed to deposit to the plaintiff's bank account cash cheques for a total of $165,528.71 drawn by Temp-Rite in respect of monies due by Temp-Rite to the plaintiff for goods purchased from the plaintiff."
19 Her Honour heard argument from the parties. Her response to the matters brought before her is reflected in her written reasons published on 12 February 1999. She notes at the outset that the application for a variation of White J's order revolved largely around what provision should be made for the defendant's legal costs, bearing in mind that some additional proceedings had been commenced and that matters of appeal were in motion or contemplated in respect of both some additional legal proceedings involving the parties and the proceedings in this matter, CIV 1541 of 1998.
20 Her Honour undertook a full review of the matters bearing upon the exercise of her discretion. She noted that the plaintiff's submission was that if the sum permitted to the defendant in respect of his legal costs were substantially increased it would render the Mareva injunction and any further judgment obtained against the plaintiff nugatory. She said that although it was put to her in a number of different ways in essence this boiled down to a suggestion that because the defendant had limited funds if they were all spent on his defence then there would be nothing left to satisfy any potential judgment.
21 She said quite firmly in the course of her reasons that in her view this was treating the injunction as de facto security and such an argument should be rejected. It is apparent from her discussion of the matters before her that by and large she took account of the principles which had been reviewed by White J in his reasoning. It is apparent from the remark
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- I have just drawn attention to that she also took account of the notion that an injunction of this kind should not be invoked for the purpose of providing security to the plaintiff.
22 It is apparent from the reasoning of Wheeler J that she too was troubled by the lack of a clear demonstration that there was a risk of dissipation. She said at page 8 of her reasons, and I quote:
"There are two issues which might dispose me towards either granting the defendant's application or, alternatively, removing any 'cap' on the amount which the defendant may spend. The first is one of principle.
If one looks at the basis of the Mareva injunction in principle, it appears that its current rationale is that it prevents dissipation of assets in anticipation of an adverse decision in a way which would interfere with the administration of justice, or perhaps alternatively, it simply prevents abuse of the process of the court. I am aware that there have been a number of attempts to explain the basis of the jurisdiction and that they have taken varying forms, but I think this formulation is appropriate for present purposes. Originally, the jurisdiction was exercised to prevent removal of assets from the jurisdiction or otherwise placing them beyond the reach of creditors, in circumstances where it appeared the party restrained by the injunction was attempting, or might attempt, to ensure that he would be able to enjoy the benefit of those assets notwithstanding any adverse decision in the proceedings. It is difficult to see that expenditure of funds on legal expenses, even if that expenditure is somewhat extravagant in nature, would normally be the type of expenditure which the injunction was designed to protect against."
23 Wheeler J ultimately concluded that it would be appropriate to vary the orders made by White J in order to permit the defendant to pay costs reasonably incurred in these proceedings in respect of appeal FUL 175 of 1998, proceedings CIV 2103 of 1998 and FUL 151 of 1998 up to a total amount of $120,000. She added:
"How the defendant apportions those funds between the various proceedings is up to him."
24 That ruling was reflected in a formal order varying par 3(a)(ii) of the order of White J that I described a moment ago. Thus, in summary, the
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- defendant was allowed a greater opportunity to expend such entitlement as he had in terms of his assets to the legal proceedings which were in motion at that time, being the two sets of civil proceedings that I have described.
25 I pause to say that subsequently one of the matters the subject of an appeal brought by the defendant came before the Full Court and part of the materials before me this morning includes a transcript of the relevant hearing on Friday, 5 March 1999. In the course of the exchanges between members of the Full Court and counsel there was some reference to a degree of ambiguity in the plaintiff's pleaded case as reflected in par 4, being the paragraph I mentioned a moment ago. It emerges from the materials before me that, probably as a consequence of the discussion before the Full Court, the plaintiff then applied to amend its statement of claim. Particulars of that amendment are reflected in a minute of proposed amended statement of claim dated 6 April 1999.
26 The earlier formulation of the claim in par 4 was deleted and in its place was substituted the following:
"4 On various dates between, on or about 5 January 1995 and on or about 17 February 1998 the defendant:
4.1 failed to deposit to the plaintiff's bank account cash cheques for a total of $160,540.88 drawn by and intended by Temp-Rite for the plaintiff."
28 I will not in these reasons explore the full implications of the revised pleading or endeavour to make any determination as to how exactly the claim being advanced by the plaintiff should be characterised. Nonetheless, I note that there was some degree of ambiguity as it arose in discussion before the Full Court, and the fact that it was viewed seriously is manifested by the fact that an amendment was subsequently made to that part of the pleaded claim.
29 It seems that in subsequent weeks and months the defendant, in the manner envisaged by the varied order, drew upon the fund that had been
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- established consistently with par 4 of White J's order for living expenses and for legal costs. The value of the proceeds from the Rockdale property has therefore been diminished to some extent.
30 The next significant matter which was drawn to my attention for the purpose of today's hearing before me was the fact that in March 2000 the defendant was charged with various criminal offences.
31 The materials relied upon by the defendant in the present application include the affidavit of the defendant sworn 6 July 2000. At par 16 of the affidavit, he says that since the orders made by her Honour Wheeler J on 9 February 1999 were made his need for access to assets and moneys to fund legal representation has altered significantly. He says, and I quote:
"17. On 9 March 2000 I was arrested by representatives of the Major Fraud Squad of the Western Australian Police and informed me that I was to be charged with approximately 80 instances of stealing as a servant, 10 instances of fraud and one instance of theft. I was granted bail on the same date and I have since attended at hearings on 14 March 2000 and 9 May 2000. At present the matter has been adjourned to an election date on 5 July 2000 as the handup brief from the police was not available prior to the hearing on 9 May 2000. I have since received the handup brief for the charges of stealing as a servant charges and the theft charge. I have only received a statement of material facts in respect of the fraud charges.
18. The charges are related to some of the matters in dispute in these proceedings.
19. I am informed by my legal advisers and I verily believe that the costs of the criminal proceedings including costs incurred to date will be approximately $90,000 to $100,000."
32 The defendant in his affidavit goes on to say that by reason of the terms of the Mareva injunction he is not permitted access to any of his funds to be able to fund his defence in the criminal proceedings. I pause there to say that I understand from argument before me that his summation is accepted to be so. In other words, the provision for release of a portion of the funds pursuant to the orders previously described are confined to the existing civil proceedings.
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33 The defendant then goes on to describe his other assets. He refers to 2600 Telstra shares valued at approximately $17,000. He refers to his share in the land situated at 10 Iona Place, Greenwood. He understands by information from a real estate agency that the property in question is worth at most $197,000. Thus after a deduction of commission his interest would be worth the sum of $95,000, from which certain amounts have to be deducted to repay amounts due to the Challenge Bank. Reference is also made to a Commonwealth Bank approved deposit in an amount of $3704.64.
34 In reviewing the defendant's assets, this being verified in the defendant's affidavit, and as a result of matters put to me by counsel for the defendant, it appears that in terms of the liquid cash or immediately accessible cash available to the defendant under the previous arrangements, the amount now remaining (being effectively the proceeds from the sale of the Rockdale property) is the sum of $47,000 or a figure in that vicinity.
35 It is against this background that the defendant has applied to set aside the order for an injunction previously made. In the normal course of events one would understand that there is an onus upon the defendant to identify changed circumstances sufficient to warrant the setting aside of the order.
36 The changed circumstances which the defendant points to in the present case, as outlined to me by counsel for the defendant, are firstly some shifting of position in regard to the nature of the claim being advanced by the plaintiff, this being reflected in the amendment to the pleadings I mentioned earlier. As to this matter, it is said that the structure of the claim before me is of a different order to the way in which the claim was being advanced at the time their Honours White J and Wheeler J dealt with the application for injunctive relief.
37 Secondly, and perhaps more importantly, emphasis is placed upon the fact that the defendant is now facing serious criminal charges and that significant legal costs will be incurred if he is to defend those charges as fully as he would wish. It is certainly apparent from the materials presented to me that the defendant intends to defend the charges, or to obtain extensive legal representation in respect of them.
38 The defendant says that it is not sufficient simply to vary the injunction. His argument is to this effect: against the background of assets which cannot be described as sizeable and which are, in any event,
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- diminishing as a consequence of the orders previously made, and in circumstances where he now has significant commitments in terms of legal expenses, there is no real risk of the assets being dissipated in the manner contemplated at the time the orders were originally made.
39 The plaintiff opposes the application to set aside the injunction. Counsel for the plaintiff relies upon the affidavit of James Steedman sworn 7 September 2000 in which reference is made to various matters that may have a bearing upon the exercise of a discretion. It is said that the defendant has not made an adequate disclosure of his present employment position. As the defendant, in effect, bears an onus of sorts as the party seeking to set aside or even to vary the injunction, this is a matter which should have been addressed.
40 Reference is made to the defendant having sufficient resources to fund a holiday. It is also said, perhaps more importantly, that there has been no significant change to the circumstances being reviewed by White and Wheeler JJ as they are viewed today. There may have been some comparatively minor amendments to the statement of claim but that was in the nature of an adjustment. In essence, it was then, and is still being alleged, that the defendant wrongfully misappropriated the plaintiff's property. An allegation of that kind has a bearing upon his honesty and this was a factor which carried significant weight with his Honour White J. The plaintiff says further that although the criminal charges may have been now laid against the defendant, that of itself does not represent a significant change sufficient to justify a setting aside or variation.
41 The plaintiff acknowledges the reality of the dilemma confronting the defendant, being faced with criminal charges. The plaintiff's proposal is, as expressed by counsel, that the injunction should remain in place but with a variation allowing access to the funds in the bank account for the purpose not only of civil proceedings but also, and more importantly, for the criminal charges which are now uppermost in the mind of the defendant.
42 Counsel for the plaintiff adds a gloss to this effect: provision could also be made for a stay of the civil proceedings as they are now overshadowed by the criminal charges. If a stay is allowed, then the funds that are available can be directed essentially to the defending of the criminal charges with the result that the defendant is not placed at a disadvantage.
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43 It is against this background that I must weigh up the pros and cons of the matter and determine whether the defendant has put forward sufficient to justify a setting aside of the order previously made. Counsel for the defendant draws attention to the fact that so long as the injunction is in place, it inhibits the way in which the defendant can employ his assets, and thus a mere variation of the order in the manner canvassed by counsel for the plaintiff is not a sufficient answer to the defendant's urgent need.
44 I note in passing that counsel for the defendant has said that he does not want to have the injunction discharged. He applies to have it set aside in the way he has proposed, his intention in that regard being to preserve the undertaking as to damages previously provided by the plaintiff. I will say no more about that matter for the moment as it may require further discussion, both in principle and as to the details, should I reach that point.
45 It follows from earlier discussion that I must keep steadily in mind the principles to be applied in regard to a Mareva injunction of this kind. They underpinned the reasoning of both White J and Wheeler J. Central to those principles is the notion that it must be demonstrated that there is a significant risk that the assets of the defendant will be dissipated, and in a manner that might be regarded as an abuse of the proceedings of enforcement which might otherwise be regarded as available to a successful plaintiff. However, as a qualification to those broad considerations, one must take account of the principle I mentioned earlier arising out of Ninemia's case, that the Mareva injunction should not be invoked for the purpose of providing security to the plaintiff.
46 In my view, there have been significant changes in the circumstances of this matter since it was dealt with by White J and by Wheeler J. There has been some alteration to the manner in which the plaintiff's claim is expressed. That matter of itself would not be sufficient to justify a setting aside of the injunction in the manner proposed, but nonetheless the amendments to the statement of claim I mentioned earlier do reveal a degree of ambiguity in the way in which the claim is now expressed. This factor was not before or brought to the attention of White J and Wheeler J at the time they had to review the relevant circumstances.
47 One also has to take account of the fact, in my view, that the amount of readily available resources available to the defendant are not large and this perhaps must be weighed up when one reviews the risk of dissipation. Viewed hypothetically, it might be different if the defendant had ready
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- access to a very substantial cash resource exclusively under his control which might be dissipated because it could be readily dealt with by him. The circumstances are not of that order in this case. His cash resources are not large and they are likely to be applied to a defence of the criminal charges.
48 Most important of all the changed circumstances is the presence, as a matter of urgent need, of the various criminal charges brought against the defendant.
49 Reference has been made by counsel for the defendant to the principles under discussion in the High Court decision of Dietrich v R (1992) 177 CLR 292. That case is thought to be authority for the proposition that a party to criminal proceedings is as of right entitled to receive a fair trial where criminal proceedings concern serious charges. In the absence of compelling circumstances the trial should be adjourned if the accused through no fault of his own does not have adequate representation.
50 I do not see that case as having any direct application to the circumstances before me, except that it reflects a general view, which most practitioners in the legal profession would share, that it is most important that a defendant faced with criminal charges be at liberty to muster the best defence available to him and not be deprived of any reasonable opportunity of presenting his case. It does seem to me that the precept expressed in that general form must be kept steadily in mind.
51 In summary, then, it emerges from the narrative that the defendant is now facing criminal charges. There is evidence before me that he wishes to apply such resources as he does have to obtaining proper advice and representation in respect of those charges. There is evidence before me that this is likely to involve a sizeable amount which could be as high as $90,000. Even if a preliminary hearing is dispensed with by election, the legal costs would nonetheless be in the order of $45,000. It seems to me that the risk of the defendant's assets, such as they are, being dissipated by improper conduct has diminished because of the urgent need now confronting the defendant, who is presently on bail. Further, and in any event, the amount of the assets is not large and the form of the assets means that they are not readily transmissible.
52 I take account also of the fact that those who made the order originally, White J and Wheeler J, were troubled to some degree by the absence of a clear demonstration that the assets might be dissipated. The
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- changed circumstances I have mentioned, if anything, tend to reinforce this reservation that there is additionally the lack of a clear demonstration of the possibility of dissipation. I take account also, as Wheeler J did, that there is an element in the plaintiff's argument of invoking the Mareva injunction for the purpose of providing security to the plaintiff, contrary to the principles reflected in the decided cases.
53 Accordingly, for these reasons, I consider, weighing up the matter, that the defendant has made out a case, setting aside the injunction in the manner proposed.
54 I have given careful consideration to the argument on the plaintiff's side that it would be sufficient merely to vary the order. It seems to me, however, in circumstances where the defendant is facing criminal charges, and may have to provide a very clear account, either to governmental agencies or to lending institutions, as to how he is placed in regard to the control of his resources, that the presence of the injunctive orders in the form I have described could represent a barrier to the effective representation of the charges brought against him.
55 Accordingly, for these various reasons I accede to the submissions made on behalf of the defendant and I will grant the order sought. It follows from earlier discussion that the order will be set aside rather than discharged.
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